Document:

<PAGE>
                                                                   Exhibit 4.3.1

     FIFTEENTH SUPPLEMENTAL INDENTURE, dated as of January 28, 2003, between The
Kroger Co., a corporation duly organized and existing under the laws of the
State of Ohio (herein called the "Company"), having its principal office at 1014
Vine Street, Cincinnati, Ohio 45202, the Guarantors listed on the signature
pages and Schedule I hereto (each, a "Guarantor") and U.S. Bank, N.A. (formerly
known as Firstar Bank, N.A.), a banking corporation duly organized and existing
under the laws of the State of Ohio, as Trustee (herein called the "Trustee").

                             RECITALS OF THE COMPANY

     The Company has heretofore executed and delivered to the Trustee an
Indenture dated as of June 25, 1999 (the "Indenture"), providing for the
issuance from time to time of the Company's unsecured debentures, notes or other
evidences of indebtedness (herein and therein called the "Securities"), to be
issued in one or more series as in the Indenture provided.

     Section 201 of the Indenture permits the form of the Securities of any
series to be established pursuant to an indenture supplemental to the Indenture.

     Section 301 of the Indenture permits the terms of the Securities of any
series to be established in an indenture supplemental to the Indenture.

     Section 901(7) of the Indenture provides that, without the consent of any
Holders, the Company, when authorized by a Board Resolution, and the Trustee, at
any time and from time to time, may enter into one or more indentures
supplemental to the Indenture for the purpose of establishing the form or terms
of Securities of any series as permitted by Sections 201 and 301 of the
Indenture.

     Each of the Guarantors has duly authorized the issuance of a guarantee of
the Securities, as set forth herein, and to provide therefor, each of the
Guarantors has duly authorized the execution and delivery of this Fifteenth
Supplemental Indenture.

     The Company and the Guarantors, pursuant to the foregoing authority,
propose in and by this Fifteenth Supplemental Indenture to establish the terms
and form of the Securities of a new series and to amend and supplement the
Indenture in certain respects with respect to the Securities of such series.

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     All things necessary to make this Fifteenth Supplemental Indenture a valid
agreement of the Company and the Guarantors, and a valid amendment of and
supplement to the Indenture, have been done.

     NOW, THEREFORE, THIS FIFTEENTH Supplemental Indenture WITNESSETH:

     For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Securities of the series to be created hereby, as
follows:

                                   ARTICLE ONE

                                   DEFINITIONS

Section 101. DEFINITIONS.

     (a) For all purposes of this Fifteenth Supplemental Indenture:

          (1) Capitalized terms used herein without definition shall have the
     meanings specified in the Indenture;

          (2) All references herein to Articles and Sections, unless otherwise
     specified, refer to the corresponding Articles and Sections of this
     Fifteenth Supplemental Indenture and, where so specified, to the Articles
     and Sections of the Indenture as supplemented by this Fifteenth
     Supplemental Indenture; and

          (3) The terms "hereof", "herein", "hereby", "hereto", "hereunder" and
     "herewith" refer to this Fifteenth Supplemental Indenture.

     (b) For all purposes of the Indenture and this Fifteenth Supplemental
Indenture, with respect to the Securities of the series created hereby, except
as otherwise expressly provided or unless the context otherwise requires:

          "Adjusted Treasury Rate" means, with respect to any Redemption Date,
     the rate per annum equal to the semi-annual equivalent yield to maturity of
     the Comparable Treasury Issue, assuming a price for the Comparable Treasury
     Issue (expressed as a percentage of its principal amount) equal to the
     Comparable Treasury Price for such Redemption Date.

          "Attributable Debt" means, in connection with a Sale and Lease-Back
     Transaction, as of any particular time, the aggregate of present values
     (discounted at a rate per annum equal to the interest rate borne by the
     Securities of the series created by this Fifteenth Supplemental Indenture)
     of the obligations of the Company or any

                                      - 2 -

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     Restricted Subsidiary for net rental payments during the remaining primary
     term of the applicable lease, calculated in accordance with generally
     accepted accounting principles. The term "net rental payments" under any
     lease for any period shall mean the sum of the rental and other payments
     required to be paid in such period by the lessee thereunder, not including,
     however, any amounts required to be paid by such lessee (whether or not
     designated as rental or additional rental) on account of maintenance and
     repairs, reconstruction, insurance, taxes, assessments, water rates,
     operating and labor costs or similar charges required to be paid by such
     lessee thereunder or any amounts required to be paid by such lessee
     thereunder contingent upon the amount of sales, maintenance and repairs,
     reconstruction, insurance, taxes, assessments, water rates or similar
     charges.

          "Business Day" means any day other than a Saturday or Sunday or a day
     on which banking institutions in New York City or Cincinnati, Ohio are
     authorized or obligated by law or executive order to close.

          "Capital Lease" means any lease of property which, in accordance with
     generally accepted accounting principles, should be capitalized on the
     lessee's balance sheet or for which the amount of the asset and liability
     thereunder as if so capitalized should be disclosed in a note to such
     balance sheet; and "Capitalized Lease Obligation" means the amount of the
     liability which should be so capitalized or disclosed.

          "Comparable Treasury Issue" means the United States Treasury security
     selected by a Quotation Agent as having a maturity comparable to the
     remaining term of the Securities to be redeemed that would be utilized, at
     the time of selection and in accordance with customary financial practice,
     in pricing new issues of corporate debt securities of comparable maturity
     to the remaining term of such Securities.

          "Comparable Treasury Price" means, with respect to any Redemption
     Date, (i) the average of the Reference Treasury Dealer Quotations, after
     excluding the highest and lowest such Reference Treasury Dealer Quotations
     for such Redemption Date, or (ii) if the Trustee obtains fewer than three
     such Reference Treasury Dealer Quotations, the average of all such
     Quotations.

          "Consolidated Net Tangible Assets" means, for the Company and its
     Subsidiaries on a consolidated basis determined in accordance with
     generally accepted accounting principles, the aggregate amounts of assets
     (less depreciation and valuation

                                      - 3 -

<PAGE>

     reserves and other reserves and items deductible from gross book value of
     specific asset accounts under generally accepted accounting principles)
     which under generally accepted accounting principles would be included on a
     balance sheet after deducting therefrom (a) all liability items except
     deferred income taxes, commercial paper, short-term bank Indebtedness,
     Funded Indebtedness, other long-term liabilities and shareholders' equity
     and (b) all goodwill, trade names, trademarks, patents, unamortized debt
     discount and expense and other like intangibles, which in each case would
     be so included on such balance sheet.

          "Credit Facility" means any credit agreement, loan agreement or credit
     facility, whether syndicated or not, involving the extension of credit by
     banks or other credit institutions, entered into by the Company or Fred
     Meyer, Inc. and outstanding on the date of this Fifteenth Supplemental
     Indenture, and any refinancing or other restructuring of such agreement or
     facility.

          "Funded Indebtedness" means any Indebtedness maturing by its terms
     more than one year from the date of the determination thereof, including
     (i) any Indebtedness having a maturity of 12 months or less but by its
     terms renewable or extendible at the option of the obligor to a date later
     than 12 months from the date of the determination thereof and (ii) rental
     obligations payable more than 12 months from the date of determination
     thereof under Capital Leases (such rental obligations to be included as
     Funded Indebtedness at the amount so capitalized at the date of such
     computation and to be included for the purposes of the definition of
     Consolidated Net Tangible Assets both as an asset and as Funded
     Indebtedness at the amount so capitalized).

          "Non-Restricted Subsidiary" means any Subsidiary that the Company's
     Board of Directors has in good faith declared pursuant to a written
     resolution not to be of material importance, either singly or together with
     all other Non-Restricted Subsidiaries, to the business of the Company and
     its consolidated Subsidiaries taken as a whole.

          "Operating Assets" means all merchandise inventories, furniture,
     fixtures and equipment (including all transportation and warehousing
     equipment but excluding office equipment and data processing equipment)
     owned or leased pursuant to Capital Leases by the Company or a Restricted
     Subsidiary.

          "Operating Property" means all real property and improvements thereon
     owned or leased pursuant to Capital Leases by the Company or a Restricted
     Subsidiary and constituting,

                                      - 4 -

<PAGE>

     without limitation, any store, warehouse, service center or distribution
     center wherever located, provided that such term shall not include any
     store, warehouse, service center or distribution center which the Company's
     Board of Directors declares by written resolution not to be of material
     importance to the business of the Company and its Restricted Subsidiaries.

          "Quotation Agent" means the Reference Treasury Dealer appointed by the
     Company.

          "Reference Treasury Dealer" means (i) J.P. Morgan Securities, Inc. and
     its successors; provided, however, that if the foregoing shall cease to be
     a primary U.S. Government securities dealer in New York City (a "Primary
     Treasury Dealer"), the Company shall substitute therefor another Primary
     Treasury Dealer, and (ii) any other Primary Treasury Dealer selected by the
     Company.

          "Reference Treasury Dealer Quotations" means, with respect to each
     Reference Treasury Dealer and any Redemption Date, the average, as
     determined by the Company, of the bid and asked prices for the Comparable
     Treasury Issue (expressed in each case as a percentage of its principal
     amount) quoted in writing to the Trustee by such Reference Treasury Dealer
     at 5:00 p.m. on the third Business Day preceding such Redemption Date.

          "Restricted Subsidiaries" means all Subsidiaries other than
     Non-Restricted Subsidiaries.

          "Sale and Lease-Back Transaction" has the meaning specified in Section
     1010.

          "Subsidiary" means (i) any corporation or other entity of which
     securities or other ownership interests having ordinary voting power to
     elect a majority of the board of directors or other persons performing
     similar functions are at the time directly or indirectly owned by the
     Company and/or one or more Subsidiaries or (ii) any partnership of which
     more than 50% of the partnership interest is owned by the Company or any
     Subsidiary.

                                   ARTICLE TWO

                                 SECURITY FORMS

Section 201. FORM OF SECURITIES OF THIS SERIES.

     The Securities of this series shall be in the form set forth in this
Article.

                                      - 5 -

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Section 202. FORM OF FACE OF SECURITY.

     This Security is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee of a Depositary. This Security is not exchangeable for Securities
registered in the name of a Person other than the Depositary or its nominee
except in the limited circumstances described in the Indenture, and no transfer
of this Security (other than a transfer of this Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary) may be registered except in
the limited circumstances described in the Indenture.

     Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to The Kroger Co. or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.

                                 THE KROGER CO.

                           5.50% Senior Notes due 2013

CUSIP No. 501044 CE 9
ISIN No. US 501044 CE 98                                              $.........

     The Kroger Co., a corporation duly organized and existing under the laws of
the State of Ohio (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to , or registered assigns, the principal sum
of $ on February 1, 2013 and to pay interest thereon from January 28, 2003, or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semi-annually on February 1 and August 1 in each year,
commencing August 1, 2003 at the rate of interest of 5.50% per annum until the
principal hereof is paid or made available for payment. Interest on the Security
will be computed on the basis of a 360-day year of twelve 30-day months. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the January 15 or July 15 (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date. Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the

                                      - 6 -

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Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.

     Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in Cincinnati, Ohio, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; PROVIDED, HOWEVER, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.

     In the case where any Interest Payment Date or the maturity date of this
Security does not fall on a Business Day, payment of interest or principal
otherwise payable on such day need not be made on such day, but may be made on
the next succeeding Business Day with the same force and effect as if made on
such Interest Payment Date or the maturity date of this Security.

     Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated: January 28, 2003

                                        THE KROGER CO.

                                        By......................................

Attest:

.............................................

     This is one of the Securities of the series designated therein referred to
in the within mentioned Indenture.

                                      - 7 -

<PAGE>

                                        U.S. BANK, N.A.,
                                        as Trustee

                                       By
                                          --------------------------------------
                                           Authorized Officer

Attest:

------------------------

Section 203. FORM OF REVERSE OF SECURITY.

     This Security is one of a duly authorized issue of Securities of the
Company (including the related Guarantees, the "Securities") issued and to be
issued under an Indenture dated as of June 25, 1999, as supplemented by the
First Supplemental Indenture dated as of June 25, 1999, the Second Supplemental
Indenture dated as of June 25, 1999, the Third Supplemental Indenture dated as
of June 25, 1999, the Fourth Supplemental Indenture dated as of September 22,
1999, the Fifth Supplemental Indenture dated as of September 22, 1999, the Sixth
Supplemental Indenture dated as of September 22, 1999, the Seventh Supplemental
Indenture dated as of February 11, 2000, the Eighth Supplemental Indenture dated
as of February 11, 2000, the Ninth Supplemental Indenture dated as of August 21,
2000, the Tenth Supplemental Indenture dated as of May 11, 2001, the Eleventh
Supplemental Indenture dated as of May 11, 2001, the Twelfth Supplemental
Indenture dated as of August 16, 2001, the Thirteenth Supplemental Indenture
dated as of April 3, 2002, the Fourteenth Supplemental Indenture dated as of
June 17, 2002, and the Fifteenth Supplemental Indenture dated as of January 28,
2003 (as so supplemented, herein called the "Indenture"), each between the
Company and the Guarantors named therein, and Firstar Bank, N.A. (now known as
U.S. Bank, N.A.), as Trustee (herein called the "Trustee", which term includes
any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Guarantors named therein, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof, initially limited in aggregate principal amount to
$500,000,000.

     The Company may from time to time, without notice to or consent of the
registered holders of the Securities issue further Securities ("Additional
Securities"). The Additional Securities will rank equal with the Securities in
all respects (or in all respects other than the payment of interest accruing
prior to the issue date of the Additional Securities, or except for the first
payment of interest following the issue date of the Additional Securities). The
Additional Securities may be consolidated and form a single series with the
Securities and may have the same terms as to status, redemption, or otherwise,
as the Securities.

     The Securities of this series will be redeemable, in whole or in part, at
the option of the Company at any time at a redemption price equal to the greater
of (i) 100% of the principal amount of such Securities or (ii) as determined by
a Quotation Agent, the sum of the

                                      - 8 -

<PAGE>

present values of the remaining scheduled payments of principal and interest
thereon (not including any portion of such payments of interest accrued as of
the date of redemption) discounted to the date of redemption on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Adjusted Treasury Rate plus 25 basis points, plus, in each case, accrued
interest thereon to the date of redemption.

     Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of the Securities to be
redeemed. Unless the Company defaults in payment of the redemption price, on and
after the Redemption Date, interest will cease to accrue on the Securities or
portions thereof called for redemption.

     The Indenture contains provisions for defeasance at any time of (i) the
entire indebtedness of this Security or (ii) certain restrictive covenants and
Events of Default with respect to this Security, in each case upon compliance
with certain conditions set forth therein.

     If an Event of Default shall occur and be continuing, the principal of all
Securities of this series may be declared due and payable in the manner and with
the effect provided in the Indenture.

     The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of 50% in aggregate principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all the Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange therefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.

     As set forth in, and subject to, the provisions of the Indenture, no Holder
of any Security will have any right to institute any proceeding with respect to
the Indenture or for any remedy thereunder, unless such Holder shall have
previously given to the Trustee written notice of a continuing Event of Default,
the Holders of not less than 25% in principal amount of the Outstanding
Securities shall have made written request, and offered reasonable indemnity, to
the Trustee to institute such proceeding as trustee, and the Trustee shall not
have received from the Holders of a majority in principal amount of the
Outstanding Securities a direction inconsistent with such request and shall have
failed to institute such proceeding within 60 days; PROVIDED, HOWEVER, that such
limitations do not apply to a suit instituted by the Holder hereof for the
enforcement of payment of the principal of (and premium, if any) or any interest
on this Security on or after the respective due dates expressed herein.

     No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and

                                      - 9 -

<PAGE>

unconditional, to pay the principal of and any premium and interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed.

     As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registerable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of and any premium and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of like tenor,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.

     The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of like tenor,
of a different authorized denomination, as requested by the Holder surrendering
the same.

     Except where otherwise specifically provided in the Indenture, no service
charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.

     Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

     All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.

Section 204. FORM OF GUARANTEE.

     The form of Guarantee shall be set forth on the Securities substantially as
follows:

                                    GUARANTEE

     For value received, each of the undersigned hereby absolutely, fully and
unconditionally and irrevocably guarantees, jointly and severally with each
other Guarantor, to the holder of the Security on which this Guarantee is
endorsed the payment of principal of, premium, if any, and interest on such
Security in the amounts and at the time when due and payable whether by
declaration thereof, or otherwise, and interest on the overdue principal and
interest, if any, of such Security, if lawful, and the payment or performance of
all other obligations of the Company under the Indenture or such Security, to
the holder of such Security and the Trustee, all in accordance with and subject
to the terms and limitations of such Security and Article Five

                                     - 10 -

<PAGE>

of the Fifteenth Supplemental Indenture to the Indenture. This Guarantee will
not become effective until the Trustee duly executes the certificate of
authentication on this Guarantee. This Guarantee shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflict of law principles thereof.

Dated: January 28, 2003

                               Each of the Guarantors Listed on Schedule I
                               hereto, as Guarantor of the Securities

                               By:
                                  ----------------------------------------
                                   Name:
                                   Title:

                                     - 11 -

<PAGE>

                                  QUEEN CITY ASSURANCE, INC.,
                                  as Guarantor of the Securities
                                  RJD ASSURANCE, INC.,
                                  as Guarantor of the Securities
                                  VINE COURT ASSURANCE INCORPORATED,
                                  as Guarantor of the Securities

                                  By
                                    --------------------------------------------
                                     Name:  Bruce M. Gack
                                     Title: Senior Vice President/Vice President

                                  RICHIE'S INC., as Guarantor of the Securities,
                                  ROCKET NEWCO, INC.,
                                  as Guarantor of the Securities
                                  HENPIL, INC.,
                                  as Guarantor of the Securities

                                  By:
                                      ------------------------------------------
                                      Name:  Paul Schweitzer
                                      Title: President/Vice President

                                     - 12 -

<PAGE>

This is one of the Guarantees referred to in the within mentioned Indenture.

Attest:                                     U.S. BANK, N.A.
                                            as Trustee

----------------------------                By:
                                               ---------------------------------
                                               Name:
                                               Title:

                                     - 13 -

<PAGE>

                                   SCHEDULE I

                                   Guarantors

Name of Guarantor                                        State of Organization
-----------------                                        ---------------------

Alpha Beta Company                                       California
Bay Area Warehouse Stores, Inc.                          California
Bell Markets, Inc.                                       California
Cala Co.                                                 Delaware
Cala Foods, Inc.                                         California
CB&S Advertising Agency, Inc.                            Oregon
Crawford Stores, Inc.                                    California
Dillon Companies, Inc.                                   Kansas
Dillon Real Estate Co., Inc.                             Kansas
Distribution Trucking Company                            Oregon
Drugs Distributors, Inc.                                 Indiana
F4L L.P.                                                 Ohio
FM, Inc.                                                 Utah
FMJ, Inc.                                                Delaware
Food 4 Less GM, Inc.                                     California
Food 4 Less Holdings, Inc.                               Delaware
Food 4 Less Merchandising, Inc.                          California
Food 4 Less of California, Inc.                          California
Food 4 Less of Southern California, Inc.                 Delaware
Fred Meyer, Inc.                                         Delaware
Fred Meyer Jewelers, Inc.                                California
Fred Meyer Stores, Inc.                                  Delaware
Hughes Markets, Inc.                                     California
Hughes Realty, Inc.                                      California
Inter-American Foods, Inc.                               Ohio
Junior Food Stores of West Florida, Inc.                 Florida
J.V. Distributing, Inc.                                  Michigan
KRGP Inc.                                                Ohio
KRLP Inc.                                                Ohio
The Kroger Co. of Michigan                               Michigan
Kroger Dedicated Logistics Co.                           Ohio
Kroger Group Cooperative, Inc.                           Ohio
Kroger Limited Partnership I                             Ohio
Kroger Limited Partnership II                            Ohio
Kroger Texas L.P.                                        Ohio
Kwik Shop, Inc.                                          Kansas
Mini Mart, Inc.                                          Wyoming
Peyton's-Southeastern, Inc.                              Tennessee
QFC Sub, Inc.                                            Washington
Quality Food Centers, Inc.                               Washington
Quality Food Holdings, Inc.                              Delaware

                                     - 14 -

<PAGE>

Name of Guarantor                                        State of Organization
-----------------                                        ---------------------

Quality Food, Inc.                                       Delaware
Quik Stop Markets, Inc.                                  California
Ralphs Grocery Company                                   Delaware
Second Story, Inc.                                       Washington
Smith's Beverage of Wyoming, Inc.                        Wyoming
Smith's Food & Drug Centers, Inc.                        Delaware
THGP Co., Inc.                                           Pennsylvania
THLP Co., Inc.                                           Pennsylvania
Topvalco, Inc.                                           Ohio
Turkey Hill, L.P.                                        Pennsylvania
Wells Aircraft, Inc.                                     Kansas

                                     - 15 -

<PAGE>

                                  ARTICLE THREE

                            THE SERIES OF SECURITIES

Section 301. TITLE AND TERMS.

     There shall be a series of Securities designated as the "5.50% Senior Notes
due 2013" of the Company. Their Stated Maturity shall be February 1, 2013, and
they shall bear interest at the rate of 5.50% per annum.

     Interest on the Securities of this series will be payable semi-annually on
February 1 and August 1 of each year, commencing August 1, 2003, until the
principal thereof is made available for payment. Interest on the Securities of
this series will be computed on the basis of a 360-day year of twelve 30-day
months. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will be paid to the Person in whose name the
Securities of this series (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest, which
shall be the January 15 or July 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.

     In the case where any Interest Payment Date or the maturity date of the
Securities of this series does not fall on a Business Day, payment of interest
or principal otherwise payable on such date need not be made on such day, but
may be made on the next succeeding Business Day with the same force and effect
as if made on such Interest Payment Date or the maturity date of the Securities
of this series.

     The aggregate principal amount of Securities of this series which may be
authenticated and delivered under this Fifteenth Supplemental Indenture is
initially limited to $500,000,000, except for Securities authenticated and
delivered upon registration or transfer of, or in exchange for, or in lieu of,
other Securities of this series pursuant to Section 304, 305 and 306 of the
Indenture and except for any Securities of this series which, pursuant to
Section 303 of the Indenture, are deemed never to have been authenticated and
delivered under the Indenture. Notwithstanding the foregoing, the Company may
from time to time, without notice to or consent of the registered holders of the
Securities issue further Securities ("Additional Securities"). The Additional
Securities will rank equal with the Securities in all respects (or in all
respects other than the payment of interest accruing prior to the issue date of
the Additional Securities, or except for the first payment of interest following
the issue date of the Additional Securities). The Additional Securities may be
consolidated and form a single series with the Securities and may have the same
terms as to status, redemption, or otherwise, as the Securities.

     The Securities of this series will be represented by two or more Global
Securities representing the entire $500,000,000 aggregate principal amount of
the Securities of this series (as such amount may be increased by the Additional
Securities), and the Depositary with respect to such Global Security or Global
Securities will be The Depository Trust Company.

                                     - 16 -

<PAGE>

     The Place of Payment for the principal of (and premium, if any) and
interest on the Securities of this series shall be the office or agency of the
Company in the City of Cincinnati, State of Ohio, maintained for such purpose,
which shall be the Corporate Trust Office of the Trustee and at any other office
or agency maintained by the Company for such purpose; PROVIDED, HOWEVER, that at
the option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.

     The Securities of this series are redeemable prior to maturity at the
option of the Company as provided in this Fifteenth Supplemental Indenture.

     The Securities of this series are not subject to a sinking fund and the
provisions of Section 501(3) and Article Twelve of the Indenture shall not be
applicable to the Securities of this series.

     The Securities of this series are subject to defeasance at the option of
the Company as provided in this Fifteenth Supplemental Indenture.

                                  ARTICLE FOUR

                  MODIFICATIONS AND ADDITIONS TO THE INDENTURE

Section 401. MODIFICATIONS TO THE CONSOLIDATION, MERGER,
             CONVEYANCE, TRANSFER OR EASE PROVISIONS.

     With respect to the Securities of this series, Section 801 of the Indenture
shall be deleted in its entirety and the following shall be substituted
therefor:

          "Section 801. COVENANT NOT TO MERGE, CONSOLIDATE, SELL OR CONVEY
     PROPERTY EXCEPT UNDER CERTAIN CONDITIONS.

          The Company covenants that it will not merge with or into or
     consolidate with any corporation, partnership, or other entity or sell,
     lease or convey all or substantially all of its assets to any other Person,
     unless (i) either the Company shall be the continuing corporation, or the
     successor entity or the Person which acquires by sale, lease or conveyance
     all or substantially all the assets of the Company (if other than the
     Company) shall be a corporation or partnership organized under the laws of
     the United States of America or any State thereof or the District of
     Columbia and shall expressly assume all obligations of the Company under
     this Indenture and the Securities of the series created by the Fifteenth
     Supplemental Indenture, including the due and punctual payment of the
     principal of and interest on all the Securities of the series created by
     the Fifteenth Supplemental Indenture according to their tenor, and the due
     and punctual performance and observance of all of the covenants and
     conditions of the Indenture to be performed or observed by the Company, by
     supplemental indenture in form satisfactory to the Trustee, executed and
     delivered to the Trustee by such entity, and (ii) the Company, such person
     or such successor

                                     - 17 -

<PAGE>

     entity, as the case may be, shall not, immediately after such merger or
     consolidation, or such sale, lease or conveyance, be in default in the
     performance of any such covenant or condition and, immediately after giving
     effect to such transaction, no Event of Default, and no event which, after
     notice or lapse of time or both, would become an Event of Default, shall
     have happened and be continuing.

          Section 802. SUCCESSOR SUBSTITUTED

          Upon any consolidation of the Company with, or merger of the Company
     into, any other Person or any sale, lease or conveyance of all or
     substantially all of the assets of the Company in accordance with Section
     801, the successor Person formed by such consolidation or into which the
     Company is merged or to which such sale, lease or conveyance is made shall
     succeed to, and be substituted for, and may exercise every right and power
     of, the Company under this Indenture with the same effect as if such
     successor Person had been named as the Company herein, and thereafter,
     except in the case of a lease, the predecessor Person shall be relieved of
     all obligations and covenants under this Indenture and the Securities."

Section 402. OTHER MODIFICATIONS.

     With respect to the Securities of this series, the Indenture shall be
modified as follows:

          (a) The eighth paragraph of Section 305 of the Indenture shall be
modified by inserting ", and a successor Depositary is not appointed by the
Company within 90 days" at the end of clause (i) in such paragraph; and

          (b) Section 401 of the Indenture shall be modified by adding to the
end of such Section the following paragraph:

          "For the purpose of this Section 401, trust funds may consist of (A)
     money in an amount, or (B) U.S. Government Obligations (as defined in
     Section 1304) which through the scheduled payment of principal and interest
     in respect thereof in accordance with their terms will provide, not later
     than one day before the due date of any payment, money in an amount, or (C)
     a combination thereof, sufficient, in the opinion of a nationally
     recognized firm of independent public accountants expressed in a written
     certification thereof delivered to the Trustee, to pay and discharge, the
     principal of, premium, if any, and each installment of interest on the
     Securities of this series on the Stated Maturity of such principal or
     installment of interest on the day on which such payments are due and
     payable in accordance with the terms of this Indenture and of such
     Securities of this series."

Section 403. ADDITIONAL COVENANTS; DEFEASANCE AND COVENANT DEFEASANCE.

     (a) With respect to the Securities of this series, the following provisions
shall be added as Sections 1009 and 1010 and as Article Thirteen (Section
references contained in these

                                     - 18 -

<PAGE>

additional provisions are to the Indenture as supplemented by this Fifteenth
Supplemental Indenture):

          "Section 1009. LIMITATIONS ON LIENS.

          After the date hereof and so long as any Securities of the series
     created by the Fifteenth Supplemental Indenture are Outstanding, the
     Company will not issue, assume or guarantee, and will not permit any
     Restricted Subsidiary to issue, assume or guarantee, any Indebtedness which
     is secured by a mortgage, pledge, security interest, lien or encumbrance of
     any kind (including any conditional sale or other title retention
     agreement, any lease in the nature thereof, and any agreement to give any
     of the foregoing) (each being hereinafter referred to as a "lien" or
     "liens") of or upon any Operating Property or Operating Asset, whether now
     owned or hereafter acquired, of the Company or any Restricted Subsidiary
     without effectively providing that the Securities of the series created by
     the Fifteenth Supplemental Indenture (together with, if the Company shall
     so determine, any other Indebtedness of the Company ranking equally with
     the Securities) shall be equally and ratably secured by a lien on such
     assets ranking ratably with and equal to (or at the Company's option prior
     to) such secured Indebtedness; provided that the foregoing restriction
     shall not apply to:

               (a) liens on any property or assets of any corporation existing
     at the time such corporation becomes a Restricted Subsidiary provided that
     such lien does not extend to any other property of the Company or any of
     its Restricted Subsidiaries;

               (b) liens on any property or assets (including stock) existing at
     the time of acquisition of such property or assets by the Company or a
     Restricted Subsidiary, or liens to secure the payment of all or any part of
     the purchase price of such property or assets (including stock) upon the
     acquisition of such property or assets by the Company or a Restricted
     Subsidiary or to secure any indebtedness incurred, assumed or guaranteed by
     the Company or a Restricted Subsidiary for the purpose of financing all or
     any part of the purchase price of such property or, in the case of real
     property, construction or improvements thereon or attaching to property
     substituted by the Company to obtain the release of a lien on other
     property of the Company on which a lien then exists, which indebtedness is
     incurred, assumed or guaranteed prior to, at the time of, or within 18
     months after such acquisition (or in the case of real property, the
     completion of construction (including any improvements on an existing
     asset) or commencement of full operation at such property, whichever is
     later (which in the case of a retail store is the opening of the store for
     business to the public)); provided that in the case of any such
     acquisition, construction or improvement, the lien shall not apply to any
     other property or assets theretofore owned by the Company or a Restricted
     Subsidiary;

               (c) liens on any property or assets to secure Indebtedness of a
     Restricted Subsidiary to the Company or to another Restricted Subsidiary;

               (d) liens on any property or assets of a corporation existing at
     the time such corporation is merged into or consolidated with the Company
     or a Restricted Subsidiary

                                     - 19 -

<PAGE>

     or at the time of a purchase, lease or other acquisition of the assets of a
     corporation or firm as an entirety or substantially as an entirety by the
     Company or a Restricted Subsidiary provided that such lien does not extend
     to any other property of the Company or any of its Restricted Subsidiaries;

               (e) liens on any property or assets of the Company or a
     Restricted Subsidiary in favor of the United States of America or any State
     thereof, or any department, agency or instrumentality or political
     subdivision of the United States of America or any State thereof, or in
     favor of any other country, or any political subdivision thereof, to secure
     partial, progress, advance or other payments pursuant to any contract or
     statute or to secure any Indebtedness incurred or guaranteed for the
     purpose of financing all or any part of the purchase price (or, in the case
     of real property, the cost of construction) of the property or assets
     subject to such liens (including, but not limited to, liens incurred in
     connection with pollution control, industrial revenue or similar
     financings);

               (f) liens existing on properties or assets of the Company or any
     Restricted Subsidiary existing on the date hereof; provided that such liens
     secure only those obligations which they secure on the date hereof or any
     extension, renewal or replacement thereof;

               (g) any extension, renewal or replacement (or successive
     extensions, renewals or replacements) in whole or in part, of any lien
     referred to in the foregoing clauses (a) through (f), inclusive; provided
     that such extension, renewal or replacement shall be limited to all or a
     part of the property or assets which secured the lien so extended, renewed
     or replaced (plus improvements and construction on real property);

               (h) liens imposed by law, such as mechanics', workmen's,
     repairmen's, materialmen's, carriers', warehouseman's, vendors', or other
     similar liens arising in the ordinary course of business of the Company or
     a Restricted Subsidiary, or governmental (federal, state or municipal)
     liens arising out of contracts for the sale of products or services by the
     Company or any Restricted Subsidiary, or deposits or pledges to obtain the
     release of any of the foregoing liens;

               (i) pledges, liens or deposits under worker's compensation laws
     or similar legislation and liens or judgments thereunder which are not
     currently dischargeable, or in connection with bids, tenders, contracts
     (other than for the payment of money) or leases to which the Company or any
     Restricted Subsidiary is a party, or to secure the public or statutory
     obligations of the Company or any Restricted Subsidiary, or in connection
     with obtaining or maintaining self-insurance or to obtain the benefits of
     any law, regulation or arrangement pertaining to unemployment insurance,
     old age pensions, social security or similar matters, or to secure surety,
     appeal or customs bonds to which the Company or any Restricted Subsidiary
     is a party, or in litigation or other proceedings such as, but not limited
     to, interpleader proceedings, and other similar pledges, liens or deposits
     made or incurred in the ordinary course of business;

               (j) liens created by or resulting from any litigation or other
     proceeding which is being contested in good faith by appropriate
     proceedings, including liens

                                     - 20 -

<PAGE>

     arising out of judgments or awards against the Company or any Restricted
     Subsidiary with respect to which the Company or such Restricted Subsidiary
     is in good faith prosecuting an appeal or proceedings for review or for
     which the time to make an appeal has not yet expired; or final unappealable
     judgment liens which are satisfied within 30 days of the date of judgment;
     or liens incurred by the Company or any Restricted Subsidiary for the
     purpose of obtaining a stay or discharge in the course of any litigation or
     other proceeding to which the Company or such Restricted Subsidiary is a
     party;

               (k) liens for taxes or assessments or governmental charges or
     levies not yet due or delinquent, or which can thereafter be paid without
     penalty, or which are being contested in good faith by appropriate
     proceedings; landlord's liens on property held under lease; and any other
     liens or charges incidental to the conduct of the business of the Company
     or any Restricted Subsidiary or the ownership of the property or assets of
     any of them which were not incurred in connection with the borrowing of
     money or the obtaining of advances or credit and which do not, in the
     opinion of the Company, materially impair the use of such property or
     assets in the operation of the business of the Company or such Restricted
     Subsidiary or the value of such property or assets for the purposes of such
     business; or

               (l) liens not permitted by clauses (a) through (k) above if at
     the time of, and after giving effect to, the creation or assumption of any
     such lien, the aggregate amount of all Indebtedness of the Company and its
     Restricted Subsidiaries secured by all such liens not so permitted by
     clauses (a) through (k) above together with the Attributable Debt in
     respect of Sale and Lease-Back Transactions permitted by paragraph (a) of
     Section 1010 does not exceed 10% of Consolidated Net Tangible Assets.

          Section 1010. LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS.

          After the date hereof and so long as any Securities of the series
     created by the Fifteenth Supplemental Indenture are Outstanding, the
     Company agrees that it will not, and will not permit any Restricted
     Subsidiary to, enter into any arrangement with any Person providing for the
     leasing by the Company or a Restricted Subsidiary of any Operating Property
     or Operating Asset (other than any such arrangement involving a lease for a
     term, including renewal rights, for not more than 3 years and leases
     between the Company and a Restricted Subsidiary or between Restricted
     Subsidiaries), whereby such Operating Property or Operating Asset has been
     or is to be sold or transferred by the Company or any Restricted Subsidiary
     to such Person (herein referred to as a "Sale and Lease-Back Transaction"),
     unless:

               (a) the Company or such Restricted Subsidiary would, at the time
     of entering into a Sale and Lease-Back transaction, be entitled to incur
     Indebtedness secured by a lien on the Operating Property or Operating Asset
     to be leased in an amount at least equal to the Attributable Debt in
     respect of such Sale and Lease-Back Transaction without equally and ratably
     securing the Securities of the series created by the Fifteenth Supplemental
     Indenture pursuant to Section 1009; or

                                     - 21 -

<PAGE>

               (b) the proceeds of the sale of the Operating Property or
     Operating Asset to be leased are at least equal to the fair market value of
     such Operating Property or Operating Asset (as determined by the chief
     financial officer or chief accounting officer of the Company) and an amount
     in cash equal to the net proceeds from the sale of the Operating Property
     or Operating Asset so leased is applied, within 180 days of the effective
     date of any such Sale and Lease-Back Transaction, to the purchase or
     acquisition (or, in the case of Operating Property, the construction) of
     Operating Property or Operating Assets or to the retirement, repurchase,
     redemption or repayment (other than at maturity or pursuant to a mandatory
     sinking fund or redemption provision and other than Indebtedness owned by
     the Company or any Restricted Subsidiary) of Securities of the series
     created by the Fifteenth Supplemental Indenture or of Funded Indebtedness
     of the Company ranking on a parity with or senior to the Securities of the
     series created by the Fifteenth Supplemental Indenture, or in the case of a
     Sale and Lease-Back Transaction by a Restricted Subsidiary, of Funded
     Indebtedness of such Restricted Subsidiary; provided that in connection
     with any such retirement, any related loan commitment or the like shall be
     reduced in an amount equal to the principal amount so retired.

          The foregoing restriction shall not apply to, in the case of any
     Operating Property or Operating Asset acquired or constructed subsequent to
     the date eighteen months prior to the date of this Indenture, any Sale and
     Lease-Back Transaction with respect to such Operating Asset or Operating
     Property (including presently owned real property upon which such Operating
     Property is to be constructed) if a binding commitment is entered into with
     respect to such Sale and Lease-Back Transaction within 18 months after the
     later of the acquisition of the Operating Property or Operating Asset or
     the completion of improvements or construction thereon or commencement of
     full operations at such Operating Property (which in the case of a retail
     store is the opening of the store for business to the public).

                                ARTICLE THIRTEEN

                       DEFEASANCE AND COVENANT DEFEASANCE

          Section 1301. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT
     DEFEASANCE.

          The Company may at its option by Board Resolution, at any time, elect
     to have either Section 1302 or Section 1303 applied to the Outstanding
     Securities of this series upon compliance with the conditions set forth
     below in this Article Thirteen.

          Section 1302. DEFEASANCE AND DISCHARGE.

          Upon the Company's exercise of the option provided in Section 1301
     applicable to this Section, the Company shall be deemed to have been
     discharged from its obligations with respect to the Outstanding Securities
     of the series created by the Fifteenth Supplemental Indenture on the date
     the conditions set forth below are satisfied (hereinafter, "Defeasance").
     For this purpose, such Defeasance means that the Company shall be deemed to
     have paid and discharged the entire indebtedness represented by the
     Outstanding Securities of this series and to have satisfied all its other
     obligations under

                                     - 22 -

<PAGE>

     such Securities of this series and this Indenture insofar as such
     Securities of this series are concerned (and the Trustee, at the expense of
     the Company, shall execute proper instruments acknowledging the same),
     except for the following which shall survive until otherwise terminated or
     discharged hereunder: (A) the rights of Holders of Outstanding Securities
     of this series to receive, solely from the trust fund described in Section
     1304 and as more fully set forth in such Section, payments in respect of
     the principal of (and premium, if any) and interest on such securities when
     such payments are due, (B) the Company's obligations with respect to such
     Securities of this series under Sections 304, 305, 306, 1002 and 1003, (C)
     the rights, powers, trusts, duties and immunities of the Trustee hereunder
     and (D) this Article Thirteen. Subject to compliance with this Article
     Thirteen, the Company may exercise its option under this Section 1302
     notwithstanding the prior exercise of its option under Section 1303.

          Section 1303. COVENANT DEFEASANCE.

          Upon the Company's exercise of the option provided in Section 1301
     applicable to this Section, the Company shall be released from its
     obligations under Section 501(4) (in respect of the covenants in Sections
     1008 through 1010), Section 801 and Sections 1008 through 1010, the
     Securities of this series and the Holders of Securities of this series, on
     and after the date the conditions set forth below are satisfied
     (hereinafter, "covenant Defeasance"). For this purpose, such covenant
     Defeasance means that the Company may omit to comply with and shall have no
     liability in respect of any term, condition or limitation set forth in any
     such Section, whether directly or indirectly, by reason of any reference
     elsewhere herein to any such Section or by reason of any reference in any
     such Section to any other provision herein or in any other document, but
     the remainder of this Indenture and such Securities of this series shall be
     unaffected thereby.

          Section 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.

          The following shall be the conditions to application of either Section
     1302 or Section 1303 to the Outstanding Securities of this series:

               (1) The Company shall irrevocably have deposited or caused to be
          deposited with the Trustee (or another trustee satisfying the
          requirements of Section 609 who shall agree to comply with the
          provisions of this Article Thirteen applicable to it) as trust funds
          in trust for the purpose of making the following payments,
          specifically pledged as security for, and dedicated solely to, the
          benefit of the Holders of such Securities of this series, (A) money in
          an amount, or (B) U.S. Government Obligations which through the
          scheduled payment of principal and interest in respect thereof in
          accordance with their terms will provide, not later than one day
          before the due date of any payment, money in an amount, or (C) a
          combination thereof, sufficient, in the opinion of a nationally
          recognized firm of independent public accountants expressed in a
          written certification thereof delivered to the Trustee,

                                     - 23 -

<PAGE>

          to pay and discharge, and which shall be applied by the Trustee (or
          other qualifying trustee) to pay and discharge, the principal of,
          premium, if any, and each installment of interest on the Securities of
          this series on the Stated Maturity of such principal or installment of
          interest on the day on which such payments are due and payable in
          accordance with the terms of this Indenture and of such Securities of
          this series. For this purpose, "U.S. Government Obligations" means
          securities that are (x) direct obligations of the United States of
          America for the payment of which its full faith and credit is pledged
          or (y) obligations of a Person controlled or supervised by and acting
          as an agency or instrumentality of the United States of America the
          payment of which is unconditionally guaranteed as a full faith and
          credit obligation by the United States of America, which, in either
          case, are not callable or redeemable at the option of the Company
          thereof, and shall also include a depository receipt issued by a bank
          (as defined in Section 3(a)(2) of the Securities Act of 1933, as
          amended) as custodian with respect to any such U.S. Government
          Obligation or a specific payment of principal of or interest on any
          such U.S. Government Obligation held by such custodian for the account
          of the holder of such depository receipt, PROVIDED that (except as
          required by law) such custodian is not authorized to make any
          deduction from the amount payable to the holder of such depositary
          receipt from any amount received by the custodian in respect of the
          U.S. Government Obligation or the specific payment of principal of or
          interest on the U.S. Government Obligation evidenced by such
          depositary receipt.

               (2) No Event of Default or event which with notice or lapse of
          time or both would become an Event of Default shall have occurred and
          be continuing on the date of such deposit or, insofar as subsections
          501(6) and (7) are concerned, at any time during the period ending on
          the 121st day after the date of such deposit (it being understood that
          this condition shall not be deemed satisfied until the expiration of
          such period).

               (3) Such Defeasance or covenant Defeasance shall not cause the
          Trustee to have a conflicting interest as defined in Section 608 and
          for purposes of the Trust Indenture Act with respect to any securities
          of the Company.

               (4) Such Defeasance or covenant Defeasance shall not result in a
          breach or violation of, or constitute a default under, this Indenture
          or any other agreement or instrument to which the Company is a party
          or by which it is bound.

               (5) The Company shall have delivered to the Trustee an Officers'
          Certificate and an Opinion of Counsel, each stating that all

                                     - 24 -

<PAGE>

          conditions precedent provided for relating to either the Defeasance
          under Section 1302 or the covenant Defeasance under Section 1303 (as
          the case may be) have been complied with.

               (6) In the case of an election under Section 1302, the Company
          shall have delivered to the Trustee an Opinion of Counsel stating that
          (x) the Company has received from, or there has been published by, the
          Internal Revenue Service a ruling, or (y) since the date of this
          Fifteenth Supplemental Indenture there has been a change in the
          applicable Federal income tax law, in either case to the effect that
          and based thereon such opinion shall confirm that, the Holders of the
          Outstanding Securities of this series will not recognize income, gain
          or loss for Federal income tax purposes as a result of such Defeasance
          or covenant Defeasance and will be subject to Federal income tax on
          the same amounts, in the same manner and at the same times as would
          have been the case if such Defeasance or covenant Defeasance had not
          occurred.

          Section 1305. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE
     HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.

          Subject to the provisions of the last paragraph of Section 1003, all
     money and U.S. Government Obligations (including the proceeds thereof)
     deposited with the Trustee (or other qualifying trustee--collectively, for
     purposes of this Section 1305, the "Trustee") pursuant to Section 1304 in
     respect of the Securities of this series shall be held in trust and applied
     by the Trustee, in accordance with the provisions of such Securities of
     this series and this Indenture, to the payment, either directly or through
     any Paying Agent (including the Company acting as its own Paying Agent) as
     the Trustee may determine, to the Holders of such Securities of this
     series, of all sums due and to become due thereon in respect of principal
     (and premium, if any) and interest, but such money need not be segregated
     from other funds except to the extent required by law.

          The Company shall pay and indemnify the Trustee against any tax, fee
     or other charge imposed on or assessed against the U.S. Government
     Obligations deposited pursuant to Section 1304 or the principal and
     interest received in respect thereof other than any such tax, fee or other
     charge which by law is for the account of the Holders of the Outstanding
     Securities of this series.

          Anything in this Article Thirteen to the contrary notwithstanding, the
     Trustee shall deliver or pay to the Company from time to time upon Company
     Request any money or U.S. Government Obligations held by it as provided in
     Section 1304 which, in the opinion of a nationally recognized firm of
     independent public accountants expressed in a written certification thereof
     delivered to the Trustee, are in excess of the amount thereof which would
     then be required to be deposited to effect an equivalent Defeasance or
     covenant Defeasance.

          Section 1306. REINSTATEMENT.

                                     - 25 -

<PAGE>

          If the Trustee or the Paying Agent is unable to apply any money in
     accordance with Section 1302 or 1303 by reason of any order or judgment of
     any court or governmental authority enjoining, restraining or otherwise
     prohibiting such application, then the Company's obligations under this
     Indenture and the Securities of this series shall be revived and reinstated
     as though no deposit had occurred pursuant to this Article Thirteen until
     such time as the Trustee or Paying Agent is permitted to apply all such
     money in accordance with Section 1302 or 1303; PROVIDED, HOWEVER, that if
     the Company makes any payment of principal of (and premium, if any) or
     interest on any Security of this series following the reinstatement of its
     obligations, the Company shall be subjugated to the rights of the Holders
     of such Securities of this series to receive such payment from the money
     held by the Trustee or the Paying Agent."

Section 404. REDEMPTION OF SECURITIES.

     With respect to Securities of this series, Section 1101 of the Indenture
shall be deleted in its entirety and the following shall be substituted
therefor:

          "Section 1101. OPTIONAL REDEMPTION.

          The Securities will be redeemable, in whole or in part, at the option
     of the Company at any time at a redemption price equal to the greater of
     (i) 100% of the principal amount of such Securities or (ii) as determined
     by a Quotation Agent, the sum of the present values of the remaining
     scheduled payments of principal and interest thereon (not including any
     portion of such payments of interest accrued as of the date of redemption)
     discounted to the date of redemption on a semi-annual basis (assuming a
     360-day year consisting of twelve 30-day months) at the Adjusted Treasury
     Rate plus 25 basis points plus, in each case, accrued interest thereon to
     the date of redemption."

                                  ARTICLE FIVE

                                    GUARANTEE

Section 501. GUARANTEE.

     Each Guarantor hereby jointly and severally fully and unconditionally
guarantees (each a "Guarantee") to each Holder of a Security authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of the Indenture or the
Securities or the obligations of the Company or any other Guarantor to the
Holders or the Trustee hereunder or thereunder, that (a) the principal of,
premium, if any, and interest on the Securities will be duly and punctually paid
in full when due, whether at maturity, upon redemption, by acceleration or
otherwise, and interest on the overdue principal and (to the extent permitted by
law) interest, if any, on the Securities and all other obligations of the
Company or the Guarantor to the Holders of or the Trustee under the Indenture or
the Securities hereunder (including fees, expenses or others) (collectively, the
"Obligations") will be promptly paid in full or performed, all in accordance
with the terms of the Indenture and the Securities; and (b) in case of any
extension of time of payment or renewal of any Obligations, the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at Stated Maturity, by acceleration or otherwise.
If the

                                     - 26 -

<PAGE>

Company shall fail to pay when due, or to perform, any Obligations, for whatever
reason, each Guarantor shall be obligated to pay, or to perform or cause the
performance of, the same immediately. An Event of Default under the Indenture or
the Securities shall constitute an event of default under this Guarantee, and
shall entitle the Holders of Securities to accelerate the Obligations of the
Guarantor hereunder in the same manner and to the same extent as the Obligations
of the Company.

     Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Securities or the Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Securities with respect to any provisions
of the Indenture or the Securities, any release of any other Guarantor, the
recovery of any judgment against the Company, any action to enforce the same,
whether or not a Guarantee is affixed to any particular Security, or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a Guarantor.

     Each Guarantor further agrees that, as between it, on the one hand, and the
Holders of Securities and the Trustee, on the other hand, (a) the maturity of
the Obligations may be accelerated as provided in Article Five of the Indenture
for the purposes of the Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations, and (b)
in the event of any acceleration of such Obligations as provided in Article Five
of the Indenture, such Obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantor for the purposes of its
Guarantee.

Section 502. WAIVER OF DEMAND.

     To the fullest extent permitted by applicable law, each of the Guarantors
waives presentment to, demand of payment from and protest of any of the
Obligations, and also waives notice of acceptance of its Guarantee and notice of
protest for nonpayment.

Section 503. GUARANTEE OF PAYMENT.

     Each of the Guarantors further agrees that its Guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by the Trustee or any Holder of the Securities to
the security, if any, held for payment of the Obligations.

Section 504. NO DISCHARGE OR DIMINISHMENT OF GUARANTEE.

     Subject to Section 510 of this Fifteenth Supplemental Indenture, the
obligations of each of the Guarantors hereunder shall not be subject to any
reduction, limitation, impairment or for any reason (other than the indefeasible
payment in full in cash of the Obligations), including any claim of waiver,
release, surrender, alteration or compromise of any of the Obligations, and
shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each of the Guarantors hereunder
shall not be discharged or impaired or

                                     - 27 -

<PAGE>

otherwise affected by the failure of the Trustee or any Holder of the Securities
to assert any claim or demand or to enforce any remedy under the Indenture or
the Securities, any other guarantee or any other agreement, by any waiver or
modification of any provision of any thereof, by any default, failure or delay,
willful or otherwise, in the performance of the Obligations, or by any other act
or omission that may or might in any manner or to any extent vary the risk of
any Guarantor or that would otherwise operate as a discharge of any Guarantor as
a matter of law or equity (other than the indefeasible payment in full in cash
of all the Obligations).

Section 505. DEFENSES OF COMPANY WAIVED.

     To the extent permitted by applicable law, each of the Guarantors waives
any defense based on or arising out of any defense of the Company or any other
Guarantor or the unenforceability of the Obligations or any part thereof from
any cause, or the cessation from any cause of the liability of the Company,
other than final and indefeasible payment in full in cash of the Obligations.
Each of the Guarantors waives any defense arising out of any such election even
though such election operates to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of each of the Guarantors
against the Company or any security.

