Document:

Reimbursement Agreement between the Company and Wells Fargo Bank, NA

 EXHIBIT 10.4 
  
  
  
  
  
  
  
  
  
 REIMBURSEMENT AGREEMENT 
  
  
 between 
  
  
 WILLIAMS-SONOMA, INC. 
  
  
 and 
  
  
 WELLS FARGO BANK, N.A. 
  
  
 dated as of 
  
  
 July 1, 2005 

 TABLE OF CONTENTS 
  

					
	 	  	Page
			
	 ARTICLE 1
	 	 INTERPRETATION OF THIS AGREEMENT
	  	1
			
	 Section 1.1
	 	 Definitions
	  	1
			
	 Section 1.2
	 	 Other Interpretive Provisions
	  	10
			
	 Section 1.3
	 	 Accounting Terms and Determinations
	  	11
			
	 ARTICLE 2
	 	 CREDIT FACILITY
	  	11
			
	 Section 2.1
	 	 The Letter of Credit Commitment
	  	11
			
	 Section 2.2
	 	 Requesting Letter of Credit Actions
	  	11
			
	 Section 2.3
	 	 Reimbursement of Payments Under Letters of Credit
	  	11
			
	 Section 2.4
	 	 Nature of Bank’s Funding; Interest on Unreimbursed Drawings
	  	11
			
	 Section 2.5
	 	 Obligations Absolute
	  	12
			
	 Section 2.6
	 	 Role of the Bank
	  	13
			
	 Section 2.7
	 	 Applicability of UCP
	  	13
			
	 Section 2.8
	 	 Letter of Credit Fees and Expenses
	  	14
			
	 Section 2.9
	 	 Termination
	  	14
			
	 ARTICLE 3
	 	 TAXES
	  	14
			
	 Section 3.1
	 	 Withholding Taxes
	  	14
			
	 Section 3.2
	 	 Stamp Taxes; Etc.
	  	14
			
	 Section 3.3
	 	 Tax Indemnification
	  	14
			
	 ARTICLE 4
	 	 GUARANTIES
	  	15
			
	 Section 4.1
	 	 Guaranties
	  	15
			
	 Section 4.2
	 	 New Guarantors
	  	15
			
	 ARTICLE 5
	 	CONDITIONS PRECEDENT TO EFFECTIVENESS; LETTER OF
CREDIT ACTIONS	  	15
			
	 Section 5.1
	 	 Conditions to Effectiveness
	  	15
			
	 Section 5.2
	 	 All Letter of Credit Actions
	  	17
			
	 ARTICLE 6
	 	 REPRESENTATIONS AND WARRANTIES
	  	17
			
	 Section 6.1
	 	 Power and Authority
	  	18
			
	 Section 6.2
	 	 Financial Condition
	  	18
			
	 Section 6.3
	 	 Corporate and Similar Action; No Breach
	  	18
			
	 Section 6.4
	 	 Operation of Business
	  	18

  

 i 

 TABLE OF CONTENTS 
 (continued) 
  

					
	 	 	 	  	Page
			
	 Section 6.5
	 	 Litigation and Judgments
	  	19
			
	 Section 6.6
	 	 Rights in Properties; Liens
	  	19
			
	 Section 6.7
	 	 Enforceability
	  	19
			
	 Section 6.8
	 	 Approvals
	  	19
			
	 Section 6.9
	 	 Debt
	  	19
			
	 Section 6.10
	 	 Taxes
	  	19
			
	 Section 6.11
	 	 Margin Securities
	  	20
			
	 Section 6.12
	 	 ERISA
	  	20
			
	 Section 6.13
	 	 Disclosure
	  	20
			
	 Section 6.14
	 	 Subsidiaries; Capitalization
	  	20
			
	 Section 6.15
	 	 Material Agreements
	  	21
			
	 Section 6.16
	 	 Compliance with Laws
	  	21
			
	 Section 6.17
	 	 Investment Company Act
	  	21
			
	 Section 6.18
	 	 Public Utility Holding Company Act
	  	21
			
	 Section 6.19
	 	 Environmental Matters
	  	21
			
	 Section 6.20
	 	 Broker’s Fees
	  	22
			
	 Section 6.21
	 	 Employee Matters
	  	22
			
	 Section 6.22
	 	 Solvency
	  	23
			
	 ARTICLE 7
	 	 COVENANTS
	  	23
			
	 Section 7.1
	 	 Credit Agreement Covenants
	  	23
			
	 Section 7.2
	 	 Changes to Other Reimbursement Agreements
	  	23
			
	 Section 7.3
	 	 Further Assurances
	  	23
			
	 ARTICLE 8
	 	 DEFAULT
	  	24
			
	 Section 8.1
	 	 Events of Default
	  	24
			
	 Section 8.2
	 	 Remedies
	  	25
			
	 Section 8.3
	 	 Performance by the Bank
	  	26
			
	 Section 8.4
	 	 Set-off
	  	26
			
	 Section 8.5
	 	 Continuance of Default
	  	27
			
	 ARTICLE 9
	 	 MISCELLANEOUS
	  	27
			
	 Section 9.1
	 	 Expenses
	  	27

  

 ii 

 TABLE OF CONTENTS 
 (continued) 
  

					
	 	  	 	  	Page
			
	 Section 9.2
	  	 Indemnity by the Parent
	  	27
			
	 Section 9.3
	  	 Limitation of Liability
	  	28
			
	 Section 9.4
	  	 No Duty
	  	28
			
	 Section 9.5
	  	 No Fiduciary Relationship
	  	28
			
	 Section 9.6
	  	 Equitable Relief
	  	28
			
	 Section 9.7
	  	 No Waiver; Cumulative Remedies
	  	28
			
	 Section 9.8
	  	 Binding Effect; Successors; Participations and Assignments
	  	28
			
	 Section 9.9
	  	 Survival
	  	29
			
	 Section 9.10
	  	 Entire Agreement
	  	29
			
	 Section 9.11
	  	 Amendments and Waivers
	  	29
			
	 Section 9.12
	  	 Maximum Interest Rate
	  	29
			
	 Section 9.13
	  	 Notices
	  	30
			
	 Section 9.14
	  	 Governing Law; Venue; Service of Process
	  	30
			
	 Section 9.15
	  	 Counterparts
	  	31
			
	 Section 9.16
	  	 Severability
	  	31
			
	 Section 9.17
	  	 Headings
	  	31
			
	 Section 9.18
	  	 Construction
	  	31
			
	 Section 9.19
	  	 Independence of Covenants
	  	31
			
	 Section 9.20
	  	 Waiver of Jury Trial
	  	31
			
	 Section 9.21
	  	 Confidentiality
	  	32
			
	 Section 9.22
	  	 Termination of Credit Agreement
	  	32
			
	 Section 9.23
	  	 USA Patriot Act
	  	32

  

					
	EXHIBITS:	  	 	    	 
			
	Exhibit A	  	-	    	 Form of Subsidiary Guaranty

	Exhibit B	  	-	    	 Form of Joinder Agreement

  

 iii 

 REIMBURSEMENT AGREEMENT 
  
 THIS REIMBURSEMENT AGREEMENT dated as of July 1, 2005 is between WILLIAMS-SONOMA, INC., a corporation duly
organized and validly existing under the laws of the State of California (the “Parent”) and WELLS FARGO BANK, N.A., a national banking association (the “Bank”). 
  
 R E C I T A L S: 
  
 A. The Parent has requested that the Bank extend a $20,000,000 unsecured credit facility to the Parent for
the issuance of commercial letters of credit. 
  
 B. The Bank is willing to extend such credit facility to the Parent upon the terms and conditions set forth in this Agreement and the other Transaction Documents. 
  
 NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties
hereto agree as follows: 
  
 ARTICLE 1 
  
 Interpretation of this Agreement 
  
 Section 1.1 Definitions. Wherever used in this
Agreement, the following terms have the following meanings: 
  
 “Affiliate” means, with respect to any Person, any other Person (a) that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, such
Person; (b) that directly or indirectly beneficially owns or holds ten percent (10.0%) or more of any class of Capital Stock of such Person; or (c) ten percent (10.0%) or more of the Capital Stock of which is directly or indirectly beneficially
owned or held by the Person in question. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person, whether
through the ownership of Capital Stock, by contract, or otherwise; provided, however, in no event shall the Bank be deemed an Affiliate of the Parent or any Subsidiary of the Parent. 
  
 “Agreement” means this Reimbursement Agreement, as it may be amended, restated, or
otherwise modified. 
  
 “Agent”
has the meaning specified in the Credit Agreement. 
  
 “Attorney Costs” means and includes all reasonable fees and disbursements of any law firm or other external counsel and the allocated cost of internal legal services and all disbursements of internal counsel. 
  
 “Bank” has the meaning specified in the
introductory paragraph of this Agreement. 
  
 “Bank-Related Persons” means the Bank, each of the Bank’s Affiliates, and the officers, directors, employees, agents, and attorneys-in-fact of such Persons and Affiliates. 

 “Bankruptcy Code” has the meaning specified in Section 8.1(d).

  
 “Base Rate” means for any day
a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus one-half of one percent (0.50%) and (b) the rate of interest in effect for such day as publicly announced from time to time by the Bank as its “prime
rate.” Such rate is a rate set by the Bank based upon various factors including the Bank’s costs and desired return, general economic conditions, and other factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate. Any change in such rate announced by the Bank shall take effect at the opening of business on the day specified in the public announcement of such change. 
  
 “Business Day” means any day other than a
Saturday, Sunday, or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, the state of California. 
  
 “Capital Lease Obligations” means, as to any Person, the obligations of such Person to pay rent or other amounts under a
lease of (or other agreement conveying the right to use) real and/or personal Property, which obligations are classified and accounted for as a capital lease on a balance sheet of such Person in accordance with GAAP. For purposes of this Agreement,
the amount of such Capital Lease Obligations shall be the capitalized amount thereof, determined in accordance with GAAP. 
  
 “Capital Stock” means corporate stock and any and all shares, partnership interests, limited liability company interests,
membership interests, equity interests, participations, rights, securities, or other equivalent evidences (however designated) of ownership, or any options, warrants, voting trust certificates, or other instruments evidencing an ownership interest
or a right to acquire an ownership interest in a Person (however designated) issued by any entity (whether a corporation, partnership, limited liability company, or other type of entity), provided, that in no event shall the term “Capital
Stock” include debt securities. 
  
 “Change of Control” means, with respect to any Person, an event or series of events by which: (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding any employee benefit plan of such Person or its Subsidiaries, or any Person acting in its capacity as trustee, agent or other fiduciary, or administrator of any such plan), becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a Person shall be deemed to have “beneficial ownership” of all securities that such Person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or indirectly, of fifty percent (50.0%) or more of the membership interests of such Person; or (b) during any period of twelve (12) consecutive months, a majority of the members
of the board of directors or other equivalent governing body of such Person cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to
that board or equivalent governing body was approved by individuals referred to in clause (i) preceding constituting at the time of such election or nomination at least a majority of that board or equivalent governing body, or (iii) whose election
or nomination to that board or other equivalent governing body was approved by individuals referred to in clause 

  

 2 

 
(i) and clause (ii) preceding constituting at the time of such election or nomination at least a majority of that board or equivalent governing body.

  
 “Closing Date” means the date
of this Agreement. 
  
 “Code”
means the Internal Revenue Code of 1986, as amended, and the regulations promulgated and rulings issued thereunder. 
  
 “Credit Agreement” means the Third Amended and Restated Credit Agreement dated as of February 22, 2005 among the Parent,
various financial institutions and Bank of America, N.A., as administrative agent, as such agreement may be amended, restated, or otherwise modified from time to time. 
  
 “Debt” means, with respect to any Person at any time (without duplication): (a) all
obligations of such Person for borrowed money; (b) all obligations of such Person evidenced by bonds, notes, debentures, or other similar instruments; (c) all obligations of such Person to pay the deferred purchase price of property or services,
except trade accounts payable of such Person arising in the ordinary course of business that are not past due by more than ninety (90) days or that are being contested in good faith by appropriate proceedings diligently pursued and for which
adequate reserves have been established in accordance with GAAP; (d) all Capital Lease Obligations of such Person; (e) Guarantees by such Person of indebtedness, liabilities, or obligations of the kinds described in clauses (a), (b), (c), (d), (f),
(g), (h), (i), (j), (k) and (l) of this definition; (f) all indebtedness, liabilities, and obligations of the types described in the foregoing clauses (a) through (e) secured by a Lien existing on Property owned by such Person, whether or not the
indebtedness, liabilities, and obligations secured thereby have been assumed by such Person or are non-recourse to such Person; provided, however, that the amount of such Debt of any Person described in this clause (f) shall, for purposes of this
Agreement, be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such Debt or (ii) the fair market value of the Property encumbered, as determined by the Bank in its discretion; (g) all reimbursement obligations of such Person
(whether contingent or otherwise) in respect of letters of credit, bankers’ acceptances, surety or other bonds, and similar instruments; (h) all liabilities of such Person in respect of unfunded vested benefits under any Plan (excluding
obligations to deliver stock in respect of stock options or stock ownership plans); (i) all vested obligations of such Person for the payment of money under any earn-out, noncompete, consulting, or similar arrangements providing for the deferred
payment of the purchase price for any property to the extent that any such obligations are, according to GAAP, reflected as a capitalized liability on a balance sheet of such Person; (j) all obligations of such Person to redeem or retire shares of
Capital Stock of such Person; (k) all indebtedness, liabilities, and obligations of such Person under any Hedge Agreement; and (l) the principal balance outstanding under any synthetic lease, tax retention operating lease, off balance sheet loan, or
similar off balance sheet financing product to which such Person is a party, where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an operating lease in accordance with GAAP. The Debt of any Person
shall include the Debt of any partnership or joint venture in which such Person is a general partner or a joint venturer, but only to the extent to which there is recourse to such Person for payment of such Debt. 
  