Section 506. CONTINUED EFFECTIVENESS.

     Subject to Section 510 of this Fifteenth Supplemental Indenture, each of
the Guarantors further agrees that its Guarantee hereunder shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal of or interest on any Obligation is rescinded or must
otherwise be restored by the Trustee or any Holder of the Securities upon the
bankruptcy or reorganization of the Company.

Section 507. SUBROGATION.

     In furtherance of the foregoing and not in limitation of any other right of
each of the Guarantors by virtue hereof, upon the failure of the Company to pay
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each of the Guarantors
hereby promises to and will, upon receipt of written demand by the Trustee or
any Holder of the Securities, forthwith pay, or cause to be paid, to the Holders
in cash the amount of such unpaid Obligations, and thereupon the Holders shall,
assign (except to the extent that such assignment would render a Guarantor a
"creditor" of the Company within the meaning of Section 547 of Title 11 of the
United States Code as now in effect or hereafter amended or any comparable
provision of any successor statute) the amount of the Obligations owed to it and
paid by such Guarantor pursuant to this Guarantee to such Guarantor, such
assignment to be PRO RATA to the extent the Obligations in question were
discharged by such Guarantor, or make such other disposition thereof as such
Guarantor shall direct (all without recourse to the Holders, and without any
representation or warranty by the Holders). If (a) a Guarantor shall make
payment to the Holders of all or any part of the Obligations and (b) all the
Obligations and all other amounts payable under this Fifteenth Supplemental
Indenture shall be indefeasibly paid in full, the Trustee will, at such
Guarantor's request, execute and deliver to such Guarantor appropriate
documents, without recourse and

                                     - 28 -

<PAGE>

without representation or warranty, necessary to evidence the transfer by
subrogation to such Guarantor of an interest in the Obligations resulting from
such payment by such Guarantor.

Section 508. INFORMATION.

     Each of the Guarantors assumes all responsibility for being and keeping
itself informed of the Company's financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Obligations and
the nature, scope and extent of the risks that each of the Guarantors assumes
and incurs hereunder, and agrees that the Trustee and the Holders of the
Securities will have no duty to advise the Guarantors of information known to it
or any of them regarding such circumstances or risks.

Section 509. SUBORDINATION.

     Upon payment by any Guarantor of any sums to the Holders, as provided
above, all rights of such Guarantor against the Company, arising as a result
thereof by way of right of subrogation or otherwise, shall in all respects be
subordinated and junior in right of payment to the prior indefeasible payment in
full in cash of all the Obligations to the Trustee; PROVIDED, HOWEVER, that any
right of subrogation that such Guarantor may have pursuant to this Fifteenth
Supplemental Indenture is subject to Section 507 hereof.

Section 510. TERMINATION.

     A Guarantor shall, upon the occurrence of either of the following events,
be automatically and unconditionally released and discharged from all
obligations under this Fifteenth Supplemental Indenture and its Guarantee
without any action required on the part of the Trustee or any Holder if such
release and discharge will not result in any downgrade in the rating given to
the Securities by Moody's Investors Service and Standard and Poor's Rating
Services:

          (a) upon any sale, exchange, transfer or other disposition (by merger
or otherwise) of all of the Capital Stock of a Guarantor or all, or
substantially all, of the assets of such Guarantor, which sale or other
disposition is otherwise in compliance with the terms of the Indenture;
provided, however, that such Guarantor shall not be released and discharged from
its obligations under this Fifteenth Supplemental Indenture and its Guarantee
if, upon consummation of such sale, exchange, transfer or other disposition (by
merger or otherwise), such Guarantor remains or becomes a Guarantor under any
Credit Facility; or

          (b) at the request of the Company, at any time that none of the Credit
Facilities are guaranteed by any Subsidiary of the Company.

The Trustee shall deliver an appropriate instrument evidencing such release upon
receipt of a request of the Company accompanied by an Officers' Certificate
certifying as to the compliance with this Section. Any Guarantor not so released
will remain liable for the full amount of the principal of, premium, if any, and
interest on the Notes provided in this Fifteenth Supplemental Indenture and its
Guarantee.

                                     - 29 -

<PAGE>

Section 511. GUARANTEES OF OTHER INDEBTEDNESS.

     As long as the Securities are guaranteed by the Guarantors, the Company
will cause each of its Subsidiaries that becomes a Guarantor in respect of (i)
any Indebtedness of the Company which is outstanding on the date hereof and (ii)
any Indebtedness incurred by the Company after the date hereof (other than in
respect of asset-backed securities), to include in any guarantee given by any
such Guarantor, provisions similar to those set forth in Section 510 hereof.

Section 512. ADDITIONAL GUARANTORS.

     The Company will cause each of its Subsidiaries that becomes a Guarantor in
respect of any Indebtedness of the Company following the date hereof to execute
and deliver a supplemental indenture pursuant to which it will become a
Guarantor under this Fifteenth Supplemental Indenture, if it has not already
done so or unless the Guarantor is prohibited from doing so by applicable law or
a provision of a contract to which it is a party or by which it is bound.

Section 513. LIMITATION OF GUARANTOR'S LIABILITY.

     Each Guarantor, and by its acceptance hereof each Holder, hereby confirms
that it is the intention of all such parties that the Guarantee by such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of
Title 11 of the United States Code, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar Federal of state law. To
effectuate the foregoing intention, the Holders and such Guarantor hereby
irrevocably agree that the obligations of such Guarantor under this Fifteenth
Supplemental Indenture and its Guarantee shall be limited to the maximum amount
which, after giving effect to all other contingent and fixed liabilities of such
Guarantor, and after giving effect to any collections from or payments made by
or on behalf of, any other Guarantor in respect of the obligations of such
Guarantor under its Guarantee or pursuant to its contribution obligations under
this Fifteenth Supplemental Indenture, will result in the obligations of such
Guarantor under its Guarantee not constituting such fraudulent transfer or
conveyance.

Section 514. CONTRIBUTION FROM OTHER GUARANTORS.

     Each Guarantor that makes a payment or distribution under its Guarantee
shall be entitled to a contribution from each other Guarantor in a pro rata
amount based on the net assets of each Guarantor, determined in accordance with
generally accepted accounting principles in effect in the United States of
America as of the date hereof.

Section 515. NO OBLIGATION TO TAKE ACTION AGAINST THE COMPANY.

     Neither the Trustee, any Holder nor any other Person shall have any
obligation to enforce or exhaust any rights or remedies or take any other steps
under any security for the Obligations or against the Company or any other
Person or any property of the Company or any other Person before the Trustee,
such Holder or such other Person is entitled to demand

                                     - 30 -

<PAGE>

payment and performance by any or all Guarantors of their liabilities and
obligations under their Guarantee.

Section 516. DEALING WITH THE COMPANY AND OTHERS.

     The Holders, without releasing, discharging, limiting or otherwise
affecting in whole or in part the obligations and liabilities of any Guarantor
hereunder and without the consent of or notice to any Guarantor, may:

          (a) grant time, renewals, extensions, compromises, concessions,
waivers, releases, discharges and other indulgences to the Company or any other
Person;

          (b) take or abstain from taking security or collateral from the
Company or from perfecting security or collateral from the Company;

          (c) release, discharge, compromise, realize, enforce or otherwise deal
with or do any act or thing in respect of (with or without consideration) any
and all collateral, mortgages or other security given by the Company or any
third party with respect to the Obligations;

          (d) accept compromises or arrangements from the Company;

          (e) apply all monies at any time received from the Company or from any
security to such part of the Obligations as the Holders may see fit or change
any such application in whole or in part from time to time as the Holders may
see fit; and

          (f) otherwise deal with, or waive or modify their right to deal with,
the Company and all other Persons and any security as the Holders or the Trustee
may see fit.

Section 517. EXECUTION AND DELIVERY OF THE GUARANTEE.

          (a) To further evidence the Guarantee set forth in this Article Five,
each Guarantor hereby agrees that a notation of such Guarantee shall be endorsed
on each Security authenticated and delivered by the Trustee and executed by
either manual or facsimile signature of an officer of each Guarantor. The
corporate seal of a Guarantor may be reproduced on the executed Guarantee and
the execution thereof may be attested to by any appropriate officer of the
Guarantor, but neither such reproduction nor such attestation is or shall be
required.

          (b) Each of the Guarantors hereby agrees that its Guarantee set forth
in this Article Five shall remain in full force and effect notwithstanding any
failure to endorse on each Security a notation of such Guarantee.

          (c) If an officer of a Guarantor whose signature is on this Fifteenth
Supplemental Indenture or a Guarantee no longer holds that office at the time
the Trustee authenticates such Guarantee or at any time thereafter, such
Guarantor's Guarantee of such Security shall be valid nevertheless.

                                     - 31 -

<PAGE>

          (d) The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of any Guarantee
set forth in this Fifteenth Supplemental Indenture on behalf of each Guarantor.

                                   ARTICLE SIX

                                  MISCELLANEOUS

Section 601. MISCELLANEOUS.

          (a) The Trustee accepts the trusts created by the Indenture, as
supplemented by this Fifteenth Supplemental Indenture, and agrees to perform the
same upon the terms and conditions of the Indenture, as supplemented by this
Fifteenth Supplemental Indenture.

          (b) The recitals contained herein shall be taken as statements of the
Company, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of this
Fifteenth Supplemental Indenture.

          (c) All capitalized terms used and not defined herein shall have the
respective meanings assigned to them in the Indenture.

          (d) Each of the Company and the Trustee makes and reaffirms as of the
date of execution of this Fifteenth Supplemental Indenture all of its respective
representations, covenants and agreements set forth in the Indenture.

          (e) All covenants and agreements in this Fifteenth Supplemental
Indenture by the Company or the Trustee and each Guarantor shall bind its
respective successors and assigns, whether so expressed or not.

          (f) In case any provisions in this Fifteenth Supplemental Indenture
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

          (g) Nothing in this Fifteenth Supplemental Indenture, express or
implied, shall give to any Person, other than the parties hereto and their
successors under the Indenture and the Holders of the series of Securities
created hereby, any benefit or any legal or equitable right, remedy or claim
under the Indenture.

          (h) If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act of 1939, as may be amended from time to
time, that is required under such Act to be a part of and govern this Fifteenth
Supplemental Indenture, the latter provision shall control. If any provision
hereof modifies or excludes any provision of such Act that may be so modified or
excluded, the latter provision shall be deemed to apply to this Fifteenth
Supplemental Indenture as so modified or excluded, as the case may be.

          (i) This Fifteenth Supplemental Indenture shall be governed by and
construed in accordance with the laws of the State of New York.

                                     - 32 -

<PAGE>

          (j) All amendments to the Indenture made hereby shall have effect only
with respect to the series of Securities created hereby.

          (k) All provisions of this Fifteenth Supplemental Indenture shall be
deemed to be incorporated in, and made a part of, the Indenture; and the
Indenture, as supplemented by this Fifteenth Supplemental Indenture, shall be
read, taken and construed as one and the same instrument.

          This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

                                     - 33 -

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.

Attest:                                 THE KROGER CO.
                                        Each of the Guarantors Listed on
                                        Schedule I hereto, as Guarantor of
                                        the Securities

                                       By:
----------------------------                -----------------------------------
Bruce M. Gack Assistant                     Name:  Paul W. Heldman
Secretary/Secretary                         Title: Senior Vice President/
                                                   President/VicePresident

Attest:                                 QUEEN CITY ASSURANCE, INC.,
                                        as Guarantor of the Securities
                                        RJD ASSURANCE, INC.,
                                        as Guarantor of the Securities
                                        VINE COURT ASSURANCE INCORPORATED,
                                        as Guarantor of the Securities

                                       By:
----------------------------                -----------------------------------
Scott M. Henderson Treasurer                Name:  Bruce M. Gack
                                            Title: Senior Vice President/
                                                   Vice President

                                        RICHIE'S INC., as Guarantor of
                                        the Securities

                                       By:
                                            -----------------------------------
                                            Name:  Paul Schweitzer
                                            Title: President

                                     - 34 -

<PAGE>

                                        ROCKET NEWCO, INC.,
                                        as Guarantor of the Securities
                                        HENPIL, INC.,
                                        as Guarantor of the Securities

                                       By:
                                           ------------------------------------
                                            Name:  Paul Schweitzer
                                            Title: Vice President

                                     - 35 -

<PAGE>

Attest:                                 U.S. BANK, N.A.,
                                        as Trustee

                                       By:
---------------------------                 -----------------------------------
                                            Name:
                                            Title :

                                     - 36 -

<PAGE>

                                   SCHEDULE I
                                   Guarantors

Name of Guarantor                                       State of OrganizatioN
-----------------                                       ---------------------
Alpha Beta Company                                      California
Bay Area Warehouse Stores, Inc.                         California
Bell Markets, Inc.                                      California
Cala Co.                                                Delaware
Cala Foods, Inc.                                        California
CB&S Advertising Agency, Inc.                           Oregon
Crawford Stores, Inc.                                   California
Dillon Companies, Inc.                                  Kansas
Dillon Real Estate Co., Inc.                            Kansas
Distribution Trucking Company                           Oregon
Drugs Distributors, Inc.                                Indiana
F4L L.P.                                                Ohio
FM, Inc.                                                Utah
FMJ, Inc.                                               Delaware
Food 4 Less GM, Inc.                                    California
Food 4 Less Holdings, Inc.                              Delaware
Food 4 Less Merchandising, Inc.                         California
Food 4 Less of California, Inc.                         California
Food 4 Less of Southern California, Inc.                Delaware
Fred Meyer, Inc.                                        Delaware
Fred Meyer Jewelers, Inc.                               California
Fred Meyer Stores, Inc.                                 Delaware
Hughes Markets, Inc.                                    California
Hughes Realty, Inc.                                     California
Inter-American Foods, Inc.                              Ohio
Junior Food Stores of West Florida, Inc.                Florida
J.V. Distributing, Inc.                                 Michigan
KRGP Inc.                                               Ohio
KRLP Inc.                                               Ohio
The Kroger Co. of Michigan                              Michigan
Kroger Dedicated Logistics Co.                          Ohio
Kroger Group Cooperative, Inc.                          Ohio
Kroger Limited Partnership I                            Ohio
Kroger Limited Partnership II                           Ohio
Kroger Texas L.P.                                       Ohio
Kwik Shop, Inc.                                         Kansas
Mini Mart, Inc.                                         Wyoming
Peyton's-Southeastern, Inc.                             Tennessee
QFC Sub, Inc.                                           Washington
Quality Food Centers, Inc.                              Washington
Quality Food Holdings, Inc.                             Delaware
Quality Food, Inc.                                      Delaware
Quik Stop Markets, Inc.                                 California

                                     - 37 -

<PAGE>

Name of Guarantor                                       State of OrganizatioN
-----------------                                       ---------------------
Ralphs Grocery Company                                  Delaware
Second Story, Inc.                                      Washington
Smith's Beverage of Wyoming, Inc.                       Wyoming
Smith's Food & Drug Centers, Inc.                       Delaware
THGP Co., Inc.                                          Pennsylvania
THLP Co., Inc.                                          Pennsylvania
Topvalco, Inc.                                          Ohio
Turkey Hill, L.P.                                       Pennsylvania
Wells Aircraft, Inc.                                    Kansas

                                     - 38 -

<PAGE>

STATE OF _____________________)
                              ) ss.:
COUNTY OF ____________________)

                  On the 28th day of January, 2003, before me personally came
_______________, to me known, who, being by me duly sworn, did depose and say
that he is __________________ of The Kroger Co., and ____________________ of
each of the Guarantors Listed on Schedule I hereto, corporations described in
and which executed the foregoing instrument; that he knows the seals of said
corporations; that the seals affixed to said instrument are such corporate
seals; that they were so affixed by authority of the Board of Directors of such
corporations, and that he signed his name thereto by like authority.

                                       ---------------------------------------

STATE OF _____________________)
                              ) ss.:
COUNTY OF ____________________)

                  On the 28th day of January, 2003, before me personally came
______________, to me known, who, being by me duly sworn, did depose and say
that he is ________________ of Rocket Newco, Inc. and Henpil, Inc., corporations
described in and which executed the foregoing instrument; that he knows the
seals of said corporations; that the seals affixed to said instrument are such
corporate seals; that they were so affixed by authority of the Board of
Directors of said corporations, and that he signed his name thereto by like
authority.

                                       ---------------------------------------

                                      - 1 -

<PAGE>

STATE OF _____________________)
                              ) ss.:
COUNTY OF ____________________)

                  On the 28th day of January, 2003, before me personally came
_______________, to me known, who, being by me duly sworn, did depose and say
that he is _________________ of Queen City Assurance, Inc., RJD Assurance, Inc.
and Vine Court Assurance Incorporated, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Boards of Directors of said
corporation, and that he signed his name thereto by like authority.

                                       ---------------------------------------

STATE OF _____________________)
                              ) ss.:
COUNTY OF ____________________)

                  On the 28th day of January, 2003, before me personally came
______________, to me known, who, being by me duly sworn, did depose and say
that he is ____________ of Richie's Inc., one of the corporations described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Boards of Directors of said
corporation, and that he signed his name thereto by like authority.

                                       ---------------------------------------

                                      - 2 -

<PAGE>

STATE OF _____________________)
                              ) ss.:
COUNTY OF ____________________)

                  On the 28th day of January, 2003, before me personally came
_________________, to me known, who, being by me duly sworn, did depose and say
that he is a _____________ of U.S. Bank, N.A., one of the corporations described
in and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.

                                       ---------------------------------------

                                      - 3 -Credit Agreement dtd January 14, 2003

 Exhibit 10.1 
  
 
 
 CREDIT AGREEMENT 
  
  
 Dated as of January 14, 2003 
  
  
 among 
  
  
 WEST MARINE FINANCE COMPANY, INC.,

  
  
 as Borrower, 
  

 
 THE LENDERS NAMED HEREIN, 
  
 WELLS FARGO BANK, NATIONAL ASSOCIATION, 
  
  
 as
Administrative Agent and Arranger 
  
  
 and 
  
  
 UNION BANK OF CALIFORNIA, N.A., 
  
  
 as Syndication Agent 
  
 

 
 1 

 TABLE OF CONTENTS 
  
 
	  	  	 Page
 

	 ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS
 	  	 1
 
	 
	 1.1
 	  	 Defined Terms
 	  	 1
 
	 1.2
 	  	 Use of Defined Terms
 	  	 38
 
	 1.3
 	  	 Accounting Terms; Covenant Calculations
 	  	 38
 
	 1.4
 	  	 Rounding
 	  	 39
 
	 1.5
 	  	 Exhibits and Schedules
 	  	 39
 
	 1.6
 	  	 References to “Borrower, Parent and their collective Subsidiaries”
 	  	 39
 
	 1.7
 	  	 Miscellaneous Terms
 	  	 39
 
	 1.8
 	  	 Time
 	  	 39
 
	 1.9
 	  	 References
 	  	 39
 
	 
	 ARTICLE 2 ADVANCES AND LETTERS OF CREDIT
 	  	 40
 
	 
	 2.1
 	  	 Advances-General
 	  	 40
 
	 2.2
 	  	 Alternate Base Rate Advances
 	  	 42
 
	 2.3
 	  	 Eurodollar Rate Advances
 	  	 42
 
	 2.4
 	  	 Conversion and Continuation of Advances
 	  	 42
 
	 2.5
 	  	 Letters of Credit
 	  	 44
 
	 2.6
 	  	 Termination or Reduction of the Commitments
 	  	 50
 
	 2.7
 	  	 Administrative Agent’s Right to Assume Funds Available for Advances
 	  	 50
 
	 2.8
 	  	 Swing Line
 	  	 51
 
	 2.9
 	  	 Security
 	  	 53
 
	 
	 ARTICLE 3 PAYMENTS AND FEES
 	  	 54
 
	 
	 3.1
 	  	 Principal and Interest
 	  	 54
 
	 3.2
 	  	 Unused Revolving Facility Commitment Fee
 	  	 57
 
	 3.3
 	  	 Arrangement Fee; Agency Fee etc
 	  	 58
 
	 3.4
 	  	 Letter of Credit Fees
 	  	 58
 
	 3.5
 	  	 Increased Commitment Costs
 	  	 59
 
	 3.6
 	  	 Eurodollar Costs and Related Matters
 	  	 59
 
	 3.7
 	  	 Late Payments and Default Rate
 	  	 63
 
	 3.8
 	  	 Computation of Interest and Fees
 	  	 63
 
	 3.9
 	  	 Non-Banking Days
 	  	 64
 

 

 
 -i- 

 TABLE OF CONTENTS 
 (continued)

  
 
	  	  	  	  	 Page
 

	 3.10
 	  	 Manner and Treatment of Payments
 	  	 64
 
	 3.11
 	  	 Taxes
 	  	 65
 
	 3.12
 	  	 Funding Sources
 	  	 68
 
	 3.13
 	  	 Failure to Charge Not Subsequent Waiver
 	  	 68
 
	 3.14
 	  	 Administrative Agent’s Right to Assume Payments Will be Made
 	  	 69
 
	 3.15
 	  	 Fee Determination Detail
 	  	 69
 
	 3.16
 	  	 Survivability
 	  	 69
 
	 3.17
 	  	 Replacement of Lenders under Certain Circumstances
 	  	 69
 
	 
	 ARTICLE 4 REPRESENTATIONS AND WARRANTIES
 	  	 70
 
	 
	 4.1  
 	  	 Existence and Qualification; Power; Compliance With Laws
 	  	 70
 
	 4.2  
 	  	 Authority; Compliance With Other Agreements and Instruments and Government Regulations
 	  	 71
 
	 4.3  
 	  	 No Governmental Approvals Required
 	  	 71
 
	 4.4  
 	  	 Parent and Subsidiaries
 	  	 72
 
	 4.5  
 	  	 Financial Statements
 	  	 73
 
	 4.6  
 	  	 No Other Liabilities; No Material Adverse Change
 	  	 73
 
	 4.7  
 	  	 Title to and Location of Property
 	  	 73
 
	 4.8  
 	  	 Intangible Assets
 	  	 74
 
	 4.9  
 	  	 Litigation
 	  	 74
 
	 4.10
 	  	 Binding Obligations
 	  	 74
 
	 4.11
 	  	 No Default
 	  	 75
 
	 4.12
 	  	 ERISA
 	  	 75
 
	 4.13
 	  	 Regulation T, U and X; Investment Company Act
 	  	 75
 
	 4.14
 	  	 Disclosure
 	  	 76
 
	 4.15
 	  	 Tax Liability
 	  	 76
 
	 4.16
 	  	 Projections
 	  	 76
 
	 4.17
 	  	 Hazardous Materials
 	  	 77
 
	 4.18
 	  	 Employee Matters
 	  	 77
 
	 4.19
 	  	 Fiscal Year
 	  	 77
 
	 4.20
 	  	 Solvency
 	  	 77
 

 

 
 -ii- 

  
 TABLE OF CONTENTS 
 (continued) 
  
 
	  	  	  	  	 Page
 

	 4.21
 	  	 Brokerage Commissions
 	  	 77
 
	 4.22
 	  	 Real Property
 	  	 77
 
	 4.23
 	  	 Creation, Perfection and Priority of Liens
 	  	 78
 
	 4.24
 	  	 Operating Accounts
 	  	 79
 
	 4.25
 	  	 Policies of Insurance
 	  	 79
 
	 4.26
 	  	 No Consignments
 	  	 79
 
	 4.27
 	  	 No Vehicle Inventory
 	  	 79
 
	 4.28
 	  	 Licenses/Inventory
 	  	 79
 
	 4.29
 	  	 Government Accounts Receivable
 	  	 80
 
	 4.30
 	  	 West Marine FSC, Inc
 	  	 80
 
	 4.31
 	  	 Financing Statements
 	  	 80
 
	 4.32
 	  	 Reaffirmation
 	  	 80
 
	 
	 ARTICLE 5 AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND REPORTING REQUIREMENTS)
 	  	 81
 
	 
	 5.1  
 	  	 Payment of Taxes and Other Potential Liens
 	  	 81
 
	 5.2  
 	  	 Preservation of Existence
 	  	 81
 
	 5.3  
 	  	 Maintenance of Properties
 	  	 81
 
	 5.4  
 	  	 Maintenance of Insurance
 	  	 81
 
	 5.5  
 	  	 Compliance With Laws
 	  	 82
 
	 5.6  
 	  	 Inspection Rights
 	  	 82
 
	 5.7  
 	  	 Keeping of Records and Books of Account
 	  	 83
 
	 5.8  
 	  	 Compliance With Agreements
 	  	 83
 
	 5.9  
 	  	 Use of Proceeds
 	  	 83
 
	 5.10
 	  	 Hazardous Materials Laws
 	  	 83
 
	 5.11
 	  	 Syndication Process
 	  	 83
 
	 5.12
 	  	 New Subsidiaries
 	  	 83
 
	 5.13
 	  	 Appraisals
 	  	 84
 
	 5.14
 	  	 Additional Documents/Action
 	  	 84
 
	 5.15
 	  	 Post-Closing Matters
 	  	 88
 

 

 
 -iii- 

  
 TABLE OF CONTENTS 
 (continued) 
  
 
	  	  	  	  	 Page
 

	 ARTICLE 6 NEGATIVE COVENANTS
 	  	 89
 
	 
	  	  	 6.1
 	  	 Prepayment of Indebtedness
 	  	 89
 
	  	  	 6.2
 	  	 Prepayment of Subordinated Obligations
 	  	 89
 
	  	  	 6.3
 	  	 Disposition of Property
 	  	 90
 
	  	  	 6.4
 	  	 Mergers
 	  	 90
 
	  	  	 6.5
 	  	 Hostile Tender Offers
 	  	 90
 
	  	  	 6.6
 	  	 Distributions
 	  	 90
 
	  	  	 6.7
 	  	 ERISA
 	  	 91
 
	  	  	 6.8
 	  	 Change in Nature of Business
 	  	 91
 
	  	  	 6.9
 	  	 Liens and Negative Pledges; Sale and Leasebacks
 	  	 91
 
	  	  	 6.10
 	  	 Indebtedness and Guaranty Obligations
 	  	 91
 
	  	  	 6.11
 	  	 Transactions with Affiliates
 	  	 93
 
	  	  	 6.12
 	  	 Current Ratio
 	  	 93
 
	  	  	 6.13
 	  	 Leverage Ratio
 	  	 93
 
	  	  	 6.14
 	  	 Fixed Charge Coverage Ratio
 	  	 93
 
	  	  	 6.15
 	  	 Tangible Net Worth
 	  	 93
 
	  	  	 6.16
 	  	 Investments and Acquisitions
 	  	 94
 
	  	  	 6.17
 	  	 Capital Expenditures
 	  	 95
 
	  	  	 6.18
 	  	 Amendments
 	  	 95
 
	  	  	 6.19
 	  	 Change in Location of Chief Executive Offices, Jurisdiction of Organization and Assets
 	  	 95
 
	  	  	 6.20
 	  	 Use of Lender’s Name
 	  	 96
 
	  	  	 6.21
 	  	 Change of Fiscal Periods or Accounting Practices
 	  	 96
 
	  	  	 6.22
 	  	 Deposit and Brokerage Accounts
 	  	 96
 
	  	  	 6.23
 	  	 Interest Rate Protection Agreements
 	  	 96
 
	  	  	 6.24
 	  	 Limitation on Consolidated Tax Liability
 	  	 96
 
	  	  	 6.25
 	  	 Referenced Financing Statements
 	  	 96
 
	 
	 ARTICLE 7 INFORMATION AND REPORTING REQUIREMENTS
 	  	 96
 
	 
	  	  	 7.1
 	  	 Financial and Business Information
 	  	 96
 
	  	  	 7.2
 	  	 Compliance Certificates
 	  	 100
 

 

 
 -iv- 

  
 TABLE OF CONTENTS 
 (continued) 
  
 
	  	  	  	  	  	  	 Page
 

	 ARTICLE 8 CONDITIONS
 	  	 100
 
	 
	  	  	 8.1
 	  	 Initial Advances
 	  	 100
 
	  	  	 8.2
 	  	 Any Advance
 	  	 105
 
	 
	 ARTICLE 9 EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
 	  	 106
 
	 
	  	  	 9.1
 	  	 Events of Default
 	  	 106
 
	  	  	 9.2
 	  	 Remedies Upon Event of Default
 	  	 109
 
	 
	 ARTICLE 10 THE ADMINISTRATIVE AGENT
 	  	 112
 
	 
	  	  	 10.1
 	  	 Appointment and Authorization
 	  	 112
 
	  	  	 10.2
 	  	 Administrative Agent and Affiliates
 	  	 112
 
	  	  	 10.3
 	  	 Proportionate Interest in any Collateral
 	  	 113
 
	  	  	 10.4
 	  	 Lenders’ Credit Decisions
 	  	 113
 
	  	  	 10.5
 	  	 Action by Administrative Agent
 	  	 113
 
	  	  	 10.6
 	  	 Liability of Administrative Agent
 	  	 114
 
	  	  	 10.7
 	  	 Indemnification
 	  	 115
 
	  	  	 10.8
 	  	 Successor Administrative Agent
 	  	 116
 
	  	  	 10.9
 	  	 Performance of Conditions
 	  	 117
 
	  	  	 10.10
 	  	 Collateral Matters
 	  	 117
 
	  	  	 10.11
 	  	 No Obligations of Borrower
 	  	 118
 
	 
	 ARTICLE 11 MISCELLANEOUS
 	  	 118
 
	 
	  	  	 11.1
 	  	 Cumulative Remedies; No Waiver
 	  	 118
 
	  	  	 11.2
 	  	 Amendments; Consents
 	  	 118
 
	  	  	 11.3
 	  	 Costs and Expenses
 	  	 120
 
	  	  	 11.4
 	  	 Nature of Lenders’ Obligations
 	  	 121
 
	  	  	 11.5
 	  	 Survival of Representations and Warranties
 	  	 121
 
	  	  	 11.6
 	  	 Notices
 	  	 121
 
	  	  	 11.7
 	  	 Execution of Loan Documents
 	  	 121
 
	  	  	 11.8
 	  	 Binding Effect; Assignment
 	  	 122
 
	  	  	 11.9
 	  	 Lien on Deposits and Property in Possession of any Lender; Right of Setoff
 	  	 125
 
	  	  	 11.10
 	  	 Sharing of Setoffs
 	  	 125
 

 

 
     -v- 

 TABLE OF CONTENTS 
 (continued)

  
 
	  	  	  	  	 Page
 

	 11.11
 	  	 Indemnity by Borrower
 	  	 126
 
	 11.12
 	  	 Nonliability of the Lenders
 	  	 127
 
	 11.13
 	  	 No Third Parties Benefited
 	  	 128
 
	 11.14
 	  	 Confidentiality
 	  	 129
 
	 11.15
 	  	 Further Assurances
 	  	 129
 
	 11.16
 	  	 Integration
 	  	 130
 
	 11.17
 	  	 Governing Law
 	  	 130
 
	 11.18
 	  	 Severability of Provisions
 	  	 131
 
	 11.19
 	  	 Headings
 	  	 131
 
	 11.20
 	  	 Time of the Essence
 	  	 131
 
	 11.21
 	  	 Hazardous Material Indemnity
 	  	 131
 
	 11.22
 	  	 Waiver of Right to Trial by Jury
 	  	 132
 
	 11.23
 	  	 Purported Oral Amendments
 	  	 132
 
	 11.24
 	  	 Arbitration
 	  	 132
 

 

 
 -vi- 

  
 The exhibits listed below have been omitted. A copy of the omitted exhibits will be

 furnished to the Securities and Exchange Commission upon their request. 
  
 Exhibits 
  
 
	 A
 	 	 -
 	  	 Form of Assignment and Acceptance
 
	 B
 	 	 -
 	  	 Form of Compliance Certificate
 
	 C
 	 	 -
 	  	 Form of Letter of Credit Agreements
 
	 D
 	 	 -
 	  	 Form of Note
 
	 E
 	 	 -
 	  	 Form of Opinion of Counsel
 
	 F
 	 	 -
 	  	 Form of Request for Borrowing
 
	 G
 	 	 -
 	  	 Form of Request for Continuation/Conversion
 
	 H
 	 	 -
 	  	 Form of Notice of Payment/Prepayment
 
	 I
 	 	 -
 	  	 Last Days of Borrower’s Fiscal Quarters
 
	 J
 	 	 -
 	  	 Collateral Certificate
 
	 K
 	 	 -
 	  	 Form of Control Agreement
 
	 L
 	 	 -
 	  	 Form of Landlord Subordination
 
	 M
 	 	 -
 	  	 Language to be Deleted from Certificate of Incorporation
 
	 
	 The schedules listed below have been omitted. A copy of the omitted schedules will be
 furnished to the Securities and Exchange Commission upon their request.
 
	 
	 Schedules
 
	 
	 1.1
 	 	  	  	 Lender Commitments/Pro Rata Shares
 
	 1.2
 	 	  	  	 Material Contracts
 
	 2.5
 	 	  	  	 Existing Letters of Credit
 
	 4.4
 	 	  	  	 Subsidiaries
 
	 4.6
 	 	  	  	 Material Liabilities/Material Contingent Liabilities
 
	 4.7
 	 	  	  	 Title and Leasehold Interests Disclosure
 
	 4.7A
 	 	  	  	 Existing Liens, Negative Pledges and Rights of Others
 
	 4.7B
 	 	  	  	 Location of Property
 
	 4.8
 	 	  	  	 Intangible Assets; Restrictions on Use
 
	 4.9
 	 	  	  	 Material Litigation
 
	 4.16
 	 	  	  	 Projections
 
	 4.17
 	 	  	  	 Hazardous Materials Matters
 
	 4.21
 	 	  	  	 Brokerage Commissions
 
	 4.22
 	 	  	  	 Real Property
 
	 4.24
 	 	  	  	 Operating Accounts
 
	 4.26
 	 	  	  	 Consignments
 
	 4.27
 	 	  	  	 Vehicle Inventory`
 
	 4.29
 	 	  	  	 Government Accounts Receivable
 
	 6.10
 	 	  	  	 Existing Indebtedness and Guaranty Obligations
 
	 6.11
 	 	  	  	 Affiliate Transactions
 
	 6.16
 	 	  	  	 Existing Investments
 

 
  

  
 CREDIT AGREEMENT 
  
 Dated as of January 14, 2003 
  
 This CREDIT
AGREEMENT (as amended, supplemented or otherwise modified from time to time, this “Agreement”) is entered into by and among WEST MARINE FINANCE COMPANY, INC., a California corporation (“Borrower”), each lender whose
name is set forth on the signature pages of this Agreement and each lender that may hereafter become a party to this Agreement pursuant to Section 11.8 (each a “Lender” and collectively, “Lenders”), WELLS
FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent and Arranger and UNION BANK OF CALIFORNIA, N.A., as Syndication Agent. 
  
 In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows: 
  
 ARTICLE 1 
  
 DEFINITIONS AND ACCOUNTING TERMS 
  

1.1    Defined Terms. Unless otherwise indicated in this Agreement or any other Loan Document, each term set forth below, when used in this
Agreement or any other Loan Document, shall have the respective meaning given to that term below or in the provision of this Agreement or other document, instrument or agreement referenced below. 
  

“AAA” shall have the meaning given to that term in Section 11.25(b). 
  
 “Acquired Boat U.S. Operations” the retail stores, wholesale business and distribution center, and catalogue and internet operations
comprising the Product Group of Boat U.S. acquired by West Marine Products, Inc. pursuant to the Boat U.S. Acquisition. 
  
 “Acquired Person” means (a) any Person that is the subject of an Acquisition after the Closing Date and (b) any assets constituting a discrete business or operation unit that is the subject of an Acquisition
on or after the date hereof. 
  
 “Acquisition” means any transaction, or any series
of related transactions, consummated after the Closing Date, by which Borrower, Parent, or any of their collective Subsidiaries directly or indirectly (a) acquires any ongoing business or all or substantially all of the assets of any firm,
partnership, joint venture, limited liability company, corporation, any other Person or division thereof, whether through purchase of assets, merger or otherwise, (b) acquires in one transaction or as the most recent transaction in a series of
transactions control of Securities of a Person engaged in an ongoing business representing more than 50% of the ordinary voting power for the election of directors or other governing position if the business affairs of such Person are managed by a
board of directors or other governing body or (c) acquires control of 

 

  
 more than 50% of the ownership interest in any partnership, joint venture,
limited liability company, business trust or other Person that is not managed by a board of directors or other governing body. 
  
 “Adjustment Date” means August 22, 2004. 
  
 “Administrative Agent” means Wells Fargo when acting in its capacity as the Administrative Agent under any of the Loan Documents, or any successor Administrative Agent. 
  
 “Administrative Agent’s Office” means the Administrative Agent’s address as set forth on the
signature pages of this Agreement, or such other address as the Administrative Agent hereafter may designate by written notice to Borrower and the Lenders. 
  
 “Advance” means any advance made or to be made by any Lender as provided in Section 2.1(a) and, unless the context otherwise
requires, any Swing Line Loans. 
  
 “Affiliate” means, as to any Person, (a) any
other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person or (b) each of such Person’s officers, directors, joint venturers and partners; provided, however, that in no
case shall the Administrative Agent or any Lender be deemed to be an Affiliate of Borrower, Parent or any of their Subsidiaries for purposes of this Agreement. As used in this definition, “control” (and the correlative terms,
“controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of Securities or partnership or other
ownership interests, by contract or otherwise); provided that, in any event, any Person that owns, directly or indirectly, 10% or more of the Securities having ordinary voting power for the election of directors or other governing body of a
corporation that has more than 100 record holders of such Securities, or 10% or more of the partnership or other ownership interests of any other Person that has more than 100 record holders of such interests, will be deemed to be an Affiliate of
such corporation, partnership or other Person. 
  
 “Aggregate Effective Amount”
means, as of any date of determination and with respect to all Letters of Credit then outstanding, the sum of (a) the aggregate effective undrawn face amounts of all such Letters of Credit after giving effect to any issuance, renewal,
extension or increase in the amount of any Letter of Credit occurring on such date plus (b) the aggregate amounts paid by Issuing Lender under such Letters of Credit not then reimbursed to Issuing Lender by Borrower pursuant to Section
2.5(d) and not the subject of one or more Advances made pursuant to Section 2.5(e) or (f). 

 
 -2- 

  
 “Aggregate Availability Reserve Amount” means,
as of any date of determination, the aggregate amount of all then applicable availability reserves established pursuant to Section 5.14, including, without limitation, after giving effect to Section 5.14(e)(3), if
applicable. 
  
 “Alternate Base Rate” means, as of any date of determination, the
rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the higher of (a) the Prime Rate in effect on such date and (b) the Federal Funds Rate in effect on such date plus 1⁄2 of 1% (50 basis points). 

 
 “Alternate Base Rate Advance” means an Advance that bears interest in relation to the
Alternate Base Rate as provided in Section 3.1(b). 
  
 “Applicable Alternate Base Rate
Margin” means, with respect to any Alternate Base Rate Advance, for each Pricing Period, the interest rate margin set forth below (expressed in basis points per annum) opposite the Applicable Pricing Level for that Pricing Period:

  
 
	 Applicable
 Pricing
 Level
 
	 	  	  	 Margin
 

	 I
 	 	  	  	 125.0
 
	 II
 	 	  	  	 100.0
 
	 III
 	 	  	  	 75.0
 
	 IV
 	 	  	  	 50.0
 
	 V
 	 	  	  	 25.0
 

 
  
 “Applicable Commitment Fee Margin”
means, for each Pricing Period, the margin set forth below (expressed in basis points per annum) opposite the Applicable Pricing Level for that Pricing Period: 
  
 
	 Applicable
 Pricing
 Level
 
	 	  	  	 Margin
 

	 I
 	 	  	  	 50.0
 
	 II
 	 	  	  	 50.0
 
	 III
 	 	  	  	 50.0
 
	 IV
 	 	  	  	 37.5
 
	 V
 	 	  	  	 37.5
 

 
  

 
 -3- 

  
 “Applicable Eurodollar Rate Margin” means, with
respect to any Eurodollar Rate Advance, for each Pricing Period, the interest rate margin set forth below (expressed in basis points per annum) opposite the Applicable Pricing Level for that Pricing Period: 
  
 
	 Applicable
 Pricing
 Level
 
	 	  	  	 Margin
 

	 I
 	 	  	  	 300.0
 
	 II
 	 	  	  	 250.0
 
	 III
 	 	  	  	 225.0
 
	 IV
 	 	  	  	 200.0
 
	 V
 	 	  	  	 175.0
 

 
  
 “Applicable Letter of Credit Fee
Rate” means, as of any date of determination, the then effective Applicable Eurodollar Rate Margin. 
  
 “Applicable Pricing Level” means, for each Pricing Period the pricing level set forth below opposite the ratio of Funded Debt plus six times Rental Expense to EBITDAR achieved by Borrower as of the first day of that
Pricing Period: 
  
 
	  	 	  	    	 Funded Debt Plus Six Times Rental
 
	 Pricing Level
 
	 	  	    	 Expense to EBITDAR
 

	 I
 	 	  	    	 > 4.00x
 
	 II
 	 	  	    	 > 3.50x £ 4.00x
 
	 III
 	 	  	    	 > 3.25x £ 3.50x
 
	 IV
 	 	  	    	 > 3.00x £ 3.25x
 
	 V
 	 	  	    	 £ 3.00x
 

 
  
 Notwithstanding anything to the contrary herein,
until any adjustment called for in connection with the first Pricing Occurrence arising after the delivery of the financial statements and Compliance Certificate for the Fiscal Quarter ending June 28, 2003, the Applicable Pricing Level for each of
the Applicable Alternate Base Rate Margin, the Applicable Commitment Fee Margin and the Applicable Eurodollar Rate Margin (and by definition the Applicable Letter of Credit Fee Rate) shall be “I”. 
  
 “Arranger” means Wells Fargo Bank, National Association. 

 
 -4- 

  
 “Asset Purchase Agreement” means that certain Asset Purchase
Agreement dated as of January 14, 2003 between West Marine Products, Inc. and Boat U.S. 
  
 “Assignment and
Acceptance” means an assignment and acceptance agreement substantially in the form of Exhibit A. 
  
 “Banking Day” means any Monday, Tuesday, Wednesday, Thursday or Friday, other than a day on which banks are authorized or required to be closed in California or New York. 
  
 “Boat U.S.” means Boat America Corporation, a Virginia corporation. 
  

“Boat U.S. 2002 Financial Statements” means the financial statements referred to in Section 7.1(l) hereof. 
  
 “Boat U.S. Acquisition” means Borrower’s Acquisition of substantially all of the assets of the Product Group of Boat
U.S. pursuant to the Asset Purchase Agreement. 
  
 “Boat U.S. EBITDA Quarter Component” shall mean
an amount equal to the earnings before interest, taxes, depreciation and amortization for the fiscal year ending December 31, 2002 after exclusion of all earnings before interest, taxes, depreciation and amortization attributable to the operations
and businesses not acquired by West Marine Products, Inc. pursuant to the Boat U.S. Acquisition, in each case, as reflected on the Boat U.S. 2002 Financial Statements divided by four. 
  
 “Boat U.S. Rental Expense Quarter Component” shall mean an amount equal to the rental expense, less all sublease revenue, for the fiscal year ending
December 31, 2002 after exclusion of all rental expense and sublease revenue attributable to the operations and businesses not acquired by West Marine Products, Inc. pursuant to the Boat U.S. Acquisition, in each case, as reflected on the Boat U.S.
2002 Financial Statements divided by four. 
  
 “Borrowing” means a borrowing consisting of
simultaneous Advances of the same type. 
  
 “Capital Expenditure” means any expenditure that is
treated as a capital expenditure under GAAP, including any expenditure that is required to be capitalized in accordance with GAAP that relates to an asset subject to a Capital Lease. 
  
 “Capital Lease” means, as to any Person, a lease of any Property by that Person as lessee that is, or should be in accordance with GAAP (including
Financial Accounting Standards Board Statement No. 13, as amended or superseded from time to time, or if such Statement is not then in effect, such other statement of GAAP as 

 
 -5- 

  
 may be applicable) recorded as a “capital lease” on the balance sheet of that Person prepared
in accordance with GAAP. 
  
 “Capital Lease Obligations” means all monetary obligations of a Person
under any Capital Lease. 
  
 “Cash” means, when used in connection with any Person, all monetary and
non-monetary items owned by that Person that are treated as cash in accordance with GAAP. 
  
 “Cash
Equivalents” means, when used in connection with any Person, that Person’s Investments in: 
  
 (a)
Government Securities due within one year after the date of the making of the Investment; 
  
 (b) readily marketable
direct obligations of any State of the United States of America or any political subdivision of any such State or any public agency or instrumentality thereof or the District of Columbia given on the date of such Investment a credit rating of at
least Aa by Moody’s or AA by S&P, in each case due within one year from the making of the Investment; 
  
 (c) certificates of deposit issued by, bank deposits in, eurodollar deposits through, bankers’ acceptances of, and repurchase agreements covering Government Securities executed by any Lender or any bank incorporated under the
Laws of the United States of America, any State thereof or the District of Columbia and having on the date of such Investment combined capital, surplus and undivided profits of at least $250,000,000, or total assets of at least $5,000,000,000, in
each case due within one year after the date of the making of the Investment; 
  
 (d) certificates of deposit issued
by, bank deposits in, eurodollar deposits through, bankers’ acceptances of, and repurchase agreements covering Government Securities executed by any Lender or any branch or office located in the United States of America of a bank incorporated
under the Laws of any jurisdiction outside the United States of America having on the date of such Investment combined capital, surplus and undivided profits of at least $500,000,000, or total assets of at least $15,000,000,000, in each case due
within one year after the date of the making of the Investment; 
  
 (e) repurchase agreements covering Government
Securities executed by a broker or dealer registered under Section 15(b) of the Securities Exchange Act of 1934, as amended, having on the date of the Investment capital of at least $50,000,000, due within 90 days after the date of the making of the
Investment; provided that the maker of the Investment receives written confirmation of the transfer to it of record ownership of the Government Securities on the books of a “primary 

 
 -6- 

  
 dealer” in such Government Securities or on the books of such registered broker or dealer, as soon
as practicable after the making of the Investment; 
  
 (f) readily marketable commercial paper or other debt
Securities issued by corporations doing business in and incorporated under the Laws of the United States of America or any State thereof or the District of Columbia or of any corporation that is the holding company for a bank described in clause
(c) or (d) above given on the date of such Investment a credit rating of at least P-1 by Moody’s or A-1 by S&P, in each case due within 270 days after the date of the making of the Investment; 
  
 (g) “money market preferred stock” issued by a corporation incorporated under the Laws of the United States of America or any
State thereof or the District of Columbia (i) given on the date of such Investment a credit rating of at least Aa by Moody’s and AA by S&P, in each case having an investment period not exceeding 50 days or (ii) to the extent that investors
therein have the benefit of a standby letter of credit issued by a Lender or a bank described in clauses (c) or (d) above; provided that the aggregate amount of all such Investments does not exceed $5,000,000; 

 
 (h) a readily redeemable “money market mutual fund” sponsored by a bank described in clause (c) or (d)
hereof, or a registered broker or dealer described in clause (e) hereof, that has and maintains an investment policy limiting its investments primarily to instruments of the types described in clauses (a) through (g) hereof and
given on the date of such Investment a credit rating of at least Aa by Moody’s and AA by S&P; and 
  
 (i)
corporate notes or bonds having an original term to maturity of not more than one year issued by a corporation incorporated under the Laws of the United States of America, or a participation interest therein; provided that (i) commercial
paper issued by such corporation is given on the date of such Investment a credit rating of at least Aa by Moody’s and AA by S&P and (ii) the aggregate amount of all such Investments does not exceed $5,000,000. 
  
 “Casualty Event” means, with respect to any Property of any Person, any loss of or damage to, or any condemnation or
other taking of, such Property for which such Person, its parent company or any of their Subsidiaries receives insurance proceeds, or proceeds of a condemnation award or other compensation. 
  
 “Certificate” means a certificate signed by a Senior Officer or Responsible Official (as applicable) of the Person providing the certificate. 

 
 “Change in Control” means any of the following events: (a) the sale, lease, transfer or other disposition, in
one or a series of related transactions, of all or substantially all of the assets of Borrower, Parent and their Subsidiaries taken as a 

 
 -7- 

  
 whole to any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2)
of the Securities Exchange Act, but not including the merger of any Subsidiary into Parent or into another domestic Subsidiary of Parent), (b) Parent shall fail to own, directly or indirectly, 100% of the outstanding capital stock or other equity
interests of any Subsidiary of Parent, including Borrower, (c) any Person or two or more Persons acting in concert shall have acquired beneficial ownership, directly or indirectly, of, or shall have acquired by contract or otherwise, or shall have
entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of, or control over, the greater of 33-1/3% or more of the outstanding capital stock or other equity interests of Borrower or Parent, or that
percentage or more of such stock or other equity interests currently owned or controlled by Randolph K. Repass, such that Randolph K. Repass ceases to be the majority shareholder, provided that the foregoing shall not apply to transfers by
Randolph K. Repass and his estate, executors, administrators and heirs, and his lineal descendants, any private foundation or other charitable entity controlled by him or his estate, executors, administrators or heirs, and any corporation,
partnership, limited liability company, trust or other entity in which he or his estate, executors, administrators or heirs, or his lineal descendants have a direct or indirect beneficial interest or voting control of greater than 50%, (d) during
any period of up to 24 consecutive months, commencing after the Closing Date, individuals who at the beginning of such 24-month period were directors of Borrower or Parent (together with any new director whose election by Borrower’s or
Parent’s board of directors or whose nomination for election by Borrower’s or Parent’s shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such
period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors of Borrower or Parent then in office or (e) any transaction or series of related transactions constituting
a “change in control” or similar occurrence under documentation evidencing or governing Indebtedness of Borrower, Parent and/or any of their collective Subsidiaries of $5,000,000 or more, which gives the holder(s) of such Indebtedness the
right to accelerate or otherwise require payment of such Indebtedness prior to the maturity date thereof. As used herein, “beneficial ownership” shall have the meaning provided in Rule 13d-3 of the Securities and Exchange Commission under
the Securities Exchange Act. 
  
 “Closing Date” means the time and Banking Day on which the
conditions set forth in Section 8.1 are satisfied or waived. The Administrative Agent shall notify Borrower and the Closing Date Lenders of the date that is the Closing Date. 
  
 “Closing Date Lenders” means Wells Fargo and Union Bank of California, N.A. and any other lender party to this Agreement as of the Closing Date.

  
 “Code” means the Internal Revenue Code of 1986, as amended or replaced and as in effect from
time to time. 

 
 -8- 

  
 “Collateral” means, collectively, all of the collateral
(including any cash collateral) subject to the Liens, or intended to be subject to the Liens, created by the Security Documents or any one of them. 
  
 “Collateral Certificate” means a Collateral Certificate in the form of Exhibit J, appropriately completed and duly executed by Borrower. 
  
 “Commercial Letter of Credit” means any of the commercial letters of credit issued by the Issuing Lender under the
Revolving Facility pursuant to Section 2.5, either as originally issued or as the same may be supplemented, modified, amended, extended, restated or supplanted. 
  
 “Commercial Letter of Credit Sublimit” means an amount equal to the lesser of (a) the aggregate amount of the Lenders’ Commitments and (b)
$15,000,000. The Commercial Letter of Credit Sublimit is part of, and not in addition to, the aggregate amount of the Lenders’ Commitments. 
  
 “Commitment” means with respect to each Lender, the commitment of such Lender to make Advances and to purchase participation interests in Letters of Credit (expressed as the maximum
aggregate amount of the Advances to be made and participation interests to be purchased by such Lender hereunder), as such commitment may be (a) reduced from time to time pursuant to Section 2.6 and (b) reduced or increased from time
to time pursuant to assignments by or to such Lender pursuant to Section 11.8. The initial amount of each Lender’s Commitment is set forth on Schedule 1.1 or in the Assignment and Acceptance pursuant to which such Lender shall
have assumed its Commitment, as applicable. The initial aggregate amount of the Lenders’ Commitments is $185,000,000. 
  
 “Compliance Certificate” means a certificate in the form of Exhibit B, properly completed and signed by the chief financial officer of Borrower. 
  
 “Contingent Contractual Lien Location” means, as of any date of determination, any location (other than a Non-Contingent Contractual Lien Location) where
any inventory or books or records of Borrower, Parent or any of their Subsidiaries are located and which is leased to Borrower, Parent or any of their Subsidiaries pursuant to a lease or other agreement which by its terms provides the landlord or
any other Person with a Lien on any of its or their Property which Lien becomes or is effective after the occurrence of a contingent event or circumstance. 
  
 “Continuation,” “Continue” and “Continued” each refers to a continuation of Eurodollar Rate Advances from one Eurodollar Period to the next Eurodollar
Period pursuant to Section 2.4(c). 
  
 “Contractual Obligation” means, as to any Person, any
obligation under any material indenture, note, lease, loan agreement, Security, deed of trust, mortgage, 

 
 -9- 

 security agreement, guaranty, instrument, contract, agreement or other form of material contractual obligation or undertaking to which such
Person is a party or by which such Person or any of its Property is bound. 
  
 “Control Agreement”
means a control agreement among the applicable Party, the Administrative Agent and the applicable financial institution or securities intermediary substantially in the form attached hereto as Exhibit K or in such other form as the
Administrative Agent may agree to in its discretion. 
  
 “Conversion,” “Convert”
and “Converted” each refers to a conversion of Advances of one Type into Advances of the other Type pursuant to Section 2.4(a) or 2.4(b). 
  
 “Current Assets” means, as of any applicable date of determination, all Cash, Cash Equivalents, non-affiliated customer receivables, claims against the
United States government and inventories, or other assets that should be classified as current in accordance with GAAP. 
  
 “Current Liabilities” means, as of any applicable date of determination, (i) all liabilities of a Person that should be classified as current in accordance with GAAP plus (ii) all of the following liabilities
of a Person whether or not they should be classified as current in accordance with GAAP: the principal amount of all Indebtedness of Borrower, Parent and their collective Subsidiaries which constitute a revolving facility or revolving loan
obligation irrespective of its maturity date and the current portion of any term loans, the aggregate principal Indebtedness outstanding under the Loan Documents and the Aggregate Effective Amount of all outstanding Letters of Credit, plus
(iii) to the extent not otherwise included, all liabilities of such Person to any of its Affiliates (including officers, directors, shareholders, subsidiaries and commonly held companies), whether or not classified as current in accordance with
GAAP. 
  
 “Current Ratio” means, as of any applicable date of determination, the ratio of Current
Assets to Current Liabilities. 
  
 “Debtor Relief Laws” means the Bankruptcy Code of the United
States of America, as amended from time to time, and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws from time to time in effect
affecting the rights of creditors generally. 
  
 “Debt Rating” means, as of each date of
determination, (a) in the event such a credit rating is issued by either Moody’s or S&P, the bank debt credit rating assigned to the long term senior unsecured Indebtedness of Parent by that credit reporting agency, or (b) if no bank debt
credit rating is assigned, the most creditworthy credit 

 
 -10- 

 rating, actual or implicit, assigned to senior unsecured Indebtedness of Parent by that credit rating agency. 
  
 “Default” means any event or circumstance which, with the giving of any applicable notice or passage of time specified in
Section 9.1, or both, would be an Event of Default. 
  
 “Default Rate” means the interest
rate prescribed in Section 3.7. 
  
 “Designated Deposit Account” means a deposit account to
be maintained by Borrower with Wells Fargo or one of its Affiliates, as from time to time designated by Borrower by written notification to the Administrative Agent. 
  
 “Designated Eurodollar Market” means, with respect to any Eurodollar Rate Advance, the London Eurodollar Market. 
  
 “Disqualified Stock” means any capital stock, warrants, options or other rights to acquire capital stock (but excluding
any debt Security which is convertible, or exchangeable, for capital stock), which, by its terms (or by the terms of any Security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the Maturity Date. 
  
 “Disposition” means the sale, transfer or other disposition (each, a “Transfer”) in any single transaction or series of related
transactions of any asset, or group of related assets, of Borrower, Parent or any of their collective Subsidiaries other than (a) a Transfer of Cash, Cash Equivalents, Investments (other than Investments in a Subsidiary),
inventory sold, transferred or otherwise disposed of to retail or wholesale customers in the ordinary course of business of Borrower, Parent or any of their collective Subsidiaries, or (b) a Transfer of other personal property sold or otherwise
disposed of where other personal property has been acquired within 270 days thereafter, by such Party and (c) a Transfer to Borrower. 
  
 “Distribution” means, with respect to any equity interest or Security issued by a Person, or any warrant or right to acquire any equity interest or Security of a Person, (a) the retirement, redemption,
purchase, or other acquisition for value by such Person of any such equity interest or Security, (b) the declaration or (without duplication) payment by such Person of any dividend in Cash or in Property (other than in common stock or
an equivalent equity interest of such Person) on or with respect to any such equity interest or Security, (c) any Investment by such Person in the holder of any such equity interest or Security, and (d) any other payment by such Person constituting
a distribution under applicable Laws with respect to such equity interest or Security. 
  
 “Dollars”
or “$” means United States of America dollars. 

 
 -11- 

  
 “EBITDA” means, with respect to any fiscal period, the
sum of (a) Net Income for that period, plus (b) any extraordinary loss to the extent deducted in determining such Net Income, minus (c) any extraordinary gain to the extent added in determining such Net Income,
plus (d) Interest Expense of Borrower, Parent and their collective Subsidiaries for that period, plus (e) the aggregate amount of federal and state taxes on or measured by income of Borrower, Parent and their collective Subsidiaries
for that period (whether or not payable during that period), plus (f) depreciation and amortization expense of Borrower, Parent and their collective Subsidiaries for that period, plus (g) all other non-cash, expenses of Borrower,
Parent and their collective Subsidiaries for that period, plus (h) transaction costs related to the closing of the transactions contemplated by this Agreement and the closing of the Boat U.S. Acquisition (and transaction costs related to any
Acquisition which requires the consent of the Requisite Lenders to the extent such transaction costs are allowed to be included in this clause (h) pursuant to a written consent from the Requisite Lenders in their sole and absolute discretion)
plus (i) for any period which includes the first Fiscal Quarter and/or the second Fiscal Quarter of Fiscal Year 2003, the costs and expenses related to the closing of any stores which are stores acquired in the Boat U.S. Acquisition or are
existing stores which are in overlapping markets in which stores acquired in the Boat U.S. Acquisition are located during the first Fiscal Quarter or the second Fiscal Quarter of Fiscal Year 2003 (as applicable) in an aggregate amount not to exceed
$500,000 for all such store closings, in each case as determined in accordance with GAAP, consistently applied and, in the case of items (d), (e), (f), (g),(h) and (i) only to the extent deducted in determining
such Net Income for that period. In determining EBITDA attributable to an Acquired Person acquired during such period, such Acquired Person shall be treated as if owned on the first day of the applicable period and companies (or business units or
divisions) sold, transferred or otherwise disposed of during such period will be treated as if not owned during the entire applicable period; provided that in the case of the EBITDA attributable to the Acquired Boat U.S. Operations such
EBITDA shall be included as follows: (A) for each Fiscal Quarter ending after January 1, 2003 which is included in the calculation of EBITDA, such calculation shall include the actual EBITDA for the Acquired Boat U.S. Operations for each such Fiscal
Quarter; and (B) for each Fiscal Quarter ending prior to January 1, 2003 which is included in the calculation of EBITDA, such calculation shall include the Boat U.S. EBITDA Quarter Component for each such Fiscal Quarter. 
  
 “EBITDAR” means, with respect to any fiscal period, EBITDA plus Rental Expense of Borrower, Parent and their
collective Subsidiaries for that period. 
  
 “Eligible Assignee” means (a) another Lender, (b) with
respect to any Lender, any Affiliate of that Lender, (c) any commercial bank having total assets of $500,000,000 or more, (d) any (i) savings bank, savings and loan association, finance company or similar financial institution or entity or (ii)
insurance company engaged in the business of writing insurance which, in either case (A) has total assets of 
  

 
 -12- 

 $500,000,000 or more, (B) is engaged in the business of lending money and extending credit under credit facilities similar to those extended
under this Agreement and (C) is operationally and procedurally able to meet the obligations of a Lender hereunder to the same degree as a commercial bank (as reasonably determined by the assigning Lender) and (e) any other financial institution
(including a mutual fund or other fund) having total assets of $500,000,000 or more which meets the requirements set forth in subclauses (B) and (C) of clause (d) above; provided that each Eligible Assignee must either (x) be organized
under the Laws of the United States of America, any State thereof or the District of Columbia or (y) be organized under the Laws of the Cayman Islands or any country which is a member of the Organization for Economic Cooperation and Development, or
a political subdivision of such a country. 
  
 “ERISA” means the Employee Retirement Income Security
Act of 1974, and any final or temporary regulations issued pursuant thereto, as amended or replaced and as in effect from time to time. 
  
 “ERISA Affiliate” means, with respect to any Person, any other Person (or any trade or business, whether or not incorporated) that is under common control with that Person within the meaning of Section 414
(b), (c), (m) or (o) of the Code. 
  
 “Eurodollar Banking Day” means any Banking Day on which
dealings in Dollar deposits are conducted by and among banks in the Designated Eurodollar Market. 
  
 “Eurodollar Base Rate” means with respect to any Eurodollar Rate Advance comprising part of the same Borrowing, the interest rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) at which
deposits in Dollars are offered by the Eurodollar Reference Lender to prime banks in the Designated Eurodollar Market at or about 10:00 a.m. local time in the Designated Eurodollar Market, two (2) Eurodollar Banking Days before the first day of the
applicable Eurodollar Period in an aggregate amount approximately equal to the amount of the Eurodollar Rate Advance comprising part of such Borrowing and for a period of time comparable to the number of days in the applicable Eurodollar Period. The
determination of the Eurodollar Base Rate by the Administrative Agent shall be conclusive in the absence of manifest error. 
  
 “Eurodollar Lending Office” means, as to each Lender, its office or branch so designated by written notice to Borrower and the Administrative Agent as its Eurodollar Lending Office. If no Eurodollar Lending Office is
designated by a Lender, its Eurodollar Lending Office shall be its office at its address for purposes of notices hereunder. 
  
 “Eurodollar Market” means a regular established market located outside the United States of America by and among banks for the solicitation, offer and acceptance of Dollar deposits in such banks. 

 
 -13- 

  
 “Eurodollar Obligations” means eurocurrency liabilities, as
defined in Regulation D or any comparable regulation of any Governmental Agency having jurisdiction over any Lender. 
  
 “Eurodollar Period” means, as to each Eurodollar Rate Advance comprising part of the same Borrowing, the period commencing on the date specified by Borrower pursuant to Section 2.1(b) and ending 7, 14 or 21
days, or 1, 2, 3 or 6 months, or any other period (with the written consent of all of the Lenders) thereafter, as specified by Borrower in the applicable Request for Borrowing or Request for Continuation/Conversion provided that:

  
 (a) The first day of any Eurodollar Period shall be a Eurodollar Banking Day; 

 
 (b) Any Eurodollar Period that would otherwise end on a day that is not a Eurodollar Banking Day shall be
extended to the immediately succeeding Eurodollar Banking Day unless such Eurodollar Banking Day falls in another calendar month, in which case such Eurodollar Period shall end on the immediately preceding Eurodollar Banking Day; 

 
 (c) No Eurodollar Period for any Eurodollar Rate Advance shall extend beyond June 16, 2003, if after giving
effect to the reductions scheduled to occur on June 16, 2003 any Eurodollar Rate Advance would be required to be prepaid. 
  
 (d) No Eurodollar Period for any Eurodollar Rate Advance shall extend beyond the Maturity Date. 
  
 “Eurodollar Rate” means, with respect to any Eurodollar Rate Advance comprising part of the same Borrowing, an interest rate per annum (rounded upward, if necessary, to the nearest 1/100th of one percent) determined
pursuant to the following formula: 
  
 
	 
	  	 	  	 	 Eurodollar Base Rate
 
	 Eurodollar Rate
 	 	 =
 	 	 1.00-Eurodollar Reserve
 Percentage
 

 
  
 The Eurodollar Rate shall be adjusted automatically as to all
Eurodollar Rate Advances then outstanding as of the effective date of any change in the Eurodollar Reserve Percentage. 
  
 “Eurodollar Rate Advance” means an Advance that bears interest in relation to the Eurodollar Rate as provided in Section 3.1(c). 

 
 -14- 

  
 “Eurodollar Reference Lender” means Wells Fargo or the
Administrative Agent if Wells Fargo is no longer the Administrative Agent. 
  
 “Eurodollar Reserve
Percentage” means, with respect to any Eurodollar Rate Advance comprising part of the same Borrowing, the maximum reserve percentage (expressed as a decimal, rounded upward, if necessary, to the nearest 1/100th of one percent) in effect on
the date the Eurodollar Base Rate for the Borrowing of which such Eurodollar Rate Advance is a part is determined (whether or not such reserve percentage is applicable to any Lender) under regulations issued from time to time by the Federal Reserve
Board for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to eurocurrency funding (currently referred to as “eurocurrency liabilities”) having a term
comparable to the Eurodollar Period for such Eurodollar Rate Advance. The determination by the Administrative Agent of any applicable Eurodollar Reserve Percentage shall be conclusive in the absence of manifest error. 
  
 “Event of Default” shall have the meaning provided in Section 9.1. 
  
 “Existing Credit Facilities” means the credit facilities provided to Borrower, Parent or their collective Subsidiaries
pursuant to that certain Credit Agreement dated as of March 1, 2002, among Borrower, the banks that were party thereto, and Wells Fargo Bank, National Association, as administrative agent. 
  
 “Existing Letters of Credit” means the letters of credit described on Schedule 2.5. 
  
 “Federal Funds Rate” means, as of any date of determination, the rate set forth in the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such successor, “H.15(519)”) for such date opposite the caption “Federal Funds (Effective)”. If for any relevant date such rate is not yet published in
H.15(519), the rate for such date will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New
York (including any such successor, the “Composite 3:30 p.m. Quotation”) for such date under the caption “Federal Funds Effective Rate”. If on any relevant date the appropriate rate for such date is not yet published in
either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such date will be the arithmetic mean of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that date by each of
three leading brokers of Federal funds transactions in New York City selected by the Administrative Agent. For purposes of this Agreement, any change in the Alternate Base Rate due to a change in the Federal Funds Rate shall be effective as of the
opening of business on the effective date of such change. 
  

 
 -15- 

  
 “Federal Reserve Board” means the Board of Governors of the
Federal Reserve System. 
  
 “Fee Letter” means the letter agreement dated as of December 12, 2002
between Borrower and Wells Fargo regarding certain fees payable by Borrower in connection with the Revolving Facility as indicated therein. 
  
 “Final Aggregate Availability Reserve Amount” shall have the meaning provided in Section 5.14(e)(2). 
  
 “Fiscal Quarter” means any fiscal quarter of Borrower, Parent and their collective Subsidiaries. 
  
 “Fiscal Year” means the fiscal year of Borrower, Parent and their collective Subsidiaries ending on the Saturday closest to each December 31. 

 
 “Fixed Charge Coverage Ratio” means, for any period, the ratio of (x) EBITDAR less maintenance capital
expenditures made during the applicable period, to (y) the aggregate of Net Interest Expense during the applicable period plus Rental Expense during the applicable period, plus scheduled principal payments during the applicable period
(including, without limitation, scheduled payments made under Capital Leases that should be treated as payment of principal in accordance with GAAP) plus if the principal amount of the Indebtedness under this Agreement exceeds $175,000,000,
the difference between the highest outstanding balance and $175,000,000 during the applicable period. For purposes of this definition, the term “maintenance capital expenditure” shall mean a Capital Expenditure for the maintenance or
repair of Borrower’s, Parent’s and their Subsidiaries’ Property, but excluding: (i) any capital expenditures made from the proceeds of insurance; and (ii) the acquisition of new Property, except as such acquisition may be required to
complete such maintenance or repair, and shall be calculated in a manner that is consistent with the Projections. 
  
 “Foreign Plan” means any employee benefit plan maintained by Borrower or any of its Subsidiaries which is mandated or governed by any Governmental Rule of any Governmental Agency other than the United States.

  
 “Funded Debt” means, as of any date of determination, without duplication, the sum
of (a) all principal Indebtedness of Borrower, Parent and their collective Subsidiaries for borrowed money without respect to their maturity (including Subordinated Obligations and any other subordinated indebtedness, debt Securities
issued by Borrower, Parent and any of their collective Subsidiaries, the aggregate principal Indebtedness outstanding under the Loan Documents including, without limitation, the Notes and the Aggregate Effective Amount of all outstanding Letters of
Credit) on that date plus (b) the aggregate amount of the principal portion of all Capital Lease Obligations of Borrower, Parent and their collective Subsidiaries plus 

 
 -16- 

  
 (c) any Guaranty Obligations of Borrower, Parent and their collective Subsidiaries with respect to the
Indebtedness of others of the types referred to in (a) and (b) above. 
  
 “GAAP” means, as of any
date of determination, accounting principles (a) set forth as generally accepted in then currently effective Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants, (b) set forth as generally accepted
in then currently effective Statements of the Financial Accounting Standards Board or (c) that are then approved by such other entity as may be approved by a significant segment of the accounting profession in the United States of America. The term
“consistently applied,” as used in connection therewith, means that the accounting principles applied are consistent in all material respects with those applied at prior dates or for prior periods. 
  
 “Government Securities” means readily marketable (a) direct full faith and credit obligations of the United States of
America or any State thereof or obligations unconditionally guaranteed by the full faith and credit of the United States of America or any State thereof and (b) obligations of an agency or instrumentality of, or corporation owned, controlled or
sponsored by, the United States of America or any State thereof that are generally considered in the securities industry to be implicit obligations of the United States of America or any State thereof. 
  
 “Governmental Agency” means (a) any international, foreign, federal, state, county or municipal government, or political
subdivision thereof, (b) any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body or (c) any court or administrative tribunal of competent jurisdiction. 
  
 “Governmental Authorization” shall mean any permit, license, registration, approval, finding of suitability,
authorization, plan, directive, order, consent, exemption, waiver, consent order or consent decree of or from, or notice to, action by or filing with, any Governmental Authority. 
  
 “Governmental Rule” means any law, rule, regulation, ordinance, order, code interpretation, judgment, decree, directive, guideline, policy or similar form
of decision of any Governmental Agency. 
  
 “Guarantor” means, collectively, each of West Marine,
Inc., a Delaware corporation, West Marine Products, Inc., a California corporation, West Marine Canada Corp., a Nova Scotia unlimited liability company, West Marine Puerto Rico, Inc., a California corporation, W Marine Management Co., Inc., a
California corporation, West Marine LBC, Inc., a California corporation, West Marine IHC I, Inc., a California corporation, E&B Marine Inc., a Delaware corporation, E&B Marine LBC, Inc., a California corporation, E&B Marine IHC I, Inc.,
a California corporation, E&B Marine Supply, Inc., a New Jersey corporation, E&B Marine Supply, Inc., a Maryland corporation, Goldbergs’ Marine Distributors, Inc., a Delaware corporation, 

 
 -17- 

  
 James Bliss & Co., Inc., a Massachusetts corporation, Sea Ranger Marine Inc., a Delaware
corporation, Krista Corporation, a Delaware corporation, and Central Marine Supply, Inc., a New Jersey corporation, and any other Subsidiary of Parent or Borrower now or hereafter existing. 
  
 “Guaranty” means any one or more of the following: that certain Guaranty of even date herewith executed by each Guarantor, any guaranty delivered pursuant
to Section 5.15 and each other guaranty provided after the Closing Date in respect of any of the Obligations. 
  
 “Guaranty Obligation” means, as to any Person, any (a) guarantee by that Person of Indebtedness of, or other obligation performable by, any other Person or (b) assurance given by that Person to an obligee of any
other Person with respect to the performance of an obligation by, or the financial condition of, such other Person, whether direct, indirect or contingent, including any purchase or repurchase agreement covering such obligation or any
collateral security therefor, any agreement to provide funds (by means of loans, capital contributions or otherwise) to such other Person, any agreement to support the solvency or level of any balance sheet item of such other Person or any
“keep-well” or other arrangement of whatever nature given for the purpose of assuring or holding harmless such obligee against loss with respect to any obligation of such other Person; provided, however, that the term
Guaranty Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guaranty Obligation in respect of Indebtedness shall be deemed to be an amount equal to the stated or
determinable amount of the related Indebtedness (unless the Guaranty Obligation is limited by its terms to a lesser amount, in which case to the extent of such amount) or, if not stated or determinable, the maximum reasonably anticipated liability
in respect thereof as determined by the Person in good faith. The amount of any other Guaranty Obligation shall be deemed to be the maximum reasonably anticipated liability in respect thereof as determined by the Person in good faith. 

 
 “Hazardous Materials” means oil or petrochemical products, poly-chlorinated biphenyls, asbestos, urea
formaldehyde, flammable explosives, radioactive materials, hazardous wastes, toxic substances or related materials, including any substances considered “hazardous substances,” “hazardous wastes,” “hazardous materials,”
“infectious wastes”, “pollutant substances”, “solid waste” or “toxic substances” under any Hazardous Materials Laws. 
  
 “Hazardous Materials Laws” means all Laws pertaining to the treatment, transportation or disposal of Hazardous Materials on or about any Real Property owned or leased by Borrower,
Parent or any of their collective Subsidiaries thereof, or any portion thereof, including without limitation the following: the Federal Water Pollution Control Act (33 U.S.C. § 1251, et seq.), the Federal Resource Conservation and
Recovery Act of 1976 (42 U.S.C. § 6901, et seq.), the Comprehensive 

 
 -18- 

  
 Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. § 9601,
et seq.) and the Superfund Amendments and Reauthorization Act of 1986, the Hazardous Materials Transportation Act, as amended (44 U.S.C. § 1801, et seq.), the Toxic Substances Control Act, 15 U.S.C. § 2601
et seq., the California Health and Safety Code (Section 25100, et seq.), the California Water Code and the California Administrative Code, in each case as such Laws are amended from time to time. 
  
 “Income Taxes” means any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, that (i) are imposed on a Person’s overall net income by the United States, (ii) are imposed on a Person’s overall net income (and franchise taxes imposed on or measured by income, earnings or retained
earnings) by the state or foreign jurisdiction under the laws of which such Person is organized or any political subdivision thereof, and (iii) are imposed on a Person’s overall net income (and franchise taxes imposed on or measured by income,
earnings or retained earnings) by the state or foreign jurisdiction of its principal office, Eurodollar Lending Office or in which such Person is “doing business” or any political subdivision thereof. 
  
 “Indebtedness” means, as to any Person (without duplication), (a) indebtedness of such Person for borrowed money or for
the deferred purchase price of Property (excluding accounts payable in the ordinary course of business not more than sixty (60) days past due), (b) all Capital Lease Obligations of such Person, (c) indebtedness of such Person arising under
bankers’ acceptance facilities or under facilities for the discount of accounts receivable of such Person, (d) any direct or contingent obligations of such Person under letters of credit issued for the account of such Person, (e) any net
obligations of such Person under Interest Rate Protection Agreements, (f) all Guaranty Obligations of such Person with respect to the obligations of other Persons of the types described in clauses (a)-(e) above; and (g) all obligations of other
Persons of the types described in clauses (a)-(f) above to the extent secured by (or for which any holder of such obligations has an existing right, contingent or otherwise, to be secured by) any Lien in any property (including accounts and contract
rights) of such Person to the extent of the fair market value of such assets as determined in good faith by such Person, even though such Person has not assumed or become liable for the payment of such obligations. 
  
 “Intangible Assets” means assets that are considered intangible assets under GAAP, including customer lists,
goodwill, covenants not to compete, copyrights, trade names, trademarks and patents. 
  
 “Intellectual
Property Security Agreement” means that certain Security Agreement (Intellectual Property), dated as of the date hereof, among Borrower, other Persons from time to time party thereto and the Administrative Agent. 

 
 -19- 

  
 “Interest Expense” means, with respect to any Person and as of
the last day of any fiscal period, the sum of (a) all interest, fees, charges and related expenses (in each case as such expenses are calculated according to GAAP) paid or payable (without duplication) for that fiscal period by that
Person to a lender in connection with borrowed money (including any obligations for fees, charges and related expenses payable to the issuer of any letter of credit) or the deferred purchase price of assets that are considered “interest
expense” under GAAP plus (b) the portion of rent paid or payable (without duplication) for that fiscal period by that Person under Capital Lease Obligations that should be treated as interest in accordance with Financial Accounting
Standards Board Statement No. 13, plus (c) the net amounts paid or payable (or minus the net amounts received or receivable) under Interest Rate Protection Agreements for that fiscal period by that Person. 
  
 “Interest Rate Protection Agreement” means a written agreement between Borrower and one or more financial institutions
providing for “swap”, “cap”, “collar” or other interest rate protection with respect to any Indebtedness. 
  
 “Investment” means, when used in connection with any Person, any investment by or of that Person, whether by means of purchase or other acquisition of stock or other Securities of any other Person or by
means of a loan, advance creating a debt, capital contribution, guaranty or other debt or equity participation or interest in any other Person, including any partnership, limited liability company and joint venture interests of such Person.
The amount of any Investment shall be the amount actually invested (minus any return of capital with respect to such Investment which has actually been received in Cash or has been converted into Cash), without adjustment for subsequent
increases or decreases in the value of such Investment. For the avoidance of doubt, (i) any such investment by or of that Person is not a Capital Expenditure but the use of the proceeds of any such investment by or of such Person for the purpose of
improvement or expansion of any property (that would otherwise constitute a Capital Expenditure as defined in this Agreement) is a Capital Expenditure and (ii) a guarantee by Parent, Borrower or any of their domestic Subsidiaries of any obligation
of any foreign Subsidiary is an Investment for purposes of Section 6.16. 
  
 “ISP” means the
“International Standby Practices 1998” published by the Institute of International Banking Law & Practice or such later version thereof as may be in effect at the time of determination. 
  
 “Issuing Lender” means Wells Fargo, when acting in its capacity as Issuing Lender under any of the Loan Documents
(including such other Persons that may act as agent for and on behalf of Wells Fargo) or any successor Issuing Lender. 
  
 “Landlord Subordination” means a landlord subordination agreement executed in favor of the Administrative Agent by the landlord of a leased location of Parent, 

 
 -20- 

  
 Borrower or any of their Subsidiaries or any one or more of them substantially in
the form attached hereto as Exhibit L, complete and in recordable form or in such other form as the Administrative Agent may agree to in its reasonable discretion. 
  
 “Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, regulations, ordinances, codes
and administrative or judicial precedents. 
  
 “Leasehold Analysis Report” shall
have the meaning given to such term in Section 5.14(a)(i). 
  
 “Lender” means
each Closing Date Lender and each lender that may hereafter become a party to this Agreement pursuant to Section 11.8 and includes the Issuing Lender and the Swing Line Lender (unless the context otherwise requires); provided that, for
the purpose of the term “Lender Interest Rate Protection Agreement” the term “Lender” shall also include any counterparty to an Interest Rate Protection Agreement that was a Lender at the time such Interest Rate Protection
Agreement was entered into and any Affiliate of a Lender which enters into a Interest Rate Protection Agreement which expressly relates to the Indebtedness evidenced by this Agreement and the Loan Documents. 
  
 “Lender Interest Rate Protection Agreement(s)” means one or more Interest Rate Protection Agreement with
respect to the Indebtedness evidenced by this Agreement between Borrower and any counterparty that was a Lender, or an Affiliate of a Lender, on the date such Interest Rate Protection Agreement was entered into, on terms acceptable to Borrower and
that Lender, Lenders or Affiliates. Each Lender Interest Rate Protection Agreement shall be a Loan Document and shall be secured by the Liens created by the Security Documents to the extent set forth in Section 2.9(a). 

 
 “Letter of Credit” means any of the Commercial Letters of Credit and the Standby Letters of
Credit issued by the Issuing Lender under the Revolving Facility pursuant to Section 2.5, either as originally issued or as the same may be supplemented, modified, amended, extended, restated or supplanted. Letters of Credit shall include the
Existing Letters of Credit. 
  
 “Letter of Credit Agreement” means either of the
Commercial Letter of Credit Agreement or Standby Letter of Credit Agreement to be executed by Borrower as applicable, in the form of Exhibit C, either as originally executed or as it may from time to time be supplemented, modified, amended,
extended, restated or supplanted. 
  
 “Letter of Credit Application” shall mean an
application and agreement for the issuance or amendment of a letter of credit in form and substance reasonably satisfactory to the Issuing Lender. 

 
 -21- 

  
 “Lien” means any mortgage, deed of trust,
pledge, hypothecation, assignment for security, security interest, encumbrance, lien or charge of any kind, whether voluntarily incurred or arising by operation of Law or otherwise, affecting any Property, including any conditional sale or
other title retention agreement, any lease in the nature of a security interest, or the agreement to provide any of the foregoing and/or the filing of any financing statement (other than a precautionary financing statement with respect
to a lease that is not in the nature of a security interest) under the UCC or comparable Law of any jurisdiction with respect to any Property. 
  
 “Loan Documents” means, collectively, this Agreement, the Notes, any Guaranty, any Letter of Credit Agreement, any Request for Borrowing, any Request for Continuation/Conversion, the
Security Documents, the Collateral Certificate, the Fee Letter, any Letter of Credit Application, any Compliance Certificate, and any other agreements of any type or nature heretofore or hereafter executed and delivered by Borrower or any other
Party to the Administrative Agent or to any Lender in any way relating to or in furtherance of this Agreement, including any Interest Rate Protection Agreement relating to Advances made under this Agreement, in each case either as originally
executed or as the same may from time to time be supplemented, modified, amended, restated, extended or supplanted. 
  
 “Margin Stock” means “margin stock” as such term is defined in Regulation T, U and X, as applicable. 
  
 “Material Adverse Effect” means any event, occurrence or circumstance which (a) has had or could reasonably be expected to have any
material adverse effect whatsoever upon the validity or enforceability of any Loan Document, (b) has been or could reasonably be expected to have any material adverse effect whatsoever upon the business, assets, condition (financial or otherwise) or
operations of Parent, Borrower and their Subsidiaries, taken as a whole, (c) has materially impaired or could reasonably be expected to materially impair the ability of Borrower to pay or perform the Obligations, (d) has materially impaired or could
reasonably be expected to materially impair the ability of the Guarantor to pay or perform any portion of its obligations in accordance with the terms of any Guaranty, (e) has had or could reasonably be expected to have any material adverse effect
whatsoever on the rights and remedies of the Administrative Agent or any Lender under this Agreement, the other Loan Documents or any related document, instrument or agreement or (f) has had or could reasonably be expected to have any material
adverse effect whatsoever on the value of the Collateral, the Administrative Agent’s or any Lender’s security interest in the Collateral or the perfection or priority of such security interests. 
  
 “Material Contracts” means, collectively, (i) the agreements identified on Schedule 1.2 attached
hereto and (ii) any other agreement that would, if terminated, materially adversely affect the business, condition (financial or otherwise) or operations of Borrower, Parent and their collective Subsidiaries, taken as a whole. 

 
 -22- 

  
 “Material Documents” means (i) Material
Contracts and (ii) Material Governing Documents. 
  
 “Material Governing Documents”
means (i) the articles of incorporation, certificate of incorporation, by-laws and other organizational documents of any Party and (ii) the Asset Purchase Agreement and all documents related thereto (including all exhibits, appendices, schedules,
annexes and attachments thereto and amendments thereof). 
  
 “Material Statutory Lien
Location” means, as of any date of determination, any location of Borrower, Parent or any of their Subsidiaries where any inventory or books or records of Borrower, Parent or any of their Subsidiaries are located and which is located in
Pennsylvania, Texas, Washington or West Virginia. 
  
 “Maturity Date” means the
earlier of (a) January 14, 2006 and (b) the termination or cancellation of the Revolving Facility (and all of the Commitments pertaining thereto) pursuant to the terms of this Agreement. 
  
 “Maximum Revolving Credit Amount” means (a) from the Closing Date through June 16, 2003, $185,000,000 and (b) from and after June 17, 2003,
$175,000,000; in each case, as reduced by any Commitment reduction hereunder. 
  
 “Moody’s” means Moody’s Investor Service, Inc. and its successors. 
  
 “Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA to which Borrower or any of its ERISA Affiliates contributes, is obligated to contribute or has had an
obligation to contribute. 
  
 “Negative Pledge” means a Contractual Obligation which
contains a covenant binding on Borrower, Parent or any of their collective Subsidiaries that prohibits Liens on any of its Property, other than (a) any such covenant contained in a Contractual Obligation granting or relating to a
particular Permitted Encumbrance which affects only the Property that is the subject of such Permitted Encumbrance, (b) any such covenant that does not apply to Liens securing the Obligations, (c) any encumbrance or restriction that restricts in a
customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license or other contract or the assignment, encumbrance or hypothecation of such lease, license or other contract (but such encumbrance or
restriction shall not affect the Liens created under the Security Documents to the extent permitted by such lease, license or contract, the UCC or other applicable Law), (d) any restriction related solely to the assets subject to a sale or other
disposition permitted pursuant hereto imposed pursuant to an agreement entered into in connection with a sale or other disposition permitted pursuant hereto pending the closing of such sale or other disposition, (e) any restriction contained in the
agreements governing any Indebtedness permitted pursuant to Section 6.10 so long as such restriction does not affect or restrict in any way the Liens created under the 

 
 -23- 

  
 Security Documents or the ability of Parent, Borrower or any of their
Subsidiaries to create any Liens in favor of the Administrative Agent or the Lenders in the future. 
  
 “Net Income” means, with respect to any fiscal period, the consolidated net income of Borrower, Parent and their collective Subsidiaries for that period, determined in accordance with GAAP, consistently applied.

  
 “Net Interest Expense” means Interest Expense minus cash interest income;
provided that in no event shall Net Interest Expense be less than zero. 
  
 “Net
Proceeds” means: 
  
 (a) With respect to any Disposition of any asset or Property by any
Person, the aggregate consideration received by such Person from such Disposition less the sum of (i) the actual amount of the fees and commissions payable to Persons other than such Person or any Affiliate of such Person, the legal expenses
and other costs and expenses directly related to such Disposition that are to be paid by such Person, (ii) the amount of any Indebtedness (other than the Obligations) which is secured by such asset and is required to be repaid or prepaid by such
Person as a result of such Disposition, (iii) the amount of any consent payment required to be paid to any unrelated non-Affiliate third party holder of any Indebtedness whose consent to such Disposition is required, (iv) the amount of all taxes
paid (or reasonably estimated to be payable) by such Person (or, in the case of a member of a consolidated group, its parent), and the amount of any reserves established by such Person to fund contingent liabilities reasonably estimated to be
payable that are directly attributable to such event (as determined reasonably and in good faith by such Person); provided that as the amount of such liabilities are known, any unexpended portion of such reserve related to such contingent
liabilities shall be deemed to be “Net Proceeds” from a Disposition and shall be subject to the terms and conditions of this Agreement at such time, and (v) in the case of the sale of an entity in which Persons other than Borrower, Parent
and their Subsidiaries hold a minority interest but the full amount of the proceeds relating to the sale of such entity are received by Borrower, Parent or a Subsidiary, any amounts required to be paid to such minority interest holder in connection
with such sale; provided such amounts are not in excess of such minority interest holder’s pro rata share of the proceeds from such sale; provided further that to the extent such proceeds are not paid to such minority
holder within 30 days of receipt by Borrower, Parent or a Subsidiary such proceeds shall be deemed to be “Net Proceeds” from a Disposition and shall be subject to the terms and conditions of this Agreement at such time; 

 
 (b) With respect to any issuance or incurrence of any Indebtedness by any Person, the aggregate consideration
received by such Person from such issuance or incurrence less the sum of the actual amount of the fees and commissions payable to Persons other than such Person or any Affiliate of such Person, the legal expenses and 

 
 -24- 

  
 the other costs and expenses directly related to such issuance or incurrence that
are to be paid by such Person; 
  
 (c) With respect to any issuance of Securities by any Person, the
aggregate consideration received by such Person from such issuance less the sum of the actual amount of the fees and commissions payable to Persons other than such Person or any Affiliate of such Person, the legal expenses and the other costs
and expenses directly related to such issuance that are to be paid by such Person; provided, however, that for the purpose of this clause (c), an issuance of Securities by a Party shall not include any of the following: (i) any capital
contribution from any Party in the form of Securities or any issuance or sale of Securities by any Subsidiary of Parent to Parent or any of Parent’s Subsidiaries and (ii) any sale or issuance by any Party to directors, officers or employees of
such Party or any other Party of Securities in the form of warrants, options or similar rights to acquire any other Securities of such Party in connection with any stock option or other employee benefit plan or as part of executive compensation, in
each case, in the ordinary course of business, or any sale or issuance of Securities upon the exercise of any such warrants, options or similar rights and (iii) any sale or issuance of Securities of Parent as consideration in a Permitted
Acquisition; and 
  
 (d) With respect to any Casualty Event, the aggregate amount of proceeds of
insurance, condemnation awards and other compensation received in respect of such Casualty Event net of expenses of repair or replacement and costs and expenses of recovery incurred by Parent, Borrower and their collective Subsidiaries in connection
with such Casualty Event. 
  
 “Non-Contingent Contractual Lien Location” means, as
of any date of determination, any location where any inventory or books or records of Borrower, Parent or any of their Subsidiaries are located and which is leased to Borrower, Parent or any of their Subsidiaries pursuant to a lease or other
agreement which by its terms provides the landlord or any other Person with a Lien on any of its or their Property which Lien becomes or is effective substantially concurrently with or shortly after the execution of such lease or other agreement or
which becomes or is effective without the occurrence of any contingent event or circumstance. 
  
 “Note” means the Swing Line Note and any of the promissory notes made by Borrower to a Lender evidencing Advances under that Lender’s Commitment, substantially in the form of Exhibit D, either as
originally executed or as the same may from time to time be supplemented, modified, amended, renewed, extended or supplanted. 
  
 “Notice of Payment/Prepayment” means a written notice of payment or prepayment as applicable in the form of Exhibit H, signed by a Responsible Official of 

 
 -25- 

  
 Borrower, and properly completed to provide all information required to be
included therein. 
  
 “Obligations” means all present and future obligations of
every kind or nature of Borrower at any time and from time to time owed to the Lenders, the Swing Line Lender, the Administrative Agent and/or the Issuing Lender, under any one or more of the Loan Documents, whether due or to become due, matured or
unmatured, liquidated or unliquidated, or contingent or noncontingent including obligations with respect to the reimbursement of Letters of Credit, and obligations of performance as well as obligations of payment, and including all interest
(including interest that accrues after the commencement of any proceeding under any Debtor Relief Law by or against Borrower), fees, charges, expenses, attorneys’ fees and accountants’ fees payable by Borrower hereunder and
thereunder. 
  
 “Operating Accounts” means the deposit, checking, securities,
brokerage or other similar accounts of Parent, Borrower or any of their Subsidiaries described on Schedule 4.24, and each other deposit, savings, securities, brokerage or similar account hereafter established by Parent, Borrower or any of
their Subsidiaries. 
  
 “Opinion of Counsel” means the favorable written legal
opinion of Dow, Lohnes & Albertson, PLLC, special counsel to Borrower, substantially in the form of Exhibit E. 
  
 “Other Taxes” shall have the meaning given to such term in Section 3.11(b). 
  
 “Parent” means West Marine, Inc., a Delaware corporation. 
  
 “Party” means Parent, Borrower and any of their collective Subsidiaries that now or hereafter is a party to any of the Loan Documents. 
  
 “PBGC” means the Pension Benefit Guaranty Corporation or any successor thereof established under ERISA. 
  
 “Pension Plan” means any “pension plan” (as such term is defined in Section 3(2) of ERISA) that
is subject to the minimum funding rules of Section 302 of ERISA or Title IV of ERISA or is a 401(k) plan, other than a Multiemployer Plan, which is maintained by Borrower, Parent or any of their collective Subsidiaries or to which
Borrower, Parent or any of their collective Subsidiaries contributes or has or has had an obligation to contribute. 
  
 “Permitted Acquisition” means an Acquisition by Borrower, Parent or any wholly-owned Subsidiary of Borrower or Parent of all or substantially all of the assets of, or all of the capital stock or other equity
interests of, an Acquired Person engaged in the same, substantially the same or related line(s) of business as Parent; provided, that: 

 
 -26- 

  
 (a) if such Acquisition is of all of the capital stock or other
equity interests of the Acquired Person, such Acquired Person is merged with and into Borrower or Parent or such Subsidiary substantially simultaneously with such party’s acquisition of such capital stock or other equity interests or becomes a
wholly-owned Subsidiary of Borrower or Parent or such Subsidiary; 
  
 (b) in the case of the
Acquisition of the capital stock or other equity interest of an Acquired Person, the board of directors (or comparable governing body) of such Acquired Person shall have duly approved such Acquisition; 
  
 (c) with respect to Acquisitions with a cash purchase price which individually exceeds $2,500,000 or in the aggregate
during any Fiscal Quarter exceeds $5,000,000, Borrower shall have delivered a pro-forma Compliance Certificate for the most recently completed Rolling Period, demonstrating that, upon giving effect to the proposed Acquisition as of the last day of
such Rolling Period, Borrower, Parent and their collective Subsidiaries shall be in compliance with the covenants set forth in Article 6 hereof; 
  
 (d) for each target Acquired Person involving the assumption of Indebtedness and/or aggregate consideration with a fair market value of $3,000,000 or more,
such target Acquired Person shall have had a positive “EBITDA” for the twelve-month fiscal period immediately preceding the date of such Acquisition (with EBITDA calculated for such Acquired Person in a manner consistent with the
calculation of EBITDA for Borrower, Parent and their collective Subsidiaries specified herein); 
  
 (e) at the time of such Acquisition, (i) each of the representations and warranties contained in the Loan Documents shall be true and correct in all material respects (except to the extent such representations and warranties
expressly relate to an earlier date), (ii) no Default or Event of Default shall have occurred and remain in effect and (iii) after giving effect to such Acquisition, on a pro forma combined basis, Borrower, Parent and their collective Subsidiaries,
on a projected basis, will be in compliance with Article 6 hereof, as of each of the four Fiscal Quarters ending after the date of the Acquisition, as reflected in updated projections, to the extent a pro-forma Compliance Certificate is
required pursuant to clause (c) above, provided by Borrower to the Administrative Agent and the Lenders prior to the effective date of such Acquisition; 
  
 (f) if such Acquisition involves the purchase of an interest in a partnership between Borrower or Parent (or a Subsidiary of Borrower or Parent) as a
general partner and entities unaffiliated with Borrower or Parent or such Subsidiary as the other partners, such transaction shall be effected by having such equity interest acquired by a corporate holding company directly or indirectly wholly-owned
by Borrower or Parent newly formed for the sole purpose of effecting such transaction; 

 
 -27- 

  
 (g) with respect to any Acquisition consummated by a wholly owned
Subsidiary organized outside of the United States of America, such Acquisition shall only be consummated using funds previously funded to such Subsidiary in compliance with the terms and conditions of the Loan Documents, including, without
limitation, Section 6.16 of this Agreement; 
  
 (h) the Indebtedness assumed and/or
consideration paid or payable in cash in connection with any Acquisition of an Acquired Person in a related line of business to Parent (as opposed to the same or similar line of business to Parent), when taken together with (i) each other Permitted
Acquisition of an Acquired Person in a related line of business to Parent (as opposed to the same or similar line of business to Parent) consummated since the Closing Date and (ii) any Investments in Subsidiaries engaged in a related line of
business to Parent (as opposed to the same or similar line of business to Parent) shall not exceed $3,000,000 in the aggregate. For purposes of this Agreement, “related line of business” means a business related to the business of selling
boating accessories and equipment such as a marine casualty insurance business; 
  
 (i) the
Indebtedness assumed and/or consideration paid or payable in cash in connection with such Acquisition, when taken together with each other Permitted Acquisition consummated since the Closing Date shall not exceed $25,000,000 in the aggregate.

  
 “Permitted Encumbrances” means: 
  
 (a) Liens incident to construction on or maintenance of Property for which adequate reserves in accordance with GAAP have
been set aside (or deposits made pursuant to applicable Law) and which are being contested in good faith by appropriate proceedings and have been stayed and have not proceeded to final judgment; provided that, by reason of nonpayment of the
obligations secured by such Liens, no such Property is subject to an impending risk of loss or forfeiture; 
  
 (b) Liens for taxes, assessments or other governmental charges or levies on Property which are not yet past due; or Liens for taxes, assessments or other governmental charges or levies on Property for which adequate reserves in
accordance with GAAP have been set aside and are being contested in good faith by appropriate proceedings and have been stayed and have not proceeded to final judgment; provided that, by reason of nonpayment of the obligations secured by such
Liens, no such Property is subject to an impending risk of loss or forfeiture; 
  
 (c) defects and
irregularities in title to any Property which in the aggregate do not materially impair the fair market value or use of the Property for the purposes for which it is or may reasonably be expected to be held; 

 
 -28- 

  
 (d)    easements, exceptions, reservations,
or other agreements for the purpose of pipelines, conduits, cables, wire communication lines, power lines and substations, streets, trails, walkways, drainage, irrigation, water, and sewerage purposes, dikes, canals, ditches, the removal of oil,
gas, coal, or other minerals, and other like purposes affecting Property which in the aggregate do not materially burden or impair the fair market value or use of such Property for the purposes for which it is or may reasonably be expected to be
held; 
  
 (e)    easements, exceptions, reservations, or other agreements for the
purpose of facilitating the joint or common use of Property in or adjacent to a shopping center or similar project affecting Property which in the aggregate do not materially burden or impair the fair market value or use of such Property for the
purposes for which it is or may reasonably be expected to be held; 
  
 (f)    rights reserved to or vested in any Governmental Agency to control or regulate, or obligations or duties to any Governmental Agency with respect to, the use of any Property; 
  
 (g)    rights reserved to or vested in any Governmental Agency to control or regulate, or obligations
or duties to any Governmental Agency with respect to, any right, power, franchise, grant, license, or permit; 
  
 (h)    present or future zoning Laws or other Laws restricting the occupancy, use, or enjoyment of Property; 
  
 (i)    statutory Liens, other than those described in clauses (a) or (b) above, arising in the ordinary course of business with respect to obligations which are not
delinquent or are being contested in good faith by appropriate proceedings; provided that, if delinquent, adequate reserves in accordance with GAAP have been set aside with respect thereto and, by reason of nonpayment, no Property is subject
to an impending risk of loss or forfeiture; 
  
 (j)    covenants, conditions, and
restrictions affecting the use of Property which in the aggregate do not materially impair the fair market value or use of the Property for the purposes for which it is or may reasonably be expected to be held; 
  
 (k)    landlord Liens and other Liens and rights of lessors and tenants under leases and rental
agreements covering Property entered into in the ordinary course of business of the Person owning such Property to the extent of such Property and to the extent such leases and rental agreements are permitted under this Agreement; 

 
 (l)    Liens consisting of pledges or deposits to secure obligations under workers’
compensation laws or similar legislation, including Liens of judgments thereunder which are not currently dischargeable; 

 
 -29- 

  
 (m)    Liens consisting of pledges or
deposits of Property to secure performance in connection with operating leases made in the ordinary course of business; provided the aggregate value of all such pledges and deposits (excluding the property subject to such lease) in connection
with any such lease does not at any time exceed 10% of the annual fixed rentals payable under such lease; 
  
 (n)    Liens consisting of deposits of Property to secure bids made with respect to, or performance of, contracts (other than contracts creating or evidencing an extension of credit to the
depositor); 
  
 (o)    Liens consisting of any right of offset, or statutory
bankers’ lien, on bank deposit accounts maintained in the ordinary course of business so long as such bank deposit accounts are not established or maintained for the purpose of providing such right of offset or bankers’ lien; 

 
 (p)    Liens consisting of deposits of Property to secure statutory obligations of
Borrower; 
  
 (q)    Liens consisting of deposits of Property to secure (or in
lieu of) surety or customs bonds in the ordinary course of business; 
  
 (r)    Judgment or judicial attachment liens either stayed or bonded and Liens consisting of deposits of Property to secure appeal bonds in respect of any such judgment or judicial attachment liens;
provided that the aggregate amount of all such Liens and deposits does not exceed $10,000,000; 
  
 (s)    Liens in favor of customs and revenue authorities arising as a matter of law or pursuant to a bond to secure payment of customs duties in connection with the importation of goods; 
  
 (t)    Liens on Property acquired by Borrower, Parent or any of their Subsidiaries that were in
existence at the time of the acquisition of such Property and were not created in contemplation of such acquisition provided that the aggregate amount of Indebtedness of Borrower, Parent and their Subsidiaries secured by such liens shall not at any
time exceed $5,000,000; 
  
 (u)    Liens securing Indebtedness permitted by
Sections 6.10(d) and/or 6.10(e) on and limited to the capital assets acquired, constructed or financed with the proceeds of such Indebtedness; and 
  
 (v)    Permitted Rights of Others. 
  
 “Permitted Right of Others” means a Right of Others consisting of (a) an interest (other than a legal or equitable
co-ownership interest, an option or right to acquire a legal or equitable co-ownership interest and any interest of a ground lessor 

 
 -30- 

  
 under a ground lease), that does not materially impair the fair market value or
use of Property for the purposes for which it is or may reasonably be expected to be held, (b) an option or right to acquire a Lien that would be a Permitted Encumbrance or other encumbrance permitted pursuant to Section 6.9, (c) the
subordination of a lease or sublease in favor of a financing entity and (d) a license, or similar right, of or to Intangible Assets granted in the ordinary course of business. 
  