 3 

 “Default” means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of Default. 
  
 “Default Rate” means, in respect of any amount payable by the Parent under any Transaction Document, a rate per annum equal to the sum of two percent (2.00%), plus the Base Rate.

  
 “Disclosure Letter” means the
disclosure letter dated as of the date hereof delivered by the Parent to the Bank, as amended or otherwise modified from time to time. 
  
 “Dollars” and “$” mean lawful money of the U.S. 
  
 “Domestic Subsidiary” means any Subsidiary
of the Parent that is organized under the laws of any political subdivision of the United States. 
  
 “Environmental Laws” means any and all federal, state, and local laws, regulations, and requirements regulating health, safety, or the environment, as such laws, regulations, and
requirements may be amended or supplemented from time to time. 
  
 “Environmental Liabilities” means, as to any Person, all indebtedness, liabilities, obligations, responsibilities, Remedial Actions, losses, damages, punitive damages, consequential damages, treble
damages, costs, and expenses (including, without limitation, all reasonable fees, disbursements, and expenses of counsel, expert and consulting fees, and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest
incurred as a result of any claim or demand, by any Person, whether based in contract, tort, implied or express warranty, strict liability, or criminal or civil statute, including, without limitation, any Environmental Law, Permit, order, or
agreement with any Governmental Authority or other Person, arising from environmental, health, or safety conditions, or the Release or threatened Release of a Hazardous Material into the environment. 
  
 “ERISA” means the Employee Retirement Income
Security Act of 1974, as amended from time to time, and the regulations and published interpretations thereunder. 
  
 “ERISA Affiliate” means any corporation or trade or business which is a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code) as the Parent or any Subsidiary of the Parent or is under common control (within the meaning of Section 414(c) of the Code) with the Parent or any Subsidiary of the Parent. 

 
 “Event of Default” has the meaning
specified in Section 8.1. 
  
 “Federal
Funds Rate” means, for any day, the rate per annum (rounded upwards to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve Bank on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding 

  

 4 

 
Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Bank on such day on such transactions as determined by the Bank.

  
 “Fee Letter” has the meaning
specified in Section 2.8. 
  
 “Fiscal
Quarters” means one of four thirteen (13) week or, if applicable, fourteen (14) week quarters in a Fiscal Year, with the first of such quarters beginning on the first day of a Fiscal Year and ending on the Sunday of the thirteenth (or
fourteenth, if applicable) week in such quarter. 
  
 “Fiscal Year” means the Parent’s fiscal year for financial accounting purposes beginning on the Monday following the Sunday nearest January 31 of each year and ending on the Sunday nearest January 31 of the following
year. The current (as of the date hereof) Fiscal Year of the Parent will end on January 29, 2006. 
  
 “GAAP” means generally accepted accounting principles, applied on a “consistent basis” (as such phrase is interpreted in accordance with Section 1.3), as set forth in
Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants and/or in statements of the Financial Accounting Standards Board and/or their respective successors and which are applicable in the circumstances
as of the date in question. 
  
 “Governmental Authority” means any nation or government, any federal, state, county, municipal, parish, provincial, township, or other political subdivision thereof, and any department, commission, board, court, agency, or
other instrumentality or entity exercising executive, legislative, judicial, regulatory, or administrative functions of or pertaining to government. 
  
 “Guarantee” means any indebtedness, liability, or obligation, contingent or otherwise, of any Person directly or
indirectly guaranteeing any Debt of any other Person or indemnifying such other Person for any Debt and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (a) to purchase or
pay (or advance or supply funds for the purchase or payment of) such Debt (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for the purpose of assuring in any other manner the obligee of such Debt of the payment thereof or protecting the obligee against loss in respect thereof (in whole or in part), provided that the
term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Guarantee shall be deemed to be equal to the lesser of (y) an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee is made or (z) the maximum amount for which such guaranteeing Person may be liable pursuant to the terms of the instrument embodying such Guarantee, unless such primary obligation and the maximum
amount for which such guaranteeing Person may be liable are not stated or determinable, in which case the amount of such Guarantee shall be such guaranteeing Person’s maximum reasonably anticipated liability in respect thereof as mutually
determined by the Parent and the Bank in good faith. The term “Guarantee” used as a verb has a corresponding meaning. 
  

 5 

 “Guarantor” means any Person who is or becomes a party to any Guaranty
of the Obligations or any part thereof, including each Domestic Subsidiary who is a party to the Subsidiary Guaranty pursuant to the terms of Article 4. 
  
 “Guaranty” means the Subsidiary Guaranty or any other guaranty agreement executed and delivered by a Person in favor of
the Bank, and any and all amendments, restatements, or other modifications thereof, and “Guaranties” means all of such agreements, collectively. 
  
 “Hazardous Material” means any substance, product, waste, pollutant, chemical, contaminant,
insecticide, pesticide, constituent, or material which is or becomes listed, regulated, or addressed under any Environmental Law as a result of its hazardous or toxic nature. 
  
 “Hedge Agreement” means any agreement, device, or arrangement designed to protect a Person
from the fluctuations of interest rates, exchange rates, or forward rates applicable to its assets, liabilities, or exchange transactions, including, but not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap, swap, or collar protection agreements, and forward rate currency or interest rate options, as the same may be amended or modified and in effect from time to time, and any cancellation, buy-back,
reversal, termination, or assignment of any of the foregoing. 
  
 “Indemnified Liabilities” has the meaning specified in Section 9.2. 
  
 “Joinder Agreement” means an agreement to be executed by a Person pursuant to the terms of Section 4.2, in substantially
the form of Exhibit B. 
  
 “Letter
of Credit” means any commercial letter of credit issued or outstanding hereunder. Each Letter of Credit will be issued by the Bank for the account of the Parent, but may indicate in its terms that it is being issued at the request of the
Parent or, if the Parent so directs, at the request of a Subsidiary of the Parent. 
  
 “Letter of Credit Action” means the issuance, supplement, amendment, renewal, extension, modification, or other action relating to a Letter of Credit. 
  
 “Letter of Credit Application” means an
application for a Letter of Credit Action from time to time in use by the Bank. 
  
 “Letter of Credit Cash Collateral Account” means a blocked deposit account maintained by the Parent with the Bank in which the Parent hereby grants a security interest to the
Bank as security for Letter of Credit Usage and with respect to which the Parent agrees to execute and deliver from time to time such documentation as the Bank may reasonably request to further assure and confirm such security interest. 

 
 “Letter of Credit Expiration Date” means
the date which is one hundred fifty (150) days after the Maturity Date. 
  
 “Letter of Credit Usage” means, as at any date of determination, the aggregate undrawn face amount of outstanding Letters of Credit, plus the aggregate amount of all drawings under the Letters of
Credit which as of such date remain not reimbursed by the Parent. 
  

 6 

 “Lien” means any lien, mortgage, security interest, tax lien, pledge,
charge, hypothecation, assignment, preference, priority, or other encumbrance of any kind or nature whatsoever (including, without limitation, any conditional sale or title retention agreement), whether arising by contract, operation of law, or
otherwise. 
  
 “Material Adverse
Effect” means any material adverse effect, or the occurrence of any event or the existence of any condition that could reasonably be expected to have a material adverse effect, on (a) the business or financial condition, prospects,
performance, or operations of the Parent individually or the Parent and its Subsidiaries taken as a whole, (b) the ability of the Parent individually or the Parent and its Subsidiaries taken as a whole to pay and perform the obligations for which it
or they, as applicable, are responsible when due, or (c) the validity or enforceability of (i) any of the Transaction Documents or (ii) the rights and remedies of the Bank under any of the Transaction Documents. 
  
 “Maturity Date” means the day which is the
first anniversary of the Closing Date. 
  
 “Maximum Rate” has the meaning specified in Section 9.12. 
  
 “Minimum Amount” means, with respect to any Letter of Credit Action, a face amount equal to $5,000. 
  
 “Multiemployer Plan” means a multiemployer plan defined as such in Section 3(37) of ERISA
to which contributions have been made by the Parent or any ERISA Affiliate at any time within the six (6) year period preceding the date hereof or hereafter and which is covered by Title IV of ERISA. 
  
 “Obligations” means any and all obligations,
indebtedness, and liabilities of the Parent to the Bank, arising pursuant to this Agreement or any other Transaction Document, whether now existing or hereafter arising, whether direct, indirect, fixed, contingent, liquidated, unliquidated, joint,
several, or joint and several, including, without limitation, the obligation of the Parent to repay amounts funded under any Letter of Credit, interest on amounts funded under any Letter of Credit, and all fees, costs, and expenses (including,
without limitation, Attorney Costs) provided for in the Transaction Documents. 
  
 “Other Reimbursement Agreements” means (a) the Reimbursement Agreement dated as of July 1, 2005 between the Parent and Bank of America, N.A., and each other agreement, document, or instrument entered
into or delivered in connection therewith, as such agreements, documents, and instruments may be amended, restated, or otherwise modified from time to time, and (b) the Reimbursement Agreement dated as of July 1, 2005 between the Parent and The Bank
of New York, and each other agreement, document, or instrument entered into or delivered in connection therewith, as such agreements, documents, and instruments may be amended, restated, or otherwise modified from time to time, and “Other
Reimbursement Agreement” means any one of such agreements, documents, and instruments. 
  
 “Other Taxes” has the meaning specified in Section 3.2. 
  
 “Parent” has the meaning specified in the introductory paragraph of this Agreement. 
  

 7 

 “PBGC” means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA. 
  
 “Permit” means any permit, certificate, approval, order, license, or other authorization. 
  
 “Permitted Liens” means any Liens permitted under the Credit Agreement. 
  
 “Person” means any individual, corporation,
limited liability company, business trust, association, company, partnership, joint venture, Governmental Authority, or other entity. 
  
 “Plan” means any employee benefit plan established or maintained by the Parent or any ERISA Affiliate and which is
subject to Title IV of ERISA. 
  
 “Principal Office” means the office of the Bank located at 550 California Street, MAC A0112-101, San Francisco, California. 
  
 “Prohibited Transaction” means any transaction described in Section 406 or 407 of ERISA or Section 4975(c)(1) of the Code
for which no statutory or administrative exemption applies. 
  
 “Property” means, for any Person, property or assets of all kinds, real, personal, or mixed, tangible or intangible (including, without limitation, all rights relating thereto), whether owned or
acquired on or after the Closing Date. 
  
 “Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System as the same may be amended, modified, or supplemented from time to time or any successor regulation therefor. 
  
 “Release” means, as to any Person, any
release, spill, emission, leaking, pumping, injection, deposit, disposal, disbursement, leaching, or migration of Hazardous Materials into the indoor or outdoor environment or into or from Property owned or leased by such Person, including, without
limitation, the migration of Hazardous Materials through or in the air, soil, surface water, ground water, or property, in violation of Environmental Laws. 
  
 “Remedial Action” means all actions required under applicable Environmental Laws to (a) cleanup, remove, treat, or
otherwise address Hazardous Materials in the indoor or outdoor environment, (b) prevent the Release or threat of Release or minimize the further Release of Hazardous Materials, or (c) perform pre-remedial studies and investigations and post-remedial
monitoring and care; provided that “Remedial Action” shall not include such actions taken in the normal course of business and in material compliance with Environmental Laws. 
  
 “Reportable Event” means any of the events set forth in Section 4043 of ERISA for which the
30-day notice requirement has not been waived by the PBGC. 
  
 “Solvent” means, with respect to any Person as of the date of any determination, that on such date (a) the fair value of the Property of such Person (both at fair valuation and at present fair
saleable value) is greater than the total liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair saleable value of the assets of such Person is not 

  

 8 

 
less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is
able to realize upon its assets and pay its debts and other liabilities, contingent obligations, and other commitments as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature, and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such
Person’s property would constitute unreasonably small capital after giving due consideration to current and anticipated future capital requirements and current and anticipated future business conduct and the prevailing practice in the industry
in which such Person is engaged. In computing the amount of contingent liabilities at any time, such liabilities shall be computed at the amount which, in light of the facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability. 
  
 “Subsidiary” means, (a) when used to determine the relationship of a Person (the “parent”) to another Person, a Person (the “subsidiary”) of which an aggregate of
more than fifty percent (50.0%) or more of the Capital Stock is owned of record or beneficially by the parent, or by one or more Subsidiaries of the parent, or by the parent and one or more Subsidiaries of the parent, (i) if the holders of such
Capital Stock (A) are ordinarily, in the absence of contingencies, entitled to vote for the election of a majority of the directors (or other individuals performing similar functions) of the subsidiary, even though the right so to vote has been
suspended by the happening of such a contingency, or (B) are entitled, as such holders, to vote for the election of a majority of the directors (or individuals performing similar functions) of the subsidiary, whether or not the right so to vote
exists by reason of the happening of a contingency, or (ii) in the case of Capital Stock which is not issued by a corporation, if such ownership interests constitute a majority voting interest and (b) when used with respect to a Plan, ERISA or a
provision of the Code pertaining to employee benefit plans, means, with respect to the parent, any corporation, trade or business (whether or not incorporated) which is under common control with the parent and is treated as a single employer with
the parent under Section 414(b) or Section 414(c) of the Code and the regulations thereunder. 
  
 “Subsidiary Guarantor” means a domestic Subsidiary of the Parent which is, or is required to be, a Guarantor hereunder. 
  