 “Person” means any individual or entity, including a trustee, corporation, limited liability company, general partnership, limited
partnership, joint stock company, trust, estate, unincorporated organization, business association, firm, joint venture, Governmental Agency, or other entity. 
  
 “Pricing Occurrence” means with respect to any change in the ratio of Funded Debt plus six times Rental Expense to EBITDAR which results in
a change in the Applicable Pricing Level, the date which is fifty (50) days after the end of each of the first three Fiscal Quarters in each Fiscal Year (beginning with the Fiscal Quarter ending June 28, 2003) and one hundred (100) days after the
end of each Fiscal Year (for each Fiscal Year ending after June 28, 2003) so long as the Administrative Agent has received a Compliance Certificate pursuant to Section 7.2 and the accompanying financial statements under Section 7.1(a) or
7.1(b) (as applicable) reflecting evidence of such change; provided that if Borrower fails to deliver a Compliance Certificate pursuant to Section 7.2 or the accompanying financial statements under Section 7.1(a) or 7.1(b)
(as applicable) prior to the date which is fifty (50) days after the end of each of the first three Fiscal Quarters in each Fiscal Year (beginning with the Compliance Certificate and financial statements for the Fiscal Quarter ending June 28, 2003)
or one hundred (100) days after the end of each Fiscal Year (for each Fiscal Year ending after June 28, 2003), then the Applicable Pricing Level shall be “I” until the earlier of (i) five (5) Banking Days after such Compliance Certificate
and financial statements have been is delivered and (ii) the date the Default Rate is effective and at such time and thereafter the Applicable Pricing Level shall be adjusted as contemplated herein. 
  
 “Pricing Period” means (a) the period commencing on the Closing Date and ending on the first Pricing
Occurrence to occur thereafter and (b) each subsequent period commencing on the date of a Pricing Occurrence and ending on the next Pricing Occurrence to occur. 
  
 “Prime Rate” means the rate of interest most recently announced within Wells Fargo, at its principal office in San Francisco, California,
as its “prime rate.” The “prime rate” is one of several base rates used by Wells Fargo and serves as the basis upon which effective rates of interest are calculated for loans and other credits making reference thereto. The
“prime rate” is evidenced by the recording thereof after its announcement in such internal publication or publications as Wells Fargo may designate. Any change in the Prime Rate shall take effect on the day the change is announced within
Wells Fargo. 

 
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 “Projections” means the three year financial
projections of Borrower, Parent and their collective Subsidiaries heretofore distributed by or on behalf of Borrower to the Administrative Agent reflecting the consummation of the transactions contemplated by the Asset Purchase Agreement and the
Loan Documents (including (a) the initial Borrowings on the Closing Date and (b) the consummation of the Boat U.S. Acquisition), a true and correct copy of which is attached to the Certificate of Senior Officer described in Section 8.1(a)(8).

  
 “Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible. 
  
 “Pro Rata Share” of any amount
means, with respect to any Lender at any time, the product of (a) a fraction the numerator of which is the amount of such Lender’s Commitment (or, if such Commitment shall have expired or been terminated, the amount of such
Lender’s Advances), and the denominator of which is the aggregate Commitments or Advances, as the case may be, at such time, multiplied by (b) such amount. Schedule 1.1 sets forth the Pro Rata Shares of the Closing Date Lenders as
of the Closing Date. 
  
 “Quarterly Payment Date” means the last day of each of
Borrower’s Fiscal Quarters as set forth in Exhibit I attached hereto. 
  
 “Real
Property” means, as of any date of determination, all real property then owned, leased or occupied by Borrower, Parent or any of their collective Subsidiaries. 
  
 “Referenced Financing Statement(s)” shall have the meaning given to that term in Section 4.31. 
  
 “Register” shall have the meaning given to that term in Section 11.8(d). 
  
 “Regulation D” means Regulation D, as at any time amended, of the Federal Reserve Board, or any other
regulation in substance substituted therefor. 
  
 “Regulations T, U and X” means
Regulations T, U and X, respectively, as at any time amended, of the Federal Reserve Board, or any other regulations in substance substituted therefor. 
  
 “Rental Expense” means, to the extent not calculated as Interest Expense, the sum of (a) all rental payments under building leases
(including base rent, percentage rent, common area payments and real estate taxes), plus (b) all rent payments under equipment operating leases, plus (c) all other rental expense, minus (d) all sublease revenue. In determining
the Rental Expense attributable to an Acquired Person acquired during such period, such Acquired Person shall be treated as if owned on the first day of the applicable period and companies (or business units or divisions) sold, transferred or
otherwise disposed of during such period will be treated as if not owned 

 
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 during the entire applicable period; provided that in the case of the Rental Expense attributable
to the Acquired Boat U.S. Operations such Rental Expense shall be included as follows: (a) for each Fiscal Quarter ending after January 1, 2003 which is included in the calculation of Rental Expense, such calculation shall include the actual Rental
Expense for the Acquired Boat U.S. Operations for each such Fiscal Quarter; and (b) for each Fiscal Quarter ending prior to January 1, 2003 which is included in the calculation of Rental Expense, such calculation shall include the Boat U.S. Rental
Expense Quarter Component for each such Fiscal Quarter. For purposes of Section 4.22 and Section 5.14, “Rental Expense” shall not include any deduction for any sublease revenue under clause (d) above. 
  
 “Request for Borrowing” means a written request for a Borrowing substantially in the form of Exhibit F, signed by
a Responsible Official of Borrower, and properly completed to provide all information required to be included therein. 
  
 “Request for Continuation/Conversion” means a written request to Continue or Convert a Borrowing substantially in the form of Exhibit G, signed by a Responsible Official of Borrower, and properly completed to
provide all information required to be included therein. 
  
 “Requirement of Law” means, as to any
Person, the articles or certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any Law, Governmental Rule, or judgment, award, decree, writ or determination of a Governmental Agency, in each case
applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject. 
  
 “Requisite Lenders” means at any time Lenders owed or holding in the aggregate more than 50% of the sum of (a) the then aggregate unpaid principal amount of the Advances plus (b) the then
Aggregate Effective Amount (to the extent not then included as Advances) plus (c) the then aggregate unused portion of the Commitments, provided that if there are two (2) or more Lenders, in no event shall Requisite Lenders be fewer than two
(2) Lenders. 
  
 “Responsible Official” means, as to any Person, (a) when used with reference to a
Person other than an individual, for a corporation, a senior vice president or higher corporate officer of such Person (including any Senior Officer), general partner of such Person, corporate officer of a corporate general partner of such Person,
corporate officer of a corporate general partner of a partnership that is a general partner of such Person, manager or managing member (in the case of a Person that is a limited liability company), or any other responsible official thereof duly
acting on behalf thereof, and (b) when used with reference to a Person who is an individual, such Person. The Lenders shall be entitled to conclusively rely upon any document or certificate that is signed or executed by a Responsible Official of
Borrower, Parent or 

 
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 any of their collective Subsidiaries as having been authorized by all necessary corporate, partnership,
limited liability company and/or other action on the part of Borrower, Parent or such Subsidiary. 
  
 “Revolving Credit Facility Usage” means, as of any date of determination, the sum of (a) the aggregate principal amount of funded Indebtedness then outstanding under the Advances plus (b) the Aggregate
Effective Amount under all outstanding Letters of Credit plus (c) the Swing Line Outstandings. 
  
 “Revolving Facility” means the revolving credit facility provided hereunder in respect of the aggregate Commitments. 
  
 “Right of Others” means, as to any Property in which a Person has an interest, any legal or equitable right, title or other interest (other than a Lien) held by any other Person in
that Property, and any option or right held by any other Person to acquire any such right, title or other interest in that Property, including any option or right to acquire a Lien; provided, however, that (a) no covenant
restricting the use or disposition of Property of such Person contained in any Contractual Obligation of such Person and (b) no provision contained in a contract creating a right of payment or performance in favor of a Person that conditions,
limits, restricts, diminishes, transfers or terminates such right shall be deemed to constitute a Right of Others. 
  
 “Rolling Period” means any period of four consecutive Fiscal Quarters of Borrower, Parent and their collective Subsidiaries. 
  
 “Rules” shall have the meaning given to that term in Section 11.25(b). 
  
 “S&P” means Standard & Poor’s Ratings Group, a division of McGraw Hill, Inc. and its successors. 
  
 “Sale and Leaseback” means, with respect to any Person, the sale of Property owned by that Person (the “Seller”) to another Person (the
“Buyer”), together with the substantially concurrent leasing of such Property by the Buyer to the Seller. 
  
 “Security” means any capital stock, share, voting trust certificate, bond, debenture, note or other evidence of Indebtedness, limited partnership interest, member interest, or any warrant, option or other right to
purchase or acquire any of the foregoing. 
  
 “Security Documents” means and includes the Security
Agreement, the Intellectual Property Security Agreement, any Control Agreements, each pledge agreement or security agreement delivered in accordance with Section 5.12 and Section 5.15 and all other instruments, agreements, or documents
(including UCC financing statements and fixture filings) delivered to the Administrative Agent or any 

 
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 Lender in connection with any Collateral or to secure the Obligations or the obligation of a Guarantor
under any Guaranty. 
  
 “Senior Officer” means (a) the chief executive officer, (b) the president,
(c) any executive vice president, (d) the chief financial officer, the (e) vice president of finance, (f) chief accounting officer or (g) the treasurer or controller, in each case of any Person. The Lenders shall be entitled to conclusively rely
upon any document or certificate that is signed or executed by a Senior Officer of Borrower, Parent or any of their collective Subsidiaries as having been authorized by all necessary corporate, partnership, limited liability company and/or action on
the part of Borrower, Parent or such Subsidiary. 
  
 “Solvent” means, as of any date of
determination, and as to any Person, that on such date: (a) the fair valuation of the assets of such Person is greater than the fair valuation of such Person’s probable liability in respect of existing debts; (b) such Person does not intend to,
and does not believe that it will, incur debts beyond such Person’s ability to pay as such debts mature; (c) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, which would leave
such Person with assets remaining which would constitute unreasonably small capital after giving effect to the nature of the particular business or transaction (including, in the case of Borrower, the transactions occurring on the Closing
Date); and (d) such Person is generally paying its debts as they become due. For purposes of the foregoing (1) the “fair valuation” of any assets means the amount realizable within a reasonable time, either through collection or sale, of
such assets at their regular market value, which is the amount obtainable by a capable and diligent businessman under no compulsion to sell from an interested buyer willing to purchase such assets within a reasonable time under ordinary
circumstances; and (2) the term “debts” includes any legal liability whether matured or unmatured, liquidated or unliquidated, absolute, fixed, or contingent. 
  
 “Special Eurodollar Circumstance” means the application or adoption after the Closing Date of any Law or interpretation, or any change therein or thereof,
or any change in the interpretation or administration thereof by any Governmental Agency, central bank or comparable authority charged with the interpretation or administration thereof, or compliance by any Lender or its Eurodollar Lending Office
with any request or directive (whether or not having the force of Law) of any such Governmental Agency, central bank or comparable authority. 
  
 “Standby Letter of Credit” means any of the standby letters of credit issued by the Issuing Lender under the Revolving Facility pursuant to Section 2.5, either as originally
issued or as the same may be supplemented, modified, amended, extended, restated or supplanted. 

 
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 “Standby Letter of Credit Sublimit” means an amount equal to the
lesser of (a) the aggregate amount of the Lenders’ Commitments and (b) $5,000,000. The Standby Letter of Credit Sublimit is part of, and not in addition to, the aggregate amount of the Lenders’ Commitments. 
  
 “Stockholders’ Equity” means, as of any date of determination and with respect to Borrower, Parent and their
collective Subsidiaries, the consolidated stockholders’ equity of Borrower, Parent and their collective Subsidiaries as of that date determined in accordance with GAAP; provided that there shall be excluded from Stockholders’ Equity
any amount attributable to Disqualified Stock. 
  
 “Subordinated Obligations” means, as of any date
of determination (without duplication), any Indebtedness of Borrower, Parent or any of their collective Subsidiaries on that date which has been subordinated in right of payment to the Obligations in a manner reasonably satisfactory to the Requisite
Lenders and contains such other protective terms with respect to senior debt (such as amount, maturity, amortization, interest rate, covenants, defaults, remedies, payment blockage and terms of subordination) as the Requisite Lenders may
reasonably require. 
  
 “Subsidiary” means, as of any date of determination and with respect to any
Person, any corporation, limited liability company or partnership (whether or not, in any case, characterized as such or as a “joint venture”), whether now existing or hereafter organized or acquired: (a) in the case of a corporation or
limited liability company, of which a majority of the Securities having ordinary voting power for the election of directors or other governing body (other than Securities having such power only by reason of the happening of a contingency) are at the
time beneficially owned by such Person and/or one or more Subsidiaries of such Person, (b) in the case of a partnership, of which a majority of the partnership or other ownership interests are at the time beneficially owned by such Person and/or one
or more of its Subsidiaries and (c) in any event, any other Person included in the financial statements of such Person on a consolidated basis. Any reference to a “Subsidiary” or “Subsidiaries” shall, unless otherwise provided,
be deemed to be a reference to a Subsidiary (or Subsidiaries, as the case may be) of Borrower and Parent, as applicable. 
  
 “Swing Line” means the revolving line of credit established by the Swing Line Lender in favor of Borrower pursuant to Section 2.8. 
  
 “Swing Line Lender” means Wells Fargo. 
  
 “Swing Line Loans” means loans made by the Swing Line Lender to Borrower pursuant to Section 2.8. 
  
 “Swing Line Note” means the promissory note executed by Borrower in favor of the Swing Line Lender in connection with the Swing Line. 

 
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 “Swing Line Outstandings” means, as of any date of
determination, the aggregate principal Indebtedness of Borrower on all Swing Line Loans then outstanding. 
  
 “Swing Line Sublimit” means, as of any date of determination, an amount equal to the lesser of (a) the aggregate amount of the Lenders’ Commitments and (b) $10,000,000. The Swing Line Sublimit is part of, and
not in addition to, the aggregate amount of the Lenders’ Commitments. 
  
 “Tangible Net Worth”
means, as of any date of determination, on a consolidated basis for Parent, Borrower and their Subsidiaries, the aggregate of Stockholders’ Equity, minus the aggregate of any Intangible Assets and any Indebtedness due from stockholders,
employees and/or affiliates, and minus equity resulting from the exercise of employee stock options. 
  
 “Target Leverage Ratio” shall have the meaning given to such term in Section 3.1(d)(vi). 
  
 “Taxes” shall have the meaning given to such term in Section 3.11(a). 
  
 “Termination Date” means the date on which the Advances and all other Obligations under this Agreement and the other Loan Documents are fully and finally paid in full, in Cash, and Borrower shall have no further
right to borrow any monies or obtain other credit extensions or financial accommodations under this Agreement or any of the other Loan Documents. 
  
 “Termination Value” means, in respect of any one or more Interest Rate Protection Agreements, after taking into account the effect of any legally enforceable netting agreement relating
to such Interest Rate Protection Agreements, (a) for any date on or after the date such Interest Rate Protection Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Interest Rate Protection Agreements, as determined by the Administrative Agent based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Interest Rate Protection Agreements which may include any Lender. 
  
 “to the best knowledge of” means, when modifying a representation, warranty or other statement of any Person, that the fact or situation described therein is known by the Person (or, in the case of a Person other
than a natural Person, known by a Responsible Official of that Person) making the representation, warranty or other statement, or with the exercise of reasonable due diligence under the circumstances (in accordance with the standard of what a
reasonable Person in similar circumstances would have done) would have been known by the Person (or, in the case of a Person 

 
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 other than a natural Person, would have been known by a Responsible Official of
that Person). 
  
 “Triggering Event” shall have the meaning provided in Section
5.14(e). 
  
 “Type” refers to the distinction between Advances bearing interest
at the Alternate Base Rate and Advances bearing interest at the Eurodollar Rate. 
  
 “UCC” means the Uniform Commercial Code as the same may from time to time be enacted and in effect in the State of California; provided that, in the event by reason of mandatory provisions of law, any or all
of the attachment, perfection or priority of the Administrative Agent’s or any Lender’s Lien on any collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of
California, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes
of definitions related to such provisions. 
  
 “UCP” means the rules of the Uniform
Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce at the time of issuance of any Commercial Letter of Credit. 
  
 “Wells Fargo” means Wells Fargo Bank, National Association. 
  
 “Year 1” shall have the meaning given to such term in Section 6.10(d). 
  
 “Year 2” shall have the meaning given to such term in Section 6.10(d). 
  
 “Year 3” shall have the meaning given to such term in Section 6.10(d). 
  
 1.2 Use of Defined Terms. Any defined term used in the plural shall refer to all members of the relevant class, and any defined term used in the singular shall refer
to any one or more of the members of the relevant class. 
  
 1.3 Accounting Terms; Covenant Calculations. All
accounting terms not specifically defined in this Agreement shall be construed in conformity with, and all financial data required to be submitted by this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, except as
otherwise specifically prescribed herein. In the event that any of Borrower, Parent or any of their Subsidiaries change their accounting practices as permitted by Section 6.21 or GAAP changes during the term of this Agreement such that the
covenants contained herein would then be calculated in a different manner or with different components, (i) Borrower and the Lenders agree to amend this Agreement in such respects as are necessary to conform those covenants as criteria for
evaluating Borrower’s, Parent’s and/or any of their Subsidiaries’ financial condition to substantially the same criteria as were effective prior to such change in GAAP or such Person’s change in its accounting practices

 
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 and (ii) Borrower, Parent and their Subsidiaries shall be deemed to be in compliance with the covenants
contained in the aforesaid Sections if and to the extent that Borrower, Parent and their Subsidiaries would have been in compliance therewith under GAAP or such accounting practices as in effect immediately prior to such change, but shall have the
obligation to deliver each of the materials described in Article 7 to the Administrative Agent and the Lenders, on the dates therein specified, with financial data presented in a manner which conforms with GAAP and such accounting practices
(as applicable) as in effect immediately prior to such change. 
  
 1.4 Rounding. Any financial ratios required
to be maintained by Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed in this
Agreement and rounding the result up or down to the nearest number (with a round-up if there is no nearest number) to the number of places by which such ratio is expressed in this Agreement. 
  
 1.5 Exhibits and Schedules. All Exhibits and Schedules to this Agreement, either as originally existing or as the same may from time to time be supplemented,
modified or amended, are incorporated herein by this reference. A matter disclosed on any Schedule shall be deemed disclosed on all Schedules. 
  
 1.6 References to “Borrower, Parent and their collective Subsidiaries”. Any reference herein to “Borrower, Parent and their collective Subsidiaries” or the like shall refer
solely to Borrower or to Parent during such times, if any, as Borrower or Parent shall have no Subsidiaries. 
  
 1.7
Miscellaneous Terms. The term “or” is disjunctive; the term “and” is conjunctive. The term “shall” is mandatory; the term “may” is permissive. Masculine terms also apply to females; feminine terms also
apply to males. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement or any other Loan Document shall refer to this Agreement or such other Loan Document, as the case may
be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. The words “include” and “including” and words of similar import when used in this Agreement or any other Loan
Document shall not be construed to be limiting or exclusive. 
  
 1.8 Time. All references in this Agreement
and each of the other Loan Documents to a time of day shall mean San Francisco, California time, unless otherwise indicated. 
  
 1.9 References. 
  
 (a) References in this Agreement to “Recitals,”
“Sections,” “Paragraphs,” “Exhibits” and “Schedules” are to recitals, sections, paragraphs, exhibits and schedules herein and hereto unless otherwise indicated. 

 
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 (b) References in this Agreement or any other Loan Document to any document,
instrument or agreement (i) shall include all exhibits, schedules and other attachments thereto, (ii) shall include all documents, instruments or agreements issued or executed in replacement thereof if such replacement is permitted hereby, and (iii)
shall mean such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time if such amendment, modification or supplement is permitted hereby.

  
 (c) References in this Agreement or any other Loan Document to any Governmental Rule (i) shall include any
successor Governmental Rule, (ii) shall include all rules and regulations promulgated under such Governmental Rule (or any successor Governmental Rule), and (iii) shall mean such Governmental Rule (or successor Governmental Rule) and such rules and
regulations, as amended, modified, codified or reenacted from time to time and in effect at any given time. 
  
 (d)
References in this Agreement or any other Loan Document to any Person in a particular capacity (i) shall include any successors to and permitted assigns of such Person in that capacity and (ii) shall exclude such Person individually or in any other
capacity. 
  
 ARTICLE 2 
  
 ADVANCES AND LETTERS OF CREDIT 
  
 2.1 Advances-General.

  
 (a) Subject to the terms and conditions set forth in this Agreement, from time to time on any Banking Day during
the period from the Closing Date up to, but not including the Maturity Date, each Lender severally agrees to make advances in Dollars to Borrower under the Revolving Facility in such amounts as Borrower may request or be deemed to have requested
hereunder (each an “Advance” and collectively, the “Advances”) provided that, after giving effect to such Advances, (i) Revolving Credit Facility Usage does not exceed the Maximum Revolving Credit
Amount minus the then applicable Aggregate Availability Reserve Amount at such time and (ii) as to each Lender, such Lender’s Pro Rata Share of Revolving Credit Facility Usage does not exceed such Lender’s Commitment minus
such Lender’s Pro Rata Share of the then applicable Aggregate Availability Reserve Amount at such time. All Advances shall be made by the Lenders ratably according to their respective Commitments. 
  
 Within the limits of each Lender’s Commitment in effect from time to time and subject to the foregoing, Borrower may borrow under
this Section 2.1(a), prepay Advances pursuant to Section 3.1 and reborrow under this Section 2.1(a). 
  
 (b) Subject to the next sentence, each Borrowing shall be made pursuant to a Request for Borrowing which shall specify (i) the date of such requested Borrowing, (ii) the 

 
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 Type of Advances comprising such Borrowing, (iii) the amount of such Borrowing, and (iv) in the case of
a Borrowing consisting of Eurodollar Rate Advances, the Eurodollar Period therefor. Unless the Administrative Agent has notified, in its sole and absolute discretion, Borrower to the contrary not less than three (3) days prior to the date of any
Borrowing, a Borrowing may be requested by telephone by a Responsible Official of Borrower, in which case Borrower shall confirm such request by promptly delivering a Request for Borrowing (conforming to the preceding sentence) in person or by
telecopier to the Administrative Agent. The Administrative Agent shall incur no liability whatsoever hereunder in acting upon any telephonic request for a Borrowing purportedly made by a Responsible Official of Borrower, and Borrower hereby agrees
to indemnify the Administrative Agent from any loss, cost, expense or liability as a result of so acting. 
  
 (c)
Promptly following receipt of a Request for Borrowing, the Administrative Agent shall notify each Lender by telephone or telecopier (and if by telephone, promptly confirmed by telecopier) of the date of the requested Borrowing, the Type of Advances
comprising such Borrowing, the Eurodollar Period (if applicable), and the amount corresponding to that Lender’s ratable share of the Borrowing. Not later than 1:00 p.m., California time, on the date specified for any Borrowing (which must be a
Banking Day), each Lender shall make its ratable share of the Borrowing in immediately available funds available to the Administrative Agent at the Administrative Agent’s Office. Upon satisfaction or waiver of the applicable conditions set
forth in Article 8, all Advances shall be credited on that date in immediately available funds to the Designated Deposit Account or remitted directly to one or more third parties, as directed by Borrower in writing and approved by the
Administrative Agent. 
  
 (d) Anything in paragraph (b) above to the contrary notwithstanding, Borrower may not (a)
request Alternate Base Rate Advances for any Borrowing if the aggregate amount of such Borrowing is less than $500,000 (and any such Borrowing exceeding such minimum amount shall be in an integral multiple of $100,000); provided that the
foregoing minimum amount shall not apply to an Alternate Base Rate Advance that causes the aggregate amount borrowed under the Revolving Facility to equal the full amount available for Advances hereunder, or (b) elect Eurodollar Rate Advances for
any Borrowing (i) if the aggregate amount of such Borrowing is less than $1,000,000 (and any such Borrowing exceeding such minimum amount shall be in an integral multiple of $100,000) or (ii) if the obligation of the Lenders to make Eurodollar Rate
Advances shall then be suspended pursuant to Section 2.4, 3.5 or 3.6. 
  
 (e) The Advances made
by each Lender under its Commitment shall be evidenced by that Lender’s Note. 
  
 (f) A Request for Borrowing
shall be irrevocable upon the Administrative Agent’s first notification thereof. 

 
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 (g) The Administrative Agent, on behalf of the Lenders, is hereby authorized to
make Borrowings available to Borrower upon fulfillment of the applicable conditions set forth in Article 8. Upon fulfillment of such applicable conditions, the proceeds of Borrowings shall either be credited in immediately available funds to
the Designated Deposit Account or remitted directly to one or more third parties, as directed by Borrower in writing and approved by the Administrative Agent. The proceeds of any Borrowing consisting of Eurodollar Rate Advances shall be so credited
or remitted on the first day of the applicable Eurodollar Period for such Borrowings. 
  
 2.2 Alternate Base Rate
Advances. Each request by Borrower for a Borrowing comprised of Alternate Base Rate Advances shall be made pursuant to a Request for Borrowing (or telephonic or other request for Borrowing referred to in the second sentence of Section
2.1(b), if applicable) received by the Administrative Agent, at the Administrative Agent’s Office, not later than 1:00 p.m. California time, at least one (1) Banking Day before the requested Borrowing. All Advances shall constitute
Alternate Base Rate Advances unless properly designated as a Eurodollar Rate Advance pursuant to Section 2.3 or 2.4. 
  
 2.3 Eurodollar Rate Advances. 
  
 (a) Each request by Borrower for a Borrowing
comprised of Eurodollar Rate Advances shall be made pursuant to a Request for Borrowing (or telephonic or other request for Borrowing referred to in the second sentence of Section 2.1(b), if applicable) received by the Administrative Agent,
at the Administrative Agent’s Office, not later than 11:00 a.m., California time, at least three (3) Eurodollar Banking Days before the first day of the applicable Eurodollar Period. 
  
 (b) On the date which is two (2) Eurodollar Banking Days before the first day of the applicable Eurodollar Period, the Administrative Agent shall confirm its determination
of the applicable Eurodollar Rate (which determination shall be conclusive in the absence of manifest error) and promptly shall give notice of the same to Borrower and the Lenders by telephone or telecopier (and if by telephone, promptly confirmed
by telecopier). 
  
 (c) Unless the Administrative Agent otherwise consents, Eurodollar Rate Advances may not be
outstanding under more than five (5) separate Eurodollar Periods at any one time. 
  
 (d) No Borrowing comprised of
Eurodollar Rate Advances may be requested during the continuation of a Default or Event of Default. 
  
 (e) Nothing
contained herein shall require any Lender to fund any Eurodollar Rate Advance in the Designated Eurodollar Market. 
  
 2.4 Conversion and Continuation of Advances. 

 
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 (a) Optional Conversion. Borrower may on any Banking Day, upon notice
given to the Administrative Agent not later than 11:00 a.m. (California time) on the third Eurodollar Banking Day prior to the date of a proposed Conversion if the Conversion is into Eurodollar Rate Advances, or one Banking Day prior to the date of
a proposed Conversion if the Conversion is into Alternate Base Rate Advances, and subject to the provisions of Sections 3.5 and 3.6, Convert all or any portion of the Advances of one Type outstanding under the Revolving
Facility (and, in the case of Eurodollar Rate Advances, having the same Eurodollar Period) into Advances of the other Type under the Revolving Facility; provided that any Conversion of Eurodollar Rate Advances into Alternate Base Rate
Advances on other than the last day of a Eurodollar Period for such Eurodollar Rate Advances shall be subject to Section 3.6(e), any Conversion of Alternate Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less
than $1,000,000 or integral multiples of $100,000 in excess thereof and no Conversion of any Advances shall result in more than five (5) separate Eurodollar Periods being outstanding under the Revolving Facility. Each such notice of Conversion shall
be made pursuant to a Request for Continuation/Conversion and shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the aggregate amount and Type of the Advances (and, in the case of Eurodollar Rate Advances,
the Eurodollar Period therefor) to be Converted and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Eurodollar Period for such Advances. Each request for Conversion shall be irrevocable and binding on Borrower.

  
 (b) Certain Mandatory Conversions. 
  
 (i) On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment or
prepayment or otherwise, to less than $1,000,000 such Advances shall automatically Convert into Alternate Base Rate Advances. 
  
 (ii) If Borrower shall fail to select the duration of any Eurodollar Period for any outstanding Eurodollar Rate Advances in accordance with the provisions contained in Section 2.1(b) and in
clause (a) or (c) of this Section 2.4, each such Eurodollar Rate Advance will automatically, on the last day of the then existing Eurodollar Period therefor, Convert into an Alternate Base Rate Advance. 
  
 (iii) Upon the occurrence and during the continuance of any Event of Default, upon notice from the Administrative Agent to
Borrower, (x) each Eurodollar Rate Advance will automatically, on the last day of the then existing Eurodollar Period therefor, Convert into an Alternate Base Rate Advance and (y) the obligation of the Lenders to make, or to Convert Advances into,
or to Continue, Eurodollar Rate Advances shall be suspended. 
  
 (c) Continuations. Borrower may, on any
Eurodollar Banking Day, upon notice given to the Administrative Agent not later than 11:00 a.m. (California time) on the 

 
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 third Eurodollar Banking Day prior to the date of the proposed Continuation and subject to the
provisions of Sections 3.5 and 3.6, Continue all or any portion of the Eurodollar Rate Advances outstanding under a Facility having the same Eurodollar Period; provided that any such Continuation shall be made only on the last
day of a Eurodollar Period for such Eurodollar Rate Advances, no Continuation of Eurodollar Rate Advances shall be in an amount less than $1,000,000 and no Continuation of any Eurodollar Rate Advances shall result in more than five (5) separate
Eurodollar Periods being outstanding under the Revolving Facility. Each such notice of Continuation shall be made pursuant to a Request for Continuation/Conversion and shall, within the restrictions specified above, specify (i) the date of such
Continuation, (ii) the aggregate amount of, and the Eurodollar Period for, the Advances being Continued and (iii) the duration of the initial Eurodollar Period for the Eurodollar Rate Advances subject to such Continuation. Each notice of
Continuation shall be irrevocable and binding on Borrower. 
  
 2.5 Letters of Credit. 
  
 (a) Letters of Credit. 
  
 (i) Standby Letter of Credit. Subject to the terms and conditions hereof, at any time and from time to time from the Closing Date through the Maturity Date, the Issuing Lender shall issue such
Standby Letters of Credit in Dollars under the Revolving Facility as Borrower may request by submitting a completed Letter of Credit Application to the Issuing Lender as provided herein; provided that giving effect to all such Standby Letters
of Credit, (i) Revolving Credit Facility Usage does not exceed the Maximum Revolving Credit Amount minus the then applicable Aggregate Availability Reserve Amount at such time, (ii) the Aggregate Effective Amount under all outstanding Standby
Letters of Credit shall not exceed the Standby Letter of Credit Sublimit at such time, and (iii) as to each relevant Lender, such Lender’s Pro Rata Share of Revolving Credit Facility Usage does not exceed such Lender’s Commitment
minus such Lender’s Pro Rata Share of the then applicable Aggregate Availability Reserve Amount at such time. 
  
 (ii) Commercial Letter of Credit. On the terms and subject to the conditions hereof, at any time and from time to time from the Closing Date through the Maturity Date, the Issuing Lender shall issue such Commercial Letters
of Credit in Dollars under the Revolving Facility as Borrower may request by submitting a completed Letter of Credit Application to the Issuing Lender as provided herein; provided that giving effect to all such Commercial Letters of Credit,
(i) Revolving Credit Facility Usage does not exceed the Maximum Revolving Credit Amount minus the then applicable Aggregate Availability Reserve Amount at such time, (ii) the Aggregate Effective Amount under all outstanding Commercial Letters
of Credit shall not exceed the Commercial Letter of Credit Sublimit at such time, and (iii) as to each 

 
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 relevant Lender, such Lender’s Pro Rata Share of Revolving Credit Facility
Usage does not exceed such Lender’s Commitment minus such Lender’s Pro Rata Share of the then applicable Aggregate Availability Reserve Amount at such time. 
  
 Each Letter of Credit shall be in a form acceptable to the Issuing Lender. Unless the Issuing Lender and the Requisite Lenders otherwise consent, the term of any Standby Letter of Credit shall not
exceed 365 days, and the term of any Commercial Letter of Credit shall not exceed 180 days. Unless all the Lenders otherwise consent in a writing delivered to the Administrative Agent, the term of any Letter of Credit shall not extend beyond the
Maturity Date. A Letter of Credit Application shall be irrevocable absent the consent of the Issuing Lender. All Existing Letters of Credit shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to
and governed by the terms and conditions hereof. 
  
 (b) Each Letter of Credit Application shall be submitted to the
Issuing Lender, with a copy to the Administrative Agent, at least three (3) Banking Days prior to the date upon which the related Letter of Credit is proposed to be issued. The Administrative Agent shall promptly notify the Issuing Lender whether
such request, and the issuance of a Letter of Credit pursuant thereto, conforms to the requirements of this Agreement. Upon issuance of a Letter of Credit, the Issuing Lender shall promptly notify the Administrative Agent of the amount and terms
thereof. A Letter of Credit Application may be delivered to the Issuing Lender by facsimile by a Responsible Official of Borrower, in which case Borrower shall confirm such request by promptly delivering the signed original Letter of Credit
Application (conforming to the preceding sentence) to the Issuing Lender. The Issuing Lender shall incur no liability whatsoever hereunder in acting upon any Letter of Credit Application received by facsimile purportedly made by a Responsible
Official of Borrower, and Borrower hereby agrees to indemnify the Issuing Lender from any loss, cost, expense or liability as a result of so acting. 
  
 (c) Upon issuance of a Letter of Credit, each Lender shall be deemed to have purchased a pro rata participation in such Letter of Credit from the Issuing Lender in proportion to that Lender’s Pro
Rata Share of the Revolving Facility. Without limiting the scope and nature of each Lender’s participation in any Letter of Credit, each Lender shall, pro rata according to its Pro Rata Share of the Revolving Facility, pay to the Issuing Lender
through the Administrative Agent in respect of such Lender’s participation interest promptly upon demand the amount not reimbursed by Borrower. The obligation of each Lender to pay for its participation interest shall be absolute and
unconditional and shall not be affected by the occurrence of an Event of Default or any other occurrence or event. Any such payment in respect of such Lender’s participation interest shall not relieve or otherwise impair the obligation of
Borrower to reimburse the Issuing Lender for the amount of any payment made by the Issuing Lender under any Letter of Credit together with interest as hereinafter provided. 

 
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 (d) Borrower agrees to pay to the Issuing Lender through the Administrative Agent
an amount equal to any payment made by the Issuing Lender with respect to each Letter of Credit within one (1) Banking Day after demand made by the Issuing Lender therefor, together with interest on such amount from the date of any payment made by
the Issuing Lender at the rate applicable to Alternate Base Rate Advances under the Revolving Facility for the period commencing on the date of any such payment and continuing through the first Banking Day following such demand and thereafter at the
Default Rate. The principal amount of any such payment shall be used to reimburse the Issuing Lender for the payment made by it under the Letter of Credit. Upon receipt of any such reimbursement from Borrower after a Lender has funded its
participation interest, the Issuing Lender shall pay the amount of such reimbursement to the Administrative Agent, for the ratable benefit of those Lenders that pursuant to Section 2.5(c) have paid for their participation interest.

  
 (e) Borrower may, pursuant to a Request for Borrowing, request that Advances be made pursuant to Section
2.1(a) to provide funds for the payment required by Section 2.5(d). The proceeds of such Advances shall be paid directly to the Issuing Lender to reimburse it for the payment made by it under the Letter of Credit. 
  
 (f) If Borrower fails to make the payment required by Section 2.5(d) within the time period therein set forth, in lieu of the
Lenders’ requirement to pay for their participation interest under Section 2.5(c), the Issuing Lender may unless Borrower or any Guarantor is the subject of any proceeding under any Debtor Relief Law (but is not required to), without
notice to or the consent of Borrower, instruct the Administrative Agent to cause Advances to be made by the Lenders under the Revolving Facility in an aggregate amount equal to the amount paid by the Issuing Lender with respect to that Letter of
Credit and, for this purpose, the conditions precedent set forth in Article 8 shall not apply and any such Advances shall be deemed requested by Borrower hereunder. The proceeds of such Advances shall be paid to the Issuing Lender to
reimburse it for the payment made by it under the Letter of Credit. 
  
 (g) The issuance of any supplement,
modification, amendment, renewal, or extension to or of any Letter of Credit shall be treated in all respects the same as the issuance of a new Letter of Credit; provided that the payment of fees shall be in accordance with the Issuing
Lender’s customary schedules for such services. Without limiting any other term or condition of the Loan Documents, the Issuing Lender shall be under no obligation to amend any Letter of Credit if (A) the Issuing Lender would have no obligation
at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit. 
  
 (h) Upon the occurrence and during the continuance of an Event of Default and, as applicable, as set forth in Section 3.1, Borrower
shall deposit in an account with the Issuing Lender (the “Letter of Credit Collateral Account”), an amount in cash, or shall deliver to Issuing Lender a standby letter of credit issued by a bank and having terms and conditions

 
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 acceptable to Administrative Agent, in an amount equal to the aggregate amount of issued and outstanding
Letters of Credit as of such date. The Issuing Lender shall retain the amounts in the Letter of Credit Collateral Account or the standby letter of credit as security for the payment and performance of all obligations of Borrower with respect to then
outstanding Letters of Credit. In the event any Letter of Credit is drawn on subsequent to Borrower’s satisfaction of its obligations under this subparagraph (h), Issuing Lender may use funds in the Letter of Credit Collateral Account or draw
on the standby letter of credit delivered hereunder to reimburse Issuing Lender for amounts paid by Issuing Lender under such drawn Letter of Credit. Upon the cure or waiver of any Event of Default (so long as no other Event of Default has occurred
and is continuing) or, in the case of cash collateral held pursuant to Section 3.1, when all Letters of Credit have expired and/or are terminated, all amounts held in the Letter of Credit Collateral Account and any letter of credit delivered
pursuant to this Section shall be returned to Borrower. 
  
 (i) The Issuing Lender shall be under no obligation to
issue any Letter of Credit if: 
  
 (i) any order, judgment or decree of any Governmental Agency or
arbitrator shall by its terms purport to enjoin or restrain the Issuing Lender from issuing such Letter of Credit, or any Requirement of Law applicable to the Issuing Lender or any directive (whether or not having the force of law) from any
Governmental Agency with jurisdiction over the Issuing Lender shall require that the Issuing Lender refrain from the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the Issuing Lender with respect
to such Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Lender is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the Issuing Lender any unreimbursed loss, cost or
expense (for which the Issuing Lender is not otherwise compensated by Borrower hereunder) which was not applicable on the Closing Date and which the Issuing Lender in good faith deems material to it; 
  
 (ii) the issuance of such Letter of Credit would violate one or more policies of the Issuing Lender; or 

 
 (iii) such Letter of Credit is denominated in a currency other than Dollars. 
  
 (j) The obligation of Borrower to pay to the Issuing Lender the amount of any payment made by the Issuing Lender under any Letter of
Credit and to repay each Borrowing made in connection with any Letter of Credit shall be absolute, unconditional, and irrevocable and shall be paid strictly in accordance with the terms of this Agreement and the other Loan Documents. Without
limiting the foregoing, Borrower’s obligations shall not be affected by any of the following circumstances: 

 
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 (i) any lack of validity or enforceability of the Letter of
Credit, this Agreement, or any other agreement or instrument relating thereto; 
  
 (ii) any amendment
or waiver of or any consent to departure from the Letter of Credit, this Agreement, or any other agreement or instrument relating thereto, with the written consent of Borrower executed by a Responsible Official of Borrower; 
  
 (iii) the existence of any claim, counterclaim, setoff, defense, or other rights that Borrower may have at any time
against the Issuing Lender, the Administrative Agent or any Lender, any beneficiary of the Letter of Credit (or any Persons for whom any such beneficiary may be acting) or any other Person, whether in connection with the Letter of Credit, this
Agreement, or any other agreement or instrument relating thereto, or any unrelated transactions; provided that Borrower shall retain a claim against the Issuing Lender for losses directly related to the Issuing Lender’s failure in any material
respect with its obligations under the UCP or the ISP, as the case may be, and applicable Law or Governmental Rules; 
  
 (iv) any draft, demand, certificate, statement, or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid, or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever so long as any such document reasonably appeared, on its face, to comply with the terms and conditions of the Letter of Credit as determined by the UCP or the ISP, as the case may be, and applicable Law or
Governmental Rules; 
  
 (v) payment by the Issuing Lender in good faith under the Letter of Credit
against presentation of a draft, certificate or any accompanying document which does not strictly comply with the terms of the Letter of Credit; or any payment made by the Issuing Lender in good faith under such Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising
in connection with any proceeding under any Debtor Relief Law; 
  
 (vi) the existence, character,
quality, quantity, condition, packing, value or delivery of any Property purported to be represented by documents presented in connection with any Letter of Credit or for any difference between any such Property and the character, quality, quantity,
condition, or value of such Property as described in such documents; 
  
 (vii) the time, place,
manner, order or contents of shipments or deliveries of Property as described in documents presented in connection with 

 
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 any Letter of Credit or the existence, nature and extent of any insurance
relative thereto;  
  
 (viii) the solvency or financial responsibility of any party issuing
any documents in connection with a Letter of Credit;  
  
 (ix) any failure or delay in notice
of shipments or arrival of any Property;  
  
 (x) any error in the transmission of any message
relating to a Letter of Credit not caused by the Issuing Lender, or any delay or interruption in any such message;  
  
 (xi) any error, neglect or default of any correspondent of the Issuing Lender in connection with a Letter of Credit (provided that Issuing Lender shall use best efforts to resolve any such error, neglect or default with such
correspondent on Borrower’s behalf and further agrees to use its standard policies in selecting a correspondent);  
  
 (xii) any consequence arising from acts of God, war, insurrection, civil unrest, disturbances, labor disputes, emergency conditions or other causes beyond the control of the Issuing Lender; 

  
 (xiii) so long as the Issuing Lender in good faith determines that the contract or document
appears to comply, on its face, with the terms and conditions of the Letter of Credit, the form, accuracy, genuineness or legal effect of any contract or document referred to in any document submitted to the Issuing Lender in connection with a
Letter of Credit; provided, however, that no such payment shall be deemed a waiver or release by Borrower of any claim it may have against the Issuing Lender; and 
  
 (xiv) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, Borrower. 
  
 (k) The Issuing Lender shall be entitled to the
protection accorded to the Administrative Agent pursuant to Section 10.6 (subject to the standards set forth therein), mutatis mutandis. 
  
 (l) Unless otherwise expressly agreed by the Issuing Lender and Borrower when a Letter of Credit is issued (including any such agreement applicable to any Existing Letters of Credit), (i) the ISP shall
apply to each Standby Letter of Credit, and (ii) the UCP shall apply to each Commercial Letter of Credit. 

 
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   (m) In the event of any conflict between the terms hereof and the
terms of any Letter of Credit Application or any Letter of Credit Agreement, the terms hereof shall control. 
  
   2.6 Termination or Reduction of the Commitments. 
  
    (a)
Optional. Borrower may at any time or from time to time, upon not less than three (3) Banking Days’ notice to the Administrative Agent, terminate in whole or reduce in part the Commitments which notice shall be irrevocable;
provided that each partial reduction of the Commitments shall be in an aggregate amount of $1,000,000 or an integral multiple of $500,000 in excess thereof; provided, however, that: 
  
 (i) Borrower may not reduce the Commitments prior to the Maturity Date, if, after giving effect to such reduction, the
Revolving Facility Credit Usage then outstanding would exceed the then applicable outstanding amount of all the Lenders’ Commitments; and 
  
 (ii) Borrower may not cancel the Commitments prior to the Maturity Date, if, after giving effect to such cancellation, any Advance, Letter of Credit or any other payment obligation would then remain
outstanding. 
  
  (b) Mandatory. 
  
 (i) The Commitments shall be automatically and permanently reduced (1) by $10,000,000 on June 16, 2003, (2) if the Triggering Event has occurred, by the
Final Aggregate Availability Reserve Amount on the Adjustment Date and (3) to zero on the Maturity Date in addition to all other mandatory reductions. 
  
 (ii) The total aggregate amount of all the then applicable Lenders’ Commitments shall be automatically and permanently reduced by an amount equal to
the maximum amount that would be required to be applied as a mandatory prepayment of the Swing Line Loans and the Advances and funding of cash collateral of Letters of Credit pursuant to Sections 3.1(d)(iii), (iv), (v) or
(vi) as of the date any such mandatory prepayment is required to be made. 
  
 (c) Reduction Pro Rata; No
Reinstatements. Each reduction of the Commitments shall be applied to the respective Commitments of the Lenders according to their respective Pro Rata Shares. Commitments once terminated or reduced may not be reinstated. 
  
 2.7 Administrative Agent’s Right to Assume Funds Available for Advances. Unless the Administrative Agent shall have been
notified by any relevant Lender no later than 10:00 a.m., California time, on the Banking Day of the proposed funding by the Administrative Agent of any Borrowing that such Lender does not intend to make available to 

 
 -50- 

  
 the Administrative Agent such Lender’s portion of the total amount of such Borrowing, the
Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on the date of the Borrowing and the Administrative Agent may, in reliance upon such assumption, make available to Borrower a corresponding
amount. If the Administrative Agent has made funds available to Borrower based on such assumption and such corresponding amount is not in fact made available to the Administrative Agent by such Lender, the Administrative Agent shall be entitled to
recover such corresponding amount on demand from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent promptly shall notify Borrower and Borrower
shall pay such corresponding amount to the Administrative Agent. The Administrative Agent also shall be entitled to recover from such Lender interest on such corresponding amount in respect of each day from the date such corresponding amount was
made available by the Administrative Agent to Borrower to the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to the daily Federal Funds Rate. Nothing herein shall be deemed to relieve any Lender
from its obligation to fulfill its Commitments or to prejudice any rights which the Administrative Agent or Borrower may have against any Lender as a result of any default by such Lender hereunder. 
  
 2.8 Swing Line. 
  
   (a) Subject to the terms and conditions of this Agreement, the Swing Line Lender shall from time to time from the Closing Date through the day prior to the Maturity Date make Swing Line Loans to Borrower in such
amounts as Borrower may request; provided that (a) after giving effect to such Swing Line Loan, Revolving Credit Facility Usage does not exceed the Maximum Revolving Credit Amount minus the then applicable Aggregate Availability
Reserve Amount at such time, (b) after giving effect to such Swing Line Loan, the Swing Line Outstandings do not exceed the Swing Line Sublimit at such time and, (c) without the consent of all of the Lenders, no Swing Line Loan may be made during
the continuation of an Event of Default if written notice of such Event of Default shall have been provided to Swing Line Lender by the Administrative Agent or a Lender sufficiently in advance of the making of such Swing Line Loan. Borrower may
borrow, repay and reborrow under this Section. Borrowings under the Swing Line may be made in amounts which are integral multiples of $100,000 (or the remaining availability under the Swing Line) upon telephonic request by a Responsible Official of
Borrower made to the Administrative Agent not later than 2:00 p.m., California time, on the Banking Day of the requested borrowing (which telephonic request shall be promptly confirmed in writing by telecopier). Promptly after receipt of such a
request for borrowing, the Administrative Agent shall provide telephonic verification to the Swing Line Lender that, after giving effect to such request, availability for Advances will exist under Section 2.1(a) (and such verification shall
be promptly confirmed in writing by telecopier). Each repayment of a Swing Line Loan shall be in an amount which is an integral multiple of $100,000 (or the Swing Line Outstandings). Borrower shall notify the Swing Line Lender of its intention to
make a repayment of a Swing Line Loan not later than 1:00 p.m. California time on the date of repayment. If Borrower 

 
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 instructs the Swing Line Lender to debit its demand deposit account at the Swing Line Lender in the
amount of any payment with respect to a Swing Line Loan, or the Swing Line Lender otherwise receives repayment, after 3:00 p.m., California time, on a Banking Day, such payment shall be deemed received on the next Banking Day. The Swing Line Lender
shall promptly notify the Administrative Agent of the Swing Loan Outstandings each time there is a change therein. 
  
 (b) Subject to subsection (d) below, the principal amount of all Swing Line Loans shall be due and payable on the earlier of (i) the maturity date agreed to by the Swing Line Lender and Borrower with respect to such Swing Line
Loan (which maturity date shall not be a date more than ten (10) consecutive Banking Days from the date of advance thereof) or (ii) the Maturity Date. 
  
 (c) Upon the making of a Swing Line Loan, each Lender shall be deemed to have purchased from the Swing Line Lender a participation therein in an amount equal to that Lender’s Pro Rata Share of the
Revolving Facility times the amount of the Swing Line Loan. Upon demand made by the Swing Line Lender, each Lender shall, according to its Pro Rata Share of the Revolving Facility, promptly provide to the Swing Line Lender its purchase price
therefor in an amount equal to its participation therein. The obligation of each Lender to so provide its purchase price to the Swing Line Lender shall be absolute and unconditional (except only demand made by the Swing Line Lender) and shall not be
affected by the occurrence of a Default or Event of Default; provided that no Lender shall be obligated to purchase its Pro Rata Share of (i) Swing Line Loans to the extent that, after giving effect to such Swing Line Loan, Revolving Credit
Facility Usage exceeds the Maximum Revolving Credit Amount minus the then applicable Aggregate Availability Reserve Amount at such time, (ii) Swing Line Loans to the extent that, after giving effect to such Swing Line Loan, Swing Line
Outstandings exceed the Swing Line Sublimit at such time and (iii) any Swing Line Loan made (absent the consent of all of the Lenders) during the continuation of an Event of Default if written notice of such Event of Default shall have been provided
to Swing Line Lender by the Administrative Agent or a Lender sufficiently in advance of the making of such Swing Line Loan. Upon receipt of any payment from Borrower after a Lender has funded its participation interest, the Swing Line Lender shall
pay the amount of such payment to the Administrative Agent, for the ratable benefit of those Lenders that pursuant to this Section have paid for their participation interest (but only with respect to periods subsequent to the date such Lender paid
the Swing Line Lender its purchase price). 
  