 “Subsidiary Guaranty” means a guaranty
agreement executed and delivered by each of the Subsidiary Guarantors in favor of the Bank, in substantially the form of Exhibit A, as such guaranty agreement may be amended, restated, or otherwise modified from time to time. 
  
 “Taxes” has the meaning specified in Section
3.1. 
  
 “Transaction Documents”
means this Agreement, each Letter of Credit Application, each Letter of Credit, the Disclosure Letter, each Guaranty (including, without limitation, the Subsidiary Guaranty), the Fee Letter, any Joinder Agreement, and all other agreements,
documents, and instruments now or hereafter executed and/or delivered pursuant to or in connection with any of the foregoing, and any and all amendments, modifications, supplements, renewals, extensions, or restatements thereof (excluding any
commitment letter, term sheet, or other agreement entered into prior to the Closing Date). 
  

 9 

 “UCC” means the Uniform Commercial Code as in effect from time to time
in the State of California. 
  
 “U.S.” means the United States of America. 
  
 “Voting Stock” means Capital Stock of a Person having by the terms thereof ordinary voting power to elect a majority of the board of directors (or similar governing body) of such Person (irrespective
of whether or not at the time Capital Stock of any other class or classes of such Person shall have or might have voting power by reason of the happening of any contingency). 
  
 Section 1.2 Other Interpretive Provisions. 
  
 (a) The meanings of defined terms are equally applicable to
the singular and plural forms of the defined terms. 
  
 (i) The words “hereof”, “herein”, “hereunder” and words of similar import referring to this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise specified, all Article, Exhibit and Section references pertain to Articles, Exhibits and Sections of this Agreement. 
  
 (ii) The term “including” is not limiting and means “including
without limitation.” 
  
 (iii) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each
mean “to but excluding”, and the word “through” means “to and including.” 
  
 (b) Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement) and other contractual instruments
shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Transaction Document, and (ii) references to any statute or
regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing, or interpreting the statute or regulation. 
  
 (c) This Agreement and other Transaction Documents may use several different limitations, tests, or
measurements to regulate the same or similar matters. All such limitations, tests, and measurements are cumulative and shall each be performed in accordance with their terms. Unless otherwise expressly provided, any reference to any action of the
Bank by way of consent, approval, or waiver shall be deemed modified by the phrase “in its sole discretion.” 
  
 (d) Terms used herein that are defined in the UCC, unless otherwise defined herein, shall have the meanings specified in the UCC.

  

 10 

 Section 1.3 Accounting Terms and Determinations 
  
 (a) The provisions of Section 1.3 of the Credit Agreement, as
such Section is in effect on the Closing Date, are hereby incorporated herein by this reference the same as if fully stated herein. 
  
 ARTICLE 2 
  
 Credit Facility 
  
 Section 2.1 The Letter of Credit Commitment. Subject to the terms and conditions set forth in this Agreement, (a) from the Closing Date through and including the Maturity Date, the Bank shall issue Letters of
Credit as the Parent may from time to time request and (b) from the Closing Date through and including the Letter of Credit Expiration Date, the Bank shall take such Letter of Credit Actions (other than issuing Letters of Credit) as the Parent may
from time to time request; provided, however, that the Letter of Credit Usage shall not exceed $20,000,000 at any time. Unless consented to by the Bank, no Letter of Credit may have an expiration date more than one hundred fifty (150) days after the
date of its issuance or last renewal; provided, however, that no Letter of Credit shall have an expiration date after the Letter of Credit Expiration Date. Notwithstanding the foregoing, if any Letter of Credit remains outstanding after the Letter
of Credit Expiration Date, the Parent shall, not later than the Letter of Credit Expiration Date, deposit cash in an amount equal to such Letter of Credit Usage in a Letter of Credit Cash Collateral Account. 
  
 Section 2.2 Requesting Letter of Credit Actions. The
Parent may irrevocably request a Letter of Credit Action in a Minimum Amount therefor in Dollars by delivering a Letter of Credit Application therefor to the Bank by notice delivered in accordance with Section 9.13 or via the Bank’s electronic
trade banking system (a) with respect to the initial issuance of any Letter of Credit, not later than three (3) Business Days prior to the effective date of such issuance and (b) with respect to any Letter of Credit Action not included in clause (a)
preceding, by 10:00 a.m. (San Francisco, California time) on the day of the requested Letter of Credit Action. Each request for any Letter of Credit Action shall be in a form acceptable to the Bank in its sole discretion, including, without
limitation, the current form of Letter of Credit Application in use by the Bank. The Bank shall, upon satisfaction of the applicable conditions set forth in Article 7, effect such Letter of Credit Action. This Agreement shall control in the event of
any conflict with any Letter of Credit Application. 
  
 Section 2.3 Reimbursement of Payments Under Letters of Credit. Promptly upon receiving notice of any drawing under a Letter of Credit, the Bank shall notify the Parent. Within one (1) Business Day of such notification from the Bank
to the Parent, the Parent shall reimburse the Bank for any payment that the Bank makes under a Letter of Credit. The Bank may, but shall not be obligated to, withdraw the amount of any such payment which is not made when due from any account of the
Parent maintained with the Bank. 
  
 Section 2.4
Nature of Bank’s Funding; Interest on Unreimbursed Drawings. If the Parent fails to reimburse the Bank for a drawing under a Letter of Credit, the funding by the Bank shall be deemed to be a loan by the Bank to the Parent. Any amount
funded by the Bank 

  

 11 

 
hereunder shall be payable by the Parent upon demand of the Bank, and shall bear interest, from the date of such drawing through but excluding the date that
payment is made, at a rate per annum equal to the Default Rate. 
  
 Section 2.5 Obligations Absolute. The obligation of the Parent to pay to the Bank the amount of any payment made by the Bank under any Letter of Credit shall be absolute, unconditional, and irrevocable. Without
limiting the foregoing, the Parent’s obligation shall not be affected by any of the following circumstances: 
  
 (a) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other agreement or instrument relating hereto
or thereto; 
  
 (b) any amendment or waiver of or
any consent to departure from such Letter of Credit, this Agreement, or any other agreement or instrument relating hereto or thereto; 
  
 (c) the existence of any claim, setoff, defense, or other rights which the Parent or any Subsidiary of the Parent may have at any time
against the Bank, any beneficiary of such Letter of Credit (or any Person for whom any such beneficiary may be acting) or any other Person, whether in connection with such Letter of Credit, this Agreement, or any other agreement or instrument
relating hereto or thereto, or any unrelated transactions; 
  
 (d) any demand, statement, or any other document presented under such 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 appeared on its face to comply with the terms of the Letter of Credit; 
  
 (e) payment by the Bank in good faith under such Letter of Credit against presentation of a draft or any accompanying document which does
not strictly comply with the terms of such Letter of Credit; or any payment made by the Bank 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 the Bankruptcy Code or other applicable laws; 
  
 (f) the existence, character, quality, quantity, condition,
packing, value, or delivery of any property purported to be represented by documents presented in connection with such 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; 
  
 (g)
the time, place, manner, order, or contents of shipments or deliveries of property as described in documents presented in connection with such Letter of Credit or the existence, nature, and extent of any insurance relative thereto; 
  
 (h) the solvency or financial responsibility of any party
issuing any documents in connection with such Letter of Credit; 
  
 (i) any failure or delay in notice of shipments or arrival of any Property; 
  

 12 

 (j) any error in the transmission of any message relating to such Letter of Credit not
caused by the Bank, or any delay or interruption in any such message; 
  
 (k) any error, neglect, or default of any correspondent of the Bank in connection with such Letter of Credit; 
  
 (l) any consequence arising from acts of God, wars, insurrections, civil unrest, disturbances, labor disputes, emergency conditions, or
other causes beyond the control of the Bank; 
  
 (m) so long as the Bank in good faith determines that the document appears on its face to comply with the terms 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 Bank in connection with such Letter of Credit; and 
  
 (n) any other circumstances whatsoever where the Bank has acted in good faith. 
  
 (o) In addition, the Parent will examine within three (3) Business Days a copy of each Letter of Credit and amendments thereto delivered
to it and, in the event of any claim of noncompliance with the Parent’s instructions or other irregularity, the Parent will immediately notify the Bank in writing. The Parent shall be conclusively deemed to have waived any such claim against
the Bank and its correspondents unless such notice is given as aforesaid. 
  
 Section 2.6 Role of the Bank. The Parent agrees that, in paying any drawing under a Letter of Credit, the Bank shall not have any responsibility to obtain any document (other than any sight draft, certificates,
and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. The Parent hereby assumes all risks of
the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Parent’s pursuing such rights and remedies as it may
have against the beneficiary or transferee at law or under any other agreement. No Bank-Related Person, nor any of the respective correspondents, participants, or assignees of the Bank, shall be liable or responsible for any of the matters described
in Section 2.5. In furtherance and not in limitation of the foregoing, the Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary,
and the Bank shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason. 
  
 Section 2.7 Applicability of UCP. Subject to applicable law, unless otherwise expressly agreed by the Bank and the Parent when a Letter of Credit is issued, performance under Letters of Credit by the Bank, its
correspondents, and beneficiaries will be governed by the rules of the Uniform Customs and Practice for Documentary Credits, as published in its most recent version by the International Chamber of Commerce (the “ICC”) on the date
any commercial Letter of Credit is issued, and including the ICC decision published by the 

  

 13 

 
Commission on Banking Technique and Practice on April 6, 1998 regarding the European single currency (euro). 
  
 Section 2.8 Letter of Credit Fees and Expenses. The
Parent shall pay directly to the Bank for its sole account its customary documentary and processing charges in accordance with that certain letter agreement between the Parent and the Bank dated as of the date hereof (as such letter agreement may be
amended, restated or otherwise modified from time to time, the “Fee Letter”). Such fees and charges are nonrefundable. 
  
 Section 2.9 Termination. The term of this Agreement shall end on the Letter of Credit Expiration Date. The Parent shall have the
right to terminate this Agreement, without premium or penalty, at any time prior to the Letter of Credit Expiration Date by giving the Bank written notice of such termination not less than thirty (30) days prior to such date of termination, provided
that the Parent makes payment to the Bank of an amount equal to the aggregate amount of all outstanding Letter of Credit Usage to be held in a Letter of Credit Cash Collateral Account. 
  
 ARTICLE 3 
  
 Taxes 
  
 Section 3.1 Withholding Taxes. Except as otherwise provided in this Agreement, any and all payments by the Parent or any Guarantor
to or for the account of the Bank hereunder or under any other Transaction Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, charges, or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on or measured by the Bank’s income, and franchise taxes imposed on the Bank, by the jurisdiction under the laws of which the Bank is organized, located, or doing business or any
political subdivision thereof (all such non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings, and liabilities being hereinafter referred to as “Taxes”). If the Parent or any Guarantor shall be required by
law to deduct any Taxes from or in respect of any sum payable under any Transaction Document to the Bank, (i) the sum payable shall be increased as necessary so that after making all required deductions (including, without limitation, deductions
applicable to additional sums payable under this Section 3.1 and Section 3.2) the Bank receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Parent or any Guarantor, as applicable, shall make such
deductions, (iii) the Parent or any Guarantor, as applicable, shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable law, and (iv) the Parent or any Guarantor, as applicable, shall
furnish to the Bank the original or a certified copy of a receipt evidencing payment thereof. 
  
 Section 3.2 Stamp Taxes; Etc. In addition, the Parent agrees to pay any and all present or future stamp or documentary taxes and any other excise or property taxes or charges or similar
levies which arise from any payment made under this Agreement or any other Transaction Document or from the execution or delivery of, or otherwise with respect to, this Agreement or any other Transaction Document (“Other Taxes”).

  
 Section 3.3 Tax Indemnification. THE
PARENT AGREES TO INDEMNIFY THE BANK AND THE BANK-RELATED PERSONS FOR THE FULL AMOUNT OF TAXES 

  

 14 

 
AND OTHER TAXES (INCLUDING, WITHOUT LIMITATION, ANY “TAXES” OR “OTHER TAXES” IMPOSED OR ASSERTED BY ANY JURISDICTION ON AMOUNTS PAYABLE
UNDER SECTION 3.1 AND SECTION 3.2) PAID BY THE BANK OR ANY BANK-RELATED PERSON (AS THE CASE MAY BE) AND ANY LIABILITY (INCLUDING, WITHOUT LIMITATION, PENALTIES, INTEREST, AND EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO, OTHER THAN PENALTIES,
ADDITIONS TO TAX, INTEREST, AND EXPENSES ARISING AS A RESULT OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE PART OF THE BANK OR BANK-RELATED PERSON. 
  
 ARTICLE 4 
  
 Guaranties 
  
 Section 4.1 Guaranties. Each Domestic Subsidiary in existence as of the Closing Date and any other Subsidiary of the Parent which at any time Guarantees the indebtedness, liabilities, and obligations of the
Parent under the Credit Agreement shall guarantee payment and performance of the Obligations pursuant to the Subsidiary Guaranty. Additionally, the Parent shall cause one or more of its other Domestic Subsidiaries (if any) to Guarantee (by means of
the execution and delivery of a Joinder Agreement) payment and performance of the Obligations pursuant to the Subsidiary Guaranty as follows: (a) in the event that any Domestic Subsidiary which is not a Guarantor has assets of a net book value in
excess of $25,000,000 or gross revenue for the most recently completed four (4) Fiscal Quarters in excess of $25,000,000 the Parent shall cause such Domestic Subsidiary to become a Guarantor as provided by Section 4.2 and (b) in the event that the
Parent’s Domestic Subsidiaries which are not previously Guarantors hereunder have assets, in the aggregate for all such Domestic Subsidiaries, of a net book value in excess of $100,000,000 or gross revenue for the most recently completed four
(4) Fiscal Quarters in excess of $100,000,000, the Parent shall cause one or more of such Subsidiaries to become Guarantors as provided by Section 4.2 with the effect that the assets and gross revenue of the remaining Domestic Subsidiaries of the
Parent which are not Guarantors hereunder do not exceed $75,000,000 as of such date. 
  
 Section 4.2 New Guarantors. In the event that the Parent is required to cause one or more of its Subsidiaries to become Guarantors as set forth in Section 4.1, such new Guarantor or
Guarantors (as the case may be) shall, contemporaneously with the delivery of the financial statements required by Section 10.1(a) and Section 10.1(b) of the Credit Agreement, execute and deliver to the Bank a Joinder Agreement pursuant to which
each such Subsidiary of the Parent becomes a Guarantor under this Agreement and such other certificates and documentation, including the items otherwise required pursuant to Section 5.1, as the Bank may reasonably request. 
  
 ARTICLE 5 
  
 Conditions Precedent to Effectiveness; Letter of Credit Actions 
  
 Section 5.1 Conditions to Effectiveness. This
Agreement shall become effective as of the Closing Date upon the satisfaction of the following conditions precedent: 
  

 15 

 (a) Deliveries. The Bank shall have received all of the following, each dated
(unless otherwise indicated) the Closing Date, in form and substance satisfactory to the Bank: 
  
 (i) Resolutions; Authority. For each of the Parent and the Guarantors, resolutions of its board of directors (or
similar governing body) certified by its Secretary or an Assistant Secretary which authorize its execution, delivery, and performance of the Transaction Documents to which it is or is to be a party; 
  
 (ii) Incumbency Certificate. For each
of the Parent and the Guarantors, a certificate of incumbency certified by the Secretary or an Assistant Secretary certifying the names of its officers (A) who are authorized to sign the Transaction Documents to which it is or is to be a party
(including, without limitation, the certificates contemplated herein) together with specimen signatures of each such officer and (B) who will, until replaced by other officers duly authorized for that purpose, act as its representatives for the
purposes of signing documentation and giving notices and other communications in connection with this Agreement and the transactions contemplated hereby; 
  
 (iii) Good Standing Certificate. A certificate of good standing for the Parent, dated as of a recent date, issued
by the Secretary of State of the State of California; 
  
 (iv) Reimbursement Agreement. This Agreement, together with all Schedules, Exhibits, and other attachments (if any), duly executed by the Parent and the Bank; 
  
 (v) Subsidiary Guaranty. The
Subsidiary Guaranty executed by each of the Subsidiary Guarantors; 
  
 (vi) Fee Letter. The Fee Letter, duly executed by the Parent and the Bank; 
  
 (vii) Consents. Copies of all material consents or waivers, if any, necessary for the execution, delivery, and
performance by the Parent and each Guarantor of the Transaction Documents to which it is a party, as the Bank may require, which consents shall be certified by an authorized representative of the Parent or such Guarantor, as applicable, as true and
correct copies of such consents as of the Closing Date; 
  
 (viii) Disclosure Letter. The Disclosure Letter, duly executed by the Parent; 
  
 (ix) Opinions of Counsel. Satisfactory opinions of legal counsel to the Parent and the Guarantors as to such
matters as the Bank may request. 
  
 (b)
Attorney Costs. The Attorney Costs referred to in Section 9.1 for which statements have been presented shall have been paid in full on the Closing Date. 
  

(c) Closing Certificate. The Bank shall have received a certificate executed by an officer of the Parent confirming that all
representations and warranties contained in Article 6 and the other Transaction Documents are true and correct in all material respects on and as of the Closing Date with the same force and effect as if such representations and warranties had been
made on and as of the Closing Date except to the extent that such representations and warranties relate specifically to another date. 
  

 16 

 (d) Additional Documentation. The Bank shall have received such additional
approvals, opinions, or other documentation as the Bank may reasonably request to effectuate the purpose hereof. 
  
 Section 5.2 All Letter of Credit Actions. The obligation of the Bank to take any Letter of Credit Action under this Agreement is
subject to the following additional conditions precedent: 
  
 (a) No Default. No Default shall have occurred and be continuing, or would result from such requested Letter of Credit Action; 
  
 (b) Representations and Warranties. All of the representations and warranties contained in Article 6
and in the other Transaction Documents shall be true and correct in all material respects on and as of the date of taking such Letter of Credit Action with the same force and effect as if such representations and warranties had been made on and as
of such date except to the extent that such representations and warranties relate specifically to another date; 
  
 (c) Governmental Restrictions. Except as set forth in Schedule 5.2 to the Disclosure Letter, there shall be no governmental
inquiries, injunctions, or restraining orders instituted or pending, or any statute or rule enacted, promulgated, entered, or enforced which would have a Material Adverse Effect upon the Parent (individually) or the Parent and its Subsidiaries
(taken as a whole); 
  
 (d) No Material Adverse
Change. No material adverse change shall have occurred with respect to the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise), or prospects of the Parent (individually) or the Parent and its
Subsidiaries (taken as a whole) since January 30, 2005; and 
  
 (e) Letter of Credit Application. The Parent shall have delivered to the Bank a duly completed Letter of Credit Application as required by Section 2.2 and such other documentation related thereto as the Bank
shall reasonably request. 
  
 Each Letter of Credit Action
requested by the Parent hereunder shall constitute a representation and warranty by the Parent that the conditions precedent set forth in this Section 5.2 have been satisfied (both as of the date of such notice and, unless the Parent otherwise
notifies the Bank prior to the date of such requested Letter of Credit Action as of the date of such requested Letter of Credit Action). 
  
 ARTICLE 6 
  
 Representations and Warranties 
  
 To induce the Bank to enter into this Agreement, the Parent represents and warrants that the following statements are and, after giving effect to the transactions contemplated hereby will be,
true, correct, and complete. 
  

 17 

 Section 6.1 Power and Authority. 
  
 (a) The Parent and each of its Subsidiaries is (i) duly
organized, validly existing, and in good standing under the laws of the jurisdiction of its organization; (ii) has all requisite power and authority to own its assets and carry on its business as now being or as proposed to be conducted; and (iii)
is qualified to do business in all jurisdictions in which the nature of its business makes such qualification necessary and where failure to so qualify would have a Material Adverse Effect; 
  
 (b) The Parent and each of its Subsidiaries has the power and
authority to execute, deliver, and perform its respective obligations under the Transaction Documents to which it is or may become a party. 
  
 Section 6.2 Financial Condition. The Parent has delivered to the Bank the audited financial statements of the Parent and its
Subsidiaries as of and for the Fiscal Years ended February 2, 2003, February 1, 2004, and January 30, 2005. Except as set forth on Schedule 6.2 to the Disclosure Letter, such financial statements have been prepared in accordance with GAAP, and
present fairly, the financial condition of the Parent and its Subsidiaries as of the respective dates indicated therein and the results of operations for the respective periods indicated therein. Neither the Parent nor any of its Subsidiaries has
any material contingent liabilities, liabilities for taxes, unusual forward or long-term commitments, or unrealized or anticipated losses from any unfavorable commitments except as referred to or reflected in the financial statements dated as of
January 30, 2005. Since the date of the financial statements dated as of January 30, 2005, no material adverse change has occurred with respect to the business, assets, liabilities (actual or contingent), operations, condition (financial or
otherwise), or prospects of the Parent (individually) or of the Parent and its Subsidiaries (taken as a whole). 
  
 Section 6.3 Corporate and Similar Action; No Breach. The execution, delivery, and performance by the Parent and each of its
Subsidiaries of the Transaction Documents to which it is or may become a party and compliance with the terms and provisions thereof have been duly authorized by all requisite action on the part of the Parent and each of its Subsidiaries,
respectively, and do not and will not (a) violate or conflict with, or result in a breach of, or require any consent under (i) the articles of incorporation, bylaws, or other organizational documents (as applicable) of such Person, (ii) any
applicable law, rule, or regulation or any order, writ, injunction, or decree of any Governmental Authority or arbitrator, or (iii) any material agreement or instrument to which such Person is a party or by which any of them or any of their property
is bound or subject, or (b) constitute a default under any such material agreement or instrument, or result in the creation or imposition of any Lien upon any of the revenues or assets of such Person. 
  
 Section 6.4 Operation of Business. Each of the Parent
and its Subsidiaries possesses all material licenses, Permits, franchises, patents, copyrights, trademarks, and tradenames, or rights thereto, necessary to conduct its business substantially as now conducted and as presently proposed to be
conducted, and, to the best of their knowledge, neither the Parent nor any of its Subsidiaries is in violation of any valid rights of others with respect to any of the foregoing where such violation could reasonably be expected to have a Material
Adverse Effect. Except as 

  

 18 

 
set forth in Schedule 6.4 to the Disclosure Letter, since January 30, 2005, the Parent and its Subsidiaries have conducted their respective businesses only
in the ordinary and usual course. 
  
 Section 6.5
Litigation and Judgments. Except as set forth in Schedule 6.5 to the Disclosure Letter, there is no action, suit, investigation, or proceeding before or by any Governmental Authority or arbitrator pending or threatened against or affecting
the Parent or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect. As of the Closing Date, except as set forth in Schedule 6.5 to the Disclosure Letter, there are no outstanding judgments against the Parent
or any of its Subsidiaries in excess of $1,000,000. 
  
 Section 6.6 Rights in Properties; Liens. The Parent and each of its Subsidiaries has good title to or valid leasehold interests in its respective Properties, real and personal and none of such Properties or leasehold interests of the
Parent or any of its Subsidiaries is subject to any Lien, other than Permitted Liens. 
  
 Section 6.7 Enforceability. The Transaction Documents to which the Parent or any Subsidiary of the Parent is a party, when executed and delivered, shall constitute the legal, valid, and
binding obligations of the Parent or such Subsidiary, as applicable, enforceable against such Person in accordance with their respective terms, except as limited by bankruptcy, insolvency, or other laws of general application relating to the
enforcement of creditors’ rights and general principles of equity. 
  
 Section 6.8 Approvals. No authorization, approval, or consent of, and no filing or registration with, any Governmental Authority or other third party is or will be necessary for the execution, delivery, or
performance by the Parent or any Subsidiary of the Parent of the Transaction Documents to which it is or may become a party, except where the failure to obtain any such authorization, approval, or consent could not reasonably be expected to have a
Material Adverse Effect, or for the validity or enforceability thereof. 
  
 Section 6.9 Debt. Neither the Parent nor any of its Subsidiaries has any Debt, except as set forth in Schedule 6.9 to the Disclosure Letter or as otherwise permitted by Section 11.1 of the Credit Agreement.

  
 Section 6.10 Taxes. Except as set forth
in Schedule 6.10 to the Disclosure Letter or, after the Closing Date, matters which do not violate Section 10.4 of the Credit Agreement, the Parent and each Subsidiary of the Parent have filed all federal and other material tax returns required to
be filed, including all income, franchise and employment tax returns and all material property and sales tax returns, and have paid all of their respective liabilities for taxes, assessments, governmental charges, and other levies shown as due and
payable on such returns and all other material liabilities for taxes, assessments, government charges and other levies that are due and payable other than, in each case, those being contested in good faith by appropriate proceedings diligently
pursued for which adequate reserves have been established in accordance with GAAP. Except as set forth in Schedule 6.10 to the Disclosure Letter or, after the Closing Date, matters which do not violate Section 10.4 of the Credit Agreement, there is
no pending investigation of the Parent or any Subsidiary of the Parent by any taxing authority with respect to any liability for tax or of any pending but unassessed tax liability of the Parent or any Subsidiary of the Parent. 
  

 19 

 Section 6.11 Margin Securities. Neither the Parent nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying margin stock (within the meaning of Regulation U or Regulations T or X of the Board of Governors of the Federal
Reserve System), and no Letter of Credit requested by the Parent hereunder will be used in connection with any transaction whereby the Parent or any Subsidiary of the Parent buys or carries any margin stock or extends credit to others for the
purpose of buying or carrying margin stock. 
  
 Section 6.12 ERISA. With respect to each Plan, the Parent and each Subsidiary of the Parent is in compliance with all applicable provisions of ERISA. Neither a Reportable Event nor a Prohibited Transaction has occurred and is
continuing with respect to any Plan. No notice of intent to terminate a Plan has been filed, nor has any Plan been terminated. As of the Closing Date, no circumstances exist which constitute grounds entitling the PBGC to institute proceedings to
terminate, or appoint a trustee to administer, a Plan, nor has the PBGC instituted any such proceedings. Neither the Parent nor any of its Subsidiaries nor any ERISA Affiliate has completely or partially withdrawn from a Multiemployer Plan. The
Parent, each Subsidiary of the Parent, and each ERISA Affiliate have met their minimum funding requirements under ERISA with respect to each Plan. Except as set forth in Schedule 6.12 to the Disclosure Letter, the present value of all vested
benefits under each Plan do not exceed the fair market value of all Plan assets allocable to such benefits, as determined on the most recent valuation date of the Plan and in accordance with ERISA. Neither the Parent, any of its Subsidiaries, nor
any ERISA Affiliate has any outstanding liability to the PBGC under ERISA (other than liability for the payment of PBGC premiums in the ordinary course of business). 
  
 Section 6.13 Disclosure. All factual information furnished by or on behalf of the Parent or any
Subsidiary of the Parent to the Bank for purposes of or in connection with this Agreement, the other Transaction Documents, or any transaction contemplated herein or therein is, and all other such factual information hereafter furnished by or on
behalf of the Parent or any Subsidiary of the Parent to the Bank, will be true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make
such information not misleading in any material respect at such time in light of the circumstances under which such information was provided (it being recognized by the Bank that projections and estimates as to future events are not to be viewed as
facts and that the actual results during the period or periods covered by any such projections and estimates may differ from projected or estimated results). 
  