 (d) In the event that any Swing Line Loan remains outstanding for ten
(10) consecutive Banking Days, then on the next Banking Day (unless Borrower has made other arrangements acceptable to the Swing Line Lender to repay such Swing Line Loan, in full), Borrower shall request an Advance pursuant to Section 2.1(a)
sufficient to repay the aggregate principal amount of such Swing Line Loan together with any and all accrued and unpaid interest with respect thereto. In addition, the Swing Line Lender may unless Borrower or any Guarantor is the subject of any
proceeding under any Debtor Relief Law, at any time, in its sole discretion, by written notice to Borrower and the Lenders, demand payment of the 

 
 -52- 

 Swing Line Loans by way of an Advance in the full amount or any portion of the Swing Line Outstandings. In each case, the Administrative Agent
shall automatically provide the respective Advances made by each Lender to the Swing Line Lender (which the Swing Line Lender shall then apply to the Swing Line Outstandings). In the event that Borrower fails to request an Advance within the time
specified by Section 2.2 on any such date, the Administrative Agent may, but is not required to, without notice to or the consent of Borrower, cause Alternate Base Rate Advances to be made by the Lenders under the Revolving Facility in
amounts which are sufficient to reduce the Swing Line Outstandings as required above and such Advance shall be deemed requested by Borrower. The proceeds of such Advances shall be paid directly to the Swing Line Lender for application to the Swing
Line Outstandings. 
  
 2.9 Security. 
  
 (a) Security Documents. The Advances, Swing Line Loans and Letters of Credit, together with all other Obligations, shall be secured by the Liens created by the
Security Documents. So long as the terms thereof are in compliance with this Agreement, each Lender Interest Rate Protection Agreement shall be secured by the Lien of the Security Documents (a) on a pari passu basis to the extent of the
associated Termination Value, and (b) to the extent of any excess, on a basis which is in all respects subordinated to all other Obligations. 
  
 (b) Further Assurances. Borrower shall, at its expense, deliver, and shall cause each Guarantor to deliver, to the Administrative Agent such additional security agreements, pledge agreements,
Control Agreements, and other instruments, agreements, certificates, opinions and documents (including UCC financing statements and fixture filings) as the Administrative Agent may reasonably request to: 
  
 (i) grant, perfect, maintain, protect and evidence security interests in favor of the Administrative Agent, for the
benefit of the Administrative Agent and the Lenders, in any or all present and future property of Borrower and the Guarantors which would constitute Collateral under the Security Documents prior to the Liens or other interests of any Person, except
for Permitted Encumbrances; and 
  
 (ii) otherwise establish, maintain, protect and evidence the
rights provided to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, pursuant to the Security Documents. 
  
 Borrower shall fully cooperate with the Administrative Agent and perform all additional acts reasonably requested by the Administrative Agent to effect the purposes of this Section 2.9,
including, without limitation, compliance with Sections 5.14 and 6.22 hereof. 

 
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 ARTICLE 3 
  
 PAYMENTS AND FEES 
  
 3.1 Principal and Interest.

  
 (a) Interest shall be payable on the outstanding daily unpaid principal amount of each Advance from the date
thereof until payment in full is made and shall accrue and be payable at the rates set forth or provided for herein before and after any Default, before and after maturity, before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law, with interest on overdue interest at the Default Rate to the fullest extent permitted by applicable Laws. 
  
 (b) Interest accrued on each Alternate Base Rate Advance (including each Swing Line Loan) shall be due and payable in arrears on each Quarterly Payment Date. Except as otherwise provided in
Section 3.7, the unpaid principal amount of any Alternate Base Rate Advance (including any Swing Line Loan) shall bear interest at a fluctuating rate per annum equal to the Alternate Base Rate plus the Applicable Alternate Base Rate
Margin. Each change in the interest rate under this Section 3.1(b) due to a change in the Alternate Base Rate shall take effect simultaneously with the corresponding change in the Alternate Base Rate. The Swing Line Lender shall be
responsible for invoicing Borrower for interest on the Swing Line Loans. The interest payable on Swing Line Loans is solely for the account of the Swing Line Lender (subject to Section 2.8(c)). 
  
 (c) Interest accrued on each Eurodollar Rate Advance which is for a term of three months or less shall be due and payable on the last day
of the related Eurodollar Period. Interest accrued on each other Eurodollar Rate Advance shall be due and payable on the date which is three months after the date such Eurodollar Rate Advance was made (and, in the event that all of the Lenders have
approved a Eurodollar Period of longer than six months, every three months thereafter through the last day of the Eurodollar Period) and on the last day of the related Eurodollar Period. Except as otherwise provided in Section 3.7, the
unpaid principal amount of any Eurodollar Rate Advance shall bear interest at a rate per annum equal to the Eurodollar Rate for that Eurodollar Rate Advance plus the Applicable Eurodollar Rate Margin. 
  
 (d) If not sooner paid, the principal amount of the Indebtedness under this Agreement shall be payable as follows: 

 
  (i) the amount, if any, by which the Revolving Credit Facility Usage at any time exceeds the Maximum
Revolving Credit Amount minus the then applicable Aggregate Availability Reserve Amount at such time shall be payable immediately, such prepayments shall be applied to the principal amount of the Indebtedness under this Agreement in the
following order: (A) first, all then outstanding principal in connection with the Swing Line Loans to 

 
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 the extent Swing Line Loans in a sufficient amount are then outstanding, (B) second, all then outstanding principal in
connection with all other Advances to the extent Advances in a sufficient amount are then outstanding and (C) otherwise, cash collateralize the Obligations in an amount equal to the then outstanding Letters of Credit in the manner set forth in
Section 2.5(h), in an aggregate amount equal to such excess; 
  
 (ii) the principal amount of
the Indebtedness under this Agreement shall in any event be due and payable on the Maturity Date; 
  
 (iii) if any Disposition of any assets of Borrower, Parent or any Subsidiary occurs including any Disposition of any assets that have not been replaced by assets of similar type as contemplated in the definition of Disposition but
excluding (i) any Disposition permitted under Section 6.3(a), (c) and (d) and (ii) for each Fiscal Year up to $1,000,000 of aggregate Net Proceeds realized from Dispositions permitted under Section 6.3(b), Borrower shall
thereupon prepay the principal amount of the Indebtedness under this Agreement in an aggregate amount equal to one hundred percent (100%) of the Net Proceeds of such Disposition, such prepayments shall be applied to the principal amount of the
Indebtedness under this Agreement in the following order: (A) first, all then outstanding principal in connection with the Swing Line Loans to the extent Swing Line Loans in a sufficient amount are then outstanding, (B) second, all then outstanding
principal in connection with all other Advances to the extent Advances in a sufficient amount are then outstanding and (C) otherwise, cash collateralize the Obligations in an amount equal to the then outstanding Letters of Credit in the manner set
forth in Section 2.5(h); 
  
 (iv) upon the incurrence by Borrower, Parent or any of their
Subsidiaries of any Indebtedness, other than Indebtedness incurred pursuant to Section 6.10(a), (b), (c), (d), (e), (g) or (h), Borrower shall thereupon prepay the principal amount of the Indebtedness
under this Agreement in an aggregate amount equal to one hundred percent (100%) of the Net Proceeds of such Indebtedness, such prepayments shall be applied to the principal amount of the Indebtedness under this Agreement in the following order: (A)
first, all then outstanding principal in connection with the Swing Line Loans to the extent Swing Line Loans in a sufficient amount are then outstanding, (B) second, all then outstanding principal in connection with all other Advances to the extent
Advances in a sufficient amount are then outstanding and (C) otherwise, cash collateralize the Obligations in an amount equal to the then outstanding Letters of Credit in the manner set forth in Section 2.5(h); 
  
 (v) upon the date of receipt by Borrower, Parent or their Subsidiaries or any of their Affiliates (or, if applicable, the
Administrative 

 
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 Agent’s receipt as loss payee under any policy of insurance) of the proceeds of insurance (excluding business
interruption insurance), condemnation award or other compensation in respect of any Casualty Event affecting any portion of the assets of Borrower, Parent, their Subsidiaries or any one or more of them if, in each case, Borrower has decided not to
repair or replace such Property or to the extent has not otherwise re-invested such proceeds in accordance with this Agreement in the business of any Party within 270 days of the occurrence of such Casualty Event, Borrower shall thereupon prepay the
principal amount of the Indebtedness under this Agreement in an aggregate amount equal to one hundred percent (100%) of the Net Proceeds of such Casualty Event not previously applied to the repair or replacement of such Property or otherwise
re-invested as described above, such prepayments shall be applied to the principal amount of the Indebtedness under this Agreement in the following order: (A) first, all then outstanding principal in connection with the Swing Line Loans to the
extent Swing Line Loans in a sufficient amount are then outstanding, (B) second, all then outstanding principal in connection with all other Advances to the extent Advances in a sufficient amount are then outstanding and (C) otherwise, cash
collateralize the Obligations in an amount equal to the then outstanding Letters of Credit in the manner set forth in Section 2.5(h); provided, however, that if an Event of Default has occurred and is continuing at the time of
receipt by Borrower, Parent, their Subsidiaries or any one or more of them or their Affiliates (or the Administrative Agent’s receipt as loss payee under any policy of insurance) of such Net Proceeds or if an Event of Default occurs before all
such funds are expended, the Advances shall be due and payable in an amount equal to the Net Proceeds from such Casualty Events and, to the extent there are insufficient Advances, the Obligations shall be cash collateralized, in each case as set
forth above and any Net Proceeds from such Casualty Events shall be immediately paid to the Administrative Agent for the account of the Lenders; 
  
 (vi) if, at any time after the Closing Date that the ratio of Funded Debt as of the last day of the most recently ended Fiscal Quarter plus six times Rental Expense for Parent and its Subsidiaries on a
consolidated basis for the twelve month period then ended to EBITDAR for Parent and its Subsidiaries on a consolidated basis for the twelve month period then ended (the “Leverage Ratio”) exceeds 3.00 to 1.00 (the “Target
Leverage Ratio”), Borrower, Parent or any of their Subsidiaries issues or sells any Securities, Borrower shall, immediately upon such issuance or sale, prepay the principal amount of the Indebtedness under this Agreement in an aggregate
amount equal to the lesser of fifty percent (50%) of the Net Proceeds of such Securities and that amount that, if it had been applied as a prepayment of Funded Debt on the last day of the most recently ended Fiscal Quarter, would have caused the
Leverage Ratio to equal the Target Leverage Ratio; such prepayments shall be applied to the principal amount of the Indebtedness under this Agreement in the following 

 
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 order: (A) first, all then outstanding principal in connection with the Swing
Line Loans to the extent Swing Line Loans in a sufficient amount are then outstanding, (B) second, all then outstanding principal in connection with all other Advances to the extent Advances in a sufficient amount are then outstanding and (C)
otherwise, cash collateralize the Obligations in an amount equal to the then outstanding Letters of Credit in the manner set forth in Section 2.5(h); 
  
      (e) Borrower shall deliver to the Administrative Agent, at the time of each prepayment required under Section 3.1(d), (A) a certificate signed by the chief
financial officer of Borrower setting forth in reasonable detail the calculation of the amount of such prepayment and (B) to the extent practicable, at least three (3) Banking Days prior written notice of such prepayment. Each notice of prepayment
shall specify the prepayment date and the Type and principal amount of each Advance (or portion thereof) to be prepaid. In the event that Borrower shall subsequently determine that the actual amount was greater than the amount set forth in such
certificate, Borrower shall promptly make an additional prepayment of the Advances (and/or, if applicable, the Commitments shall be permanently reduced) in an amount equal to the amount of such excess, and Borrower shall concurrently therewith
deliver to the Administrative Agent a certificate signed by the chief financial officer of Borrower demonstrating the derivation of the additional amount resulting in such excess. 
  
      (f) The principal amount of the Indebtedness under this Agreement may, at any time and from time to time, voluntarily be paid or prepaid in
whole or in part without premium or penalty, except that with respect to any voluntary prepayment under this subsection, (i) any partial prepayment of any Eurodollar Rate Advance shall be not less than $1,000,000 and shall be an integral
multiple of $100,000 and any partial prepayment of any Alternate Base Rate Advance shall be not less than $500,000 and shall be an integral multiple of $100,000, (ii) the Administrative Agent shall have received a Notice of Payment/Prepayment of any
prepayment by 9:00 a.m. California time on the date that is (x) in the case of a Eurodollar Rate Advance three (3) Banking Days before the date of prepayment and (y) in the case of an Alternate Base Rate Advance, one (1) Banking Day before the date
of prepayment, which notice shall identify the date and amount of the prepayment and the Advance(s) being prepaid, (iii) each prepayment of principal on any Eurodollar Rate Advance shall be accompanied by payment of interest accrued to the date of
payment on the amount of principal paid, and (iv) any payment or prepayment of all or any part of any Eurodollar Rate Advance on a day other than the last day of the applicable Eurodollar Period shall be subject to Section 3.6(e).

  
 3.2 Unused Revolving Facility Commitment Fee. From the Closing Date through the Maturity Date, Borrower
shall pay to the Administrative Agent, for the ratable accounts of the applicable Lenders in accordance with their respective Pro Rata Shares, a commitment fee equal to the Applicable Commitment Fee Margin times the average daily amount by
which the Maximum Revolving Credit Amount exceeds the sum of (a) the aggregate principal amount then outstanding Advances (exclusive of all Swing Line Outstandings) plus (b) the 

 
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 Aggregate Effective Amount under all outstanding Letters of Credit. The commitment fee shall be payable quarterly in arrears on each Quarterly
Payment Date. 
  
 3.3 Arrangement Fee; Agency Fee etc. Borrower shall pay to Wells Fargo the fees in the
amounts and at such times heretofore agreed upon and set forth in the Fee Letter. Such fees are fully earned as of the due date thereof and are non-refundable. 
  
 3.4 Letter of Credit Fees. With respect to each Letter of Credit, Borrower shall pay the following fees: 
  
 (a) Letters of Credit. 
  
 (i) Standby
Letters of Credit. Concurrently with the issuance of each Standby Letter of Credit and on each Quarterly Payment Date thereafter so long as such Standby Letter of Credit shall remain outstanding, to the Administrative Agent for the ratable
accounts of the Lenders in accordance with their respective Pro Rata Shares, a Standby Letter of Credit fee in an amount equal to the product of the then Applicable Letter of Credit Fee Rate times the then outstanding undrawn amount of such
Standby Letter of Credit, for the period commencing on such payment date and ending on the next succeeding Quarterly Payment Date or for the remaining term of such Standby Letter of Credit, whichever is shorter; 
  
 (ii) Commercial Letters of Credit. Concurrently with the issuance of each Commercial Letter of Credit, to the
Administrative Agent for the ratable accounts of the Lenders in accordance with their respective Pro Rata Shares, a one-time Commercial Letter of Credit fee equal to 0.25% (25 basis points) of the stated amount of such Commercial Letter of Credit;
provided, however, that the applicable Commercial Letter of Credit fee payable in connection with the original issuance of any Commercial Letter of Credit (and on each anniversary date thereof if such Commercial Letter of Credit is
renewed or extended) shall be no less than $250; and 
  
 (b) concurrently with the issuance of each Letter of Credit,
and on each Quarterly Payment Date thereafter so long as such Letter of Credit shall remain outstanding, to the Issuing Lender for its own account, a fronting fee equal to 0.125% (12.5 basis points) on the face amount of such Letter of Credit.

  
 Computation of Letter of Credit fees shall be calculated based on a year of 360 days. In addition to the foregoing, in connection with a
Letter of Credit and activity relating thereto, Borrower also shall pay amendment, transfer, issuance, negotiation and such other fees as the Issuing Lender normally charges, in the amounts set forth from time to time as the Issuing Lender’s
published scheduled fees for such services. Each of the fees payable with respect to Letters of Credit under this Section is earned when due and is nonrefundable. Each of the 

 
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 foregoing fees shall be applicable to the Existing Letters of Credit from and after the Closing Date. 
  
 3.5 Increased Commitment Costs. If any Lender shall determine in good faith that the introduction after the Closing Date of any
applicable law, rule, regulation or guideline regarding capital adequacy, or any change therein or any change in the interpretation or administration thereof by any central bank or other Governmental Agency charged with the interpretation or
administration thereof, or compliance by such Lender (or its Eurodollar Lending Office) or any corporation controlling such Lender, with any request, guideline or directive regarding capital adequacy (whether or not having the force of Law) of any
such central bank or other authority not imposed as a result of such Lender’s or such corporation’s failure to comply with any other Laws, affects or would affect the amount of capital required or expected to be maintained by such Lender
or any corporation controlling such Lender and (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy and such Lender’s desired return on capital) determines in good faith that the
amount of such capital is increased, or the rate of return on capital is reduced, as a consequence of its obligations under this Agreement, then, within five (5) days after demand of such Lender, Borrower shall pay to such Lender, from time to time
as specified in good faith by such Lender, additional amounts sufficient to compensate such Lender in light of such circumstances; provided that (i) Lenders notify Borrower of such changes within 180 days after their occurrence, and (ii)
Lenders are generally making claims for compensation for such changes against other similarly situated borrowers. Payments by Borrower under this subsection shall not include (A) Income Taxes attributable to Lenders, and (B) any withholding taxes or
other taxes based on gross income imposed by the United States of America on any Lender for any period with respect to which it has failed to provide Borrower with the appropriate form or forms required by Section 3.11(e), to the extent such
forms are then required by applicable Laws. Each Lender shall promptly notify Borrower and the Administrative Agent of any event of which it has actual knowledge, occurring after the Closing Date, that will entitle such Lender to compensation
pursuant to this Section and will designate a different lending office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such Lender, be otherwise disadvantageous to
it in any material respect. Any Lender demanding compensation under this Section shall include with its demand a statement setting forth in reasonable detail the basis upon which it has been determined that such compensation is due from Borrower,
the calculation of the amount of compensation to be paid to it hereunder, which calculation shall be conclusive and binding, absent demonstrable error. In determining such amount such Lender may use any reasonable averaging and attribution methods.
Each Lender’s determination of such amounts shall be conclusive in the absence of manifest error. 
  
 3.6
Eurodollar Costs and Related Matters. 
  
 (a) In the event that any Governmental Agency imposes on any Lender
after the Closing Date any reserve or comparable requirement (including any emergency, supplemental or other reserve but excluding any such amount included in the calculation of 

 
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 the Eurodollar Rate) with respect to the Eurodollar Obligations of that Lender, Borrower shall pay that Lender within five (5) days after demand
all amounts necessary to compensate such Lender (determined as though such Lender’s Eurodollar Lending Office had funded 100% of its Eurodollar Rate Advances in the Designated Eurodollar Market) in respect of the imposition of such reserve
requirements (provided that Borrower shall not be obligated to pay any such amount which arose prior to the date which is 180 days preceding the date of such demand or is attributable to periods prior to the date which is 180 days preceding the date
of such demand and shall not be obligated to pay any such amount unless such Lender is generally making claims for compensation for such imposition against other similarly situated borrowers). Any Lender’s determination of such amount shall be
conclusive in the absence of manifest error. 
  
 (b) If, after the date hereof, the existence or occurrence of any
Special Eurodollar Circumstance: 
  
 (i) shall subject any Lender or its Eurodollar Lending Office to
any tax, duty or other charge or cost with respect to any Eurodollar Rate Advance, any of its Notes evidencing Eurodollar Rate Advances or its obligation to make Eurodollar Rate Advances, or shall change the basis of taxation of payments to any
Lender attributable to the principal of or interest on any Eurodollar Rate Advance or any other amounts due under this Agreement in respect of any Eurodollar Rate Advance, any of its Notes evidencing Eurodollar Rate Advances or its obligation to
make Eurodollar Rate Advances, excluding (A) Income Taxes and (B) any withholding taxes or other taxes based on gross income imposed by the United States of America for any period with respect to which it has failed to provide Borrower with
the appropriate form or forms required by Section 3.11(e), to the extent such forms are then required by applicable Laws; 
  
 (ii) shall impose, modify or deem applicable any reserve not applicable or deemed applicable on the date hereof (including any reserve imposed by the Federal Reserve Board, special deposit,
capital or similar requirements against assets of, deposits with or for the account of, or credit extended by, any Lender or its Eurodollar Lending Office, but excluding any such amount included in the calculation of the Eurodollar Rate); or

  
 (iii) shall impose on any Lender or its Eurodollar Lending Office or the Designated Eurodollar
Market any other condition affecting any Eurodollar Rate Advance, any of its Notes evidencing Eurodollar Rate Advances, its obligation to make Eurodollar Rate Advances or this Agreement, or shall otherwise affect any of the same; 

 
 and the result of any of the foregoing, as determined in good faith by such Lender, increases the cost to such Lender or its Eurodollar Lending Office
of making or maintaining any 

 
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 Eurodollar Rate Advance or in respect of any Eurodollar Rate Advance, any of its Notes evidencing Eurodollar Rate Advances or its obligation to
make Eurodollar Rate Advances or reduces the amount of any sum received or receivable by such Lender or its Eurodollar Lending Office with respect to any Eurodollar Rate Advance, any of its Notes evidencing Eurodollar Rate Advances or its obligation
to make Eurodollar Rate Advances (assuming such Lender’s Eurodollar Lending Office had funded 100% of its Eurodollar Rate Advances in the Designated Eurodollar Market), then, within five (5) Banking Days after demand by such Lender (with a copy
to the Administrative Agent), Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduction (determined as though such Lender’s Eurodollar Lending Office had funded 100%
of its Eurodollar Rate Advances in the Designated Eurodollar Market); provided that Borrower shall not be obligated to pay any such amount (i) which arose prior to the date which is 180 days preceding the date of such demand or is
attributable to periods prior to the date which is 180 days preceding the date of such demand and shall not be obligated to pay any such amount unless such Lender is generally making claims for compensation for any of the items listed in clauses
(i), (ii) or (iii) above against other similarly situated borrowers. Payments by Borrower under this subsection shall not include (A) Income Taxes attributable to Lenders, and (B) any withholding taxes or other taxes based on gross income imposed by
the United States of America on any Lender for any period with respect to which it has failed to provide Borrower with the appropriate form or forms required by Section 3.11(e), to the extent such forms are then required by applicable Laws. A
statement of any Lender claiming compensation under this subsection shall be conclusive in the absence of manifest error. 
  
 (c) If, after the date hereof, the existence or occurrence of any Special Eurodollar Circumstance shall, in the good faith opinion of any Lender, make it unlawful or impossible for such Lender or its Eurodollar Lending Office to
make, maintain or fund its portion of any Borrowing consisting of Eurodollar Rate Advances, or materially restrict the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the Designated Eurodollar Market, or to determine
or charge interest rates based upon the Eurodollar Rate, then such Lender’s obligation to make Eurodollar Rate Advances shall be suspended for the duration of such illegality or impossibility and the Administrative Agent forthwith shall give
notice thereof to the other Lenders and Borrower. Upon receipt of such notice, the outstanding principal amount of such Lender’s affected Eurodollar Rate Advances, automatically shall be converted to Alternate Base Rate Advances on either (i)
the last day of the Eurodollar Period(s) applicable to such Eurodollar Rate Advances if such Lender may lawfully continue to maintain and fund such Eurodollar Rate Advances to such day(s) or (ii) immediately if such Lender may not lawfully continue
to fund and maintain such Eurodollar Rate Advances to such day(s) and any interest accrued up to the date of such conversion shall be paid on the next Quarterly Payment Date. Each Lender agrees to endeavor promptly to notify Borrower of any event of
which it has actual knowledge, occurring after the Closing Date, which will cause such Lender to notify Borrower as set forth in the first sentence of this Section, and agrees to designate a different Eurodollar Lending Office if such designation
will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender. In the event that any Lender is 

 
 -61- 

 unable, for the reasons set forth above, to make, maintain or fund any Eurodollar Rate Advance, such Lender shall fund such Eurodollar Dollar
Rate Advance as an Alternate Base Rate Advance for the same period of time, and such amount shall be treated in all respects as an Alternate Base Rate Advance. In the event that any Lender’s obligation to make Eurodollar Rate Advances has been
suspended under this Section, such Lender shall promptly notify the Administrative Agent and Borrower of the cessation of the Special Eurodollar Circumstance which gave rise to such suspension. 
  

(d) If, with respect to any proposed Borrowing comprised of Eurodollar Rate Advances: 
  
 (i) the Administrative Agent reasonably determines that, by reason of circumstances affecting the Designated Eurodollar Market generally that are beyond the
reasonable control of the Lenders, deposits in Dollars (in the applicable amounts) are not being offered to any Lender in the Designated Eurodollar Market for the applicable Eurodollar Period; or 
  

(ii) the Requisite Lenders advise the Administrative Agent that the Eurodollar Rate as determined by the Administrative Agent (A) does not represent
the effective pricing to such Lenders for deposits in Dollars in the Designated Eurodollar Market in the relevant amount for the applicable Eurodollar Period, or (B) will not adequately and fairly reflect the cost to such Lenders of making the
applicable Eurodollar Rate Advances; 
  
 then the Administrative Agent forthwith shall give notice thereof to Borrower and the Lenders,
whereupon until the Administrative Agent notifies Borrower that the circumstances giving rise to such suspension no longer exist, the obligation of the Lenders to make any future Eurodollar Rate Advances shall be suspended. Each Lender shall
promptly notify the Administrative Agent and Borrower of the cessation of the circumstances described in clause (d)(ii) above, and the Administrative Agent shall promptly notify Borrower when the circumstances described in clause
(d)(i) above no longer apply and shall promptly notify Borrower when the Requisite Lenders have notified the Administrative Agent of the cessation of the circumstances described in clause (d)(ii) above. Upon such notice from the
Administrative Agent, the restrictions set forth in this subsection 3.6(d) shall no longer apply. 
  
 (e) Upon
payment or prepayment of any Eurodollar Rate Advance on a day other than the last day in the applicable Eurodollar Period (whether voluntarily, involuntarily, by reason of acceleration, or otherwise), or upon the failure of Borrower (for a reason
other than the breach by a Lender of its obligation pursuant to Section 2.1(a)) to borrow on the date or in the amount specified for a Borrowing comprised of Eurodollar Rate Advances in any Request for Borrowing, Borrower shall pay to the
appropriate Lender within five (5) Banking Days after demand a prepayment fee or failure to borrow fee, as the case may be (determined as though 100% of the Eurodollar Rate Advance had been funded in the Designated Eurodollar Market) equal to the
sum of: 

 
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 (1) $250; plus 
  
 (2) the amount, if any, by which (i) the additional interest would have accrued on the amount prepaid or not borrowed at
the Eurodollar Rate plus the Applicable Eurodollar Rate Margin if that amount had remained or been outstanding through the last day of the applicable Eurodollar Period exceeds (ii) the interest that such Lender could recover by placing such amount
on deposit in the Designated Eurodollar Market for a period beginning on the date of the prepayment or failure to borrow and ending on the last day of the applicable Eurodollar Period (or, if no deposit rate quotation is available for such period,
for the most comparable period for which a deposit rate quotation may be obtained); plus 
  
 (3) all out-of-pocket expenses incurred by such Lender reasonably attributable to such payment, prepayment or failure to borrow. 
  
 Each Lender’s determination of the amount of any prepayment fee payable under this Section shall be conclusive in the absence of manifest error. 
  
 (f) Each Lender agrees to endeavor promptly to notify Borrower of any event of which it has actual knowledge, occurring after the Closing Date, which will entitle such
Lender to compensation pursuant to clause (a) or clause (b) of this Section, and agrees to designate a different Eurodollar Lending Office if such designation will avoid the need for or reduce the amount of such compensation and will
not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender. Any request for compensation by a Lender under this Section shall set forth the basis upon which it has been determined that such an amount is
due from Borrower, a reasonably detailed calculation of the amount due. 
  
 3.7 Late Payments and Default
Rate. If all or any portion of the Obligations or any installment of principal or interest or any fee or cost or other amount payable under any Loan Document to the Administrative Agent or any Lender is not paid when due, it shall thereafter
bear interest at a fluctuating interest rate per annum at all times equal to the sum of the interest rate otherwise applicable thereto hereunder (or, if no interest rate is otherwise applicable thereto hereunder, the Alternate Base
Rate) plus 2.00% (the “Default Rate”), to the fullest extent permitted by applicable Laws. While any Event of Default exists, at the option of the Requisite Lenders, Borrower shall pay interest (after as well as before entry
of judgment thereon to the extent permitted by Law) on the principal amount of all outstanding Obligations, at the Default Rate, to the fullest extent permitted by Law. Accrued and unpaid interest on past due amounts (including interest on
past due interest) shall be compounded monthly, on the last day of each calendar month, to the fullest extent permitted by applicable Laws. 
  
 3.8 Computation of Interest and Fees. Computation of interest on Alternate Base Rate Advances and all fees under this Agreement (other than Letter of Credit fees) shall be 

 
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 calculated on the basis of a year of 365 or 366 days, as the case may be, and the actual number of days elapsed; computation of interest on
Eurodollar Rate Advances shall be calculated on the basis of a year of 360 days and the actual number of days elapsed. Borrower acknowledges that such latter calculation method will result in a higher yield to the Lenders than a method based on a
year of 365 or 366 days. Interest shall accrue on each Advance for the day on which the Advance is made; interest shall not accrue on an Advance, or any portion thereof, for the day on which the Advance or such portion is paid. Any Advance that is
repaid on the same day on which it is made shall bear interest for one day. Notwithstanding anything in this Agreement to the contrary, interest in excess of the maximum amount permitted by applicable Laws shall not accrue or be payable hereunder or
under the Notes, and any amount paid as interest hereunder or under the Notes which would otherwise be in excess of such maximum permitted amount shall instead be treated as a payment of principal. 
  
 3.9 Non-Banking Days. Except as otherwise specifically provided herein, if any payment to be made by Borrower or any other Party
under any Loan Document shall come due on a day other than a Banking Day, payment shall instead be considered due on the next succeeding Banking Day and the extension of time shall be reflected in computing interest and fees. 

 
 3.10 Manner and Treatment of Payments. 
  
 (a) Each payment hereunder (except payments pursuant to Sections 3.4, 3.5, 3.6, 11.3, 11.11 and 11.21) or on the Notes or under
any other Loan Document shall be made to the Administrative Agent at the Administrative Agent’s Office, in immediately available funds not later than 11:00 a.m. California time, on the day of payment (which must be a Banking Day). All payments
received after such time, on any Banking Day, shall be deemed received on the next succeeding Banking Day. The amount of all payments received by the Administrative Agent for the account of each Lender shall be immediately paid by the Administrative
Agent to the applicable Lender in immediately available funds and, if such payment was received by the Administrative Agent by 11:00 a.m., California time, on a Banking Day and not so made available to the account of a Lender on that Banking Day,
the Administrative Agent shall reimburse that Lender for the cost to such Lender of funding the amount of such payment at the Federal Funds Rate. All payments shall be made in lawful money of the United States of America and shall be made without
setoff, counterclaim or deduction of any kind. 
  
 (b) Borrower hereby authorizes the Administrative Agent to debit
the Designated Deposit Account to effect any payment due to the Lenders or the Administrative Agent pursuant to this Agreement. Any resulting overdraft in the Designated Deposit Account shall be payable by Borrower to the Administrative Agent on the
next following Banking Day. 

 
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    (c) Each payment or prepayment on account of any Borrowing
shall be applied pro rata according to the outstanding Advances made by each Lender comprising such Borrowing. 
  
    (d) Each Lender shall use its best efforts to keep a record (in writing or by an electronic data entry system) of Advances made by it and payments received by it with respect to its Note and, subject to Section
10.6(g), such record shall, as against Borrower, be presumptive evidence of the amounts owing. Notwithstanding the foregoing sentence, the failure by any Lender to keep such a record shall not affect Borrower’s obligation to pay the
Obligations. 
  
     3.11 Taxes. 
  

   (a) Any and all payments by or for the account of Borrower hereunder, or in respect of the Notes or any other Loan Document, shall be made free and
clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding Income Taxes imposed on the Administrative Agent or any Lender
as a result of a present or former connection between the Administrative Agent or such Lender and the jurisdiction imposing such tax levy, impost or withholding or any political subdivision or taxing authority thereof or therein, other than any such
connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, the Notes or other Loan Documents, (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes or any other Loan Document being hereinafter referred to as “Taxes”). If Borrower shall be required
by law to deduct or withhold any Taxes from or in respect of any sum payable hereunder or under any Note or other Loan Documents to any Lender or the Administrative Agent, (i) the sum payable by Borrower shall be increased as may be necessary so
that after Borrower and such Lender, as the case may be, have made all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section 3.11) such Lender or the
Administrative Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions or withholdings been made, (ii) Borrower shall make all such deductions or withholdings and (iii) Borrower shall pay the full
amount deducted or withheld to the relevant taxation authority or other authority in accordance with applicable Law. 
  
    (b) In addition, Borrower shall pay to the relevant taxing authority in accordance with applicable Law, and indemnify and hold the Administrative Agent and Lenders harmless from, any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise from the delivery or registration of, performance under, or otherwise with respect to, this Agreement, the Notes, the Letters of Credit or any other Loan Document
(hereinafter referred to as “Other Taxes”). 

 
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    (c) Borrower shall indemnify each Lender and the Administrative
Agent for and hold them harmless against the full amount of Taxes and Other Taxes, and for the full amount of taxes of any kind imposed by any jurisdiction on amounts payable under this Section 3.11, imposed on or paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within thirty (30) days from the date such
Lender or the Administrative Agent (as the case may be) makes written demand therefor, which demand shall contain a reasonably detailed statement of the basis and calculation of the amount demanded. 
  
    (d) Within thirty (30) days after the date of any payment of Taxes or Other Taxes pursuant to Section 3.11(a) or
(b), Borrower shall furnish to the Administrative Agent, at its address referred to in Section 11.6, the original or a certified copy of a receipt evidencing such payment, to the extent that such receipt is issued therefor or such
other written proof of payment thereof that is reasonably satisfactory to the Administrative Agent. 
  
    (e) On or before the Closing Date (or on or before accepting an assignment or receiving a participation interest herein pursuant to Section 11.8, if applicable) and on or before the date, if any, such Lender
(or participant, as applicable) changes its applicable lending office by designating a different lending office (a “New Lending Office”), and from time to time thereafter as reasonably requested in writing by Administrative Agent or
Borrower (but only so long thereafter as such Lender or participation holder remains lawfully able to do so): (i) each Lender, and each holder of a participation interest herein, that is a United States person that is not a “domestic”
corporation (as defined in Section 7701 of the Code) shall provide each of the Administrative Agent and Borrower with one original Internal Revenue Service Form W-9, or any successor or other form prescribed by the Internal Revenue Service, properly
completed and duly executed by a Responsible Official, and satisfactory to the Administrative Agent and Borrower; and (ii) each Lender, and each holder of a participation interest herein, that is organized under the laws of a jurisdiction outside
the United States shall provide each of the Administrative Agent and Borrower with either: (A) two original Internal Revenue Service Forms W-8ECI, W-8BEN or W-8IMY, as appropriate, or any successor or other form prescribed by the Internal Revenue
Service, properly completed and duly executed by a Responsible Official, and satisfactory to the Administrative Agent and Borrower, or (B) a certificate that it is not (I) a “bank” (as defined in Section 881(c)(3)(A) of the Code), (II) a
ten-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of Borrower or (III) a controlled foreign corporation related to Borrower (within the meaning of Section 864(d)(4) of the Code), and two original Internal Revenue
Service Form W-8BEN or Form W-8IMY, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, properly completed and duly executed by a Responsible Official, satisfactory to the Administrative Agent and Borrower.
Each Lender and holder of a participation interest herein shall deliver such new forms and documents prescribed by the Internal Revenue Service upon the expiration or obsolescence of any previously delivered forms or other documents referred to in
this Section, or after the occurrence of any event requiring a change in the most recent forms or other documents 

 
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 delivered by such Lender or holder. Such Lender or holder shall promptly provide written notice to each of the Administrative Agent and Borrower
at any time it determines that it is no longer in a position to provide any previously delivered form or other document (or any other form of certification adopted by the Internal Revenue Service for such purpose). In the event that Borrower or the
Administrative Agent becomes aware that a participation has been granted pursuant to Section 11.8(e) to a financial institution, then, upon request made by Borrower or the Administrative Agent to the Lender that granted such participation,
such Lender shall cause such participant financial institution to deliver the same documents and information to Borrower and the Administrative Agent as would be required under this Section if such financial institution were a Lender. Each Lender
(and each participant, as applicable) providing one or more forms or certificates pursuant to this paragraph (e) hereby represents, covenants and warrants the accuracy of the information provided therein. 
  
    (f) Borrower shall not be required to pay any additional amounts or any indemnification pursuant to paragraph (a) or (c)
above to the extent that (i) the obligation to withhold any amounts with respect to such Taxes existed on the date such Lender became a party to this Agreement or, with respect to a participant, the date such participant received a participation
interest herein pursuant to Section 11.8(e), or, with respect to payments to a New Lending Office, the date such Lender (or participant, as applicable) designated such New Lending Office; provided, however, that clause (i) of
this paragraph (f) shall not apply (x) to any Lender (or participant, as applicable) or New Lending Office that becomes a Lender (or participant, as applicable) or New Lending Office as a result of any assignment, participation, transfer or
designation made at the request of Borrower or (y) to the extent the additional amounts owing to any Lender (or participant, as applicable) that becomes a Lender (or participant, as applicable) as a result of any assignment, participation or
transfer or to any Lender (or participant, as applicable), acting through a New Lending Office, would be entitled to receive (without regard to this paragraph (f)) do not exceed the additional amounts or indemnification that the Person making the
assignment, participation, transfer or designation to such Lender (or participant, as applicable) or such New Lending Office would have been entitled to receive in the absence of such assignment, participation, transfer or designation, or
(ii) the obligation to pay such indemnification or additional amounts would not have arisen but for a failure by such Lender (or participant, as applicable) to comply with the provisions of paragraph (e) above or (iii) such Lender (or participant,
as applicable) or New Lending Office is treated as a “conduit entity” within the meaning of U.S. Treasury Regulations Section 1.881-3, as in effect on the Closing Date; provided, however, that clause (iii) of this paragraph (f) shall not
apply to the extent the additional amounts owing to any Lender (or participant, as applicable) that is so treated as a “conduit entity” do not exceed the additional amounts or indemnification that the financing entity (within the meaning
of Treasury Regulations Section 1.881-3(a)(2) or any successor provision) or the Person who established or sponsored such Lender (or participant, as applicable) would have been entitled to receive if such financing entity or such Person had been a
Lender under this Agreement as of the date such Lender had become a party to this Agreement. 

 
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  (g) Each Lender (and participant, as applicable) agrees that, in the event
of a payment of an increased amount with respect to such Lender or participant pursuant to paragraph (a) above or a demand for indemnification pursuant to paragraph (c) above, Borrower shall have the right, upon notice to the Administrative Agent
and such Lender (or participant), to require such Lender (or participant) to use reasonable efforts to designate a New Lending Office for funding or booking its Loan under this Agreement or to assign its rights and obligations under this Agreement
to another of its offices, branches or affiliates if such designation or assignment (i) would eliminate or reduce amounts payable pursuant to paragraphs (a) or (c) above in the future, and (ii) would not subject such Lender (or participant) to any
unreimbursed costs or expenses and (iii) would not, in such Lender’s (or participant’s) reasonable judgment, otherwise be disadvantageous to such Lender (or participant). 
  
  (h) Any Lender (or participant, as applicable) that becomes aware that it is entitled to receive a refund (whether by way of a direct payment or by offset) that such
Lender (or participant, as applicable) can reasonably determine is allocable to or resulting from any increase in the amounts paid by Borrower or any indemnification by Borrower under paragraph (a) or (c) above, respectively, shall promptly notify
Borrower of the availability of such refund and shall, within thirty (30) days after the receipt of a request from Borrower, apply for such refund with Borrower being responsible for any incremental costs associated with such refund request. If any
Lender (or participant, as applicable) receives any such refund (as described in the preceding sentence), so long as no Default or Event of Default has occurred and is continuing, it shall promptly pay the amount of such refund (together with any
interest received thereon) to Borrower; provided, however, that Borrower, upon the request of the applicable Lender (or participant), shall promptly repay the amount paid over to Borrower in the event such Lender (or participant) is
required to repay such refund to the applicable authority. 
  
  (i) Nothing contained in this Section
3.11 shall require any Lender or the Administrative Agent to make available any of its tax returns or any other information that it deems to be confidential or proprietary. Nothing herein contained shall interfere with the rights of each Lender
to arrange its tax affairs in whatever manner it thinks fit and, in particular, each Lender shall be under no obligation to claim credit, relief, remission or repayment from or against its corporate profits or similar tax liability in respect of the
amount of such deduction or withholding in priority to any other claims, reliefs, credits or deductions available to it or to disclose any information relating to its tax affairs. 
  
 3.12 Funding Sources. Nothing in this Agreement shall be deemed to obligate any Lender to obtain the funds for any Advance in any particular place or manner or to
constitute a representation by any Lender that it has obtained or will obtain the funds for any Advance in any particular place or manner. 
  
 3.13 Failure to Charge Not Subsequent Waiver. Any decision by the Administrative Agent or any Lender not to require payment of any interest (including interest 

 
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 arising under Section 3.7), fee, cost or other amount payable under any Loan Document, or to calculate any amount payable by a particular
method, on any occasion shall in no way limit or be deemed a waiver of the Administrative Agent’s or such Lender’s right to require full payment of any interest (including interest arising under Section 3.7), fee, cost or
other amount payable under any Loan Document, or to calculate an amount payable by another method that is not inconsistent with this Agreement, on any other or subsequent occasion. 
  
 3.14 Administrative Agent’s Right to Assume Payments Will be Made. Unless the Administrative Agent shall have been notified by Borrower prior to the date on
which any payment to be made by Borrower hereunder is due that Borrower does not intend to remit such payment (or otherwise cause sufficient funds to be available in the Designated Deposit Account for debit pursuant to Section 3.10(b)), the
Administrative Agent may, in its discretion, assume that Borrower has remitted such payment (or caused funds sufficient to make such payment to be available) when so due and the Administrative Agent may, in its discretion and in reliance upon such
assumption, make available to each Lender on such payment date, an amount equal to such Lender’s share of such assumed payment. If Borrower has not in fact remitted such payment (or caused funds sufficient to make such payment to be available)
to the Administrative Agent, each Lender shall forthwith on demand repay to the Administrative Agent the amount of such assumed payment made available to such Lender, together with interest thereon in respect of each day from and including the date
such amount was made available by the Administrative Agent to such Lender to the date such amount is repaid to the Administrative Agent at the Federal Funds Rate. 
  
 3.15 Fee Determination Detail. The Administrative Agent, and any Lender, shall provide reasonable detail to Borrower regarding the manner in which the amount of any
payment to the Administrative Agent and the Lenders, or that Lender, under Article 3 has been determined, concurrently with demand for such payment. 
  
 3.16 Survivability. All of Borrower’s obligations under Sections 3.4 and 3.5 shall survive for the one year period following the Termination Date, and Borrower shall remain
obligated thereunder for all claims under such Sections made by any Lender to Borrower prior to the expiration of such period. 
  
 3.17 Replacement of Lenders under Certain Circumstances. Borrower shall be permitted to replace any Lender (or with respect to Section 3.11 only, any participant) that requests compensation, reimbursement,
indemnification or other payment pursuant to Section 3.5, 3.6, 3.11 or 11.11 for a reason that is not generally applicable to any other Lender (or participant) or if no other Lender (or participant) is making a request
for compensation, reimbursement, indemnification or other payment pursuant to such Sections; provided, however, that (a) such replacement does not conflict with any applicable Law, (b) no Default or Event of Default shall have occurred and be
continuing at the time of such replacement, (c) prior to any such replacement, such Lender (or participant) shall have taken no action under Section 3.5, 3.6 or 3.11 so as to eliminate the continued need for payment of amounts
owing pursuant to Section 3.5, 3.6, 3.11 or 11.11, (d) the replacement financial institution shall 

 
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 purchase or acquire, at par, all Notes and other amounts owing hereunder and under any other Loan Document to such replaced Lender (or
participant) on or prior to the date of replacement, (e) the replacement financial institution, if not already a Lender (or participant), shall be reasonably satisfactory to the Administrative Agent, (f) Borrower shall pay all additional amounts (if
any) required pursuant to Section 3.5, 3.6, 3.11 or 11.11, as the case may be, in respect of any period prior to the date on which such replacement shall be consummated, (g) any such replacement shall not be deemed to be
a waiver of any rights that Borrower, the Administrative Agent or any other Lender (or participant) shall have against the replaced Lender (or participant), and (h) if such replacement is to become a Lender, such replacement shall meet the minimum
criteria of an Eligible Assignee. In connection with any such replacement the replaced Lender (or participant) shall be obligated to make such replacement in accordance with the provisions of Section 11.8; provided, however, that to
the extent required to be paid, Borrower shall be obligated to pay any registration and processing fee referred to therein. 
  
 ARTICLE 4 
  
 REPRESENTATIONS AND WARRANTIES 
  
 In order to induce the Administrative Agent and the Lenders to enter into this Agreement and the other Loan Documents, to make Advances and to issue and participate in
Letters of Credit hereunder, Borrower represents and warrants to the Administrative Agent and each of the Lenders that: 
  
 4.1 Existence and Qualification; Power; Compliance With Laws. Borrower is a corporation duly formed, validly existing and in good standing under the Laws of the State of California. Borrower is duly qualified or registered to
transact business and is in good standing in the State of California, and each other jurisdiction in which the conduct of its business or the ownership or leasing of its Properties makes such qualification or registration necessary, except
where the failure so to qualify or register and to be in good standing could not reasonably be expected to have a Material Adverse Effect. Borrower has all requisite corporate power and authority to conduct its business, to own and lease its
Properties and to execute and deliver each Loan Document to which it is a Party and to perform its Obligations. As of the date hereof, the chief executive office of Borrower is located in Watsonville, California. All outstanding capital stock of
Borrower, is duly authorized, validly issued, fully paid and non-assessable, and no holder thereof has any enforceable right of rescission under any applicable state or federal securities or other Laws. Borrower is in compliance with all Laws and
other legal requirements applicable to its business, has obtained all authorizations, consents, approvals, orders, licenses and permits from, and has accomplished all filings, registrations and qualifications with, or obtained exemptions from any of
the foregoing from, any Governmental Agency that are necessary for the transaction of its business, except where the failure so to comply with Laws and other legal requirements applicable to its business, obtain authorizations, etc., file,
register, qualify or obtain exemptions could not reasonably be expected to have a Material Adverse Effect. 

 
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 4.2 Authority; Compliance With Other Agreements and Instruments and Government
Regulations. The execution, delivery and performance by Borrower, Parent or any of their collective Subsidiaries of the Loan Documents to which any of them is a Party have been duly authorized by all necessary corporate or company action, as
applicable, and do not and will not: 
  
 (a) Require any consent or approval not heretofore obtained
of any partner, director, stockholder, member, security holder or creditor of Borrower, Parent or any of their collective Subsidiaries; 
  
 (b) Violate or conflict with any provision of any of Borrower’s, Parent’s or any of their collective Subsidiaries’ charter, certificate of incorporation, bylaws, or other organizational
documents, as applicable; 
  
 (c) Result in or require the creation or imposition of any Lien
(other than pursuant to the Loan Documents) or Right of Others upon or with respect to any Property now owned or leased or hereafter acquired by Borrower, Parent or any of their collective Subsidiaries, except where the Lien or Right of
Others could not reasonably be expected to have a Material Adverse Effect; 
  
 (d) Constitute a
“transfer of an interest” or an “obligation incurred” that is avoidable by a trustee under Section 548 of the Bankruptcy Code of 1978, as amended, or constitute a “fraudulent conveyance,” “fraudulent
obligation” or “fraudulent transfer” within the meanings of the Uniform Fraudulent Conveyances Act or Uniform Fraudulent Transfer Act, as enacted in any applicable jurisdiction; 
  

(e) Violate any Requirement of Law applicable to Borrower, Parent or any of their collective Subsidiaries except where the violation could not
reasonably be expected to have a Material Adverse Effect; or 
  
 (f) Result in a breach of or
constitute a default under, or cause or permit the acceleration of any obligation owed under, any indenture or loan or credit agreement or any other Contractual Obligation to which any of Borrower, Parent or any of their collective Subsidiaries is a
party or by which any of Borrower, Parent or any of their collective Subsidiaries or any of their respective Property is bound or affected except where the default under any Contractual Obligation, or any indenture, loan or credit agreement could
not reasonably be expected to have a Material Adverse Effect. 
  
 4.3 No Governmental Approvals Required.
Except as previously obtained or made, or as timely made as required pursuant to the Security Documents, no authorization, consent, approval, order, license or permit from, or filing, registration or qualification with, any Governmental Agency is or
will be required to authorize or permit under applicable Laws the execution, delivery and performance by Borrower, Parent or any of their collective Subsidiaries of the Loan Documents to which any of them is a Party. 

 
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 4.4 Parent and Subsidiaries. 
  
 (a) Schedule 4.4 hereto (as supplemented by Borrower pursuant to Section 5.12) correctly sets forth as of the date hereof
(and the date of any such supplement pursuant to Section 5.12) the names, form of legal entity, number of shares of capital stock or membership or other equity interests, as applicable, issued and outstanding, number of shares of capital
stock or membership or other equity interests, as applicable, owned by Borrower, Parent or any Subsidiary of Borrower or Parent (specifying such owner) and jurisdictions of organization of all Subsidiaries of Borrower or Parent. Except as
described in Schedule 4.4 (as supplemented by Borrower on each Compliance Certificate), as of the date hereof (and the date any such Compliance Certificate is delivered pursuant to the terms of this Agreement) none of Borrower, Parent or any
of their Subsidiaries owns any capital stock, membership interest, other equity interest or debt Security which is convertible, or exchangeable, for capital stock, membership interests or other equity interests in any Person, other than a Subsidiary
of Parent, which in any such case has an original cost in excess of $250,000. Unless otherwise indicated in Schedule 4.4 (as supplemented by Borrower on each Compliance Certificate), as of the date hereof (and the date any such Compliance
Certificate is delivered pursuant to the terms of this Agreement) all of the outstanding shares of capital stock, all of the outstanding membership interests or all of the units of other equity interest, as the case may be, of each Subsidiary are
owned of record and beneficially by Borrower or Parent, there are no outstanding options, warrants or other rights to purchase capital stock of any such Subsidiary, and all such shares, membership interests or other equity interests so owned are
duly authorized, validly issued, fully paid and non-assessable, and were issued in compliance with all applicable state and federal securities and other Laws, and are free and clear of all adverse claims other than Permitted Encumbrances described
in paragraph (b) of the definition of that term. 
  
 (b) Parent and each of Borrower’s or Parent’s
Subsidiaries is a legal entity of the type described in Schedule 4.4 (as supplemented by Borrower on each Compliance Certificate) duly formed, validly existing and, if such concept is legally recognized in such Parent’s or
Subsidiary’s jurisdiction of organization, in “good standing” under the Laws of its jurisdiction of organization, is duly qualified to do business as a foreign organization and, if such concept is legally recognized in any applicable
jurisdiction, is in “good standing” as such in each jurisdiction in which the conduct of its business or the ownership or leasing of its Properties makes such qualification necessary (except where the failure to be so duly qualified
and in good standing could not reasonably be expected to have a Material Adverse Effect), and has all requisite corporate or other organizational power and authority to conduct its business and to own and lease its Properties. 