 Section 6.14 Subsidiaries; Capitalization. As of the Closing Date, the Parent has no other Subsidiaries other than those listed in
Schedule 6.14 to the Disclosure Letter. As of the Closing Date, Schedule 6.14 to the Disclosure Letter sets forth the jurisdiction of incorporation or organization of the Parent and its Subsidiaries, the percentage of the Parent’s ownership of
the outstanding Voting Stock of each Subsidiary of the Parent, and the authorized, issued, and outstanding Capital Stock of the Parent and each Subsidiary of the Parent. All of the outstanding Capital Stock of the Parent and its Subsidiaries has
been validly issued, is fully paid, is nonassessable, and has not been issued in violation of any preemptive or similar rights. As of the Closing Date, except as disclosed in Schedule 6.14 to the Disclosure Letter, there are (a) no outstanding
subscriptions, options, warrants, calls, or rights (including, without limitation, preemptive rights) to acquire, and no outstanding securities or instruments convertible into, 

  

 20 

 
Capital Stock of the Parent or any of its Subsidiaries, and (b) no shareholder agreements, voting trusts, or similar agreements in effect and binding on any
shareholder of (i) to the Parent’s knowledge, the Parent or any of its Capital Stock or (ii) any Subsidiary of the Parent or any of their respective Capital Stock. All shares of Capital Stock of the Parent and its Subsidiaries were issued in
compliance with all applicable state and federal securities laws. 
  
 Section 6.15 Material Agreements. Except as set forth in Schedule 6.15 to the Disclosure Letter, neither the Parent nor any of its Subsidiaries is a party to any indenture, loan, or credit agreement, or to any
lease or other agreement or instrument, or subject to any charter or corporate restriction that could reasonably be expected to have a Material Adverse Effect. Neither the Parent nor any of its Subsidiaries is in default, or has knowledge of facts
or circumstances that with the giving of notice or passage of time or both could be expected to result in a default, in any respect in the performance, observance, or fulfillment of any of the obligations, covenants, or conditions contained in any
agreement or instrument (including, without limitation, any indenture, loan, or credit agreement, or any lease or other similar agreement or instrument) to which it is a party where such default could be expected to cause a Material Adverse Effect.

  
 Section 6.16 Compliance with Laws.
Neither the Parent nor any of its Subsidiaries is in violation of any law, rule, regulation, order, or decree of any Governmental Authority or arbitrator except for violations which could not be expected to have a Material Adverse Effect.

  
 Section 6.17 Investment Company Act.
Neither the Parent nor any of its Subsidiaries is an “investment company” within the meaning of the Investment Company Act of 1940, as amended. 
  
 Section 6.18 Public Utility Holding Company Act. Neither the Parent nor any of its Subsidiaries is a “holding company” or
a “subsidiary company” of a “holding company” or an “affiliate” of a “holding company” or a “public utility” within the meaning of the Public Utility Holding Company Act of 1935, as amended.

  
 Section 6.19 Environmental Matters.
Except as disclosed in Schedule 6.19 to the Disclosure Letter: 
  
 (a) to the Parent’s knowledge, the Parent, each Subsidiary of the Parent, and all of their respective properties, assets, and operations are in compliance with all Environmental Laws; neither the Parent nor any
of its Subsidiaries has knowledge of, nor has the Parent or any Subsidiary of the Parent received notice of, any past, present, or future conditions, events, activities, practices, or incidents which interfere with or prevent the compliance or
continued compliance of the Parent or its Subsidiaries with all Environmental Laws; 
  
 (b) the Parent and its Subsidiaries have obtained and maintained, and are in material compliance with, all material Permits, licenses, and authorizations that are required under applicable
Environmental Laws; 
  
 (c) except in compliance
in all material respects with applicable Environmental Laws, during the course of the Parent’s or any of its Subsidiaries’ ownership of or operations on any real Property, there has been no generation, treatment, recycling, storage, or
disposal of 

  

 21 

 
hazardous waste, as that term is defined in 40 CFR Part 261 or any state equivalent, use of underground storage tanks or surface impoundments, use of
asbestos containing materials, or use of polychlorinated biphenyls (PCB) used in hydraulic oils, electrical transformers, or other equipment that could reasonably be expected to have a Material Adverse Effect, and the use which the Parent and its
Subsidiaries make and intend to make of their respective properties and assets will not result in the use, generation, storage, transportation, accumulation, disposal, or Release of any Hazardous Material on, in, or from any of their properties or
assets that could reasonably be expected to have a Material Adverse Effect; 
  
 (d) neither the Parent, any of its Subsidiaries, nor any of their respective currently or previously owned or leased Properties or operations is subject to any outstanding or, to their knowledge, threatened order from
or agreement with any Governmental Authority or other Person or subject to any judicial or administrative proceeding with respect to (i) failure to comply with Environmental Laws, (ii) Remedial Action, or (iii) any Environmental Liabilities arising
from a Release or threatened Release; 
  
 (e)
there are no conditions or circumstances associated with the currently or previously owned or leased Properties or operations of the Parent or any Subsidiary of the Parent that could reasonably be expected to result in any Environmental Liabilities
or to have a Material Adverse Effect; 
  
 (f)
neither the Parent nor any of its Subsidiaries is or operates a treatment, storage, or disposal facility requiring a permit under the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the regulations thereunder, or any
comparable provision of state law, and except as would not reasonably be expected to have a Material Adverse Effect, the Parent and each Subsidiary of the Parent is in compliance with all applicable financial responsibility requirements of all
applicable Environmental Laws; 
  
 (g) neither the
Parent nor any of its Subsidiaries has filed or failed to file any notice required under applicable Environmental Law reporting an unauthorized Release; and 
  
 (h) no Lien arising under any Environmental Law has attached to any property or revenues of the Parent or any Subsidiary of the Parent.

  
 Section 6.20 Broker’s Fees. Except
as disclosed on Schedule 6.20 to the Disclosure Letter, no broker’s or finder’s fee, commission, or similar compensation will be payable by the Parent or any Subsidiary of the Parent with respect to the transactions contemplated by this
Agreement. 
  
 Section 6.21 Employee
Matters. Except as set forth on Schedule 6.21 to the Disclosure Letter, as of the Closing Date (a) neither the Parent nor any of its Subsidiaries, nor any of their respective employees, is subject to any collective bargaining agreement, (b) no
petition for certification or union election is pending with respect to the employees of the Parent or any Subsidiary of the Parent and no union or collective bargaining unit has sought such certification or recognition with respect to the employees
of the Parent or any Subsidiary of the Parent, and (c) there are no strikes, slowdowns, work stoppages, or controversies pending or, to the best 

  

 22 

 
knowledge of the Parent and the Subsidiaries of the Parent after due inquiry, threatened between the Parent or any Subsidiary of the Parent and its
respective employees. 
  
 Section 6.22
Solvency. Each of the Parent and the Subsidiary Guarantors, individually and on a consolidated basis is Solvent. 
  
 ARTICLE 7 
  
 Covenants 
  
 The Parent covenants and agrees that, as long as this Agreement shall remain in effect or any Obligations shall remain outstanding, it will perform and observe the following covenants: 
  
 Section 7.1 Credit Agreement Covenants. The Parent
will comply fully with each of the covenants contained in Article 10, Article 11, and Article 12 of the Credit Agreement (each of such covenants being incorporated herein by this reference the same as if fully stated herein) whether or not such
Credit Agreement remains in full force and effect. The Parent shall, within one (1) Business Day thereof, notify the Bank of any amendment, restatement, or other modification to Article 10, Article 11, or Article 12 of the Credit Agreement, provided
that no amendment, restatement, or other modification under the Credit Agreement shall be incorporated by reference herein unless the Bank and each letter of credit issuer under an Other Reimbursement Agreement consented to such amendment,
restatement or other modification in their capacities as lenders under the Credit Agreement (and such consent shall constitute notice under this Section 7.1). 
  

Section 7.2 Changes to Other Reimbursement Agreements. The Parent shall, within three (3) Business Days thereof, notify the Bank
of any amendment, restatement or other modification to any Other Reimbursement Agreement. 
  
 Section 7.3 Further Assurances. 
  
 (a) Further Assurance. The Parent will, and will cause each of its Subsidiaries to, execute and/or deliver pursuant to this clause (a) such further documentation and take such further
action as may be reasonably requested by the Bank to carry out the provisions and purposes of the Transaction Documents. 
  
 (b) Subsidiary Joinder. The Parent shall, and shall cause each Domestic Subsidiary to, execute and deliver to the Bank such
documentation, including, without limitation, a Joinder Agreement, as the Bank may require in accordance with Article 4, to cause each such Domestic Subsidiary to become a party to the Subsidiary Guaranty. 
  

 23 

 ARTICLE 8 
  
 Default 
  
 Section 8.1 Events of Default. Each of the following shall be deemed an “Event of Default”: 
  
 (a) the Parent shall fail to pay (i) when due the amount of
any drawing under any Letter of Credit; (ii) within three (3) Business Days of the date due any fees payable under the Transaction Documents or any part thereof; or (iii) within three (3) Business Days after the date the Parent receives written
notice of the failure to pay when due, any other Obligation or any part thereof; 
  
 (b) any representation, warranty, or certification made or deemed made by the Parent or any Subsidiary of the Parent (or any of their respective officers) in any Transaction Document or in any
certificate, report, notice, or financial statement furnished at any time in connection with any Transaction Document shall be false, misleading, or erroneous in any material respect when made or deemed to have been made; 
  
 (c) the Parent or any Subsidiary of the Parent shall fail to
perform, observe, or comply with any covenant, agreement, or term contained in Article 7 (subject, in the case of Section 7.1, to the expiration of any applicable grace period specified in the Credit Agreement); 
  
 (d) the Parent or any Subsidiary of the Parent shall (i)
apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner, liquidator, or the like of itself or of all or a substantial part of its Property, (ii) make a general assignment for the benefit
of its creditors, (iii) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect, the “Bankruptcy Code”), (iv) institute any proceeding or file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, winding-up, or composition or readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code, (vi) admit in writing its inability to, or be generally unable to pay its debts as such debts become due, or (vii) take any corporate action for the purpose of effecting any of the
foregoing; 
  
 (e) (i) a proceeding or case shall
be commenced, without the application, approval, or consent of the Parent or any Subsidiary of the Parent in any court of competent jurisdiction, seeking (A) its reorganization, liquidation, dissolution, arrangement, or winding-up, or the
composition or readjustment of its debts, (B) the appointment of a receiver, custodian, trustee, examiner, liquidator, or the like of the Parent or such Subsidiary or of all or any substantial part of its Property, or (C) similar relief in respect
of the Parent or such Subsidiary under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or readjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment, or decree
approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of sixty (60) or more days or (ii) an order for relief against the Parent or any Subsidiary shall be entered in an involuntary case under
the Bankruptcy Code; 
  

 24 

 (f) the Parent or any Subsidiary of the Parent shall fail within a period of thirty (30)
days after the commencement thereof to discharge or obtain a stay of any attachment, sequestration, forfeiture, or similar proceeding or proceedings involving an aggregate amount in excess of $15,000,000 against any of its assets or Properties;

  
 (g) A final judgment or judgments for the
payment of money in excess of $15,000,000 in the aggregate (to the extent not paid or fully covered by insurance acknowledged by a carrier reasonably acceptable to the Bank) shall be rendered by a court or courts against the Parent or any Subsidiary
of the Parent and the same shall not be satisfied, discharged, or dismissed (or provision shall not be made for such satisfaction, discharge, or dismissal), or a stay of execution or other stay of enforcement thereof shall not be procured, within
sixty (60) days from the date of entry thereof and the Parent or any Subsidiary of the Parent, as applicable, shall not, within said period of sixty (60) days, or such longer period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal; 
  
 (h) (i) the Parent or any Subsidiary of the Parent shall fail to pay when due any principal of or interest on any Debt (other than the Obligations) beyond the period of grace (if any) if the aggregate principal amount
of the affected Debt equals or exceeds $15,000,000, or the maturity of any such Debt shall have been accelerated or shall have been required to be prepaid prior to the stated maturity thereof, (ii) any event shall have occurred with respect to any
Debt in the aggregate principal amount equal to or in excess of $15,000,000 that permits the holder or holders of such Debt or any Person acting on behalf of such holder or holders to accelerate the maturity thereof or require any prepayment (other
than the right to require any prepayment pursuant to (x) a regularly scheduled option to require the Parent or any Subsidiary to repurchase or prepay such Debt or (y) any redemption, repurchase or prepayment voluntarily initiated by the Parent or
any Subsidiary) thereof, (iii) any event of default shall have occurred under the Credit Agreement or (iv) any event of default shall have occurred under any Other Reimbursement Agreement; 
  
 (i) this Agreement or any other Transaction Document shall
cease to be in full force and effect or shall be declared null and void or the validity or enforceability thereof shall be contested or challenged by the Parent or any Subsidiary, or the Parent or any Subsidiary shall deny that it has any further
liability or obligation under any of the Transaction Documents; or 
  
 (j) the occurrence of a Change of Control. 
  