 
 (c) Parent and each of Borrower’s or Parent’s Subsidiaries is in compliance with all Laws and other requirements
applicable to its business and has obtained all authorizations, consents, approvals, orders, licenses, and permits from, and each such Subsidiary has accomplished all filings, registrations, and qualifications with, or obtained exemptions from any
of the foregoing from, any Governmental Agency that are necessary for 

 
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 the transaction of its business, except where the failure to be in such compliance, obtain such authorizations, consents, approvals,
orders, licenses, and permits, accomplish such filings, registrations, and qualifications, or obtain such exemptions, could not reasonably be expected to have a Material Adverse Effect. 
  
 4.5 Financial Statements. Borrower has furnished to the Lenders (a) the audited consolidated financial statements of Borrower, Parent and their collective
Subsidiaries for the Fiscal Year ended December 29, 2001 and (b) the unaudited consolidated financial statements of Borrower, Parent and their collective Subsidiaries for the nine month fiscal period ended September 28, 2002 subject to year end
adjustments (none of which individually or in the aggregate are materially adverse to Parent, Borrower and their Subsidiaries taken as a whole). Such financial statements fairly present in all material respects the financial condition, results of
operations and cash flow of Borrower, Parent and their collective Subsidiaries, as of such dates and for such periods in conformity with GAAP consistently applied subject only to normal year-end accruals and audit adjustments as noted above.

  
 4.6 No Other Liabilities; No Material Adverse Change. Borrower, Parent and their collective Subsidiaries
do not have any material liability or material contingent liability as of the Closing Date or as of the last day of any Fiscal Quarter except (i) as of the Closing Date, as disclosed on Schedule 4.6 or as disclosed or provided for in the
financial statements described in Section 4.5 or as assumed pursuant to the Asset Purchase Agreement, or (ii) as of the last day of any Fiscal Quarter or Fiscal Year, as applicable, following the Closing Date, as disclosed or provided for in
the financial statements delivered for such Fiscal Quarter or Fiscal Year to the Administrative Agent pursuant to clause (a) or (b) of Section 7.1 and in the Compliance Certificate delivered concurrently with such financial statements. None
of Borrower, Parent or any of their Subsidiaries, other than an adequately capitalized limited liability company or corporate Subsidiary formed to invest in such partnership or joint venture, has any direct or indirect obligation or liability,
contingent or otherwise, as a partner or joint venturer in any partnership or joint venture. No event, occurrence or development has occurred that could reasonably be expected to result in a material adverse change in the business, assets,
operations or condition (financial or otherwise) of Borrower, Parent and their subsidiaries (taken as a whole) since the last day of the third quarter of Fiscal Year 2002. 
  
 4.7 Title to and Location of Property. Except as set forth on Schedule 4.7, Borrower, Parent and their collective Subsidiaries have valid title to, or a valid
leasehold interest in the Property material to their respective business, other than items of Property or exceptions to title which are in each case immaterial and Property subsequently sold or disposed of in the ordinary course of
business. Such Property is free and clear of all Liens and Rights of Others, other than Liens or Rights of Others described in Schedule 4.7A and Permitted Encumbrances, other encumbrances permitted pursuant to Section
6.9, and Permitted Rights of Others. As of the Closing Date and as of the last day of each Fiscal Quarter, all Property of Borrower, Parent and their collective Subsidiaries is located at one of the locations described in Schedule 4.7B
(as supplemented by Borrower on each Compliance Certificate) other than (a) property in transit in the ordinary course of business and (b) non- 

 
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 material property temporarily removed from any such location in the ordinary course of business. Borrower, Parent and their collective
Subsidiaries have complied in all material respects with all material obligations under all material leases to which any of them is a party and enjoys peaceful and undisturbed possession under such leases, the failure to comply with which could not
reasonably be expected to result in a Material Adverse Effect. 
  
 4.8 Intangible Assets. Borrower, Parent and
their collective Subsidiaries own, or possess the right to use to the extent necessary in their respective businesses, all material trademarks, trade names, copyrights, patents, patent rights, computer software, licenses and other Intangible Assets
that are used in the conduct of their businesses as now operated, and, except as set forth on Schedule 4.8, no such Intangible Asset, to the best knowledge of Borrower, conflicts with the valid trademark, trade name, copyright, patent, patent
right or Intangible Asset of any other Person to the extent that such conflict could reasonably be expected to have a Material Adverse Effect. Schedule 4.8 (as supplemented by Borrower on each Compliance Certificate) sets forth all material
patents, patent applications, trademarks, trade names and trade styles used by Borrower, Parent and their collective Subsidiaries on the Closing Date (and the date any such Compliance Certificate is delivered pursuant to the terms of this
Agreement). 
  
 4.9 Litigation. Except for (a) any matter fully covered as to subject matter and amount
(subject to applicable deductibles and retentions) by insurance for which the insurance carrier has not asserted lack of subject matter coverage or reserved its right to do so, (b) any matter, or series of related matters, involving a claim against
Borrower, Parent or any of their Subsidiaries that could not reasonably be expected to have a Material Adverse Effect, (c) matters of an administrative nature not involving a claim or charge against Borrower, Parent or any Subsidiary of Borrower or
Parent and (d) matters set forth in Schedule 4.9, there are no actions, suits, proceedings or investigations pending as to which Borrower, Parent or any of their Subsidiaries have been served or have received notice or, to the actual
knowledge of Borrower threatened against Borrower, Parent or any of their Subsidiaries or any Property of any of them before any Governmental Agency. None of Borrower, Parent or their collective Subsidiaries, has been indicted or convicted in
connection with or is engaging in any criminal conduct which constitutes a felony, or is currently subject to any lawsuit or proceeding or, to the best of Borrower’s knowledge, under investigation in connection with any anti-racketeering or
criminal conduct or activity which constitutes a felony nor, to the actual knowledge of Borrower, is any executive officer of any such Persons the subject of any of the foregoing where such action could reasonably be expected to have a Material
Adverse Effect on Borrower, Parent or any of their Subsidiaries. 
  
 4.10 Binding Obligations. Each of the
Loan Documents to which Borrower, Parent or any of their collective Subsidiaries is a Party will, when executed and delivered by Borrower, constitute the legal, valid and binding obligation of Borrower, Parent and any of their collective
Subsidiaries to the extent they are a Party thereto, enforceable against Borrower, Parent and any of their collective Subsidiaries to the extent they are a Party thereto in accordance with its terms, except as enforcement may be limited by
Debtor Relief Laws or 

 
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 equitable principles relating to the granting of specific performance and other equitable remedies as a matter of judicial discretion.

  
 4.11 No Default. No event has occurred and is continuing that is a Default or Event of Default.

  
 4.12 ERISA. 
  
 (a) With respect to each Pension Plan: 
  
 (i) such
Pension Plan complies in all material respects with ERISA and any other applicable Laws to the extent that noncompliance could reasonably be expected to have a Material Adverse Effect; 
  
 (ii) such Pension Plan has not incurred any “accumulated funding deficiency” (as defined in Section 302 of ERISA) that could reasonably be
expected to have a Material Adverse Effect; 
  
 (iii) no “reportable event” (as defined in
Section 4043 of ERISA, but excluding such events as to which the PBGC has by regulation waived the requirement therein contained that it be notified within thirty days of the occurrence of such event) has occurred that could reasonably be
expected to have a Material Adverse Effect; and 
  
 (iv) neither Borrower, Parent nor any of their
Subsidiaries has engaged in any non-exempt “prohibited transaction” (as defined in Section 4975 of the Code) that could reasonably be expected to have a Material Adverse Effect. 
  
 (b) Neither Borrower, Parent nor any of their Subsidiaries has incurred or expects to incur any withdrawal liability to any Multiemployer Plan that could reasonably be
expected to have a Material Adverse Effect. 
  
 (c) None of Borrower, Parent or any of their Subsidiaries has (i)
engaged in any transaction prohibited by any Governmental Rule applicable to any Foreign Plan; (ii) failed to make full payment when due of all amounts due as contributions to any Foreign Plan; or (iii) otherwise failed to comply with the
requirements of any Governmental Rule applicable to any Foreign Plan; where singly or cumulatively, the above could reasonably be expected to result in a Material Adverse Effect. 
  
 4.13 Regulation T, U and X; Investment Company Act. No part of the proceeds of any Advance hereunder will be used to purchase or carry, or to extend credit to others
for the purpose of purchasing or carrying, any Margin Stock in violation of Regulations T, U or X. Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or
carrying any such Margin Stock. Neither 

 
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 Borrower, Parent nor any of their collective Subsidiaries is or is required to be registered as an “investment company” under the
Investment Company Act of 1940. 
  
 4.14 Disclosure. No written statement made by a Senior Officer of Borrower
to the Administrative Agent or any Lender pursuant to this Agreement, or in connection with any Advance, as of the date thereof contained any untrue statement of a material fact or omitted a material fact necessary to make the statement made not
misleading in light of all the circumstances existing at the date the statement was made. There is no fact known to Borrower (other than matters of a general economic nature or matters generally applicable to businesses of the types engaged in by
Borrower) which would constitute a Material Adverse Effect that has not been disclosed in writing to the Administrative Agent and the Lenders. 
  
 4.15 Tax Liability. Borrower, Parent and their collective Subsidiaries have (i) filed, or caused to be filed or included in, (a) all Federal tax returns, and (b) all state, local and foreign tax
returns which are required to be filed, except for immaterial returns other than state income tax returns, and which returns are filed promptly upon receipt of notice that such returns have not been filed, and (ii) have paid, or made provision for
the payment of, all taxes shown thereon to be due or pursuant to any assessment received by Borrower, Parent or any of their collective Subsidiaries, except (A) such taxes, if any, as are being contested in good faith by appropriate
proceedings and as to which adequate reserves in accordance with GAAP have been established and maintained and (B) immaterial taxes; in each case, so long as no material Property of Borrower, Parent or any of their Subsidiaries is at impending risk
of being seized, levied upon or forfeited. 
  
 4.16 Projections. 
  
 (a) As of the Closing Date, to the best knowledge of Borrower the assumptions set forth in the Projections are reasonable and consistent
with each other and with all facts known to Borrower other than to the extent the disclosures set forth on Schedule 4.16 would affect such assumptions, and the Projections are reasonably based on such assumptions. Nothing in
this Section 4.16 shall be construed as a representation or covenant that the Projections in fact will be achieved. 
  
 (b) As of the date delivered, all projections furnished by Borrower to the Administrative Agent and the Lenders in connection with the Loan Documents and the transactions contemplated thereby have been prepared on a basis consistent
with the historical financial statements described above, except as described therein, have been based upon reasonable assumptions and represent, as of their respective dates of presentations, Borrower’s good faith estimates of the future
performance of Borrower, Parent and their respective Subsidiaries, and as of such respective dates Borrower had no reason to believe that such estimates and assumptions are not reasonable. Nothing in this Section 4.16 shall be construed as a
representation or covenant that the projections in fact will be achieved. 

 
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 4.17 Hazardous Materials. Except as described in Schedule 4.17, (a) neither Borrower, Parent nor any of
their Subsidiaries at any time has disposed of, discharged, released or threatened the release of any Hazardous Materials on, from or under the Real Property in violation of any Hazardous Materials Law that would individually or in the aggregate
constitute a Material Adverse Effect, (b) no condition exists that violates any Hazardous Material Law affecting any Real Property except for such violations that could not individually or in the aggregate reasonably be expected to constitute
a Material Adverse Effect, (c) no Real Property or any portion thereof is or has been utilized by Borrower, Parent or any of their Subsidiaries as a site for the manufacture of any Hazardous Materials and (d) to the extent that any Hazardous
Materials are used, generated or stored by Borrower, Parent or any of their Subsidiaries on any Real Property, or transported to or from such Real Property by Borrower, Parent or any of their Subsidiaries, such use, generation, storage and
transportation are in compliance with all Hazardous Materials Laws except to the extent such non-compliance could not reasonably be expected to constitute or create a Material Adverse Effect. 
  

4.18 Employee Matters. There is no strike, work stoppage or labor dispute with any union or group of employees pending or, to the best knowledge of Borrower
overtly threatened involving Borrower, Parent or any of their Subsidiaries that individually or in the aggregate could reasonably be expected to have a Material Adverse Effect. 
  
 4.19 Fiscal Year. Borrower, Parent and their Subsidiaries each operate on a 52/53 week fiscal year ending on the Saturday closest to December 31. 

 
 4.20 Solvency. After giving effect to this Agreement and the other Loan Documents (including after giving effect to
Advances under this Agreement as of the Closing Date), Borrower, Parent and each of their Subsidiaries shall be Solvent. 
  
 4.21 Brokerage Commissions. Except as set forth on Schedule 4.21, no Person, other than the Administrative Agent and the Lenders, is entitled to receive any brokerage commission, finder’s fee or similar fee or
payment in connection with the extensions of credit contemplated by this Agreement as a result of any agreement entered into by any Party. No brokerage or other fee, commission or compensation is to be paid by the Lenders with respect to the
extensions of credit contemplated hereby as a result of any agreement entered into by Borrower, and Borrower agrees to indemnify the Administrative Agent and the Lenders against any such claims for brokerage fees or commissions and to pay all
expenses including, without limitation, attorney’s fees incurred by the Lenders in connection with the defense of any action or proceeding brought to collect any such brokerage fees or commissions. 
  
 4.22 Real Property. Schedule 4.22 (as supplemented by Borrower on each Compliance Certificate) sets forth as of the Closing
Date and as of the last day of each Fiscal Quarter a summary description and, to the extent readily available, legal description of (a) all real property leasehold estates held by the Borrower, Parent or their Subsidiaries consisting of or related
to (i) stores, (ii) distribution centers, and (iii) all storage and other locations except, 

 
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 if the aggregate fair market value of all Property at all such storage and other locations is less than $100,000, such Schedule as so
supplemented may exclude any such storage or other location at which the aggregate fair market value of all Property is less than $25,000 and (b) all real property owned by Borrower, Parent or their Subsidiaries, which summary is accurate and
complete in all material respects. The leases creating such real property leasehold estates are in full force and effect and create a valid leasehold estate on the terms of such lease, and none of Borrower, Parent or their Subsidiaries is in default
or breach of any thereof, except as could not reasonably be expected to have a Material Adverse Effect. The Leasehold Analysis Report (as supplemented by Borrower on each Compliance Certificate unless and until the Triggering Event has occurred)
sets forth as of the date delivered and as of the last day of (i) if the Triggering Event has not occurred, each Fiscal Quarter or (ii) if the Triggering Event has occurred, the second Fiscal Quarter of Fiscal Year 2004 a summary description and, to
the extent readily available, legal description of all locations of Borrower, Parent and any of their Subsidiaries which are Non-Contingent Contractual Lien Locations, Contingent Contractual Lien Locations or Material Statutory Lien Locations as
well as the monthly Rental Expense (or the equivalent of the then applicable monthly Rental Expense if any such Rental Expense is not calculated on a monthly basis and as to any payment based on a “percentage”, Rental Expense shall include
a reasonable good faith estimate of the monthly amount (or monthly equivalent) of any such payment) and lease expiration date for each Non-Contingent Contractual Lien Location, Contingent Contractual Lien Location and Material Statutory Lien
Locations. The copies of such real property leases heretofore furnished to the Administrative Agent are true copies and there are no amendments thereto copies of which have not been furnished to the Administrative Agent. 
  
 4.23 Creation, Perfection and Priority of Liens. The execution and delivery of the Security Documents by the Parties, together with
the filing of any UCC financing statements and the recording of the U.S. Patent and Trademark Office and U.S. Copyright Office filings delivered to the Administrative Agent for filing and recording, are effective to create in favor of the
Administrative Agent for the benefit of itself and the Lenders, as security for the Obligations, a legal, valid and binding Lien on all of the Collateral. In the case of any Securities pledged to the Administrative Agent under the Security Agreement
(the “Pledged Securities”) and any pledged promissory notes, when any stock certificates representing such Pledged Securities and any such pledged promissory notes are delivered to the Administrative Agent duly endorsed in blank,
the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Parties in such Collateral, as security for the Obligations, assuming that the Administrative Agent does not have
notice of any adverse claim to the security, free of all adverse claims other than Permitted Encumbrances described in paragraph (b) of the definition of that term. In the case of deposit accounts and accounts with any securities intermediary
maintained in the United States of America and pledged to the Administrative Agent under the Security Agreement, when the Control Agreements have been duly executed and delivered by the applicable Party, the Administrative Agent and the applicable
depository bank or securities intermediary, as the case may be, the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Parties in such Collateral, as security for the

 
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 Obligations, in each case prior and superior to the Lien of any other Person (except as otherwise
expressly provided in Sections 9327 and 9328 of Article 9 of the UCC). In the case of the other Collateral described in the Security Agreement a security interest in which may be perfected by the filing of a financing statement under the UCC, when
UCC financing statements in appropriate form are filed in the applicable filing offices, the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Parties in such Collateral, as
security for the Obligations, prior and superior to the Lien of any other Person (except Permitted Encumbrances). 
  
 4.24 Operating Accounts. None of Borrower, Parent or their Subsidiaries maintains any deposit, checking, securities, brokerage or other similar account with any bank, savings association, financial institution or similar
financial intermediary which is not listed on Schedule 4.24 or the existence of which has not been disclosed to the Administrative Agent in writing. 
  
 4.25 Policies of Insurance. Each of the copies of the declaration pages, original binders, certificates of insurance and actual policy endorsements evidencing the policies of insurance related
to the Collateral, delivered to the Administrative Agent by Borrower is a true and correct and complete copy of the respective original thereof as in effect on the date hereof (and the date this representation and warranty is actually or deemed to
be re-represented and re-warranted) and no amendment or modification of said documents or instruments not included in such copy has been made. Such policies of insurance have not been terminated and are in full force and effect unless replaced or
Borrower or Parent has determined not to continue such coverage in the good faith exercise of its business judgment; provided that after such discontinuance Borrower, Parent and their Subsidiaries are in compliance with Section 5.4.
None of the Administrative Agent or Borrower, Parent or any of their Subsidiaries has received (i) a notice of non-payment of premium or termination related to any such policy or (ii) a notice of a breach related to any such policy which could
reasonably be expected to result in the termination of any such policy in either case which has not been fully cured or waived unless replaced as set forth in the prior sentence; and such policies of insurance have not been terminated and are in
full force and effect unless replaced as set forth in the prior sentence. 
  
 4.26 No Consignments. Except as
set forth on Schedule 4.26, none of Borrower, Parent or any of their Subsidiaries sells or otherwise disposes of inventory under a consignment or similar arrangement either as the consignor or consignee. 
  
 4.27 No Vehicle Inventory. Except as set forth on Schedule 4.27, no inventory of Borrower, Parent or any of their
Subsidiaries constitutes a vehicle requiring registration by Borrower, Parent or any of their Subsidiaries with the department of motor vehicles in any state or any similar agency. 
  
 4.28 Licenses/Inventory. No inventory of Borrower, Parent or any of their Subsidiaries incorporates the intellectual property of any Person which is incorporated
into 

 
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 such inventory under a license to Borrower, Parent or any of their Subsidiaries and for which the disposition of any such inventory by the
Administrative Agent or any Lender would require a consent from any such Person in order to dispose of such inventory. 
  
 4.29 Government Accounts Receivable. Schedule 4.29 (as supplemented by Borrower on each Compliance Certificate) sets forth as of the Closing Date and as of the last day of each Fiscal Quarter a detailed description of
each account receivable of Borrower, Parent or any of their Subsidiaries in an amount in excess of $100,000 which arises out of a contract with the United States of America or any department, agency, subdivision or instrumentality thereof, the
Administrative Agent. 
  
 4.30 West Marine FSC, Inc. West Marine FSC, Inc., a Barbados corporation, has ceased
doing business, has no liabilities or assets and will not incur or obtain any liabilities or assets. 
  
 4.31
Financing Statements. The following financing statements do not cover any property owned, used or in the possession of Borrower, Parent or any of their Subsidiaries except for property which is leased from or financed by the secured party
listed on any such financing statement but only to the extent such lease or financing is permitted by this Agreement: (a) UCC financing statement #94060211 filed with the California Secretary of State on March 25, 1994 naming West Marine Products,
Inc. as debtor and Northern Telecom Finance Corporation as secured party, (b) UCC financing statement #9814861117 filed with the California Secretary of State on May 27, 1998 naming West Marine Products, Inc. as debtor and IBM Credit Corporation as
secured party, (c) UCC financing statement #9802160376 filed with the California Secretary of State on January 15, 1998 naming West Marine Products, Inc. as debtor and IBM Credit Corporation as secured party, (d) UCC financing statement #0033360301
filed with the California Secretary of State on November 13, 2000 naming West Marine Products, Inc. as debtor and IBM Credit Corporation as secured party and (e) UCC financing statement #0129760792 filed with the California Secretary of State on
October 24, 2001 naming West Marine, Inc. as debtor and General Electric Capital Corporation as secured party (each a “Referenced Financing Statement” and collectively, the “Referenced Financing Statements”).

  
 4.32 Reaffirmation. Borrower shall be deemed to have reaffirmed, for the benefit of the Lenders and the
Administrative Agent, each representation and warranty contained in Article 4 on and as of the date of each making of any Advance and the issuance, extension, renewal, amendment or increase in the amount of any Letter of Credit (except for
representations and warranties expressly made as of a specified date, which shall be true as of such date). 
  

 
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 ARTICLE 5 
  
 AFFIRMATIVE COVENANTS 
  
 (OTHER THAN INFORMATION AND 
 REPORTING REQUIREMENTS) 
  
 So long as any Advance or Letter of
Credit remains unpaid, or any other non-contingent Obligation remains unpaid or unperformed, or any portion of any of the Commitments remains in force, Borrower shall, and shall cause each of its Parent, and each Subsidiary of Borrower and of Parent
to, unless the Requisite Lenders otherwise consent: 
  
 5.1 Payment of Taxes and Other Potential Liens. Pay
and discharge promptly all taxes, assessments and governmental charges or levies imposed upon any of them, upon their respective Property or any part thereof and upon their respective income or profits or any part thereof, except that
Borrower, Parent and their collective Subsidiaries shall not be required to pay or cause to be paid (a) any tax, assessment, charge or levy that is not yet past due, or is being contested in good faith by appropriate proceedings so long as the
relevant entity has established and maintains adequate reserves for the payment of the same in accordance with GAAP or (b) any immaterial tax; in each case, so long as no material Property of Borrower, Parent or any of their Subsidiaries is at
impending risk of being seized, levied upon or forfeited. 
  
 5.2 Preservation of Existence. Preserve and
maintain their respective existences (except as permitted by Section 6.4) in their respective jurisdictions of formation and all material authorizations, rights, franchises, privileges, consents, approvals, orders, licenses, permits,
or registrations from any Governmental Agency that are necessary for the transaction of their respective business and qualify and remain qualified to transact business in each jurisdiction in which such qualification is necessary in view of their
respective business or the ownership or leasing of their respective Properties except where the failure to so qualify or remain qualified could not reasonably be expected to have a Material Adverse Effect and except that any wholly owned
Subsidiary of Borrower or Parent may dissolve or liquidate into Borrower or Parent or another wholly owned Subsidiary of Borrower or Parent. 
  
 5.3 Maintenance of Properties. Maintain, preserve and protect all of their respective Properties in good order and condition, subject to wear and tear in the ordinary course of business, and not
permit any waste of their respective Properties and maintain ownership of all intellectual property and licenses thereof necessary for the operation of their business, except (a) that the failure to maintain, preserve and protect a particular
item of Property that is at the end of its useful life or that is not of significant value, either intrinsically or to the operations of Borrower, Parent and their collective Subsidiaries, shall not constitute a violation of this covenant, and (b)
this covenant shall not be construed to prohibit any Disposition otherwise permitted pursuant to Section 6.3. 
  
 5.4 Maintenance of Insurance. 
  
 (a) Maintain, or cause to be maintained, liability, casualty
and other insurance (subject to customary deductibles and retentions) in such amounts and against such risks as is carried by responsible companies engaged in similar businesses and owning similar 

 
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 assets; provided that any material change in the type, level or scope of insurance shall not be made without the prior written consent of
the Requisite Lenders; 
  
 (b) Furnish to any Lender or the Administrative Agent, upon written request, full
information as to the insurance carried; 
  
 (c) Carry and maintain each policy for such insurance with (A) a company
which is rated A or better by A.M. Best and Company at the time such policy is placed and at the time of each annual renewal thereof or (B) any other insurer which is satisfactory to the Administrative Agent; and 
  
 (d) Obtain and maintain endorsements reasonably acceptable to the Administrative Agent for such insurance naming the Administrative Agent
as an additional insured and as lender’s loss payee; 
  
 provided, however, that if any Party
shall fail to maintain insurance in accordance with this Section 5.4, or if any Party shall fail to provide the required endorsements with respect thereto, the Administrative Agent shall have the right (but shall be under no obligation) to
procure such insurance and Borrower agrees to reimburse the Administrative Agent for all costs and expenses of procuring such insurance. 
  
 5.5 Compliance With Laws. Comply with all Requirements of Law noncompliance with which could reasonably be expected to have a Material Adverse Effect. 
  
 5.6 Inspection Rights. Upon reasonable notice, at any time during regular business hours and, as requested by the Administrative Agent (but not so as to materially
interfere with the business of Borrower, Parent or any of their collective Subsidiaries) permit the Administrative Agent, or any Lender, or any authorized employee, agent or representative thereof, to examine, audit and make copies and abstracts
from the records and books of account of (including any software or CD Rom or other computer or electronic files relating thereto), and to visit and inspect the Properties of, Borrower, Parent and their collective Subsidiaries and to discuss
the affairs, finances and accounts of Borrower, Parent and their collective Subsidiaries with any of their officers, key employees or accountants and, upon request, furnish promptly to the Administrative Agent or any Lender true copies of all
financial information made available to the board of directors or audit committee of the board of directors of Borrower. If any of the Properties, books or records of Borrower, Parent or any of their collective Subsidiaries are in the possession of
a third party, Borrower authorizes that third party to permit the Administrative Agent or any Lender or any agents thereof to have access to perform inspections or audits and to respond to the Administrative Agent’s or any Lender’s request
for information concerning such Properties, books and records. Notwithstanding the foregoing, no prior notice of any such examination, audit, visit, inspection or discussion shall be required if an Event of Default has occurred and remains in effect
or if the Administrative Agent has reason to believe that an Event of Default then exists. 

 
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 5.7 Keeping of Records and Books of Account. Keep adequate records and
books of account reflecting all financial transactions in conformity with GAAP, consistently applied, and in material conformity with all applicable requirements of any Governmental Agency having regulatory jurisdiction over Borrower, Parent and
their collective Subsidiaries. 
  
 5.8 Compliance With Agreements. Promptly and fully comply with all
Contractual Obligations to which any one or more of them is a party, except for any such Contractual Obligations (a) the performance of which would cause a Default or Event of Default or (b) then being contested by any of them in good faith
by appropriate proceedings or (c) if the failure to comply could not reasonably be expected to have a Material Adverse Effect. 
  
 5.9 Use of Proceeds. Use the proceeds of all Advances to (a) refinance certain Indebtedness of Borrower, Parent and their collective Subsidiaries, (ii) finance certain acquisitions (including to pay the cash payment due
pursuant to the Asset Purchase Agreement upon the consummation of the transactions contemplated thereby) and (c) provide for the working capital and general corporate purpose needs of Borrower, Parent and their collective Subsidiaries. 

 
 5.10 Hazardous Materials Laws. Keep and maintain all Real Property and each portion thereof in compliance with all
applicable Hazardous Materials Laws, except where the failure to so comply could not be reasonably expected to have a Material Adverse Effect, and promptly notify the Administrative Agent in writing (attaching a copy of any pertinent written
material), of any of the following which could reasonably be expected to have a Material Adverse Effect: (a) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened in writing by a
Governmental Agency pursuant to any applicable Hazardous Materials Laws, (b) any and all claims made or threatened in writing by any Person against Borrower, Parent or any of their collective Subsidiaries relating to damage, contribution, cost
recovery, compensation, loss or injury resulting from any Hazardous Materials and (c) discovery by any Senior Officer of Borrower, Parent or any of their collective Subsidiaries of any occurrence or condition on any real property adjoining or in the
vicinity of such Real Property that could reasonably be expected to cause such Real Property or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of such Real Property under any applicable
Hazardous Materials Laws. 
  
 5.11 Syndication Process. Perform its obligations regarding syndication as
required by that certain commitment letter between Borrower and Wells Fargo dated December 12, 2002. 
  
 5.12 New
Subsidiaries. Borrower shall, at its own expense, promptly, and in any event within ten (10) Banking Days after the formation or acquisition of any Subsidiary of Parent or Borrower, (A) notify the Administrative Agent of such event (which notice
shall be deemed to constitute an update to Schedule 4.4), (B) amend the Security Documents as 

 
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 appropriate in light of such event to pledge to the Administrative Agent for the benefit of itself and the Lenders 100% of the Securities of
each such Person and execute and deliver all documents or instruments required thereunder or appropriate to perfect the security interest created thereby, (C) cause each such Subsidiary to become a party to the appropriate Guaranty, the Security
Agreement and each other applicable Security Document in accordance with the terms thereof or cause each such Subsidiary which is organized outside the laws of the United States to execute such security agreements and guaranties as the
Administrative Agent may reasonably request, (D) deliver to the Administrative Agent all stock certificates and other instruments constituting Collateral thereby free and clear of all adverse claims, accompanied by undated stock powers or other
instruments of transfer executed in blank (and take such other steps as may be reasonably requested by the Administrative Agent to perfect the Administrative Agent’s Lien in such Collateral in compliance with any applicable laws of
jurisdictions outside of the United States of America), (E) cause each document (including each UCC financing statement or the equivalent thereof and each filing with respect to intellectual property owned by each new Subsidiary) required by law or
reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent for the benefit of the Lenders a valid, legal and perfected first-priority security interest in and lien on
the Collateral subject to the Security Documents to be so filed, registered or recorded and evidence thereof delivered to the Administrative Agent and (F) deliver an opinion of counsel in form and substance reasonably satisfactory to the
Administrative Agent with respect to each new Subsidiary and the matters set forth in this Section. 
  
 5.13
Appraisals. During the existence of an Event of Default or upon the written request of any Lender acting pursuant to any Requirement of Law, Borrower agrees that the Administrative Agent may, at the expense of Borrower, commission an
appraisal of any property (i) to which any Party holds legal title and (ii) which is encumbered by any Security Document. 
  
 5.14 Additional Documents/Action. 
  
 (a) Obtain and deliver to the Administrative Agent all
of the following: 
  
 (i) within 30 days after the Closing Date, a written report detailing which locations of
Borrower, Parent and any of their Subsidiaries are Non-Contingent Contractual Lien Locations, Contingent Contractual Lien Locations or Material Statutory Lien Locations as well as the monthly Rental Expense (or the equivalent of the then applicable
monthly Rental Expense if any such Rental Expense is not calculated on a monthly basis and as to any payment based on a “percentage”, Rental Expense shall include a reasonable good faith estimate of the monthly amount (or monthly
equivalent) of any such payment) and lease expiration date for each Non-Contingent Contractual Lien Location, Contingent Contractual Lien Location and Material Statutory Lien Locations in form and substance reasonably satisfactory to the
Administrative Agent (the “Leasehold Analysis Report”); 

 
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 (ii) a Landlord Subordination for each leased location of Borrower, Parent and
any of their Subsidiaries as follows:  
  
 (1) within 90 days after the Closing Date, a
Landlord Subordination covering each Non-Contingent Contractual Lien Location (whether or not such location is also a Material Statutory Lien Location), provided that the failure to obtain any such Landlord Subordination under this clause (1)
within the required time period shall not result in an Event of Default but instead shall result in an availability reserve in respect of such location (until such time as a Landlord Subordination covering such Non-Contingent Contractual Lien
Location is delivered to the Administrative Agent) equal to the lesser of: 
  
 (A) the aggregate
value (based on the lower of cost or market) of all inventory located at such Non-Contingent Contractual Lien Location determined as of the end of such 90 day period and quarterly thereafter as reflected on a quarterly inventory report delivered to
the Administrative Agent and the Lenders within forty five (45) days of the end of each Fiscal Quarter which shall be in form and substance reasonably acceptable to the Administrative Agent and shall provide all information necessary and reasonably
requested by the Administrative Agent for purposes of determining the applicable availability reserve hereunder; and 
  
 (B) the sum of all lease payments remaining under the then applicable lease or other agreement for such Non-Contingent Contractual Lien Location; 
  
 (2) within 90 days after the Closing Date, a Landlord Subordination covering each Material Statutory Lien Location (other than any Material Statutory Lien
Location which is also a Non-Contingent Contractual Lien Location which will be subject to clause (1) above) and each Contingent Contractual Lien Location, provided that the failure to obtain any such Landlord Subordination under this clause
(2) within the required time period shall not result in an Event of Default but instead shall result in an availability reserve in respect of such location (until such time as a Landlord Subordination covering such Contingent Contractual Lien
Location or Material Statutory Lien Location (as the case may be) is delivered to the Administrative Agent) equal to: (x) in the case of a Contingent Contractual Lien Location (other than any Contingent Contractual Lien Location which is also a
Material Statutory Lien Location which will be subject to clause (y) below), one (1) times the then applicable monthly Rental Expense (or the equivalent of one (1) times the then applicable monthly Rental Expense if any such Rental Expense is not

 
 -85- 

  
 calculated on a monthly basis and as to any payment based on a
“percentage”, Rental Expense shall include a reasonable good faith estimate of the monthly amount (or monthly equivalent) of any such payment) and (y) in the case of a Material Statutory Lien Location, three (3) times the then applicable
monthly Rental Expense (or the equivalent of three (3) times the then applicable monthly Rental Expense if any such Rental Expense is not calculated on a monthly basis and as to any payment based on a “percentage”, Rental Expense shall
include a reasonable good faith estimate of the monthly amount (or monthly equivalent) of any such payment); 
  
 (3) within 180 days after the Closing Date, a Landlord Subordination covering each location not included in clauses (1) and (2) of this clause (ii), provided that the failure to obtain any such Landlord Subordination under
this clause (3) within the required time period shall not result in an Event of Default if Borrower, Parent and their Subsidiaries use commercially reasonably efforts to obtain such Landlord Subordination; 
  
 (iii) for any locations leased by Parent, Borrower or any of their Subsidiaries after the Closing Date or for which a lease was renewed
or extended after the Closing Date, a Landlord Subordination covering such location concurrent with the execution of any such lease or the execution of or the effective date (if no execution is required) of any such renewal or extension,
provided that: 
  
 (1) as to each Non-Contingent Contractual Lien Location (whether or not
such location is also a Material Statutory Lien Location), the failure to obtain any such Landlord Subordination under this clause (iii) shall not result in an Event of Default but instead shall result in an availability reserve in respect of such
location (until such time as a Landlord Subordination covering such Non-Contingent Contractual Lien Location is delivered to the Administrative Agent) equal to the amount as would be derived in accordance with Section 5.14(a)(ii)(1) (without
regard to the 90 day period referenced therein); 
  
 (2) as to each Contingent Contractual Lien
Location and each Material Statutory Lien Location (other than any Material Statutory Lien Location which is also a Non-Contingent Contractual Lien Location which will be subject to clause (1) above), the failure to obtain any such Landlord
Subordination under this clause (iii) shall not result in an Event of Default but instead shall result in an availability reserve in respect of such location (until such time as a Landlord Subordination covering such Contingent Contractual Lien
Location or Material Statutory Lien Location (as the case may be) is delivered to the Administrative Agent) equal to the amount as would be derived in accordance with Section 5.14(a)(ii)(2) (without regard to the 90 day period referenced
therein); and 

 
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 (3) as to each location not included in clauses (1) and (2) of
this clause (iii), the failure to obtain any such Landlord Subordination under this clause (iii) shall not result in an Event of Default if Borrower, Parent and their Subsidiaries use commercially reasonably efforts to obtain such Landlord
Subordination; 
  
 (iv) a warehouse agreement for each warehouse utilized by Borrower, Parent and any of their
Subsidiaries; 
  
 (v) a licensor’s consent from each licensor of intellectual property to Borrower, Parent
and/or any of their Subsidiaries which is incorporated into such inventory under a license to Borrower, Parent and any of their Subsidiaries and for which the disposition of any such inventory by the Administrative Agent or any Lender would require
a consent from any such Person in order to dispose of such inventory; and 
  
 (vi) a mortgagee waiver from each
mortgagee of any real property owned by Borrower, Parent and any of their Subsidiaries, in the case of each of the foregoing, in form and substance reasonably acceptable to the Administrative Agent. 
  
 (b) Notify the Administrative Agent in writing if any account receivable of Borrower, Parent or any of their Subsidiaries in an amount in
excess of $100,000 arises out of a contract with the United States of America or any department, agency, subdivision or instrumentality thereof, and execute any instruments and take any other action reasonably required or requested by the
Administrative Agent to comply with the provisions of the Federal Assignment of Claims Act in respect of any such account receivable. 
  
 (c) For purposes of calculating the availability reserves under Section 5.14(a)(ii)(1) and (2) and Section 5.14(a)(iii)(1) and (2), within 90 days of the Closing Date, deliver to the Administrative Agent a copy of any
lease or other agreement for each Non-Contingent Contractual Lien Location, Contingent Contractual Lien Location and Material Statutory Lien Location existing as of the end of such 90 day period (and for each new lease, other agreement or renewal
for any Non-Contingent Contractual Lien Location, Contingent Contractual Lien Location or Material Statutory Lien Location for which a Landlord Subordination has not been obtained and delivered to the Administrative Agent within 30 calendar days of
entering into such new lease, other agreement or renewal) in each case certified as true and correct by Borrower. 
  
 (d) The Administrative Agent shall establish, increase, decrease or otherwise adjust the Aggregate Availability Reserve Amount as contemplated above from time to time as it deems appropriate or at the request of Borrower based on the
information available to the Administrative Agent at the time of any such establishment, increase, decrease or adjustment. 
  
 (e) If (i) Borrower timely delivers a Compliance Certificate and financial statements for the second Fiscal Quarter of Fiscal Year 2004 in form and substance 

 
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 reasonably acceptable to the Administrative Agent and (ii) no Event of Default has occurred and is
continuing as of the end of the second Fiscal Quarter of Fiscal Year 2004 and as of the Adjustment Date (the satisfaction of all these condition shall be referred to herein as the “Triggering Event”), then, effective as of the
Adjustment Date, the following shall apply to this Section 5.14: 
  
 (1) the reporting
requirements under Section 5.14(a)(ii)(1)(A) and Section 5.14(c) shall have no further force or effect, 
  
 (2) the Aggregate Availability Reserve Amount as in effect on the Adjustment Date (the “Final Aggregate Availability Reserve Amount”) shall cease to be increased, decreased or adjusted (except as set forth
in clause (3) below) and on the Adjustment Date the then applicable aggregate Commitments shall be reduced by the Final Aggregate Availability Reserve Amount as set forth in Section 2.6(b)(i)(2), 
  
 (3) after giving effect to the reduction of the Commitments as set forth in Section 2.6(b)(i)(2), the Aggregate
Availability Reserve Amount shall be permanently reduced to zero, and 
  
 (4) Sections 5.14(a)(ii)
and (iii) shall be deemed modified in their entirety to read as follow: 
  
 Obtain and
deliver to the Administrative Agent for any location leased by Parent, Borrower or any of their Subsidiaries after the Closing Date or for which a lease was renewed or extended after the Closing Date, a Landlord Subordination covering such location
concurrent with the execution of any such lease or the execution of or the effective date (if no execution is required) of any such renewal or extension, provided that the failure to obtain any such Landlord Subordination under this clause
shall not result in an Event of Default if Borrower, Parent and their Subsidiaries use commercially reasonably efforts to obtain such Landlord Subordination. 
  
 5.15 Post-Closing Matters. 
  
         (a) Within 30 days after the Closing Date, the Parties shall provide the Administrative Agent with a guaranty and such security agreements in form and substance reasonably satisfactory
to the Administrative Agent from West Marine Canada Corp. together with an opinion regarding West Marine Canada Corp. and such documents in form and substance reasonably satisfactory to the Administrative Agent and do all things necessary and
reasonably requested by the Administrative Agent to provide the Administrative Agent with a first perfected Lien on the Collateral pledged by West Marine Canada Corp. (subject only to Permitted Encumbrances). 

 
 -88- 

  
 (b)  Within 10 days after the actual merging out of any such Subsidiary
of Parent or the amending of such Subsidiary’s certificate of incorporation, in each case, as described below and in any event within 90 days after the Closing Date, Borrower shall provide the Administrative Agent with evidence reasonably
satisfactory to the Administrative Agent that each of E & B Marine, Inc., Goldbergs’ Marine Distributors, Inc., Sea Ranger Marine Inc. and Krista Corporation have either (i) been merged with and into West Marine Products, Inc. with West
Marine Products, Inc. being the surviving corporation or (ii) amended their respective certificate of incorporation to delete the language currently present in their respective certificate of incorporation which is identical or similar to the
language on Exhibit M. 
  
 (c)  Within 10 Banking Days after the Closing Date, the Parties shall
provide the Administrative Agent with a legal opinion from a licensed California attorney covering the Loan Documents and California law and covering opinions 1 through 6 in the Opinion of Counsel delivered on the Closing Date in form and substance
reasonably satisfactory to the Administrative Agent and its counsel. 
  
 ARTICLE 6 
  
 NEGATIVE COVENANTS 
  
 So long as any Advance or Letter of Credit remains unpaid, or any other non-contingent Obligation remains unpaid or unperformed, or any portion of any of the Commitments remains in force, Borrower shall not, and shall not permit its
Parent or any of the Subsidiaries of Borrower or of Parent to, unless the Requisite Lenders or, if required by Section 11.2, all of the Lenders, otherwise consent: 
  
 6.1  Prepayment of Indebtedness. Prepay any principal or interest on any Indebtedness of Borrower, Parent or any of their collective Subsidiaries if an
Event of Default exists or would result from such prepayment or otherwise prepay in excess of $10 million prior to the date when due, or make any payment or deposit with any Person that has the effect of providing for the satisfaction of any
Indebtedness of Borrower, Parent or any of their collective Subsidiaries prior to the date when due, except (a) Indebtedness to the Administrative Agent and the Lenders under this Agreement and the other Loan Documents, (b) Indebtedness to
other Persons the prepayment of which is approved in advance by the Requisite Lenders in writing, and (c) Indebtedness in any amount if such Indebtedness is repaid with proceeds of any stock offering of Borrower, Parent, or any of their collective
Subsidiaries made after the Closing Date not required to be applied to the Obligations under Section 3.1(d)(vi). 
  
 6.2  Prepayment of Subordinated Obligations. Pay or prepay any (a) principal (including sinking fund payments) or any other amount (other than scheduled interest payments) with respect to any
Subordinated Obligation, or purchase, redeem or otherwise acquire (or offer to purchase, redeem or otherwise acquire) any Subordinated Obligation or 

 
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 deposit any monies, Securities or other Property with any trustee or other Person to provide assurance
that the principal or any portion thereof of any Subordinated Obligation will be paid when due or otherwise to provide for the defeasance of any Subordinated Obligation or (b) scheduled interest on any Subordinated Obligation if the payment
thereof is then prohibited under the terms of the subordination provisions governing such Subordinated Obligations. 
  
 6.3  Disposition of Property.  Make any Disposition of its Property, whether now owned or hereafter acquired, except (a) Dispositions of obsolete Property, (b) Dispositions of Property with no
material remaining useful life, or no longer used or useful in the business of Parent, Borrower or their Subsidiaries, (c) Dispositions in an aggregate amount not to exceed $5,000,000 in any Fiscal Year ending after the Closing Date, and (d)
Dispositions of Property from Parent to a Party organized under the laws of the United States and such disposed assets remain in the United States, or from a domestic Subsidiary of Parent to a Party organized under the laws of the United States and
such disposed assets remain in the United States, or from a foreign Subsidiary of Parent to a Party organized inside or outside of the United States; provided that (i) at the time of any such Disposition pursuant to clause (c) only, no
Default or Event of Default shall exist or shall result from such Disposition and (ii) the sales price relating to a Disposition (pursuant to clause (a), (b) or (c)) shall be paid in Cash. 
  
 6.4  Mergers.  Merge or consolidate with or into any Person, except mergers and consolidations of (i) a
Subsidiary into Borrower or Parent (with Borrower or Parent as the surviving entity), or (ii) any domestic Subsidiary with another domestic Subsidiary, or (iii) any foreign Subsidiary with another foreign Subsidiary, or (iv) any foreign Subsidiary
with and into a domestic Subsidiary with such domestic Subsidiary as the surviving entity, or (v) any merger that constitutes a permitted Disposition under Section 6.3; provided that (a) no Default or Event of Default would result
therefrom and (b) any such “surviving” entity shall have executed such amendments or supplements to the Loan Documents, if any, as the Administrative Agent may reasonably determine are appropriate as a result of such merger. 

 
 6.5  Hostile Tender Offers.  Make any offer to purchase or acquire, or consummate a purchase or
acquisition of, five percent (5%) or more of the voting interest in any corporation or other business entity if the board of directors or management of such corporation or business entity has notified Borrower or Parent that it opposes such offer or
purchase and such notice has not been withdrawn or superseded. 
  
 6.6  Distributions.  Declare or pay or make any form of Distribution, whether from capital, income or otherwise, and whether in Cash or other Property, except: 
  
 (a)  Distributions by any Subsidiary to Borrower or Parent or to any wholly-owned Subsidiary of Borrower or
Parent; 
  
 (b)  Distributions consisting of dividends payable solely in capital stock or
rights to purchase capital stock; and 

 
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 (c)  Distributions to any holder of the capital stock
of Borrower or Parent for the purpose of repurchasing such capital stock from such holder; provided that (i) the aggregate amount of all such Distributions shall not to exceed $1,000,000 in any Fiscal Year and (ii) the aggregate amount of any
such Distribution shall not be greater than the fair market value of the capital so repurchased; 
  
 provided that in each such case, no Default or Event of Default then exists or would result therefrom. 
  
 6.7  ERISA.  (a) At any time, permit any Pension Plan to: (i) engage in any non-exempt “prohibited transaction” (as defined in Section 4975 of the Code); (ii) fail to comply with ERISA or any
other applicable Laws; (iii) incur any material “accumulated funding deficiency” (as defined in Section 302 of ERISA); or (iv) terminate in any manner, which, with respect to each event listed in (i), (ii), (iii), or (iv) above, could
reasonably be expected to result in a Material Adverse Effect, (b) withdraw, completely or partially, from any Multiemployer Plan if to do so could reasonably be expected to result in a Material Adverse Effect, or (c) with respect to each Party
obligated in respect of a Foreign Plan, fail to comply in any material respect with the requirements of any Governmental Rule applicable to such Foreign Plan, if to do so could reasonably be expected to result in a Material Adverse Effect.

  
 6.8  Change in Nature of Business.  Make any material change in the nature of the
business of Borrower, Parent or any of their collective Subsidiaries, as it is presently conducted. 
  
 6.9  Liens and Negative Pledges; Sale and Leasebacks.  Create, incur, assume or suffer to exist any Lien, Right of Others or Negative Pledge of any nature upon or with respect to any of their respective
Properties, or engage in any Sale and Leaseback transaction with respect to any of their respective Properties, whether now owned or hereafter acquired, except: 
  
 (a)  Liens and Negative Pledges existing on the Closing Date and disclosed in Schedule 4.7A and any renewals/extensions or amendments
thereof; provided that the obligations secured or benefited thereby are not increased and such Liens and Negative Pledges do not extend to any assets other than those described on Schedule 4.7A; 
  
 (b)  Liens and Negative Pledges under the Loan Documents; and 
  
 (c)  Permitted Encumbrances and Permitted Rights of Others. 
  
 6.10  Indebtedness and Guaranty Obligations.  Create, incur, assume or suffer to exist any Indebtedness or
Guaranty Obligation except: 
  
 (a)  Indebtedness and Guaranty Obligations existing on the
Closing Date and disclosed in Schedule 6.10 (other than Indebtedness described herein to be paid 

 
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 off with Advances hereunder), and refinancings, renewals, extensions or
amendments that do not increase the amount thereof; 
  
 (b)  Indebtedness under the Loan
Documents; 
  
 (c)  Indebtedness and Guaranty Obligations owed to Borrower, Parent or any
of their Subsidiaries by Parent, Borrower or any of their Subsidiaries (which are evidenced by a note or other instrument which has been pledged and delivered to the Administrative Agent under the Security Documents) and guarantees by Parent,
Borrower or any of their Subsidiaries of any of the obligations of Parent, Borrower or any of their Subsidiaries that, in each case, are otherwise permitted to be incurred hereunder; 
  
 (d)  Indebtedness consisting of Capital Lease Obligations; provided that the aggregate principal amount of such Indebtedness when added to
the Indebtedness described in clause (e) below shall not exceed (i) $10,000,000 from the Closing Date up to the first anniversary of the Closing Date (“Year 1”), (ii) $17,000,000 from the first anniversary of the Closing Date
up to the second anniversary of the Closing Date (“Year 2”) or (iii) $25,000,000 from the second anniversary of the Closing Date up to the third anniversary of the Closing Date (“Year 3”), in each case, at any one
time outstanding (as determined in accordance with GAAP consistently applied); 
  
 (e)  Indebtedness incurred to finance the purchase or construction of capital assets (which shall be deemed to exist if the Indebtedness is incurred at or within 90 days before or after the purchase or construction of the
capital asset) of which at least 80% of each such financing is financed by Indebtedness other than Advances or Letters of Credit hereunder, or to refinance any such Indebtedness of which at least 80% is refinanced by Indebtedness other than Advances
or Letters of Credit hereunder; provided that the aggregate principal amount of such Indebtedness incurred after the Closing Date when added to the Indebtedness described in clause (d) above shall not exceed (i) $10,000,000 during Year
1, (ii) $17,000,000 during Year 2 or (iii) $25,000,000 during Year 3, in each case, at any one time outstanding (as determined in accordance with GAAP consistently applied); 
  
 (f)  Subordinated Obligations in such amount as may be approved in writing by the Requisite Lenders; 
  
 (g)  Indebtedness consisting of Interest Rate Protection Agreements; 
  
 (h)  Unsecured Indebtedness not described in clauses (a)-(g) above for general business purposes of
Borrower, Parent or their Subsidiaries (including unsecured Indebtedness in favor of a seller of a business acquired in a Permitted Acquisition) in an aggregate amount not to exceed (i) $5,000,000 during Year 1, (ii) $7,500,000 during Year 2 or
(iii) $10,000,000 during Year 3, in each case, at any one time outstanding. 

 
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 6.11 Transactions with Affiliates. Enter into any transaction of any kind
with any Affiliate of Borrower or Parent other than (without duplication): (a) salary, bonus, employee stock option and other compensation and employment arrangements with directors or officers in the ordinary course of business, (b)
Distributions permitted pursuant to Section 6.6; (c) transactions on overall terms at least as favorable to Borrower, Parent or any of their collective Subsidiaries as would be the case in an arm’s-length transaction between unrelated
parties of equal bargaining power, and (d) transactions described on Schedule 6.11 attached hereto. 
  
 6.12
Current Ratio. Permit the Current Ratio of Parent and its Subsidiaries, on a consolidated basis, at any time to be less than the ratio set forth opposite the applicable period: 
  
 
	 Period
 
	  	 Ratio
 

	 1st Fiscal Quarter 2003
 	  	 1.15 to 1.00
 
	 
	 2nd Fiscal Quarter 2003
 	  	 1.30 to 1.00
 
	 
	 3rd Fiscal Quarter 2003 and thereafter
 	  	 1.40 to 1.00
 

 
  
 6.13 Leverage Ratio. Permit the ratio of Funded Debt as of
the last day of any Fiscal Quarter plus six times Rental Expense for Parent and its Subsidiaries, on a consolidated basis, for the 12-month period then ended to EBITDAR for Parent and its Subsidiaries, on a consolidated basis, for the 12-month
period then ended to exceed the ratio set forth below on the last day of such Fiscal Quarter: 
  
 
	 Fiscal Quarter
 
	  	 Ratio
 

	 1st Fiscal Quarter 2003
 	  	 4.50 to 1.00
 
	 
	 2nd Fiscal Quarter 2003
 	  	 3.75 to 1.00
 
	 
	 3rd Fiscal Quarter 2003 to 1st Fiscal Quarter 2004
 	  	 3.50 to 1.00
 
	 
	 2nd Fiscal Quarter 2004 and thereafter
 	  	 3.00 to 1.00
 

 
  
 6.14 Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio for Parent and its Subsidiaries, on a consolidated basis, as of the last day of any Fiscal Quarter to be less than 1.50 to 1.0 for the 12-month period ending on the last day of such Fiscal Quarter. 
  
 6.15 Tangible Net Worth. Permit the Tangible Net Worth of Parent and its Subsidiaries, on a consolidated basis, at any time during
the term of this Agreement to be less than: 
  
 (a) from the date hereof through the first Fiscal Quarter of Fiscal
Year 2003, $127,500,000 or 

 
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 (b) from the second Fiscal Quarter of Fiscal Year 2003 and thereafter, 85% of
Tangible Net Worth as of the end of the first Fiscal Quarter of Fiscal Year 2003, plus 75% of Net Income after the end of the first Fiscal Quarter of Fiscal Year 2003, excluding any quarters in which Net Income is negative, 

 
 in each case, plus 100% of net equity offerings made on or after the Closing Date (other than proceeds of the exercise
of stock options). 
  
 6.16 Investments and Acquisitions. Make any Acquisition or enter into any agreement to
make any Acquisition unless approved in advance by the Requisite Lenders in writing, or make or suffer to exist any Investment, other than: 
  
 (a) Permitted Acquisitions; 
  
 (b) Investments in existence on the Closing Date and disclosed on Schedule 6.16; 
  
 (c) without limiting the requirements of Section 6.22, Investments consisting of Cash Equivalents; 
  
 (d) Investments consisting of extensions of credit to officers, directors and employees of Parent, Borrower and their Subsidiaries for travel, entertainment, relocation, anticipated bonus and analogous ordinary business
purposes provided that the aggregate amount of such Investments does not exceed $1,000,000 at any time outstanding; 
  
 (e) Investments since the date hereof in any Subsidiary of Parent which Subsidiary is operating in the same or substantially the same line of business as Parent outside of the United States; provided that the
aggregate amount of such Investments does not exceed (i) $5,000,000 during Year 1, (ii) $12,000,000 during Year 2 or (iii) $20,000,000 during Year 3 with not more than $1,000,000 in the aggregate in the form of equity at any one time (and which to
the extent constituting Indebtedness are evidenced by a note or other instrument which has been pledged and delivered to the Administrative Agent under the Security Documents) and in each case less the aggregate amount of any Investment under clause
(h) below; provided, further, that no Investment may be made after the occurrence and during the continuation of an Event of Default or if an Event of Default would result therefrom; 
  
 (f) Investments in any Subsidiary of Parent which Subsidiary is operating in the same or substantially the same line of
business as Parent inside of the United States; provided that such Subsidiary’s financial statements and records are calculated on a consolidated basis with Parent (and which to the extent constituting Indebtedness are evidenced by a
note or other instrument which has been pledged and delivered to the Administrative Agent under the Security Documents); 

 
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 (g) Investments in limited liability business entities operating
in the same or substantially the same line of business as Parent, and which entities’ financial statements and reports are not consolidated with Parent; provided that the aggregate amount of such Investments does not exceed $3,000,000
(and which to the extent constituting Indebtedness are evidenced by a note or other instrument which has been pledged and delivered to the Administrative Agent under the Security Documents); provided, further, that no Investment may be
made after the occurrence and during the continuation of an Event of Default or if an Event of Default would result therefrom; 
  
 (h) Investments in Subsidiaries engaged in a related line of business to Parent (as opposed to the same or similar line of business to Parent); provided that the aggregate amount of such
Investments when taken together with the Indebtedness assumed and/or consideration paid or payable in cash in connection with any Acquisition of an Acquired Person in a related line of business to Parent (as opposed to the same or similar line of
business to Parent) consummated since the Closing Date does not exceed $3,000,000; and 
  
 (i)
Investments consisting of the extension of credit to customers or suppliers of Parent, Borrower and their Subsidiaries in the ordinary course of business. 
  
 6.17 Capital Expenditures. With respect to Borrower, Parent and each of their Subsidiaries, collectively, make any Capital Expenditure (other than Capital Expenditures made from the proceeds of
insurance), if to do so would result in the aggregate of all such Capital Expenditures, (i) to exceed $35,000,000 in Fiscal Year 2003 or (ii) to exceed $40,000,000 in Fiscal Year 2004 or any Fiscal Year thereafter. In the event the aggregate of all
such Capital Expenditures made by Borrower, Parent and their Subsidiaries for any Fiscal Year is less than the amount of such Capital Expenditures permitted hereunder, then 50% of the difference between the amount of such Capital Expenditures
permitted for such Fiscal Year and the actual amount of Capital Expenditures made by Borrower, Parent and their Subsidiaries shall be added to the permissible amount of Capital Expenditures for the following Fiscal Year only. 

 
 6.18 Amendments. Amend, modify, supplement or replace (or agree to amend, modify, supplement or replace) or consent to
any departure from any term or provision of (a) any indenture, agreement or instrument evidencing or governing any Subordinated Obligation or (b) if any such amendment, modification, supplement, replacement or consent in any respect could reasonably
be expected to materially adversely affect the interest of the Lenders, any material provision of any Material Document. 
  
 6.19 Change in Location of Chief Executive Offices, Jurisdiction of Organization and Assets. Relocate the chief executive office, without first giving the Administrative Agent thirty (30) days’ prior written notice of any
relocation or change the jurisdiction of organization, of Borrower, Parent or any of their collective Subsidiaries. 

 
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 6.20 Use of Lender’s Name. Use any Lender’s name (or the name of
any of any Lender’s Affiliates) in connection with any of their business operations except to identify the existence of the Revolving Facility and the names of the Lenders in the ordinary course of Borrower’s business. Nothing contained in
this Agreement is intended to permit or authorize Borrower to make any commitment or contract on behalf of any Lender or the Administrative Agent. 
  
 6.21 Change of Fiscal Periods or Accounting Practices. Change (a) its Fiscal Year or any other fiscal period with respect to which it reports financial results hereunder or otherwise or (b) its
accounting practices in any material respect except as permitted by GAAP. 
  
 6.22 Deposit and Brokerage
Accounts. Fail to use commercially reasonable efforts to provide the Administrative Agent with a fully executed Control Agreement with respect to each such Operating Account promptly and in any event within thirty days of (i) the Closing Date as
to Operating Accounts existing as of the Closing Date and (ii) the date such account is established as to Operating Accounts established after the Closing Date. 
  
 6.23 Interest Rate Protection Agreements. Enter into any Interest Rate Protection Agreement, except (i) Interest Rate Protection Agreements entered into to hedge or mitigate risks to which
Parent, Borrower or any of their collective Subsidiaries has actual exposure (other than those in respect of Securities of Parent, Borrower or any of their collective Subsidiaries), and (ii) Interest Rate Protection Agreements entered into in order
to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of Parent, Borrower or any of their
collective Subsidiaries. 
  
 6.24 Limitation on Consolidated Tax Liability. Become liable for federal income
taxes relating to the taxable income of any Affiliate of Parent or Borrower which is not a Party in excess of the amount of federal income taxes it would pay if reporting as a separate entity, unless such Party is fully reimbursed by such Affiliate
on or before the payment of such taxes. 
  
 6.25 Referenced Financing Statements. Cause, allow or permit any
property owned, used or in the possession of Borrower, Parent or any of their Subsidiaries to become subject to or covered by any of the Referenced Financing Statements except for property which is leased from or financed by the secured party listed
on any such Referenced Financing Statement but only to the extent such lease or financing is permitted by this Agreement. 
  
  
 ARTICLE 7 
  
 INFORMATION AND REPORTING REQUIREMENTS 
  
 7.1 Financial and Business Information. So long as any Advance or Letter of Credit remains unpaid, or any other non-contingent
Obligation remains unpaid or 

 
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 unperformed, or any portion of any of the Commitments remains in force, Borrower shall, unless the Requisite Lenders otherwise consent, at
Borrower’s sole expense, deliver to the Administrative Agent for distribution by it to the Lenders, a sufficient number of copies for all of the Lenders of the following: 
  
 (a) As soon as practicable, and in any event within fifty (50) days after the end of each of the first three Fiscal Quarters in each Fiscal Year (commencing
with the first Fiscal Quarter of 2003), the consolidated and consolidating balance sheet of Parent and its Subsidiaries as at the end of such Fiscal Quarter and the consolidated and consolidating statements of income, operations and cash flows for
such Fiscal Quarter, and the portion of the Fiscal Year ended with such Fiscal Quarter, together with a statement of Stockholders’ Equity as of the last day of such Fiscal Quarter, all in reasonable detail and setting forth in each case in
comparative form the corresponding consolidated and consolidating current Fiscal Quarter and year-to-date figures for the corresponding period in the preceding Fiscal Year and the consolidated figures for the corresponding period in the applicable
projections. Such financial statements shall be certified by the president or chief financial officer of Borrower as fairly presenting in all material respects the financial condition, results of operations and cash flows of Borrower, Parent
and their collective Subsidiaries in accordance with GAAP (other than footnote disclosures), consistently applied, as at such date and for such periods, subject only to normal year-end accruals and audit adjustments; 

 
 (b) As soon as practicable, and in any event within ninety-five (95) days after the end of each Fiscal Year,
the audited consolidated and unaudited consolidating balance sheet of Parent and its Subsidiaries as at the end of such Fiscal Year and the audited consolidated and unaudited consolidating statements of income, operations, stockholders’ equity
and cash flows, in each case of Parent and its Subsidiaries for such Fiscal Year, all in reasonable detail and setting forth in each case in comparative form the corresponding consolidated current Fiscal Quarter and year-to-date figures for the
corresponding period in the preceding Fiscal Year and the consolidated figures for corresponding period in the applicable projections. Such financial statements shall be certified by the president or chief financial officer of Borrower as fairly
presenting in all material respects the financial condition, results of operations and cash flows of Borrower, Parent and their collective Subsidiaries in accordance with GAAP (other than footnote disclosures), consistently applied, as
at such date and for such periods, subject only to normal year-end accruals and audit adjustments. Such financial statements shall be prepared in accordance with GAAP, consistently applied, and such consolidated financial statements shall be
accompanied by a report of Deloitte & Touche LLP or other independent public accountants of recognized standing selected by Borrower and reasonably satisfactory to the Administrative Agent, which report shall be prepared in accordance with
generally accepted auditing standards as at such date, and shall not be subject to any qualifications or exceptions; 

 
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 (c) As soon as practicable, and in any event not later than
thirty (30) days after the commencement of each Fiscal Year, a copy of the projected consolidated financial statements of Borrower, Parent and their collective Subsidiaries on a quarterly basis for each Fiscal Year through the Maturity Date together
with narrative assumptions, including, in each case, projected consolidated balance sheets, statements of income and retained earnings and statements of cash flow of Borrower, Parent and their collective Subsidiaries, all in reasonable detail and in
any event to include (A) projected Capital Expenditures and (B) annual Fiscal Year projections of Borrower’s compliance with each of the covenants set forth in Sections 6.12, 6.13 6.14 and 6.15 of this Agreement; 
  
 (d) Promptly after receipt by Borrower or Parent, copies of any detailed audit reports, management letters or
recommendations submitted to Borrower or Parent (or their respective board of directors) by independent accountants in connection with the accounts or books of Borrower, Parent or any of their collective Subsidiaries, or any audit of any of them;

  
 (e) Promptly after the same are available, and in any event within five (5) Banking Days after
filing with the Securities and Exchange Commission, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of Borrower, Parent or any of their collective Subsidiaries, and copies of all
annual, regular, periodic and special reports and registration statements which Borrower, Parent or any of their collective Subsidiaries may file with the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, and not otherwise required to be delivered to the Lenders pursuant to other provisions of this Section 7.1 which reports or filings may be sent via electronic mail or, so long as acceptable to the Agent and the Lenders,
Borrower may send a notice to the Agent and the Lenders that such reports or filings have been made with the Securities and Exchange Commission. 
  
 (f) Promptly after the reasonable request by any Lender through the Administrative Agent, copies of any other report or other document that was filed by Borrower, Parent or any of their collective
Subsidiaries, with any Governmental Agency; 
  
 (g) Promptly upon a Senior Officer of Borrower or
Parent, becoming aware, and in any event within five (5) Banking Days after becoming aware, of the occurrence of any (i) “reportable event” (as such term is defined in Section 4043 of ERISA, but excluding such events as to which the
PBGC has by regulation waived the requirement therein contained that it be notified within thirty days of the occurrence of such event) or (ii) non-exempt “prohibited transaction” (as such term is defined in Section 406 of ERISA or Section
4975 of the Code) involving any Pension Plan or any trust created thereunder, telephonic notice specifying the nature thereof, and, no more than five (5) Banking Days after such telephonic notice, written notice again 

 
 -98- 

  
 specifying the nature thereof and specifying what action Borrower is taking or
proposes to take with respect thereto, and, when known, any action taken by the Internal Revenue Service with respect thereto; 
  
 (h) As soon as practicable, and in any event within two (2) Banking Days after a Senior Officer of Borrower becomes aware of the existence of any condition or event which constitutes a Default or Event
of Default, telephonic notice specifying the nature and period of existence thereof, and, no more than two (2) Banking Days after such telephonic notice, written notice again specifying the nature and period of existence thereof and specifying what
action Borrower is taking or proposes to take with respect thereto; 
  
 (i) Promptly upon a Senior
Officer of Borrower becoming aware that (i) any Person has commenced a legal proceeding with respect to a claim against Borrower, Parent or any of their Subsidiaries in which the claimant alleges damages in an amount that is $2,500,000 or more in
excess of the amount thereof that is fully covered by insurance, (ii) any creditor under a credit agreement involving Indebtedness of $500,000 or more or any lessor under a lease involving aggregate rent of $500,000 or more has asserted a default
thereunder on the part of Borrower, Parent or any of their Subsidiaries or, (iii) any Person has commenced a legal proceeding with respect to a claim against Borrower, Parent or any of their Subsidiaries under a contract that is not a credit
agreement or material lease with respect to a claim of in excess of $500,000 or which otherwise may reasonably be expected to result in a Material Adverse Effect, a written notice describing the pertinent facts relating thereto and what action
Borrower, Parent and/or their applicable Subsidiaries are taking or propose to take with respect thereto; 
  
 (j) Promptly after receipt, copies of any notice that the Debt Rating of Parent has been established or that a new or different Debt Rating has been assigned to Parent; 
  
 (k) (i) As soon as practicable, and in any event not less than 5 days prior to the proposed effective date thereof, written notice of any proposed
amendment, modification or waiver of the terms and provisions of any of the Material Contracts, which amendment, modification or waiver could reasonably be expected to be adverse to the Lenders in any material respect and (ii) as soon as
practicable, and in any event not less than 10 days prior to the proposed effective date thereof, written notice of any proposed amendment, modification or waiver of the terms and provisions of any of the Material Governing Documents. 

 
 (l) As soon as practicable, concurrent with the filing thereof with the Securities and Exchange Commission and
in any event within ninety days after the Closing Date, the audited balance sheet, statements of income, operations, stockholders’ equity and cash flows for the Acquired Boat U.S. Operations prepared 

 
 -99- 

  
 by Ernst & Young LLP for the fiscal year ending December 31, 2002. Such
financial statements shall be prepared in accordance with GAAP and such financial statements shall be accompanied by a report of Ernst & Young LLP, which report shall be prepared in accordance with generally accepted auditing standards as at
such date, and shall not be subject to any qualifications or exceptions. 
  
 (m) As soon as
practicable, and in any event within fifty (50) days after the end of each Fiscal Quarter in each Fiscal Year (commencing with the first Fiscal Quarter of 2003), a detailed report of store/location information and operating data of Parent and its
Subsidiaries on a year-to-date basis, including, without limitation, square footage, sales, gross profit and contribution, in form and substance reasonably satisfactory to the Lenders. 
  
 (n) The Leasehold Analysis Report as and when required under Section 5.14(a)(i). 
  
 (o) Each quarterly inventory report as and when required under Section 5.14(a)(ii)(1)(A). 
  
 (p) The copies of leases as and when required under Section 5.14(c). 
  
 (q) As soon as practicable, evidence that West Marine FSC, Inc., a Barbados corporation, has been dissolved. 
  
 (r) Such other data and information as from time to time may be reasonably requested by the Administrative Agent or the
Requisite Lenders. 
  
 7.2 Compliance Certificates. So long as any Advance or Letter of Credit remains unpaid,
or any other non-contingent Obligation remains unpaid or unperformed, or any portion of any of the Commitments remain outstanding, Borrower shall, at Borrower’s sole expense, deliver to the Administrative Agent for distribution by it to the
Lenders concurrently with the financial statements required pursuant to Sections 7.1(a) and 7.1(b), a Compliance Certificate signed by the president, chief accounting officer or chief financial officer of Borrower. 

 
 ARTICLE 8 
  
 CONDITIONS 
  
 8.1 Initial Advances. The Closing Date and the obligation of each Closing Date
Lender to make the initial Advance to be made by it, and the obligation of the Issuing Lender to issue the initial Letter of Credit (as applicable), is subject to the following conditions precedent, each of which shall be satisfied or waived in
writing prior to the making of the initial Advances or the issuance of the initial Letter of Credit (as applicable) (unless all of the Closing Date Lenders, in their sole and absolute discretion, shall agree otherwise): 

 
 -100- 

  
 (a) The Administrative Agent shall have received all of the following, each of
which shall be originals unless otherwise specified, each properly executed by a Responsible Official of each party thereto, each dated as of the Closing Date and each in form and substance reasonably satisfactory to the Administrative Agent and its
legal counsel (unless otherwise specified or, in the case of the date of any of the following, unless the Administrative Agent otherwise agrees or directs): 
  
 (1) at least one (1) executed counterpart of this Agreement, together with arrangements satisfactory to the Administrative Agent for additional executed
counterparts, sufficient in number for distribution to the Closing Date Lenders and Borrower; 
  
 (2)
Notes executed by Borrower in favor of each Closing Date Lender, each in a principal amount equal to that Lender’s Commitment; 
  
 (3) the Letter of Credit Agreements executed by Borrower; 
  
 (4) the Swing Line Note executed by Borrower; 
  
 (5) the Guaranty dated as of even
date herewith executed by each Guarantor; 
  
 (6) with respect to Borrower, Parent and their
collective Subsidiaries, such documentation as the Administrative Agent may reasonably require to establish the due organization, valid existence and good standing of each such Person, their qualification to engage in business in each material
jurisdiction in which they are engaged in business or required to be so qualified, their authority to execute, deliver and perform the Loan Documents to which it is a Party (if any), the identity, authority and capacity of each Responsible Official
thereof authorized to act on its behalf, including certified copies of articles or certificates of incorporation and amendments thereto, articles or certificates of organization and amendments thereto, operating agreements and amendments thereto,
bylaws and amendments thereto, certificates of good standing and/or qualification to engage in business, tax clearance certificates, certificates of corporate resolutions or limited liability company resolutions or other applicable authorization
documents, incumbency certificates, Certificates of Responsible Officials, and the like; 
  
 (7) the
Opinion of Counsel; 
  
 (8) a Certificate of the president, chief accounting officer or chief
financial officer of Borrower, certifying that attached thereto is a true and correct copy of the Projections, and further certifying that the representation contained in Section 4.16(a) is, to the best of his or her knowledge, true and
correct; 

 
 -101- 

  
 (9) one or more Requests for Borrowing or Requests for Letters of
Credit; 
  
 (10) a Certificate signed by a Senior Officer of Borrower certifying that the conditions
specified in Sections 8.1(l) and 8.1(m) have been satisfied; and 
  
 (11) the Security
Agreement executed by Parent, Borrower and their collective Subsidiaries and originals of all stock certificates, promissory notes (including, without limitation, intercompany notes) and other collateral where perfection may be effected by
possession; 
  
 (12) the Intellectual Property Security Agreement executed by Parent, Borrower and
their collective Subsidiaries; 
  
 (13) Appropriate documents for filing with the United States
Patent and Trademark Office and all other filings necessary to perfect the security interests granted to Lender by the Security Documents, all appropriately completed and duly executed by each Party and, where appropriate, notarized; 

 
 (14) A Power of Attorney in the form of Attachment 4 to the Intellectual Property Security Agreement, dated the
Closing Date and otherwise appropriately completed, duly executed by each Party to the Intellectual Property Security Agreement and notarized; 
  
 (15) to the extent received prior to the date hereof, a Control Agreement executed by Parent, Borrower and their collective Subsidiaries and the relevant financial institutions for each deposit
account, securities, brokerage or similar account of Parent, Borrower and any of their collective Subsidiaries; 
  
 (16) the Collateral Certificate, duly executed by Borrower; 
  
 (17) evidence that
insurance, of the types and in the amounts specified in the Loan Documents, is maintained in force by Borrower, together with an executed form 438 BFU and other endorsements with respect thereto; 
  

(18) a certificate signed by a Senior Officer of Borrower attaching true, correct and complete copies of each of the Material Documents (including, in
each case, any amendments or modifications of the terms thereof entered into as of the Closing Date ); 
  
 (19) evidence that, upon the filing of the applicable UCC financing statements and the recording of the U.S. Patent and Trademark Office filings contemplated by the Intellectual Property Security Agreement, all Collateral in

 
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 which a Lien may be perfected by the filing of a financing statement under the
UCC and the filing of such intellectual property filings shall be subject to a valid, perfected first priority Lien subject only to Permitted Encumbrances; 
  
 (20) A copy of the Asset Purchase Agreement (including all exhibits, appendices, schedules, annexes and attachments thereto and amendments thereof), duly
executed by each party thereto, and a copy of each agreement, certificate, opinion of counsel and other material writing delivered by or on behalf of each party to the Asset Purchase Agreement in connection with the closing of the Boat U.S.
Acquisition, with a letter from the Person delivering such writing authorizing reliance thereon by the Administrative Agent and the Lenders in the case of opinions of counsel; 
  
 (21) With respect to each existing account receivable of Borrower, Parent or any of their Subsidiaries in an amount in excess of $100,000 which arises out
of a contract with the United States of America or any department, agency, subdivision or instrumentality thereof, the Administrative Agent shall have received evidence that all action has been taken and all instruments executed that are required or
have been reasonably requested by the Administrative Agent to comply with the provisions of the Federal Assignment of Claims Act in respect of such account receivable; 
  
 (22) such other assurances, certificates, documents, consents or opinions as the Administrative Agent and/or any Closing Date Lender reasonably may require.

  
 (b) The fees payable on or before the Closing Date pursuant to Section 3.3 shall have been paid.

  
 (c) The Administrative Agent and the Lenders shall have received and reviewed to their satisfaction the financial
statements for Borrower, Parent and their subsidiaries. 
  
 (d) Each Party shall have obtained all material
Governmental Authorizations (including the expiration of the applicable waiting period pursuant to the Hart-Scott-Rodino Anti-Trust Improvements Act) and all material consents of other Persons, in each case that are necessary or advisable to have
been obtained prior to the Closing Date in connection with the Boat U.S. Acquisition, the transactions herein and the continued operation of the business conducted by the Parties in substantially the same manner as conducted prior to the Closing
Date. Each such Governmental Authorization or consent shall be in full force and effect, except in a case where the failure to obtain or maintain a Governmental Authorization or consent, either individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect. All applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that would restrain, prevent or otherwise impose adverse conditions on the Boat
U.S. 

 
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 Acquisition, the transactions contemplated by the Loan Documents or the financing thereof. No action,
request for stay, petition for review or rehearing, reconsideration, or appeal with respect to any of the foregoing shall be pending, and the time for any applicable Governmental Authority to take action to set aside its consent on its own motion
shall have expired. 
  
 (e) No adverse change occurring in governmental regulation or policy that materially
adversely affects Borrower, Parent and their Subsidiaries taken as a whole, the Administrative Agent, the Issuing Lender, the Swing Line Lender or any other Lender. 
  
 (f) The Administrative Agent shall have completed and received an inventory valuation report regarding the inventory to be acquired in the Boat U.S. Acquisition in form and
substance satisfactory to the Administrative Agent and Lenders. 
  
 (g) The Administrative Agent and Lenders shall
have reviewed (with results to their satisfaction) Borrower’s due diligence and assessment of the inventory controls of Boat U.S. 
  
 (h) No event, occurrence or development having occurred that could reasonably be expected to result in a material adverse change in the business, assets, operations or condition (financial or otherwise) of Borrower, Parent
and their subsidiaries (taken as a whole) or Boat U.S., or in the ability of Borrower, Parent or any of their Subsidiaries to operate in accordance in all material respects with the financial projections and to comply with the financial covenants
herein, in each case since the last day of the third quarter of Fiscal Year 2002. 
  
 (i) The Agent and Lenders shall
have completed due diligence satisfactory to the Administrative Agent and Lenders regarding Borrower, Parent, their Subsidiaries and Boat U.S., including, without limitation, the Projections and discovering no information in the course of due
diligence or otherwise that the Administrative Agent or the Lenders believe has a materially negative impact on any of the items in (h) above. 
  
 (j) The Administrative Agent shall have completed a satisfactory review of the Asset Purchase Agreement and related documents and the Administrative Agent shall have received evidence satisfactory to
the Administrative Agent that all conditions precedent to the Boat U.S. Acquisition under the Asset Purchase Agreement shall have been satisfied and that the closing of the Boat U.S. Acquisition will occur concurrently with the initial extension of
credit hereunder in accordance with the Asset Purchase Agreement and applicable law for an aggregate purchase price not exceeding $72,000,000 plus or minus any adjustments made pursuant to the Asset Purchase Agreement (without giving effect to any
amendments or other modifications of the Asset Purchase Agreement which have not been approved in writing by the Administrative Agent). 

 
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 (k) The reasonable costs and expenses of the Administrative Agent in connection
with the preparation of the Loan Documents payable pursuant to Section 11.3, and invoiced to Borrower prior to the Closing Date, shall have been paid. 
  
 (l) The representations and warranties of Borrower, Parent and each Subsidiary contained in Article 4 shall be true and correct in all material respects. 
  
 (m) Borrower and any other Parties shall be in compliance with all the terms and provisions of the Loan Documents, and giving effect to
the initial Advances or initial Letter of Credit (as applicable), no Default or Event of Default shall have occurred and be continuing. 
  
 (n) Borrower shall have delivered to the Administrative Agent, evidence, in form and substance satisfactory to the Lenders, that the Existing Credit Facilities have been or will be concurrently terminated and that all Liens,
if any, securing any part of the Existing Credit Facilities have been or will be concurrently reconveyed, released and/or terminated, as the case may be. 
  
 (o) All legal matters relating to the Loan Documents shall be reasonably satisfactory to Orrick, Herrington & Sutcliffe LLP, special counsel to Lender. 
  
 (p) There shall not exist (A) any order, decree, judgment, ruling or injunction which restrains the consummation of the Boat U.S.
Acquisition in the manner contemplated by the Asset Purchase Agreement; or (B) any litigation shall be pending or threatened against Borrower or any Guarantor as of the Closing Date which could reasonably be expected to have a Material Adverse
Effect. 
  
 (q) There shall have been no material adverse change in the financial, bank loan, syndication or capital
markets for credit facilities generally or similar in nature to the credit facility under this Agreement which could reasonably be expected to have a material adverse effect on the syndication of the financing contemplated by this Agreement, and
there shall not have occurred and be continuing a material disruption of or material adverse change in the financial, banking or capital markets that could reasonably be expected to have a material adverse effect on such financial, bank loan,
syndication or capital market, in each case as determined by the Administrative Agent in its sole discretion. 
  
 (r)
The Closing Date shall have occurred on or before January 31, 2003. 
  
 8.2 Any Advance. The obligation of
each Lender to make any Advance, and the obligation of the Issuing Lender to issue, extend, renew, amend or increase the amount of any Letter of Credit, is subject to the following conditions precedent (unless the Requisite Lenders or, in any case
where the approval of all of the Lenders is required pursuant to Section 11.2, all of the Lenders, in their sole and absolute discretion, shall agree otherwise): 

 
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 (a) except (i) for representations and warranties which expressly speak as
of a particular date or (ii) as disclosed by Borrower and approved in writing by the Requisite Lenders, the representations and warranties contained in Article 4 shall be true and correct in all material respects on and as of the date of the Advance
or the Letter of Credit as though made on that date; 
  
 (b) no circumstance or event shall have occurred that
constitutes a Material Adverse Effect since the last day of the third Fiscal Quarter of Fiscal Year 2002; 
  
 (c) no
Default or Event of Default has occurred and is continuing or will result from the making of any such Advance or the issuance of any such Letter of Credit; 
  
 (d) the Administrative Agent shall have timely received a Request for Borrowing (or telephonic or other request for Borrowing referred to in the second sentence of Section 2.1(b), if
applicable), or the Issuing Lender shall have received a Letter of Credit Application, as the case may be, in compliance with Article 2; and 
  
 (e) the Administrative Agent shall have received, in form and substance satisfactory to the Administrative Agent, such other assurances, certificates, documents or consents related to the foregoing as
the Administrative Agent or Requisite Lenders reasonably may require. 
  
 ARTICLE 9 
  
 EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT 
  
 9.1 Events of Default. The existence or occurrence of any one or more of the following events, whatever the reason therefor and under any circumstances whatsoever, shall constitute an Event of
Default: 
  
 (a) Borrower fails to pay any principal on any of the Advances or any reimbursement obligation in
respect of any Letter of Credit, or any portion thereof, on the date when due; or 
  
 (b) Borrower fails to pay any
interest owing under the Loan Documents or any fees under Sections 3.2 or 3.4, or any portion thereof, within five (5) Banking Days after the date when due; or fails to pay any other fee or amount payable to the Lenders or the
Administrative Agent under any Loan Document, or any portion thereof, within five (5) Banking Days after written demand therefor; or 
  
 (c) Borrower fails to comply with any of the covenants contained in Section 5.14, Section 5.15 or Article 6 hereof or any of the covenants contained in Sections 5.1, 5.5, 5.12, 5.14, 5.16, 5.17, or
5.18 of the Security Agreement (or the equivalent provisions of any security agreement delivered after the Closing Date), or any of the covenants contained in Sections 4(a), (b), (d), (f) or (g) or Section 8 of the Intellectual

 
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 Property Security Agreement (or the equivalent provisions of any intellectual
property security agreement delivered after the Closing Date) or any negative covenant contained in any other Loan Document, or any other Party fails to comply with any of the covenants contained in any of the covenants contained in Section
5.14, Section 5.15 or Article 6 hereof, or any of the covenants contained in Section 3(c) of the Guaranty (or the equivalent provision of any other Guaranty), or any of the covenants contained in Sections 5.1, 5.5, 5.12,
5.14, 5.16, 5.17, or 5.18 of the Security Agreement (or the equivalent provisions of any security agreement delivered after the Closing Date), or any of the covenants contained in Sections 4(a), (b), (d), (f) or (g) or Section 8 of the
Intellectual Property Security Agreement (or the equivalent provisions of any intellectual property security agreement delivered after the Closing Date) or any negative covenant contained in any other Loan Document; or 
  
 (d) (i) Borrower fails to comply with Section 7.1(j) in the manner stated therein or (ii) Borrower fails to perform
any other reporting requirement set forth in Article 7 within five (5) Banking Days of the date specified for performance therein; or 
  
 (e) Borrower or any other Party fails to perform or observe any other covenant or agreement (not specified in clause (a), (b), (c) or (d) above) contained in any Loan
Document on its part to be performed or observed and such default shall continue unremedied for thirty (30) calendar days after notice to Borrower from the Administrative Agent on behalf of the Requisite Lenders of such Default; or 

 
 (f) Any representation or warranty of Borrower or any other Party made in any Loan Document, or in any
certificate or other writing delivered by Borrower or such other Party pursuant to any Loan Document, proves to have been incorrect when made or reaffirmed in any material respect; or 
  
 (g) Borrower, Parent or any Subsidiary of Borrower or Parent (i) fails to pay when due (or within any stated grace period), whether at the stated maturity,
upon acceleration, by reason of required prepayment or otherwise, the principal, or any principal installment, in respect of any Indebtedness or Guaranty Obligation if the aggregate outstanding principal amount of such Indebtedness exceeds
$5,000,000, or (ii) fails to perform or observe any other term, covenant or agreement on its part to be performed or observed, or suffers any event of default to occur, in connection with any present or future Indebtedness if the aggregate
outstanding principal amount of such Indebtedness exceeds $5,000,000, or of any guaranty of present or future Indebtedness if the aggregate outstanding principal amount of such Indebtedness exceeds $5,000,000, if as a result of such failure or
sufferance any holder or holders thereof (or an agent or trustee on its or their behalf) has the right to declare such Indebtedness due before the date on which it otherwise would become due or the right to require Borrower, Parent or any such
Subsidiary to redeem or purchase, or offer to redeem or purchase, all or any portion of such Indebtedness; or 
  
 (h) Any Loan Document, at any time after its execution and delivery and for any reason other than by its terms or the agreement or action (or omission to act) of the 

 
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 Administrative Agent or satisfaction in full of all the Obligations, ceases to be
in full force and effect or is declared by a court of competent jurisdiction to be null and void, invalid or unenforceable in any respect which is materially adverse to the interests of the Lenders; or any Party thereto denies in writing that it has
any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind same; or 
  
 (i) (A) A final judgment against Borrower, Parent or any Subsidiary of Borrower or Parent is entered for the payment of money in excess of $2,500,000 (not covered by insurance or for which an insurer has reserved its rights)
and, absent procurement of a stay of execution, such judgment remains unsatisfied for thirty (30) calendar days after the date of entry of judgment, or in any event later than five (5) days prior to the date of any proposed sale thereunder; or any
writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the Property of Borrower, Parent or any of their collective Subsidiaries and is not released, vacated or fully bonded within thirty
(30) calendar days after its issue or levy or (B) a judgment against Borrower, Parent or any Subsidiary of Borrower or Parent is entered for the payment of money in the aggregate amount of $10,000,000 or more (not covered by insurance or for which
an insurer has reserved its rights) whether or not appealed, stayed or paid; or 
  
 (j) Borrower,
Parent or any of their collective Subsidiaries institutes or consents to the institution of any proceeding under a Debtor Relief Law relating to it or to all or any material part of its Property, or is unable or admits in writing its inability to
pay its debts as they mature, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any
material part of its Property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of that Person and the appointment continues undischarged or unstayed for
sixty (60) calendar days; or any proceeding under a Debtor Relief Law relating to any such Person or to all or any part of its Property is instituted without the consent of that Person and continues undismissed or unstayed for sixty (60) calendar
days; or 
  
 (k) A Change in Control occurs; or 
  

(l) The dissolution or liquidation of Borrower, Parent or any of their collective Subsidiaries, or Borrower, Parent or any such Subsidiary, any of
their partners, members, directors or stockholders, as the case may be, shall take action seeking to effect the dissolution or liquidation of Borrower, Parent or such Subsidiary, other than any dissolution or liquidation permitted by Section
5.2; or 
  
 (m) The occurrence of an Event of Default (as such term is or may hereafter be
specifically defined in any other Loan Document) under any other Loan Document; or 
  
 (n) Any
Pension Plan maintained by Borrower is finally determined by the PBGC to have a material “accumulated funding deficiency” as that term is defined in Section 

 
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 302 of ERISA in excess of an amount equal to 5% of the consolidated total assets of Borrower as of the
most-recently ended Fiscal Quarter; or 
  
 (o) Any trustee for, or any holder of, a Subordinated Obligation asserts
in writing that such Subordinated Obligation is not subordinated to the Obligations in accordance with its terms and Borrower does not promptly deny in writing such assertion and contest any attempt by such trustee or holder to take action based on
such assertion; or 
  
 (p) Any event occurs which gives the holder or holders of any Subordinated Obligation (or an
agent or trustee on its or their behalf) the right to declare such Subordinated Obligation due before the date on which it otherwise would become due, or the right (other than by reason of a Change in Control if the right to receive payment
thereof is subordinated to the Obligations on terms satisfactory to the Requisite Lenders) to require the issuer thereof, to redeem or purchase, or offer to redeem or purchase, all or any portion of any Subordinated Obligation, or a final judgment
is entered by a court of competent jurisdiction that any Subordinated Obligation is not subordinated in accordance with its terms to the Obligations; or 
  
 (q) Any Lien intended to be created by any Security Document shall at any time be invalidated, subordinated or otherwise cease to be in full force and effect, for whatever reason other than as a result
of any action of the Administrative Agent, unless such invalidation, subordination or cessation affects a non-material portion of the Collateral and is remedied by Borrower within ten Banking Days of its receipt of notice thereof; or any security
interest purported to be created by any Security Document shall cease to be, or shall be asserted by any Party not to be, a valid, first priority (except as expressly otherwise provided in this Agreement or such Security Document) perfected Lien in
the Collateral covered thereby, unless such cessation affects a non-material portion of the Collateral and is remedied by Borrower within ten Banking Days of its receipt of notice thereof; or any Party other than Parent shall issue, create or permit
to be outstanding any Securities which shall not be subject to a first priority perfected Lien under the Security Documents to the extent required pursuant hereto or thereto; or 
  
 (r) The purported revocation of any Guaranty by any Guarantor; or 
  
 (s) Any event or circumstance (other than those listed in clauses (a) through (r) above) shall occur that constitutes, in the good faith determination of the Requisite Lenders, a Material
Adverse Effect. 
  
 9.2 Remedies Upon Event of Default. Without limiting any other rights or remedies of the
Administrative Agent or the Lenders (including the Issuing Lender) provided for elsewhere in this Agreement, or the other Loan Documents, or by applicable Law, or in equity, or otherwise: 
  
 (a) Upon the occurrence, and during the continuance, of any Event of Default other than an Event of Default described in Section 9.1(j): 

 
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 (1) the Commitments to make Advances and issue Letters of Credit
and all other obligations of the Administrative Agent, the Issuing Lender, the Swing Line Lender or the Lenders and all rights of Borrower and any other Parties under the Loan Documents shall be suspended without notice to or demand upon Borrower,
which are expressly waived by Borrower except that all of the Lenders or the Requisite Lenders (as the case may be, in accordance with Section 11.2) may waive an Event of Default or, without waiving, determine, upon terms and
conditions satisfactory to the Lenders or Requisite Lenders, as the case may be, to reinstate the Commitments and such other obligations and rights and make further Advances and issue further Letters of Credit, which waiver or determination shall
apply equally to, and shall be binding upon, all the Lenders; 
  
 (2) the Issuing Lender may, with
the approval of the Administrative Agent on behalf of the Requisite Lenders, demand immediate payment by Borrower of an amount equal to the Aggregate Effective Amount of all outstanding Letters of Credit to be held by the Administrative Agent, on
behalf of the Lenders, in an interest-bearing cash collateral account as collateral for all of the Obligations; and 
  
 (3) the Requisite Lenders may request the Administrative Agent to, and the Administrative Agent thereupon shall, terminate the Commitments and/or declare all or any part of the unpaid principal of all Advances, all interest
accrued and unpaid thereon and all other amounts payable under the Loan Documents to be forthwith due and payable, whereupon the same shall become and be forthwith due and payable, without protest, presentment, notice of dishonor, demand or further
notice of any kind, all of which are expressly waived by Borrower. 
  
 (b) Upon the occurrence of any Event of
Default described in Section 9.1(j): 
  
 (1) the Commitments and the Issuing Lender’s
obligation to issue Letters of Credit shall terminate without notice to or demand upon Borrower, which are expressly waived by Borrower, except that all of the Lenders may waive the Event of Default or, without waiving, determine, upon terms
and conditions satisfactory to all the Lenders, to reinstate the Commitments and make further Advances, which determination shall apply equally to, and shall be binding upon, all the Lenders; 
  

(2) an amount equal to the Aggregate Effective Amount of all outstanding Letters of Credit shall be immediately due and payable to the Issuing Lender
without notice to or demand upon Borrower, which are expressly waived by Borrower, to be held by the Administrative Agent, on 

 
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 behalf of the Lenders, in an interest-bearing cash collateral account as
collateral for all of the Obligations; and 
  
 (3) the unpaid principal of all Advances, all interest
accrued and unpaid thereon and all other amounts payable under the Loan Documents shall be forthwith due and payable, without protest, presentment, notice of dishonor, demand or further notice of any kind, all of which are expressly waived by
Borrower. 
  
 (c) Upon the occurrence and during the continuance of any Event of Default, the Lenders and the
Administrative Agent, or any of them, without notice to (except as expressly provided for in any Loan Document or required pursuant to applicable Law and not effectively waived) or demand upon Borrower, which are expressly waived by Borrower
(except as to notices expressly provided for in any Loan Document or required pursuant to applicable Law and not effectively waived), may proceed (but only with the consent of the Requisite Lenders) to protect, exercise and enforce their
rights and remedies under the Loan Documents against Borrower and any other Party and such other rights and remedies as are provided by Law or equity. 
  
 (d) The order and manner in which the Lenders’ rights and remedies are to be exercised shall be determined by the Requisite Lenders in their sole discretion, and all payments received by the
Administrative Agent and the Lenders, or any of them, shall be applied first to the costs and expenses (including attorneys’ fees and disbursements and the allocated costs of in-house attorneys employed by the Administrative Agent or by
any Lender) of the Administrative Agent and of the Lenders, and thereafter paid pro rata to the Lenders in the same proportions that the aggregate Obligations owed to each Lender under the Loan Documents bear to the aggregate Obligations owed under
the Loan Documents to all the Lenders, without priority or preference among the Lenders. Regardless of how each Lender may treat payments for the purpose of its own accounting, for the purpose of computing Borrower’s Obligations hereunder and
under the Loan Documents, payments shall be applied first, to the costs and expenses of the Administrative Agent and the Lenders, as set forth above, second, to the payment of accrued and unpaid interest due under any Loan Documents to
and including the date of such application (ratably, and without duplication, according to the accrued and unpaid interest due under each of the Loan Documents), and third, to the payment of all other amounts (including principal and fees)
then owing to the Administrative Agent or the Lenders under the Loan Documents. No application of payments will cure any Event of Default, or prevent acceleration, or continued acceleration, of amounts payable under the Loan Documents, or prevent
the exercise, or continued exercise, of rights or remedies of the Lenders hereunder or thereunder or at Law or in equity. 

 
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 ARTICLE 10 
  
 THE ADMINISTRATIVE AGENT 
  
 10.1 Appointment
and Authorization. (a) Each Lender hereby irrevocably appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent
by the terms thereof or are reasonably incidental, as determined by the Administrative Agent, thereto. This appointment and authorization is intended solely for the purpose of facilitating the servicing of the Revolving Facility and does not
constitute appointment of the Administrative Agent as trustee for any Lender or as representative of any Lender for any other purpose and, except as specifically set forth in the Loan Documents to the contrary, the Administrative Agent shall
take such action and exercise such powers only in an administrative and ministerial capacity. The Administrative Agent is the agent of the Lenders only and does not assume any agency relationship with Parent, Borrower or their collective
Subsidiaries, express or implied. 
  
 (b) The Issuing Lender shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith until such time (and except for so long) as the Administrative Agent may agree at the request of the Requisite Lenders to act for the Issuing Lender with respect thereto;
provided, however, that the Issuing Lender shall have all of the benefits and immunities (i) provided to the Administrative Agent in this Article 10 with respect to any acts taken or omissions suffered by the Issuing Lender in connection with
Letters of Credit issued by it or proposed to be issued by it and the application and agreements for letters of credit pertaining to the Letters of Credit as fully as if the term “Administrative Agent” as used in this Article 10 included
the Issuing Lender with respect to such acts or omissions, and (ii) as additionally provided herein with respect to the Issuing Lender. 
  
 10.2 Administrative Agent and Affiliates. Wells Fargo (and each successor Administrative Agent) has the same rights and powers under the Loan Documents as any other Lender and may exercise the same as though it were
not the Administrative Agent, and the term “Lender” or “Lenders” includes Wells Fargo in its individual capacity. Wells Fargo (and each successor Administrative Agent) and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust or other business with Borrower, any Subsidiary thereof, or any Affiliate of Borrower or any Subsidiary thereof, as if it were not the Administrative Agent and without any duty to account therefor
to the Lenders. Wells Fargo (and each successor Administrative Agent) need not account to any other Lender for any monies received by it for reimbursement of its costs and expenses as Administrative Agent hereunder, or (subject to Section
11.10) for any monies received by it in its capacity as a Lender hereunder. The Administrative Agent shall not be deemed to hold a fiduciary, trust or other special relationship with any Lender and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Administrative Agent. 

 
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 10.3 Proportionate Interest in any Collateral. The Administrative Agent,
on behalf of all the Lenders, shall hold in accordance with the Loan Documents all items of any collateral or interests therein received or held by the Administrative Agent. Subject to the Administrative Agent’s and the Lenders’ rights to
reimbursement for their costs and expenses hereunder (including attorneys’ fees and disbursements and other professional services and the reasonably allocated costs of attorneys employed by the Administrative Agent or a Lender) and
subject to the application of payments in accordance with Section 9.2(d), each Lender shall have an interest in the Lenders’ interest in such collateral or interests therein in the same proportions that the aggregate Obligations owed
such Lender under the Loan Documents (other than Lender Interest Rate Protection Agreements) bear to the aggregate Obligations owed under the Loan Documents to all the Lenders, without priority or preference among the Lenders. Any obligation owed to
a Lender under a Lender Interest Rate Protection Agreement shall rank pari passu with the Obligations under the Loan Documents up to an amount equal to the Termination Value (as determined by the Administrative Agent) of that Lender Interest Rate
Protection Agreement, and shall be subordinate to the Obligations under other Loan Documents to the extent of any excess over such amount. 
  
 10.4 Lenders’ Credit Decisions. Each Lender agrees that it has, independently and without reliance upon the Administrative Agent, any other Lender or the directors, officers, agents, employees or attorneys of the
Administrative Agent or of any other Lender, and instead in reliance upon information supplied to it by or on behalf of Borrower and upon such other information as it has deemed appropriate, made its own independent credit analysis and decision to
enter into this Agreement. Each Lender also agrees that it shall, independently and without reliance upon the Administrative Agent, any other Lender or the directors, officers, agents, employees or attorneys of the Administrative Agent or of any
other Lender, continue to make its own independent credit analyses and decisions in acting or not acting under the Loan Documents. 
  
 10.5 Action by Administrative Agent. 
  
 (a) The Administrative Agent may assume that
no Default or Event of Default has occurred and is continuing, unless an officer of the Administrative Agent (or the Lender that is then the Administrative Agent) who is responsible for the administration of the Revolving Facility has received
notice from Borrower stating the nature of the Default or Event of Default or has received notice from a Lender stating the nature of the Default or Event of Default and that such Lender considers the Default or Event of Default to have occurred and
to be continuing. 
  
 (b) The Administrative Agent has only those obligations under the Loan Documents as are
expressly set forth therein. 
  
 (c) Except for any obligation expressly set forth in the Loan Documents and
as long as the Administrative Agent may assume that no Event of Default has occurred and is continuing, the Administrative Agent may, but shall not be required to, exercise its 

 
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 discretion to act or not act, except that the Administrative Agent shall be required to act or
not act upon the instructions of the Requisite Lenders (or of all the Lenders, to the extent required by Section 11.2) and those instructions shall be binding upon the Administrative Agent and all the Lenders; provided that the
Administrative Agent shall not be required to act or not act if to do so would be contrary to any Loan Document or to applicable Law or would result, in the reasonable judgment of the Administrative Agent, in substantial risk of liability to the
Administrative Agent. 
  
 (d) If the Administrative Agent has received a notice specified in clause (a), the
Administrative Agent shall immediately give notice thereof to the Lenders and shall act or not act upon the instructions of the Requisite Lenders (or of all the Lenders, to the extent required by Section 11.2); provided that the
Administrative Agent shall not be required to act or not act if to do so would be contrary to any Loan Document or to applicable Law or would result, in the reasonable judgment of the Administrative Agent, in substantial risk of liability to the
Administrative Agent, and except that if the Requisite Lenders (or all the Lenders, if required under Section 11.2) fail, for five (5) Banking Days after the receipt of notice from the Administrative Agent, to instruct the
Administrative Agent, then the Administrative Agent, in its sole discretion, may act or not act as it deems advisable for the protection of the interests of the Lenders, until such time as it receives such a notice from the Requisite Lenders.

  
 (e) The Administrative Agent shall have no liability to any Lender for acting as instructed by the Requisite
Lenders, or for refraining from acting, if so instructed by the Requisite Lenders (or, in each case, all the Lenders, if required under Section 11.2), notwithstanding any other provision hereof. 
  