 Section 8.2 Remedies. If any Event of Default shall occur and be continuing, the Bank may do any one or more of the following: 
  
 (a) Acceleration. By notice to the Parent, declare all outstanding amounts payable by the Parent
under the Transaction Documents immediately due and payable, and the same shall thereupon become immediately due and payable, without further notice, demand, presentment, notice of dishonor, notice of acceleration, notice of intent to accelerate,
protest, or other formalities of any kind, all of which are hereby expressly waived by the Parent except as where required by the specific terms of this Agreement or the other Transaction Documents; 
  

 25 

 (b) Refusal of Requests for Letter of Credit Action. The Bank may, without notice
to the Parent or any other Person, refuse any request by the Parent for any Letter of Credit Action; 
  
 (c) Judgment. Reduce any claim to judgment; 
  
 (d) Exercise any and all rights and remedies afforded by the laws of the state of California, or any other jurisdiction governing any of
the Transaction Documents, by equity, or otherwise; and 
  
 (e) Cash Collateral. The Bank may demand immediate payment by the Parent of an amount equal to the aggregate amount of all outstanding Letter of Credit Usage to be held in a Letter of Credit Cash Collateral Account, and the Parent
will immediately comply with such demand; 
  
 (f)
provided, however, that, upon the occurrence of an Event of Default under Section 8.1(d) or Section 8.1(e) with respect to the Parent or any Guarantor, the obligation of the Bank to take any Letter of Credit Action shall automatically terminate and
all amounts payable by the Parent or any other party under the Transaction Documents to the Bank shall thereupon become immediately due and payable, and an amount equal to the aggregate amount of all outstanding Letter of Credit Usage shall be
immediately due and payable to the Bank to be held in a Letter of Credit Cash Collateral Account, without notice, demand, presentment, notice of dishonor, notice of acceleration, notice of intent to accelerate, protest, or other formalities of any
kind, all of which are hereby expressly waived by the Parent. 
  
 Section 8.3 Performance by the Bank. Upon the occurrence of a Default, if the Parent or any Guarantor shall fail to perform any agreement in accordance with the terms of the Transaction Documents, the Bank may
perform or attempt to perform such agreement on behalf of the Parent or such Guarantor, as applicable. In such event, at the request of the Bank, the Parent shall promptly pay any amount expended by the Bank in connection with such performance or
attempted performance, to the Bank at the Principal Office together with interest thereon at the Default Rate from and including the date of such expenditure to but excluding the date such expenditure is paid in full. Notwithstanding the foregoing,
it is expressly agreed that the Bank shall not have any liability or responsibility for the performance of any obligation of the Parent or any Guarantor under any Transaction Document. 
  
 Section 8.4 Set-off. If an Event of Default shall have occurred and be continuing, the Bank is hereby
authorized at any time and from time to time, without notice to the Parent or any other Person (any such notice being hereby expressly waived), to set-off and apply any and all deposits (general or special, time or demand, provisional or final, but
excluding any account established by the Parent as a fiduciary for another Person) at any time held and other indebtedness at any time owing by the Bank to or for the credit or the account of the Parent against any and all of the Obligations now or
hereafter existing under any Transaction Document, irrespective of whether or not the Bank shall have made any demand under such Transaction Documents and although the Obligations may be unmatured. The Bank agrees promptly to notify the Parent after
any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights and 

  

 26 

 
remedies of the Bank hereunder are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Bank may have.

  
 Section 8.5 Continuance of Default. For
purposes of all Transaction Documents, a Default shall be deemed to have continued and exist until the Bank shall have actually received evidence satisfactory to the Bank that such Default shall have been remedied. 
  
 ARTICLE 9 
  
 Miscellaneous 
  
 Section 9.1 Expenses. The Parent hereby agrees to pay promptly after presentation of supporting documentation, without duplication:
(a) all reasonable costs and expenses of the Bank arising in connection with the preparation, negotiation, execution, delivery, syndication, and administration of the Transaction Documents and all amendments, waivers, or other modifications to the
Transaction Documents, including, without limitation, Attorney Costs of the Bank; (b) all costs and expenses of the Bank in connection with any Default and the enforcement of any Transaction Document or collection of the Obligations, including,
without limitation, Attorney Costs of the Bank; (c) all fees, costs, and expenses of the Bank arising in connection with an Event of Default and the enforcement of any Transaction Document or collection of the Obligations during the existence of an
Event of Default; (d) all transfer, stamp, documentary, or other similar taxes, assessments, or charges (including, without limitation, the Taxes and any penalties or interest) levied by any Governmental Authority in respect of any Transaction
Document or the transactions contemplated thereby; (e) all reasonable costs, expenses, assessments, and other charges incurred in connection with any filing, registration, recording, or perfection of any security interest or other Lien contemplated
by any Transaction Document; and (f) all other reasonable costs and expenses incurred by the Bank in connection with any Transaction Document. The Attorney Costs of the Bank that the Parent has agreed to pay hereunder include, without limitation,
the Attorney Costs of the Bank arising in connection with advice given to the Bank as to its rights and responsibilities hereunder. 
  
 Section 9.2 Indemnity by the Parent. Whether or not the transactions contemplated hereby are consummated, the Parent agrees to
indemnify, save and hold harmless each Bank-Related Person and their respective Affiliates, directors, officers, agents, attorneys, and employees (collectively the “Indemnitees”) from and against: (a) any and all claims, demands,
actions, or causes of action that are asserted against any Indemnitee by any Person relating directly or indirectly to a claim, demand, action, or cause of action that such Person asserts or may assert against the Parent, any of its Affiliates, or
any of their respective officers or directors; (b) any and all claims, demands, actions, or causes of action arising out of or relating to, the Transaction Documents, the commitments of the Bank hereunder, the use or contemplated use of any Letter
of Credit, or the relationship of the Parent and the Bank under this Agreement; (c) any administrative or investigative proceeding by any Governmental Authority arising out of or related to a claim, demand, action, or cause of action described in
clause (a) or clause (b) preceding; and (d) any and all liabilities (including liabilities under indemnities), losses, costs, or expenses (including Attorney Costs) that any Indemnitee suffers or incurs as a result of the assertion of any foregoing
claim, demand, action, cause of action, or proceeding, or as a result of the preparation of any defense in connection with any foregoing claim, demand, action, cause of 

  

 27 

 
action, or proceeding, in all cases, whether or not arising out of the negligence of an Indemnitee, whether or not an Indemnitee is a party to such claim,
demand, action, cause of action, or proceeding (all the foregoing, collectively, the “Indemnified Liabilities”); provided that no Indemnitee shall be entitled to indemnification for any loss caused by its own gross negligence or
willful misconduct or for any loss asserted against it by another Indemnitee. The agreements in this Section shall survive repayment of all Obligations. 
  
 Section 9.3 Limitation of Liability. Neither the Bank, any Bank-Related Person, nor any Affiliate, officer, director, employee,
attorney, or agent thereof shall have any liability with respect to the Parent for and, by the execution of the Transaction Documents to which it is a party, each other party to any Transaction Document, hereby waives, releases, and agrees not to
sue any of them upon, any claim for, any special, indirect, incidental, consequential, or punitive damages suffered or incurred by any such Person in connection with, arising out of, or in any way related to any of the Transaction Documents, or any
of the transactions contemplated by any of the Transaction Documents. 
  
 Section 9.4 No Duty. All attorneys, accountants, appraisers, and other professional Persons and consultants retained by the Bank shall have the right to act exclusively in the interest of the Bank and shall
have no duty of disclosure, duty of loyalty, duty of care, or other duty or obligation of any type or nature whatsoever to the Parent or any Guarantor, any shareholders of the Parent or any Guarantor, or any other Person. 
  
 Section 9.5 No Fiduciary Relationship. The
relationship between the Parent and the Guarantors on the one hand and the Bank on the other is solely that of debtor and creditor, and the Bank has no fiduciary or other special relationship with the Parent or any Guarantor, and no term or
condition of any of the Transaction Documents shall be construed so as to deem the relationship between the Parent and the Guarantors on the one hand and the Bank on the other to be other than that of debtor and creditor. 
  
 Section 9.6 Equitable Relief. The Parent recognizes
that in the event the Parent or any Guarantor fails to pay, perform, observe, or discharge any or all of the Obligations under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Bank. The Parent therefore agrees
that the Bank shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages. 
  
 Section 9.7 No Waiver; Cumulative Remedies. No failure on the part of the Bank to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power, or privilege under any Transaction Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or privilege under any Transaction Document preclude
any other or further exercise thereof or the exercise of any other right, power, or privilege. The rights and remedies provided for in the Transaction Documents are cumulative and not exclusive of any rights and remedies provided by law. 

 
 Section 9.8 Binding Effect; Successors; Participations
and Assignments. 
  
 (a) This Agreement and
the other Transaction Documents to which the Parent is a party will be binding upon and inure to the benefit of the Parent, the Bank, and their respective 

  

 28 

 
successors, participants and assigns, except that, the Parent may not participate or assign its rights hereunder or thereunder or any interest herein or
therein without the prior written consent of the Bank and any such attempted assignment shall be void. 
  
 (b) Notwithstanding any other provision in this Agreement, the Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may enforce such pledge or
security interest in any manner permitted under applicable law. 
  
 Section 9.9 Survival. All representations and warranties made by the Parent or any Guarantor in any Transaction Document or in any document, statement, or certificate furnished in connection with any
Transaction Document shall survive the execution and delivery of the Transaction Documents and no investigation by the Bank or any closing shall affect the representations and warranties or the right of the Bank to rely upon them. Without prejudice
to the survival of any other obligation of the Parent hereunder, the obligations under Section 9.1 and Section 9.2 shall survive termination of this Agreement. 
  

Section 9.10 Entire Agreement. This Agreement, together with the other Transaction Documents and any letter agreements referred
to herein, 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. In the event of any conflict between the provisions of this
Agreement and those of any other Transaction Document, the provisions of this Agreement shall control and govern; provided that the inclusion of supplemental rights or remedies in favor of the Bank in any other Transaction Document shall not be
deemed a conflict with this Agreement. Each Transaction 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. 
  
 Section 9.11 Amendments
and Waivers. Any provision of any Transaction Document may be amended or waived and any consent to any departure by the Parent therefrom may be granted if, but only if, such amendment, waiver, or consent is in writing and is signed by the Parent
and the Bank (any such consent not to be unreasonably withheld). In the event of amendment by the parties to the Credit Agreement to any provisions of the Credit Agreement that have been incorporated herein by reference, such provisions will not be
deemed to be amended hereunder without the written consent of the Bank to the amendment of such provisions hereunder. 
  
 Section 9.12 Maximum Interest Rate. Notwithstanding anything to the contrary contained in any Transaction Document, any interest
paid or agreed to be paid under the Transaction Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the “Maximum Rate”). If the Bank shall receive interest in an amount that exceeds the
Maximum Rate, the excessive interest shall be applied to the principal of the Obligations or, if it exceeds the unpaid principal, refunded to the Parent. In determining whether the interest contracted for, charged, or received by the Bank exceeds
the Maximum Rate, such Person may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments 

  

 29 

 
and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated
term of the Obligations. 
  
 Section 9.13
Notices. All notices and other communications provided for in any Transaction Document to which the Parent is a party shall be given or made in writing and telecopied, transmitted by e-mail, mailed by certified mail return receipt requested,
or delivered to the intended recipient at the “Address for Notices” specified in Schedule 9.13 to the Disclosure Letter, or, as to any party at such other address as shall be designated by such party in a notice to each other party given
in accordance with this Section. Except as otherwise provided in any Transaction Document, all such communications shall be deemed to have been duly given when transmitted by telecopy, subject to telephone confirmation of receipt, transmitted by
e-mail, subject to telephone confirmation of receipt, or when personally delivered or, in the case of a mailed notice, three (3) Business Days after being duly deposited in the mails, in each case given or addressed as aforesaid; provided, however,
notices to the Bank pursuant to Section 2.2 shall not be effective until received by the Bank. Any agreement of the Bank herein to receive certain notices by telephone or telecopy is solely for the convenience and at the request of the Parent. The
Bank shall be entitled to rely on the authority of any Person purporting to be a Person authorized by the Parent to give such notice and the Bank shall not have any liability to the Parent or any other Person on account of any action taken or not
taken by the Bank in reliance upon such telephonic or telecopy notice. The obligation of the Parent to repay all amounts drawn under Letters of Credit shall not be affected in any way or to any extent by any failure of the Bank to receive written
confirmation of any telephonic or telecopy notice or the receipt by the Bank of a confirmation which is at variance with the terms understood by the Bank to be contained in such telephonic or telecopy notice. 
  
 Section 9.14 Governing Law; Venue; Service of Process.

  
 (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE BANK SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. 
  
 (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATES OF CALIFORNIA OR NEW YORK OR OF THE UNITED STATES FOR SUCH STATES, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE PARENT AND THE BANK EACH CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE PARENT AND THE BANK EACH IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY TRANSACTION DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE PARENT AND THE BANK EACH AGREE TO ACCEPT JOINDER IN ANY SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY COURT OR JURISDICTION AGAINST THE OTHER PARTY BY ANY BENEFICIARY OF 

  

 30 

 
A LETTER OF CREDIT OR BY ANY ADVISING, CONFIRMING, NEGOTIATING, PAYING OR OTHER BANK, OR BY ANY OTHER PERSON OR ENTITY, WITH RESPECT TO ANY LETTER OF CREDIT
OR ANY DRAWING UNDER A LETTER OF CREDIT IF THE DEFENDANT IN SUCH SUIT, ACTION OR PROCEEDING MAKES A REASONABLE DETERMINATION THAT SUCH JOINDER IS NECESSARY FOR THE JUST RESOLUTION OF SUCH SUIT, ACTION OR PROCEEDING. THE PARENT AND THE BANK EACH
WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT, OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAWS OF ANY SUCH STATE. 
  
 Section 9.15 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same agreement. 
  
 Section 9.16 Severability. Any provision of any Transaction Document held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of such Transaction
Document and the effect thereof shall be confined to the provision held to be invalid or illegal. 
  