 10.6 Liability of Administrative Agent. Neither the Administrative Agent nor any of its directors, officers, agents, employees or
attorneys shall be liable for any action taken or not taken by them under or in connection with the Loan Documents, except for their own gross negligence or willful misconduct. Without limitation on the foregoing, the Administrative Agent and
its directors, officers, agents, employees and attorneys: 
  
 (a) May treat the payee of any Note as the holder
thereof until the Administrative Agent receives notice of the assignment or transfer thereof, in form satisfactory to the Administrative Agent, signed by the payee, and may treat each Lender as the owner of that Lender’s interest in the
Obligations for all purposes of this Agreement until the Administrative Agent receives notice of the assignment or transfer thereof, in form satisfactory to the Administrative Agent, signed by that Lender; 
  
 (b) May consult with legal counsel (including in-house legal counsel), accountants (including in-house accountants) and
other professionals or experts selected by it, or with legal counsel, accountants or other professionals or experts for Borrower, Parent or any Subsidiary of Borrower or Parent and/or any of their Affiliates or the Lenders, and shall 

 
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 not be liable for any action taken or not taken by it in good faith in accordance with any advice of
such legal counsel, accountants or other professionals or experts; 
  
 (c) Shall not be responsible to any Lender for
any statement, warranty or representation made in any of the Loan Documents or in any notice, certificate, report, request or other statement (written or oral) given or made in connection with any of the Loan Documents; 
  
 (d) Except to the extent expressly set forth in the Loan Documents, shall have no duty to ask or inquire as to the performance or
observance by Borrower or any Guarantor of any of the terms, conditions or covenants of any of the Loan Documents or to inspect any collateral or the Property, books or records of Borrower, Parent or any Subsidiary of Borrower or Parent;

  
 (e) Will not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness,
effectiveness, sufficiency or value of any Loan Document, any other instrument or writing furnished pursuant thereto or in connection therewith or any collateral; 
  
 (f) Will not incur any liability by acting or not acting in reliance upon any Loan Document, notice, consent, certificate, statement, request or other instrument or writing
believed in good faith by it to be genuine and signed or sent by the proper party or parties; and 
  
 (g) Will not
incur any liability for any arithmetical error in computing any amount paid or payable by Borrower or any Affiliate thereof or paid or payable to or received or receivable from any Lender under any Loan Document, including, without
limitation, principal, interest, commitment fees, Advances and other amounts; provided that, promptly upon discovery of such an error in computation, the Administrative Agent, the Lenders and (to the extent applicable) Borrower or its
Affiliates shall make such adjustments as are necessary to correct such error and to restore the parties to the position that they would have occupied had the error not occurred. 
  
 10.7 Indemnification. Each Lender shall, ratably in accordance with its Pro Rata Share of all of the then applicable Commitments (if any of the Commitments are then
in effect) and/or in accordance with its proportion of the aggregate outstanding Indebtedness under the Loan Documents (if all of the Commitments have then been terminated), indemnify and hold the Administrative Agent and its directors, officers,
agents, employees and attorneys harmless against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including reasonable
attorneys’ fees and disbursements and allocated costs of attorneys employed by the Administrative Agent) that may be imposed on, incurred by or asserted against it or them in any way relating to or arising out of the Loan Documents (other
than losses incurred by reason of the failure of Borrower to pay the Indebtedness represented by the Loan Documents) or any action taken or not taken by it as Administrative Agent thereunder, except such as result from its own gross
negligence or willful misconduct. 

 
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 Without limitation on the foregoing, each Lender shall reimburse the Administrative Agent upon demand
for that Lender’s Pro Rata Share of any out-of-pocket cost or expense incurred by the Administrative Agent in connection with the negotiation, preparation, execution, delivery, amendment, waiver, restructuring, reorganization (including
a bankruptcy reorganization), enforcement or attempted enforcement of the Loan Documents, to the extent that Borrower or any other Party are required by Section 11.3 to pay that cost or expense but fails to do so upon demand. Nothing in this
Section 10.7 shall entitle the Administrative Agent or any indemnitee referred to above to recover any amount from the Lenders if and to the extent that such amount has theretofore been recovered from Borrower. To the extent that the
Administrative Agent or any indemnitee referred to above is later reimbursed such amount by Borrower, it shall return the amounts paid to it by the Lenders in respect of such amount. 
  
 10.8 Successor Administrative Agent. The Administrative Agent may, and at the request of the Requisite Lenders shall, resign as Administrative Agent (i) upon
reasonable notice to the Lenders and Borrower effective upon acceptance of appointment by a successor Administrative Agent or (ii) if the Administrative Agent determines that for it to continue as Administrative Agent would result in a conflict of
interest affecting the Administrative Agent, or would create an unacceptable risk of significant liability of the Administrative Agent to a third party, or would otherwise be inadvisable under prevailing standards of banking prudence, at any time,
and effective immediately upon written notice to Borrower and the Lenders. If the Administrative Agent shall resign as Administrative Agent under this Agreement, the Requisite Lenders shall appoint from among the Lenders a successor Administrative
Agent for the Lenders, and so long as no Event of Default has occurred and is continuing, which successor Administrative Agent shall be approved by Borrower (and such approval shall not be unreasonably withheld or delayed). If no successor
Administrative Agent is appointed prior to the effective date of the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and Borrower, a successor Administrative Agent from among the
Lenders. Upon the acceptance of its appointment as successor Administrative Agent hereunder, such successor Administrative Agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and the term
“Administrative Agent” shall mean such successor Administrative Agent and the retiring Administrative Agent’s appointment, powers and duties as Administrative Agent shall be terminated. After any retiring Administrative Agent’s
resignation hereunder as Administrative Agent, the provisions of this Article 10, and Sections 11.3, 11.11 and 11.21, shall inure to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement. Notwithstanding the foregoing, if no successor Administrative Agent has accepted appointment as Administrative Agent by the date which is thirty (30) days following a retiring Administrative Agent’s
notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Requisite
Lenders appoint a successor Administrative Agent with Borrower’s approval as provided for above. Upon any resignation of Wells Fargo (or any successor Administrative Agent) as Administrative Agent, Wells Fargo (or such successor) shall be
deemed to have concurrently resigned as Issuing Lender with respect to the issuance of any 

 
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 further Letters of Credit hereunder (including without limitation the extension of the expiration of any outstanding Letter of Credit), and the
successor Administrative Agent shall (i) be deemed concurrently appointed as Issuing Lender, and (ii) shall promptly issue Letters of Credit to replace or support any outstanding Letters of Credit issued by Wells Fargo; provided that until
Wells Fargo’s Letter of Credit are so replaced or supported, Wells Fargo shall continue to receive any fees, payments and rights available to the Issuing Lender. 
  
 10.9 Performance of Conditions. For the purpose of determining fulfillment by Borrower of conditions precedent specified in Section 8.1 only, each Lender
shall be deemed to have consented to, and approved or accepted, or to be satisfied with each document or other matter sent by the Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required under Article
8 to be consented to, or approved by or acceptable or satisfactory to, that Lender, unless an officer of the Administrative Agent who is responsible for the transactions contemplated by the Loan Documents shall have received written notice from
that Lender prior to the making of the requested Advance or the issuance of the requested Letter of Credit specifying its objection thereto and either (i) such objection shall not have been withdrawn by written notice to the Administrative Agent or
(ii) in the case of any condition to the making of an Advance, that Lender shall not have made available to the Administrative Agent that Lender’s Pro Rata Share of such Advance. 
  
 10.10 Collateral Matters. 
  
            (a) The Administrative Agent is authorized by each Lender, without the necessity of any notice to or further consent from any Lender, and without the obligation to
take any such action, to take any action with respect to any Collateral or any Security Document which may from time to time be necessary to perfect and maintain perfected the Liens of the Security Documents. 
  
            (b) The Lenders irrevocably authorize the Administrative Agent, at its
option and in its discretion, to release any Lien granted to or held by the Administrative Agent upon any Collateral (i) upon termination of the Commitments and the payment in full of all Advances and all other Obligations payable under this
Agreement (other than the obligations which expressly survive the termination of this Agreement) and under the other Loan Documents; (ii) constituting Property of Borrower or its Affiliates which is sold, transferred or otherwise disposed of in
connection with any transaction not prohibited by this Agreement or the Loan Documents; (iii) constituting Property leased to Borrower or its Affiliates under an operating lease which has expired or been terminated in a transaction not prohibited by
this Agreement or the Loan Documents or which will concurrently expire and which has not been and is not intended by Borrower or its Affiliates to be, renewed or extended; (iv) consisting of an instrument, if the Indebtedness evidenced thereby has
been paid in full; or (v) if approved or consented to by those of the Lenders required by Section 11.2. Upon request by the Administrative Agent, the Lenders will confirm in writing the Administrative Agent’s authority to release
particular types or items of Collateral pursuant to this Section 10.10. 

 
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 10.11 No Obligations of Borrower. Nothing contained in this Article
10 shall be deemed to impose upon Borrower any obligation in respect of the due and punctual performance by the Administrative Agent of its obligations to the Lenders under any provision of this Agreement, and Borrower shall have no liability to
the Administrative Agent or any of the Lenders in respect of any failure by the Administrative Agent or any Lender to perform any of its obligations to the Administrative Agent or the Lenders under this Agreement. Without limiting the generality of
the foregoing, where any provision of this Agreement relating to the payment of any amounts due and owing under the Loan Documents provides that such payments shall be made by Borrower to the Administrative Agent for the account of the Lenders,
Borrower’s obligations to the Lenders in respect of such payments shall be deemed to be satisfied upon the making of such payments to the Administrative Agent in the manner provided by this Agreement. In addition, Borrower may rely on a written
statement by the Administrative Agent to the effect that it has obtained the written consent of the Requisite Lenders or all of the Lenders, as applicable under Section 11.2, in connection with a waiver, amendment, consent, approval or other
action by the Lenders hereunder, and shall have no obligation to verify or confirm the same. 
  
 ARTICLE 11 

 
 MISCELLANEOUS 
  
 11.1 Cumulative Remedies; No Waiver. The rights, powers, privileges and remedies of the Administrative Agent and the Lenders provided herein or in any Note or other Loan Document are cumulative and not exclusive of any right,
power, privilege or remedy provided by Law or equity. No failure or delay on the part of the Administrative Agent or any Lender in exercising any right, power, privilege or remedy may be, or may be deemed to be, a waiver thereof; nor may any single
or partial exercise of any right, power, privilege or remedy preclude any other or further exercise of the same or any other right, power, privilege or remedy. The terms and conditions of Article 8 hereof are inserted for the sole benefit of
the Administrative Agent and the Lenders; the same may be waived in whole or in part, with or without terms or conditions, in respect of any Borrowing or the issuance of any Letter of Credit without prejudicing the Administrative Agent’s or the
Lenders’ rights to assert them in whole or in part in respect of any other Borrowing or the issuance of any Letter of Credit. 
  
 11.2 Amendments; Consents. No amendment, modification, supplement, extension, termination or waiver of any provision of this Agreement or any other Loan Document, no approval or consent thereunder, and no consent to
any departure by Borrower or any other Party therefrom, may in any event be effective unless in writing signed by the Administrative Agent with the written approval of the Requisite Lenders (and, in the case of any amendment, modification or
supplement of or to any Loan Document to which Borrower is a party, signed by Borrower, and, in the case of any amendment, modification or supplement to Article 10, signed by the Administrative Agent), and then only in the specific instance
and for the specific purpose given; and, without the approval in writing of all the Lenders, no amendment, modification, supplement, termination, waiver or consent may be effective: 

 
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         (a) To amend or modify the
principal of, or the amount of principal, principal repayments and prepayments (other than prepayment required under Section 3.1(d)(iii), (iv), (v), and (vi), which shall only require the written approval of the Requisite
Lenders for any amendment, modification, supplement, termination, waiver or consent to be effective) or the rate of interest payable on, any Obligation, or (except pursuant to an assignment permitted pursuant to Section 11.8) the Pro Rata
Share of any Lender or the amount of any commitment fee payable to any Lender, or any other fee or amount payable to any Lender (in its capacity as a Lender) under the Loan Documents or to waive an Event of Default consisting of the failure of
Borrower to pay when due principal, interest or any fee or any Event of Default under Section 9.1(j); 
  
         (b) To postpone any date fixed for any payment of principal of, prepayment of principal of or any installment of interest on, any Obligation or any installment of any fee, or to extend
the term of the Revolving Facility, or to release any Collateral (except as specifically provided for in any Loan Document), or to release any Guarantor from its obligations arising from any Guaranty except upon a Disposition of such Guarantor to
the extent permitted pursuant hereto; 
  
         (c) To amend the provisions
of the definition of “Requisite Lenders” or “Maturity Date”; 
  
         (d) To amend or waive any provision of Article 8 or this Section 11.2; or 
  
         (e) To amend any provision of this Agreement that expressly requires the consent or approval of all the Lenders; 
  
 provided, that (i) no amendment, modification, supplement, termination, waiver or consent shall, unless in writing and signed by the Issuing Lender in
addition to the Requisite Lenders or all the Lenders, as the case may be, affect the rights or duties of the Issuing Lender under this Agreement or any Letter of Credit Agreement relating to any Letter of Credit issued or to be issued by it.

  
 Any amendment, modification, supplement, termination, waiver or consent pursuant to this Section 11.2
shall apply equally to, and shall be binding upon, all the Lenders and the Administrative Agent. 
  
 Notwithstanding the foregoing, after consulting with Borrower, the Arranger may request that the Administrative Agent cause amendment documents to be prepared and all parties hereto agree to execute such documents in order to change
the pricing, terms and structure of the Advances and other Obligations hereunder (provided that the Arranger and Administrative Agent shall not change the aggregate amount of the Advances hereunder), if the Arranger determines that such changes are
necessary in order to successfully complete the syndication of the Obligations hereunder and to reduce the final Commitment of Wells Fargo to $60,000,000. These rights will survive the execution and delivery of this Agreement and the Closing Date
until the Commitment of Wells Fargo has been reduced to $60,000,000. 

 
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 If any amendment, modification or supplement to or of any provision of any Loan
Document to which Borrower is a party is made and is not signed by Borrower, such amendment, modification or supplement shall have no force or effect on the Loan Document purported to be so amended, modified or supplemented. 
  
 11.3 Costs and Expenses. Borrower agrees to pay within five (5) Banking Days after demand, accompanied by a reasonably detailed
invoice therefor, all reasonable, out-of-pocket expenses (except in the case of the Administrative Agent’s allocated in-house counsel costs described below, which shall not be required to be “out-of-pocket”) of the
Administrative Agent (including the reasonable fees and out-of-pocket expenses of counsel to the Administrative Agent (including reasonable allocated costs of in-house counsel employed by the Administrative Agent) and of local counsel, if
any, who may be retained by counsel to the Administrative Agent) in connection with 
  
 (a) the negotiation,
preparation, syndication, closing, due diligence, administration, execution and delivery of this Agreement and of each other Loan Document, including schedules and exhibits, and any amendments, waivers, consents, supplements or other modifications
to this Agreement or any other Loan Document as may from time to time hereafter be required, whether or not the transactions contemplated hereby (or thereby) are consummated; 
  
 (b) the preparation, filing, recording, refiling or rerecording of any Loan Document or any UCC financing statements relating thereto, all searches related thereto and all
amendments, supplements, consents, waivers, amendments and restatements and other modifications to any thereof and any and all other documents or instruments of further assurance required to be filed or recorded or refiled or rerecorded by the terms
hereof or the terms of any Loan Document; 
  
 (c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document; and 
  
 (d) the preparation of any information or
response required with respect to any investigative request or inquiry, approval, findings of suitability or any other response or communication involving a Governmental Agency arising out of this Agreement, any other Loan Document or any Obligation
evidenced by the Loan Documents or the participation in any public or investigatory hearing or meeting. 
  
 Borrower also agrees to
reimburse the Administrative Agent and, after the occurrence and during the continuance of an Event of Default, the Issuing Lender and each Lender upon demand for all out-of-pocket expenses, including attorneys’ fees and legal expenses
of counsel (including the fees and out-of-pocket expenses of counsel to the Administrative Agent, the Issuing Lender and any Lender (including allocated costs of in-house counsel employed by the Administrative Agent, the Issuing Lender and
any Lender) and of local counsel, if any, who may be retained by counsel to the Administrative Agent, the Issuing Lender and any Lender) and fees and expenses of consultants to the Administrative Agent, the 

 
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 Issuing Lender and the Lenders incurred by the Administrative Agent, the Issuing Lender or such Lenders
in connection with (i) the negotiation of any restructuring or “work-out” with Borrower, whether or not consummated, of any Obligations and the preparation of any documentation related thereto, (ii) the enforcement or attempted enforcement
of any Obligations and any matter related thereto and (iii) any bankruptcy of Borrower, Parent or any of their Subsidiaries. Any amount payable to the Administrative Agent or any Lender under this Section 11.3 shall bear interest from the
fifth Banking Day following the date of demand, if not then paid, for payment at the Default Rate. 
  
 11.4    Nature of Lenders’ Obligations. The obligations of the Lenders hereunder are several and not joint or joint and several. Nothing contained in this Agreement or any other Loan Document and no
action taken by the Administrative Agent or the Lenders or any of them pursuant hereto or thereto may, or may be deemed to, make the Lenders a partnership, an association, a joint venture or other entity, either among themselves or with Borrower,
Parent or any Subsidiary or Affiliate of Borrower or Parent. A default by any Lender will not increase the Commitment of any other Lender or the Pro Rata Share of the Revolving Facility attributable to any other Lender. Any Lender not in default
may, if it desires, assume (in such proportion as the nondefaulting Lenders agree) the obligations of any Lender in default, but no Lender is obligated to do so. 
  
 11.5    Survival of Representations and Warranties. All representations and warranties contained herein or in any other Loan Document, or in any certificate or other writing
delivered by or on behalf of any one or more of the Parties pursuant to any Loan Document, will survive the making of the Advances and the issuance of the Letters of Credit hereunder and the execution and delivery of the Loan Documents, and have
been or will be relied upon by the Administrative Agent and each Lender, notwithstanding any investigation made by the Administrative Agent or any Lender or on their behalf. 
  
 11.6    Notices. Except as otherwise expressly provided in the Loan Documents, all notices, requests, demands, directions and other
communications provided for hereunder or under any other Loan Document must be in writing and must be telecopied, dispatched by commercial courier or delivered to the appropriate party at the address set forth on the signature pages of this
Agreement or other applicable Loan Document or, as to any party to any Loan Document, at any other address as may be designated by it in a written notice sent to all other parties to such Loan Document in accordance with this Section. Except
as otherwise expressly provided in any Loan Document, if any notice, request, demand, direction or other communication required or permitted by any Loan Document is given by telecopier it will be effective when sent during normal business hours on a
Banking Day when sent; if dispatched by commercial courier, on the delivery date; or if given by personal delivery, when delivered. Notices given by Borrower under Article 2 shall be deemed given on actual receipt by the Administrative Agent
or the Issuing Lender, as applicable. 
  
 11.7    Execution of Loan Documents. Unless the
Administrative Agent otherwise specifies with respect to any Loan Document, (a) this Agreement and any other Loan 

 
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 Document may be executed in any number of counterparts and any party hereto or thereto may execute any
counterpart, each of which when executed and delivered will be deemed to be an original and all of which counterparts of this Agreement or any other Loan Document, as the case may be, when taken together will be deemed to be but one and the same
instrument and (b) execution of any such counterpart may be evidenced by a telecopier transmission of the signature of such party. The execution of this Agreement or any other Loan Document by any party hereto or thereto will not become effective
until counterparts hereof or thereof, as the case may be, have been executed by all the parties hereto or thereto. 
  
 11.8    Binding Effect; Assignment. 
  
             (a)    This Agreement and the other Loan Documents to which Borrower is a Party shall be binding upon and inure to the benefit of Borrower,
the Administrative Agent, each of the Lenders, and their respective successors and assigns, except that Borrower and its Affiliates may not assign their rights hereunder or thereunder or any interest herein or therein without the prior
written consent of all the Lenders. Any assignment by Borrower or its Affiliates without the prior written consent of the Lenders shall be null and void; provided that no Person other than the Administrative Agent and the Lenders shall have
any rights under this sentence. Each Lender represents that it is not acquiring its Note with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (subject to any requirement that disposition of such Note
must be within the control of such Lender). Any Lender may at any time pledge or grant a security interest in its Note, this Agreement or any other instrument evidencing its rights as a Lender under this Agreement to a Federal Reserve Bank or in
connection with a securitization or conduit transaction, but no such pledge or grant shall release that Lender from its obligations hereunder or substitute any such pledgee or grantee for such Lender hereunder absent foreclosure of such pledge or
security interest, and neither the Administrative Agent nor any Lender shall grant a security interest in any of the Collateral except to a Federal Reserve Bank or in connection with a securitization or conduit transaction, and in any event, subject
to Section 9 of the Security Agreement and the analogous provision in any other Security Document, the Administrative Agent shall, upon the full, complete and final payment of the Obligations and the termination of the Commitments hereunder,
release all Liens created under the Security Documents or pursuant to this Section 11.8(a). 
  
             (b)    From time to time following the Closing Date, each Lender may assign to one or more Eligible Assignees all or any portion of its
rights and obligations under this Agreement (including all or a portion of its Commitment, the Advances owing to it, risk participations and the Note or Notes held by it); provided that, subject to subsection (f) below, (i) such
Eligible Assignee, if not then a Lender or an Affiliate of the assigning Lender, shall be approved by the Administrative Agent and Borrower (neither of which approvals shall be unreasonably withheld or delayed), (ii) such assignment shall be
evidenced by an Assignment and Acceptance, a copy of which shall be furnished to the Administrative Agent as hereinbelow provided, (iii) except in the case of an assignment to an Affiliate of the assigning Lender, to another Lender or of the
entire remaining rights and obligations of the assigning 

 
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 Lender under this Agreement, the assignment shall not assign a portion of such assigning Lender’s
Commitments and/or Advances owing to such assigning Lender that is equivalent to less than $5,000,000, and (iv) the effective date of any such assignment shall be as specified in the Assignment and Acceptance, but not earlier than the date which is
five (5) Banking Days after the date the Administrative Agent has received the Assignment and Acceptance unless the Administrative Agent otherwise agrees. Upon the effective date of such Assignment and Acceptance, the Eligible Assignee named therein
shall be a Lender for all purposes of this Agreement, with the Commitments, risk participations and/or Advances therein set forth and, to the extent of such Commitments, risk participations and/or Advances, the assigning Lender shall be released
from its further obligations under this Agreement to the extent of such assignment. Borrower agrees that it shall execute and deliver (against delivery by the assigning Lender to Borrower of such Lender’s Notes) to such assignee Lender, Notes
evidencing that assignee Lender’s Commitments, risk participations and/or Advances, and to the assigning Lender, Notes evidencing the remaining balance of the Commitments, risk participations and/or Advances retained by the assigning Lender.

  
             (c)    By executing
and delivering an Assignment and Acceptance, the Eligible Assignee thereunder acknowledges and agrees that: (i) other than the representation and warranty that it is the legal and beneficial owner of the rights and obligations hereunder being
assigned thereby free and clear of any adverse claim, the assigning Lender has made no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness or sufficiency of this Agreement or any other Loan Document; (ii) the assigning Lender has made no representation or warranty and assumes no responsibility with respect to
the financial condition of Borrower or the performance by Borrower of the Obligations; (iii) it has received a copy of this Agreement, together with copies of the most recent financial statements delivered pursuant to Section 7.1 and such
other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) it will, independently and without reliance upon the Administrative Agent or any Lender and
based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) it appoints and authorizes the Administrative Agent to take such
action and to exercise such powers under this Agreement as are delegated to the Administrative Agent by this Agreement; and (vi) it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender. 
  
             (d)    The Administrative Agent shall maintain at the Administrative Agent’s Office a copy of each Assignment and Acceptance delivered
to it and a register (the “Register”) of the names and address of each of the Lenders and the Pro Rata Share of the Commitments held by each Lender, giving effect to each Assignment and Acceptance. The Register shall be available
during normal business hours for inspection by Borrower or any Lender upon reasonable prior notice to the Administrative Agent. After receipt of a completed Assignment and Acceptance executed by any Lender and an Eligible Assignee, and 

 
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 receipt of an assignment fee of $3,500 from such Lender or Eligible Assignee, the Administrative Agent
shall, promptly following the effective date thereof, provide to Borrower and the Lenders a revised Schedule 1.1 giving effect thereto. Borrower, the Administrative Agent and the Lenders shall deem and treat the Persons listed as Lenders in
the Register as the holders and owners of the Pro Rata Shares of the Revolving Facility listed therein for all purposes hereof, and no assignment or transfer of any Lender’s rights and obligations hereunder shall be effective, in each case
unless and until an Assignment and Acceptance effecting the assignment or transfer thereof shall have been accepted by the Administrative Agent and recorded in the Register as provided above. Prior to such recordation, all amounts owed with respect
to the applicable Pro Rata Share of the Revolving Facility shall be owed to the Lender listed in the Register as the owner thereof, and any request, authority or consent of any Person who, at the time of making such request or giving such authority
or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Pro Rata Share of the Revolving Facility. 
  

            (e)    Each Lender may from time to time grant participations to one or
more banks or other financial institutions in or to all or a portion of its rights and/or obligations under this Agreement; provided, however, that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating banks or other financial institutions shall not be a Lender hereunder for any purpose except, if the
participation agreement so provides, for the purposes of Sections 3.5, 3.6, 11.11 and 11.21 but only to the extent that the cost of such benefits to Borrower does not exceed the cost which Borrower would have incurred in
respect of the Lender granting such participation absent the participation, (iv) Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement, (v) the participation interest shall be expressed as a percentage of the granting Lender’s Pro Rata Share of the Revolving Facility as it then exists and shall not restrict an increase in the Revolving Facility
(or the aggregate Commitments pertaining thereto), or in the granting Lender’s rights and obligations hereunder, so long as the amount of the participation interest is not affected thereby and (vi) the consent of the holder of such
participation interest shall not be required for amendments or waivers of provisions of the Loan Documents other than those which (A) extend the Maturity Date or any other date upon which any payment of money is due to the Lenders, (B)
reduce the rate of interest on the Obligations, any fee or any other monetary amount payable to the Lenders, (C) reduce the amount of any installment of principal due on the Obligations, or (D) release any Guarantor from its Guaranty, other than in
connection with a Disposition of all or substantially all of the equity interests in such Guarantor or of all or substantially all of its assets, in either case to the extent permitted by this Agreement. 
  
             (f)    Borrower agrees that upon the
occurrence and during the continuance of any Event of Default, each Lender shall be entitled to assign its rights hereunder and under the Loan Documents, or grant participation interests in its rights under this Agreement and the 

 
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 Loan Documents, to any Person, in whole or in any part thereof, notwithstanding any provisions contained
herein (including those set forth in subsection (b) above) or in any other Loan Document to the contrary, except that, other than (i) assignments by a Lender to an Affiliate of such Lender or to another Lender or
(ii) pledges described in the last sentence of subsection (a) above, no assignment shall be made without the approval of the Administrative Agent. 
  
 11.9    Lien on Deposits and Property in Possession of any Lender; Right of Setoff. As security for the prompt payment and performance of all Obligations, Borrower hereby
grants to each of the Administrative Agent and the Lenders, each as the representative of the other, as applicable, a security interest in and a right of offset with respect to, all its right, title, and interest in and to any and all deposit
accounts now or hereafter maintained with any of the Administrative Agent and the Lenders in and to any and all of its Property and the proceeds thereof now or hereafter in the possession of the Administrative Agent or any of the Lenders. If an
Event of Default has occurred and is continuing, the Administrative Agent or any Lender (but in each case only with the consent of the Requisite Lenders) may exercise its rights under Article 9 of the UCC and other applicable Laws (including common
law) and, to the extent permitted by applicable Laws, apply any funds in any deposit account maintained with it by Borrower and/or any Property of Borrower in its possession against the Obligations. The Administrative Agent or such Lender agrees
promptly to notify Borrower after any such set-off and application made by the Administrative Agent or such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application or any
of the Obligations. 
  
 11.10    Sharing of Setoffs. Each Lender severally agrees that if
it, through the exercise of any right of setoff, banker’s lien or counterclaim against Borrower or any Guarantor, or otherwise, receives payment of the Obligations held by it that is ratably more than any other Lender, through any means,
receives in payment of the Obligations held by that Lender, then, subject to applicable Laws: (a) the Lender exercising the right of setoff, banker’s lien or counterclaim or otherwise receiving such payment shall notify the Administrative Agent
and shall purchase, and shall be deemed to have simultaneously purchased, from each of the other Lenders a participation in the Obligations held by the other Lenders and shall pay to the other Lenders a purchase price in an amount so that the share
of the Obligations held by each Lender after the exercise of the right of setoff, banker’s lien or counterclaim or receipt of payment shall be in the same proportion that existed prior to the exercise of the right of setoff, banker’s lien
or counterclaim or receipt of payment; and (b) such other adjustments and purchases of participations shall be made from time to time as shall be equitable to ensure that all of the Lenders share any payment obtained in respect of the Obligations
ratably in accordance with each Lender’s share of the Obligations immediately prior to, and without taking into account, the payment; provided that, if all or any portion of a disproportionate payment obtained as a result of the exercise
of the right of setoff, banker’s lien, counterclaim or otherwise is thereafter recovered from the purchasing Lender by Borrower or any Person claiming through or succeeding to the rights of Borrower, the purchase of a participation shall be
rescinded and the purchase price thereof shall be restored to the extent of the recovery, but 

 
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 without interest. Each Lender that purchases a participation in the Obligations pursuant to this
Section 11.10 shall from and after the purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as
though the purchasing Lender were the original owner of the Obligations purchased. Borrower expressly consents to the foregoing arrangements and agrees that any Lender holding a participation in an Obligation so purchased pursuant to this Section
11.10 may exercise any and all rights of setoff, banker’s lien or counterclaim with respect to the participation as fully as if the Lender were the original owner of the Obligation purchased; provided, however, that each
Lender agrees that it shall not exercise any right of setoff, banker’s lien or counterclaim with respect to the Obligations without first obtaining the consent of the Requisite Lenders. 
  
 11.11    Indemnity by Borrower. Borrower agrees to indemnify, save and hold harmless the Administrative Agent and each Lender and their
respective Affiliates, directors, officers, agents, advisors, attorneys and employees (collectively the “Indemnitees”) from and against: (a) any and all third party claims, demands, litigation, proceeding, actions or causes of
action (except a third party claim, demand, litigation, proceeding, action or cause of action for any amount excluded from the definition of “Taxes” in Section 3.11(a)) if the third party claim, demand, litigation,
proceeding, action or cause of action arises out of or relates to (i) any act or omission (or alleged act or omission) of Borrower, Parent, any Subsidiary or other Affiliate of Borrower or Parent, or any partner, officer, director, stockholder, or
other equity interest holder of Borrower or Parent relating to the Revolving Facility, (ii) the use or contemplated use of proceeds of any Borrowing or in connection with any Letter of Credit, (iii) the Boat U.S. Acquisition (including, without
limitation, any actions taken by or omissions of Borrower, Parent or any of their affiliates in connection therewith whether or not the Boat U.S. Acquisition is consummated), (iv) any information provided to the Administrative Agent or any Lenders
by Borrower, Parent or any of their subsidiaries, (v) the timing of any public disclosures made or not made by Borrower, Parent or any of their Subsidiaries, (vi) any related transaction, (vii) any third party brokerage fees other than those
expressly agreed to by the Administrative Agent or a Lender, (viii) the sending of any materials or information through electronic, telecommunications or other information transmittal systems, (ix)the relationship of Borrower and the Lenders under
this Agreement, (x) the Commitments, (xi) the Collateral, or (xii) the Loan Documents or the Revolving Facility in any other manner or aspect, in each case, regardless of any Indemnitee is a party to any of the foregoing; (b) any administrative or
investigative proceeding or investigation by any Governmental Agency arising out of or related to any item described in clause (a) above; and (c) any and all liabilities, losses, damages, reasonable costs or expenses (including reasonable
attorneys’ fees and the reasonably allocated costs of in-house attorneys employed by any Indemnitee and disbursements of such attorneys and other professional services) that any Indemnitee suffers or incurs as a result of the assertion,
institution or conduction (as applicable) of any foregoing third party claim, demand, litigation, investigation, proceeding, action or cause of action; provided that no Indemnitee shall be entitled to indemnification for any liability, loss,
damage, cost or expense (a) to the extent arising solely from any claim against such Indemnitee from another Indemnitee or (b) that are found by a final, non- 

 
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 appealable judgment of a court of competent jurisdiction to arise from the willful misconduct, or gross
negligence of such Indemnitee or such Indemnitee’s directors, officers, employees, agents, advisors, attorneys and Affiliates. No Indemnitee shall be liable to Borrower, Parent or any of their Subsidiaries or any Affiliates thereof or to
Borrower’s, Parent’s or any of their Subsidiaries’ or any of their Affiliate’s respective security holders or creditors for any special, indirect, consequential or punitive damages relating to the Revolving Facility or any of the
other matters described in the preceding sentence or for any damages arising from the use by others of confidential information or other materials sent through electronic, telecommunications or other information transmittal systems. If any third
party claim, demand, litigation, investigation, proceeding, action or cause of action is asserted against any Indemnitee, such Indemnitee shall promptly notify Borrower, but the failure to so promptly notify Borrower shall not affect Borrower’s
obligations under this Section unless such failure materially prejudices Borrower’s right to participate in the contest of such claim, demand, action or cause of action, as hereinafter provided. Such Indemnitee may (and shall, if requested by
Borrower in writing) contest the validity, applicability and amount of such third party claim, demand, litigation, proceeding, action or cause of action and shall permit Borrower to participate in such contest. Any Indemnitee that proposes to settle
or compromise any claim or proceeding for which Borrower may be liable for payment of indemnity hereunder shall give Borrower written notice of the terms of such proposed settlement or compromise reasonably in advance of settling or compromising
such claim or proceeding and so long as no Event of Default has occurred and is continuing and Borrower is current on all payments under the Loan Documents including under this Section 11.11, such Indemnitee shall obtain Borrower’s prior
consent (which shall not be unreasonably withheld or delayed). In connection with any third party claim, demand, litigation, investigation, proceeding, action or cause of action covered by this Section 11.11 against more than one
Indemnitee, all such Indemnitees shall be represented by the same legal counsel (which may be a law firm engaged by the Administrative Agent) selected by the Administrative Agent; provided, that if such legal counsel determines in good faith
that representing all such Indemnitees would or could result in a conflict of interest under Laws or ethical principles applicable to such legal counsel or that a defense or counterclaim is available to an Indemnitee that is not available to all
such Indemnitees, then to the extent reasonably necessary to avoid such a conflict of interest or to permit unqualified assertion of such a defense or counterclaim, each affected Indemnitee shall be entitled to separate representation by legal
counsel selected by that Indemnitee, with all such legal counsel using reasonable efforts to avoid unnecessary duplication of effort by counsel for all Indemnitees; and further provided that the Administrative Agent (as an Indemnitee)
shall at all times be entitled to representation by separate legal counsel (which may be a law firm or attorneys employed by the Administrative Agent or a combination of the foregoing). Any obligation or liability of Borrower to any Indemnitee under
this Section 11.11 shall survive the expiration or termination of this Agreement and the repayment of all Borrowings and the payment and performance of all other Obligations owed to the Lenders. 
  
 11.12    Nonliability of the Lenders. Borrower acknowledges and agrees that: 

 
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             (a)    Any inspections of any Property of Borrower, Parent or any Subsidiary of Borrower or Parent made by or through the Administrative
Agent or the Lenders are for purposes of administration of the Revolving Facility only and Borrower is not entitled to rely upon the same (whether or not such inspections are at the expense of Borrower); 
  
             (b)    By accepting or approving anything
required to be observed, performed, fulfilled or given to the Administrative Agent or the Lenders pursuant to the Loan Documents, neither the Administrative Agent nor the Lenders shall be deemed to have warranted or represented the sufficiency,
legality, effectiveness or legal effect of the same, or of any term, provision or condition thereof, and such acceptance or approval thereof shall not constitute a warranty or representation to anyone with respect thereto by the Administrative Agent
or the Lenders; 
  
             (c)    The relationship between Borrower and the Administrative Agent and the Lenders is, and shall at all times remain, solely that of
borrower and lenders and agent for lenders, as applicable; neither the Administrative Agent nor the Lenders shall under any circumstance be construed to be partners or joint venturers of Borrower, any Subsidiary of Borrower, Parent or any of their
respective Affiliates; neither the Administrative Agent nor the Lenders shall under any circumstance be deemed to be in a relationship of confidence or trust or a fiduciary relationship with Borrower, Parent or any Subsidiary of Borrower or Parent
or any of their respective Affiliates, or to owe any fiduciary duty to Borrower, Parent, any Subsidiary of Borrower or Parent, or any of their respective Affiliates; neither the Administrative Agent nor the Lenders undertake or assume any
responsibility or duty to Borrower, Parent, any Subsidiary of Borrower or Parent or any of their respective Affiliates to select, review, inspect, supervise, pass judgment upon or inform Borrower, Parent, any Subsidiary of Borrower or Parent, or any
of their respective Affiliates of any matter in connection with their Property or the operations of Borrower, Parent, any Subsidiary of Borrower or Parent or any of their respective Affiliates; Borrower, Parent, any Subsidiary of Borrower or Parent
and their respective Affiliates shall rely entirely upon their own judgment with respect to such matters; and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by the Administrative Agent or the
Lenders in connection with such matters is solely for the protection of the Administrative Agent and the Lenders and neither Borrower nor any other Person is entitled to rely thereon; and 
  
             (d)    The Administrative Agent and the Lenders shall not be responsible or
liable to any Person for any loss, damage, liability or claim of any kind relating to injury or death to Persons or damage to Property or other loss, damage, liability or claim caused by the actions, inaction or negligence of Borrower, Parent, any
Subsidiary of Borrower or Parent and/or any of their respective Affiliates and Borrower hereby indemnifies and holds the Administrative Agent and the Lenders harmless on the terms set forth in Section 11.11 from any such loss, damage,
liability or claim. 
  
 11.13    No Third Parties Benefited. This Agreement is made for
the purpose of defining and setting forth certain obligations, rights and duties of Borrower, the 

 
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 Administrative Agent and the Lenders in connection with the Revolving Facility, and is made for the sole
benefit of Borrower, the Administrative Agent and the Lenders, and the Administrative Agent’s and the Lenders’ successors and assigns. Except as provided in Sections 11.8 and 11.11, no other Person shall have any
rights of any nature hereunder or by reason hereof. 
  
 11.14    Confidentiality. Each
Lender agrees to hold any confidential information that it may receive from Borrower pursuant to this Agreement in confidence, except for disclosure: (a) to other Lenders or Affiliates of a Lender; (b) to legal counsel and accountants for Borrower,
Parent, any Subsidiary of Borrower or Parent or any Lender; (c) to other professional advisors to Borrower, Parent or any Subsidiary of Borrower or Parent or any Lender; provided that the recipient has accepted such information subject to a
confidentiality agreement substantially similar to this Section 11.14; (d) to regulatory officials having (or purporting to have) jurisdiction over that Lender; (e) as required by Law or legal process, provided that each Lender agrees
to give Borrower prior notice of any such disclosures unless prohibited by applicable Laws or impracticable; (f) in connection with any legal proceeding to which that Lender and Borrower, Parent or any Subsidiary of Borrower or Parent are adverse
parties; (g) to another financial institution in connection with a disposition or proposed disposition to that financial institution of all or part of that Lender’s interests hereunder or a participation interest in its interests hereunder or
in participations interests; provided that the recipient has accepted such information subject to a confidentiality agreement substantially similar to this Section 11.14; (h) to prospective purchasers of any Collateral in connection
with any disposition thereof; or (i) if an Event of Default has occurred and is continuing, to the extent that any of the Administrative Agent or the Lenders determines such disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under the Loan Documents. For purposes of the foregoing, “confidential information” shall mean any information respecting Borrower, Parent or any Subsidiary of Borrower or Parent that a reasonable
person would consider confidential or proprietary; provided, however that the terms does not include (i) information previously filed with any Governmental Agency and available to the public, (ii) information previously or subsequently
published in any public medium or otherwise publicly known from a source other than, directly or indirectly, that Lender, and (iii) information previously or subsequently disclosed by Borrower, Parent or such Subsidiary of Borrower or Parent to any
Person not associated with Borrower, Parent or such Subsidiary of Borrower or Parent which does not owe a professional duty of confidentiality to Borrower, Parent or such Subsidiary of Borrower or Parent or which has not executed an appropriate
confidentiality agreement with Borrower, Parent or such Subsidiary of Borrower or Parent. Nothing in this Section shall be construed to create or give rise to any fiduciary duty on the part of the Administrative Agent or the Lenders to Borrower,
Parent or any Subsidiary of Borrower or Parent. 
  
 11.15    Further Assurances. Borrower
shall, at its expense and without expense to the Lenders or the Administrative Agent, do, execute and deliver such further acts and documents as the Requisite Lenders or the Administrative Agent from time to time reasonably require for the assuring
and confirming unto the Lenders or the Administrative Agent of the rights hereby 

 
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 created or intended now or hereafter so to be, or for carrying out the intention or facilitating the
performance of the terms of any Loan Document. 
  
 11.16 Integration. This Agreement, together with the other
Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and supersedes all prior agreements, written or oral, on the subject matter hereof including, except to the extent expressly set forth
therein, the that certain commitment letter dated as of December 12, 2002 between Borrower and Wells Fargo but excluding the Fee Letter. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control and govern; provided that the inclusion of supplemental rights or remedies in favor of the Administrative Agent or the Lenders in any other Loan Document shall not be deemed a conflict with this
Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof. 

 
 11.17 Governing Law. EXCEPT TO THE EXTENT OTHERWISE PROVIDED THEREIN, EACH LOAN DOCUMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY
IN A STATE OR FEDERAL COURT LOCATED IN THE STATE OF CALIFORNIA. THE PARTIES EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO THE JURISDICTION OF ANY STATE COURT IN SAN FRANCISCO COUNTY, CALIFORNIA OR ANY FEDERAL COURT IN THE CENTRAL DISTRICT OF CALIFORNIA
IN ANY ACTION OR PROCEEDING COMMENCED IN ANY SUCH COURT, AND THE PARTIES HEREBY WAIVE ANY OBJECTION THEY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION AND HEREBY CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE
BY ANY SUCH COURT. FURTHERMORE, THE PARTIES HEREBY WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT THEY MAY HAVE TO ASSERT THE DOCTRINE OF “FORUM NON CONVENIENS” OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT
IN ACCORDANCE WITH THIS SECTION 11.17. Whenever possible, each provision of this Agreement and the Loan Documents and any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto shall be
interpreted in such manner as to be effective and valid under such applicable law, but, if any provision of this Agreement and the Loan Documents or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or
thereto shall be held to be prohibited or invalid under such applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions
of this Agreement, the Loan Documents or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto. 

 
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 Borrower and the Administrative Agent shall endeavor in good-faith negotiations to replace any invalid, illegal or unenforceable provisions with
a valid provision the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provision. This Agreement and the Loan Documents shall be construed in accordance with their intent and with the fair meaning
of their provisions and without regard to any presumption or other rule requiring construction against the party which caused the same to be drafted. 
  
 11.18 Severability of Provisions. Any provision in any Loan Document that is held to be inoperative, unenforceable or invalid as to any party or in any jurisdiction shall, as to that party or
jurisdiction, be inoperative, unenforceable or invalid without affecting the remaining provisions or the operation, enforceability or validity of that provision as to any other party or in any other jurisdiction, and to this end the provisions of
all Loan Documents are declared to be severable. 
  
 11.19 Headings. Article and Section headings in this
Agreement and the other Loan Documents are included for convenience of reference only and are not part of this Agreement or the other Loan Documents for any other purpose. 
  
 11.20 Time of the Essence. Time is of the essence of the Loan Documents. 
  
 11.21 Hazardous Material Indemnity. Borrower hereby agrees to indemnify, hold harmless and defend (by counsel reasonably satisfactory to the Administrative Agent) the Administrative Agent and
each of the Lenders and their respective directors, officers, employees, agents, successors and assigns from and against any and all claims, losses, damages, liabilities, fines, penalties, charges, administrative and judicial proceedings and orders,
judgments, remedial action requirements, enforcement actions of any kind, and all reasonable costs and expenses incurred in connection therewith (including but not limited to reasonable attorneys’ fees and the reasonably allocated costs of
attorneys employed by the Administrative Agent or any Lender, and expenses to the extent that the defense of any such action has not been assumed by Borrower), arising directly or indirectly out of (a) the presence on, in, under or about any Real
Property of any Hazardous Materials, or any releases or discharges of any Hazardous Materials on, under or from any Real Property and (b) any activity carried on or undertaken on or off any Real Property by Borrower, Parent, any Subsidiary of
Borrower or Parent or any of their predecessors in title, whether prior to or during the term of this Agreement, and whether by Borrower, Parent, any Subsidiary of Borrower or Parent or any predecessor in title or any employees, agents, contractors
or subcontractors of Borrower, Parent, any Subsidiary of Borrower or Parent or any predecessor in title, or any third persons at any time occupying or present on any Real Property, in connection with the handling, treatment, removal, storage,
decontamination, clean-up, transport or disposal of any Hazardous Materials at any time located or present on, in, under or about any Real Property, except to the extent any of the foregoing results from the gross negligence or willful misconduct of
any indemnified person. The foregoing indemnity shall further apply to any residual contamination on, in, under or about any Real Property, or affecting any natural resources, and to any contamination of any Property or natural resources

 
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 arising in connection with the generation, use, handling, storage, transport or disposal of any such Hazardous Materials, and irrespective of
whether any of such activities were or will be undertaken in accordance with applicable Laws, but the foregoing indemnity shall not apply to Hazardous Materials on, in, under or about any Real Property, the presence of which is caused by the
Administrative Agent or the Lenders. Borrower hereby acknowledges and agrees that, notwithstanding any other provision of this Agreement or any of the other Loan Documents to the contrary, the obligations of Borrower under this Section shall be
unlimited obligations of Borrower and shall not be secured by any Lien on any Real Property. Any obligation or liability of Borrower to any Indemnitee under this Section 11.21 shall survive the expiration or termination of this Agreement and
the repayment of all Advances and the payment and performance of all other Obligations owed to the Lenders. 
  
 11.22
Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTY HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 
  
 11.23 Purported Oral Amendments. BORROWER EXPRESSLY ACKNOWLEDGES THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE AMENDED OR MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED, BY AN INSTRUMENT IN
WRITING THAT COMPLIES WITH SECTION 11.2. BORROWER AGREES THAT IT WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL OR WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF THE ADMINISTRATIVE AGENT OR ANY LENDER THAT DOES NOT COMPLY
WITH SECTION 11.2 TO EFFECT AN AMENDMENT, MODIFICATION, WAIVER OR SUPPLEMENT TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. 
  
 11.24 Arbitration. 
  
 (a) Arbitration. The parties hereto agree, upon demand
by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise arising out of or
relating to in any way (i) the Obligations and 

 
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 related Loan Documents which are the subject of this Agreement and its negotiation, execution, collateralization, administration, repayment,
modification, extension, substitution, formation, inducement, enforcement, default or termination, or (ii) requests for additional credit. 
  
 (b) Governing Rules. Any arbitration proceeding will (i) proceed in a location in California selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act
(Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in
accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in
accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to, as applicable, as the
“Rules”). If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control. Any party who fails or refuses to submit to arbitration following a demand by any other party
shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute. Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91
or any similar applicable state law. 
  
 (c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii)
obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the right or
obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this subsection. 
  
 (d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less
will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a
panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed in the State of California or a neutral retired
judge of the state or federal judiciary of California, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an
issue is arbitratable and will give effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator’s discretion) any pre-hearing
motions 

 
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 which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of California and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award. The
arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the
California Rules of Civil Procedure or other applicable law. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief. 
  
 (e) Discovery. In any arbitration proceeding discovery will be permitted in accordance with the Rules. All discovery shall be
expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date and within 100 days of the filing of the dispute with the AAA. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party’s presentation and that no alternative means for obtaining
information is available. 
  
 (f) Class Proceedings and Consolidations. The resolution of any dispute arising
pursuant to the terms of this Agreement shall be determined by a separate arbitration proceeding and such dispute shall not be consolidated with other disputes or included in any class proceeding. 
  
 (g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs and expenses of the arbitration proceeding.

  
 (h) Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators and the parties shall take
all action required to conclude any arbitration proceeding within 100 days of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for
disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation. If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration
provision most directly related to the Loan Documents or the subject matter of the dispute shall control. The arbitration provisions set forth in this Section 11.24 shall survive termination, amendment or expiration of any of the Loan
Documents or any relationship between the parties. 
  
 [THIS SPACE INTENTIONALLY LEFT BLANK - SIGNATURE PAGES FOLLOW]

  

 
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 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written. 
  
 
	 WEST MARINE FINANCE COMPANY, INC.,
 a California corporation

	 
	 By
 	 	 /s/    Russell Solt        
 

	  	 	 Name:  Russell Solt
 Title:    Executive Vice President and
              Chief Financial Officer
 

 
  
 
	 Address for Borrower:
  
 500 Westridge Drive
 Watsonville, CA
95076
  
 Attn: Eric Nelson
  
 Telecopier: (831) 761-4406
 Telephone: (831)
761-6925
  
 With a copy to:
  
 Dow, Lohnes & Albertson, PLLC
 1200 New
Hampshire Avenue, N.W.
 Suite 800
 Washington, D.C. 20036-6802
 Attn: Jon Hill
 Telecopier: (202) 776-2222
 Telephone: (202) 776-2725
 

 
  
  

 
 -135- 

  
 
	 WELLS FARGO BANK, NATIONAL
 ASSOCIATION,
 as Administrative Agent
 
	 
	 By
 	 	 /s/    Patrick Bishop        
 

	  	 	 Patrick Bishop
 Vice
President
 

 
  
 
	 Address for notices to Administrative Agent for
 borrowings and payments:
  
 Wells Fargo Bank, National Association
 65 West Alisal Street, 2nd Floor
 Salinas, CA 93901
 Attn: Patrick
Bishop
  
 Telecopier: (831) 757-7345
 Telephone: (831) 754-5078
  
 With a copy
to:
  
 Wells Fargo Bank, National Association
 201 Third Street, 8th Floor
 San Francisco,
California 94103
 Attn: Deborah Moore
  
 Telecopier: (415) 546-6353
 Telephone: (415)
477-5404
 

 

 
 -136- 

  
 
	 WELLS FARGO BANK, NATIONAL
 ASSOCIATION,
 as a Lender, the Issuing Lender and
 the Swing Line Lender
 
	 
	 By
 	 	 /s/    Patrick Bishop        
 

	  	 	 Patrick Bishop
 Vice
President
 

 
  
 
	 Address:
  
 Wells Fargo Bank, National Association
 65
West Alisal Street, 2nd Floor
 Salinas, CA 93901
 Attn: Patrick Bishop
  
 Telecopier: (831) 757-7345
 Telephone: (831) 754-5078
 

 

 
 -137- 

  
 
	 UNION BANK OF CALIFORNIA, N.A.,
 as Syndication Agent and a
Lender
 
	 
	 By
 	 	 /s/    William E. Hinch        
 

	  	 	 Name:  William E. Hinch
 Title:     Vice President
 

 
  
 
	 Address:
  
 Union Bank of California, N.A.
 99 Alamaden
Boulevard
 Suite 200
 San
Jose, California 95113-1687
 Attn: William E. Hinch
  
 Telecopier: (408) 279-7730
 Telephone: (408)
280-7163
 

 

 
 -138-

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