 Section 9.17 Headings. The headings, captions, and arrangements used in this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

  
 Section 9.18 Construction. The Parent,
each Guarantor (by its execution of the Transaction Documents to which it is a party), and the Bank each acknowledges that it has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review the Transaction
Documents with its legal counsel and that the Transaction Documents shall be construed as if jointly drafted by the parties thereto. 
  
 Section 9.19 Independence of Covenants. All covenants under the Transaction Documents shall be given independent effect so that if
a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid the occurrence of a Default if such
action is taken or such condition exists. 
  
 Section 9.20 Waiver of Jury Trial. 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 TRANSACTION DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY TRANSACTION DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR
TORT OR OTHERWISE, AND EACH PARTY HERETO 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 

  

 31 

 
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 
  
 Section 9.21 Confidentiality. The Bank shall use any confidential non-public information concerning
the Parent and its Subsidiaries that is furnished to the Bank by or on behalf of the Parent and its Subsidiaries in connection with the Transaction Documents (collectively, “Confidential Information”) solely for the purpose of
evaluating and providing products and services to them and administering and enforcing the Transaction Documents, and it will hold the Confidential Information in confidence. Notwithstanding the foregoing, the Bank may disclose Confidential
Information (a) to its Affiliates or any of its or its Affiliates’ directors, officers, employees, auditors, counsel, advisors, or representatives (collectively, the “Representatives”) whom it determines need to know such
information for the purposes set forth in this Section, (b) to any Governmental Authority having or claiming to have authority to regulate or oversee any aspect of the Bank’s business or that of their Representatives in connection with the
exercise of such authority or claimed authority, (c) to the extent necessary or appropriate to effect or preserve the Bank’s or any of its Affiliates’ security (if any) for any Obligation or to enforce any right or remedy or in connection
with any claims asserted by or against the Bank or any of its Representatives, and (d) pursuant to any subpoena or any similar legal process. For purposes hereof, the term “Confidential Information” shall not include information
that (x) is in the Bank’s possession prior to its being provided by or on behalf of the Parent or any of its Subsidiaries, provided that such information is not known by the Bank to be subject to another confidentiality agreement with, or other
legal or contractual obligation of confidentiality to, the Parent or any of its Subsidiaries, (y) is or becomes publicly available (other than through a breach hereof by the Bank), or (z) becomes available to the Bank on a nonconfidential basis,
provided that the source of such information was not known by the Bank to be bound by a confidentiality agreement or other legal or contractual obligation of confidentiality with respect to such information. 
  
 Section 9.22 Termination of Credit Agreement. In the
event that the Credit Agreement is terminated for any reason whatsoever, the covenants set forth in Article 10, Article 11, and Article 12 thereof and the events of default set forth in Article 13 thereof, together with all of the definitions of all
the defined terms used therein and all other portions of the Credit Agreement to which reference is made in such Articles, in each case as of such termination date, will be incorporated by reference herein and the same shall be applicable herein,
mutatis mutandis, and will be deemed to continue in effect until this Agreement is terminated and all Obligations under this Agreement are fully paid and performed. 
  
 Section 9.23 USA Patriot Act. The Bank hereby notifies the Parent that pursuant to requirements of
the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001) (the “Act”), the Bank is required to obtain, verify and record
information that identifies the Parent, which information includes the name and address of the Parent and other information that will allow the Bank to identify the Parent in accordance with the Act. 
  
 [Remainder of page intentionally left blank] 
  

 32 

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

			
	 PARENT:

	
	 WILLIAMS-SONOMA, INC.

		
	 By:
	 	 /s/ Sharon L. McCollam

	 Name:
	 	 Sharon L. McCollam

	 Title:
	 	 Executive Vice President, CFO

	
	 BANK:

	
	 WELLS FARGO BANK, N.A.

		
	 By:
	 	 /s/ Jeff A. Bailard

	 Name:
	 	 Jeff A. Bailard

	 Title:
	 	 Vice President

  

 33 

 EXHIBIT A 
  
 GUARANTY AGREEMENT 
 (Subsidiary)

  
 This GUARANTY AGREEMENT (this
“Guaranty”) dated as of July 1, 2005 is executed and delivered by each of the undersigned (collectively and individually referred to herein as the “Guarantor”), to and in favor of the Bank (as defined below).

  
 RECITALS: 
  
 A. Williams-Sonoma, Inc. (the “Parent”) and
Wells Fargo Bank, N.A. (the “Bank”) are, concurrently herewith entering into a Reimbursement Agreement dated as of July 1, 2005 (as amended, restated, or otherwise modified from time to time, the “Reimbursement
Agreement”; capitalized terms not otherwise defined herein shall have the same meaning as set forth for such terms in the Reimbursement Agreement). 
  
 B. The Guarantor has directly and indirectly benefitted and will directly and indirectly benefit from the Letters of Credit issued
pursuant to the Reimbursement Agreement. 
  
 C.
The execution and delivery of this Guaranty is required by the Reimbursement Agreement and is a condition to the Bank’s taking any Letter of Credit Action under the Reimbursement Agreement. 
  
 NOW, THEREFORE, for valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Guarantor hereby irrevocably and unconditionally guarantees to the Bank the full and prompt payment and performance of the Guaranteed Indebtedness (as defined below) upon the following terms:

  
 1. The term “Guaranteed
Indebtedness”, as used herein means all of the “Obligations”, as defined in the Reimbursement Agreement and shall include, without limitation, any and all post-petition interest and expenses (including, without limitation,
Attorney Costs) whether or not allowed under any bankruptcy, insolvency, or other similar law; provided that, notwithstanding anything to the contrary contained in this Guaranty, the Guaranteed Indebtedness shall be limited to an aggregate
amount equal to the greatest amount that would not render the Guarantor’s indebtedness, liabilities, or obligations hereunder void or voidable under Sections 544, 548, or 550 of the Bankruptcy Code or subject to being set aside or annulled
under any applicable state law relating to fraud on creditors; provided, further, that, for purposes of the immediately preceding clauses, it shall be presumed that the Guaranteed Indebtedness hereunder does not equal or exceed any
aggregate amount which would render the Guarantor’s indebtedness, liabilities, or obligations hereunder subject to being so avoided, set aside, or annulled, and the burden of proof to the contrary shall be on the party asserting to the
contrary. Subject to but without limiting the generality of the foregoing sentence, the provisions of this Guaranty are severable and, in any legally binding action or proceeding involving any state corporate law or any bankruptcy, insolvency,
fraudulent transfer, or other laws of general application relating to the enforcement of creditors’ rights and general principles of equity, if the indebtedness, liabilities, or obligations of the Guarantor hereunder would otherwise be held or

  

 A-1 

 
determined to be void, invalid, or unenforceable on account of the amount of its indebtedness, liabilities, or obligations hereunder, then, notwithstanding
any other provision of this Guaranty to the contrary, the amount of such indebtedness, liabilities, or obligations shall, for purposes of determining the Guarantor’s obligations under this Guaranty, without any further action by the Guarantor
or any other Person, be automatically limited and reduced to the greatest amount which is valid and enforceable as determined in such action or proceeding. 
  
 2. The Guarantor, together with each guarantor under any other guaranty (and specifically including each Guarantor hereunder), if any,
relating to the Reimbursement Agreement (the “Related Guaranties”) which contain a contribution provision similar to that set forth in this paragraph 2, agrees that it and all such other guarantors (collectively, the
“Contributing Guarantors”) together desire to allocate among themselves, in a fair and equitable manner, their obligations arising under this Guaranty and the Related Guaranties. Accordingly, in the event any payment or distribution
is made by the Guarantor under this Guaranty or a guarantor under a Related Guaranty (a “Funding Guarantor”) that exceeds its Fair Share (as defined below), that Funding Guarantor shall be entitled to a contribution from each of the
other Contributing Guarantors in the amount of such other Contributing Guarantor’s Fair Share Shortfall (as defined below), with the result that all such contributions will cause each Contributing Guarantor’s Aggregate Payments (as defined
below) to equal its Fair Share; provided, however, that the obligations to or from any Funding Guarantor as described in this paragraph 2 shall be subordinate to the obligation of the Guarantor to pay the Guaranteed Indebtedness
as more fully set forth in paragraph 11 hereof. “Fair Share” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Adjusted Maximum Amount (as defined
below) with respect to such Contributing Guarantor to (ii) the aggregate of the Adjusted Maximum Amounts with respect to all Contributing Guarantors, multiplied by (b) the aggregate amount paid or distributed on or before such date by all
Funding Guarantors under this Guaranty and the Related Guaranties in respect of the obligations guaranteed. “Fair Share Shortfall” means, with respect to a Contributing Guarantor as of any date of determination, the excess, if any,
of the Fair Share of such Contributing Guarantor over the Aggregate Payments of such Contributing Guarantor. “Adjusted Maximum Amount” means, with respect to a Contributing Guarantor as of any date of determination, the maximum
aggregate amount of the obligations of such Contributing Guarantor under this Guaranty or a Related Guaranty, in each case determined in accordance with the provisions hereof and thereof; provided that, solely for purposes of calculating the
“Adjusted Maximum Amount” with respect to any Contributing Guarantor for purposes of this paragraph 2, the assets or liabilities arising by virtue of any rights to or obligations of contribution hereunder or under any similar
provision contained in a Related Guaranty shall not be considered as assets or liabilities of such Contributing Guarantor. “Aggregate Payments” means, with respect to a Contributing Guarantor as of any date of determination, the
aggregate amount of all payments and distributions made on or before such date by such Contributing Guarantor in respect of this Guaranty and the Related Guaranties (including, without limitation, in respect of this paragraph 2 or any similar
provision contained in a Related Guaranty). The amounts payable as contributions hereunder and under similar provisions in the Related Guaranties shall be determined as of the date on which the related payment or distribution is made by the
applicable Funding Guarantor. The allocation among Contributing Guarantors of their obligations as set forth in this paragraph 2 or any similar provision contained in a Related Guaranty shall not be construed in any way to limit the liability
of any Contributing Guarantor hereunder or under a Related Guaranty. Each Contributing 

  

 A-2 

 
Guarantor under a Related Guaranty is a third party beneficiary to the contribution agreement set forth in this paragraph 2. 
  
 3. This Guaranty shall be an absolute, continuing,
irrevocable, and unconditional guaranty of payment and performance and not a guaranty of collection, and the Guarantor shall remain liable on its obligations hereunder until the payment and performance in full of the Guaranteed Indebtedness. No
set-off, counterclaim, recoupment, reduction, or diminution of any obligation, or any defense of any kind or nature (other than payment or performance) which the Parent may have against the Bank or any other party, or which the Guarantor may have
against the Parent, the Bank, or any other party, shall be available to, or shall be asserted by, the Guarantor against the Bank or any subsequent holder of the Guaranteed Indebtedness or any part thereof or against payment of the Guaranteed
Indebtedness or any part thereof. 
  
 4. If the
Guarantor becomes liable for any indebtedness owing by the Parent to the Bank by endorsement or otherwise, other than under this Guaranty, such liability shall not be in any manner impaired or affected hereby, and the rights of the Bank hereunder
shall be cumulative of any and all other rights that the Bank may ever have against the Guarantor. The exercise by the Bank of any right or remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other right or remedy. 
  
 5. In the event of default by the Parent in payment or performance of the Guaranteed Indebtedness, or any part thereof, when such Guaranteed Indebtedness becomes due, whether by its terms, by acceleration, or otherwise, the Guarantor shall
promptly pay the amount due thereon to the Bank, without notice or demand in lawful currency of the U.S., and it shall not be necessary for the Bank, in order to enforce such payment by the Guarantor, first to institute suit or exhaust its remedies
against the Parent or others liable on such Guaranteed Indebtedness, or to enforce any rights against any collateral which shall ever have been given to secure such Guaranteed Indebtedness. In the event such payment is made by the Guarantor, then
the Guarantor shall be subrogated to the rights then held by the Bank with respect to the Guaranteed Indebtedness to the extent to which the Guaranteed Indebtedness was discharged by the Guarantor and, in addition, upon payment by the Guarantor of
any sums to the Bank hereunder, all rights of the Guarantor against the Parent, any other guarantor of the Guaranteed Indebtedness, or any collateral arising as a result therefrom by way of right of subrogation, reimbursement, or otherwise shall in
all respects be subordinate and junior in right of payment to the prior indefeasible payment in full of the Guaranteed Indebtedness and no such right or remedy of subrogation, reimbursement or otherwise shall be exercised or otherwise entered
(except that proofs of claim may be filed in a bankruptcy or insolvency proceeding) unless and until the Guaranteed Indebtedness has been indefeasibly paid in full. 
  
 6. If acceleration of the time for payment of any amount payable by the Parent under the Guaranteed
Indebtedness is stayed upon the insolvency, bankruptcy, or reorganization of the Parent, all such amounts otherwise subject to acceleration under the terms of the Guaranteed Indebtedness shall nonetheless be payable by the Guarantor hereunder
forthwith on demand by the Bank. 
  

 A-3 

 7. The Guarantor hereby agrees that its obligations under this Guaranty shall not be
released, discharged, diminished, impaired, reduced, or affected for any reason or by the occurrence of any event, including, without limitation, one or more of the following occurrences or events, whether or not with notice to or the consent of the
Guarantor: (a) the taking or accepting of collateral as security for any or all of the Guaranteed Indebtedness or the release, surrender, exchange, or subordination of any collateral now or hereafter securing any or all of the Guaranteed
Indebtedness; (b) any partial release of the liability of the Guarantor hereunder, or the full or partial release of any other guarantor of the Guaranteed Indebtedness from liability for any or all of the Guaranteed Indebtedness; (c) any disability
of the Parent, or the dissolution, insolvency, or bankruptcy of the Parent, the Guarantor, or any other party at any time liable for the payment of any or all of the Guaranteed Indebtedness; (d) any renewal, extension, modification, waiver,
amendment, or rearrangement of any or all of the Guaranteed Indebtedness or any instrument, document, or agreement evidencing, securing, or otherwise relating to any or all of the Guaranteed Indebtedness; (e) any adjustment, indulgence, forbearance,
waiver, or compromise that may be granted or given by the Bank to the Parent, the Guarantor, or any other party ever liable for any or all of the Guaranteed Indebtedness; (f) any neglect, delay, omission, failure, or refusal of the Bank to take or
prosecute any action for the collection of any of the Guaranteed Indebtedness or to foreclose or take or prosecute any action in connection with any instrument, document, or agreement evidencing, securing, or otherwise relating to any or all of the
Guaranteed Indebtedness; (g) the unenforceability or invalidity of any or all of the Guaranteed Indebtedness or of any instrument, document, or agreement evidencing, securing, or otherwise relating to any or all of the Guaranteed Indebtedness; (h)
any payment by the Parent or any other party to the Bank is held to constitute a preference under applicable bankruptcy or insolvency law or if for any other reason the Bank is required to refund any payment or pay the amount thereof to someone
else; (i) the settlement or compromise of any of the Guaranteed Indebtedness; (j) the non-perfection of any Lien securing any or all of the Guaranteed Indebtedness; (k) any impairment of any collateral securing any or all of the Guaranteed
Indebtedness; (l) the failure of the Bank to sell any collateral securing any or all of the Guaranteed Indebtedness in a commercially reasonable manner or as otherwise required by law; (m) any change in the corporate existence, structure, or
ownership of the Parent; or (n) any other circumstance which might otherwise constitute a defense available to, or discharge of, the Parent, the Guarantor, or any other party at any time liable for the payment of any or all of the Guaranteed
Indebtedness other than payment of the Guaranteed Indebtedness. 
  
 8. The Guarantor represents and warrants as follows: 
  
 (a) All of the representations and warranties in the Reimbursement Agreement relating to the Guarantor are true and correct as of the date hereof and on each date the representations and
warranties hereunder are restated pursuant to the Transaction Documents with the same force and effect as if such representations and warranties had been made on and as of such date except to the extent that such representations and warranties
relate specifically to another date or to the extent that a fact, event, or circumstance has occurred that makes such representation or warranty untrue but which is not prohibited to occur or exist (or which does not cause a Default or an Event of
Default) under the Transaction Documents. 
  

 A-4 

 (b) The value of the consideration received and to be received by the
Guarantor as a result of the Parent and the Bank entering into the Reimbursement Agreement and the Guarantor’s executing and delivering this Guaranty and the other Transaction Documents to which it is a party is reasonably worth at least as
much as the liability and obligation of the Guarantor hereunder and thereunder, and the Reimbursement Agreement and the extension of credit to the Parent thereunder have benefitted and may reasonably be expected to benefit the Guarantor directly or
indirectly. Execution and delivery of this Guaranty and the other Transaction Documents to which the Guarantor is a party is necessary or convenient to the conduct, promotion, and attainment of the business of the Guarantor. 
  
 (c) The Guarantor has, independently and
without reliance upon the Bank and based upon such documents and information as the Guarantor has deemed appropriate, made its own analysis and decision to enter into the Transaction Documents to which it is a party. 
  
 (d) The Guarantor has adequate means to
obtain from the Parent on a continuing basis information concerning the financial condition and assets of the Parent, and the Guarantor is not relying upon the Bank to provide (and the Bank shall not have any duty to provide) any such information to
the Guarantor either now or in the future. 
  
 9.
The Guarantor covenants and agrees that, as long as the Guaranteed Indebtedness or any part thereof is outstanding or the Bank has any commitment under the Reimbursement Agreement, the Guarantor will comply with all covenants set forth in the
Reimbursement Agreement specifically applicable to the Guarantor, the terms of which are incorporated herein by reference. 
  
 10. During the existence of an Event of Default, the Bank shall have the right to set-off and apply against this Guaranty or the
Guaranteed Indebtedness or both, at any time and without notice to the Guarantor, any and all deposits (general or special, time or demand, provisional or final, but excluding any account established by the Guarantor as a fiduciary for another
party) or other sums at any time credited by or owing from the Bank to the Guarantor whether or not the Guaranteed Indebtedness is then due and irrespective of whether or not the Bank shall have made any demand under this Guaranty. The Bank agrees
promptly to notify the Parent after any such set-off and application; provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights and remedies of the Bank hereunder are in addition
to other rights and remedies (including, without limitation, other rights of set-off) which the Bank may have. 
  
 11. (a) The Guarantor hereby agrees that the Subordinated Indebtedness (as defined below) shall be subordinate and junior in right of
payment to the prior indefeasible payment in full of all Guaranteed Indebtedness as herein provided. The Subordinated Indebtedness shall not be payable, and no payment of principal, interest, or other amounts on account thereof, and no property or
guarantee of any nature to secure or pay the Subordinated Indebtedness or any part thereof shall be made or given, directly or indirectly by or on behalf of any Debtor (as defined below) or received, accepted, retained, or applied by the Guarantor
unless and until the Guaranteed Indebtedness shall have been indefeasibly paid in full in cash; except 

  

 A-5 

 
that prior to occurrence of an Event of Default, the Guarantor shall have the right to receive payments on the Subordinated Indebtedness made in the ordinary
course of business unless, and except to the extent that, the payment or receipt of such payments is prohibited or otherwise restricted by the Reimbursement Agreement or another Transaction Document other than this Guaranty. During the existence of
a Default, no payments of principal or interest may be made or given, directly or indirectly, by or on behalf of any Debtor or received, accepted, retained, or applied by the Guarantor, except for payments in Securities subordinated at least to the
same extent as the Subordinated Indebtedness, unless and until the Guaranteed Indebtedness shall have been indefeasibly paid in full in cash. If any sums shall be paid to the Guarantor by any Debtor or any other Person on account of the Subordinated
Indebtedness when such payment is not permitted hereunder, such sums shall be held in trust by the Guarantor for the benefit of the Bank and shall forthwith be paid to the Bank without affecting the liability of the Guarantor under this Guaranty and
may be applied by the Bank against the Guaranteed Indebtedness in accordance with the terms of the Reimbursement Agreement. Upon the request of the Bank, the Guarantor shall execute, deliver, and endorse to the Bank such documentation as the Bank
may request to perfect, preserve, and enforce its rights hereunder. For purposes of this Guaranty, the term “Subordinated Indebtedness” means all indebtedness, liabilities, and obligations of the Parent or any other party obligated
at any time to pay any of the Guaranteed Indebtedness other than the Guarantor (the Parent and such other obligated parties (including, without limitation, any Contributing Guarantors) are referred to herein as the “Debtors”) to the
Guarantor, whether such indebtedness, liabilities, and obligations now exist or are hereafter incurred or arise, or are direct, indirect, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such
indebtedness, liabilities, or obligations are evidenced by a note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose favor such indebtedness, obligations, or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter be acquired by the Guarantor. 
  
 (b) The Guarantor agrees that any and all Liens (including, without limitation, any judgment liens), upon any
Debtor’s assets securing payment of any Subordinated Indebtedness shall be and remain inferior and subordinate to any and all Liens, if any, upon any Debtor’s assets securing payment of the Guaranteed Indebtedness, or any part thereof,
regardless of whether such Liens in favor of the Guarantor or the Bank presently exist or are hereafter created or attached. Without the prior written consent of the Bank, until final repayment in full of all Guaranteed Indebtedness, the Guarantor
shall not (i) file suit against any Debtor or exercise or enforce any other creditor’s right it may have against any Debtor (provided that the Guarantor may file proofs of claim against the Parent or any other Debtor in any bankruptcy or
insolvency proceeding), or (ii) foreclose, repossess, sequester, or otherwise take steps or institute any action or proceedings (judicial or otherwise, including, without limitation, the commencement of, or joinder in, any liquidation, bankruptcy,
rearrangement, debtor’s relief, or insolvency proceeding) to enforce any obligations of any Debtor to the Guarantor or any Liens held by the Guarantor on assets of any Debtor. 
  
 (c) In the event of any receivership, bankruptcy, reorganization, rearrangement,
debtor’s relief, or other insolvency proceeding involving any Debtor as debtor, the Bank shall have the right to prove and vote any claim under the Subordinated Indebtedness and to receive directly from the receiver, trustee, or other court
custodian all 

  

 A-6 

 
dividends, distributions, and payments made in respect of the Subordinated Indebtedness, except payments in Securities subordinated at least to the same
extent as the Subordinated Indebtedness, until the Guaranteed Indebtedness has been indefeasibly paid in full in cash. The Bank may apply any such dividends, distributions, and payments against the Guaranteed Indebtedness in accordance with the
terms of the Reimbursement Agreement. 
  
 (d) The Guarantor agrees that all promissory notes, accounts receivable, ledgers, records, or any other evidence of Subordinated Indebtedness shall contain a specific written notice thereon that the indebtedness evidenced thereby is
subordinated under the terms of this Guaranty. 
  
 12. No amendment or waiver of any provision of this Guaranty or consent to any departure by the Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by the Bank except as otherwise provided in
the Reimbursement Agreement. No failure on the part of the Bank to exercise, and no delay in exercising, any right, power, or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or
privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. 
  
 13. Any acknowledgment or new promise, whether by payment of
principal or interest or otherwise and whether by the Parent or others (including, without limitation, any guarantor of the Guaranteed Indebtedness), with respect to any of the Guaranteed Indebtedness shall, if the statute of limitations in favor of
the Guarantor against the Bank shall have commenced to run, toll the running of such statute of limitations and, if the period of such statute of limitations shall have expired, prevent the operation of such statute of limitations. 
  
 14. This Guaranty is for the benefit of the Bank and its
successors and assigns, and in the event of an assignment of the Guaranteed Indebtedness, or any part thereof, the rights and benefits hereunder, to the extent applicable to the indebtedness so assigned, may be transferred with such indebtedness.
This Guaranty is binding not only on the Guarantor, but on the Guarantor’s successors and assigns. 
  
 15. The Guarantor recognizes that the Bank is relying upon this Guaranty and the undertakings of the Guarantor hereunder and under the
other Transaction Documents to which the Guarantor is a party in making extensions of credit to the Parent under the Reimbursement Agreement and further recognizes that the execution and delivery of this Guaranty and the other Transaction Documents
to which the Guarantor is a party is a material inducement to the Bank in entering into the Reimbursement Agreement and continuing to extend credit thereunder. The Guarantor hereby acknowledges that there are no conditions to the full effectiveness
of this Guaranty or any other Transaction Document to which it is a party. 
  
 16. Any notice or demand to the Guarantor under or in connection with this Guaranty or any other Transaction Document to which it is a party shall be deemed effective if given to the Guarantor, at the address of the
Parent in accordance with the notice provisions in the Reimbursement Agreement. 
  

 A-7 

 17. The Guarantor shall pay on demand all Attorney Costs and all other reasonable costs
and expenses incurred by the Bank in connection with the administration, enforcement, or collection of this Guaranty. 
  
 18. The Guarantor hereby waives promptness, diligence, notice of any default under the Guaranteed Indebtedness, demand of payment, notice
of acceptance of this Guaranty, presentment, notice of protest, notice of dishonor, notice of the incurring by the Parent of additional indebtedness, and all other notices and demands with respect to the Guaranteed Indebtedness and this Guaranty.

  
 19. The Reimbursement Agreement, and all of
the terms thereof, are incorporated herein by reference the same as if stated verbatim herein, and the Guarantor agrees that the Bank may exercise any and all rights granted to it under the Reimbursement Agreement and the other Transaction Documents
without affecting the validity or enforceability of this Guaranty. 
  
 20. Notwithstanding any provision of this Guaranty to the contrary: 
  
 (a) The Guarantor understands and acknowledges that if the Bank forecloses, either by judicial foreclosure or by exercise
of power of sale, any deed of trust securing the indebtedness, that foreclosure could impair or destroy any ability that the Guarantor may have to seek reimbursement, contribution, or indemnification from the Parent or others based on any right the
Guarantor may have of subrogation, reimbursement, contribution, or indemnification for any amounts paid by the Guarantor under this Guaranty. The Guarantor further understands and acknowledges that in the absence of this paragraph, such potential
impairment or destruction of the Guarantor’s rights, if any, may entitle the Guarantor to assert a defense to this Guaranty based on Section 580d of the California Code of Civil Procedure as interpreted in Union Bank v. Gradsky, 265 Cal.
App. 2d 40 (1968). By executing this Guaranty, the Guarantor freely, irrevocably, and unconditionally (i) waives and relinquishes that defense and agrees that the Guarantor will be fully liable under this Guaranty even though the Bank may foreclose,
either by judicial foreclosure or by exercise of power of sale, any deed of trust securing the Guaranteed Indebtedness, (ii) agrees that the Guarantor will not assert that defense in any action or proceeding which the Bank may commence to enforce
this Guaranty, (iii) acknowledges and agrees that the rights and defenses waived by the Guarantor in this Guaranty include any right or defense that the Guarantor may have or be entitled to assert based upon or arising out of any one or more of
Sections 580a, 580b, 580d, or 726 of the California Code of Civil Procedure or Section 2848 of the California Code, and (iv) acknowledges and agrees that the Bank is relying on this waiver in creating the Guaranteed Indebtedness, and that this
waiver is a material part of the consideration which the Bank is receiving for creating the Guaranteed Indebtedness. 
  
 (b) The Guarantor waives any rights and defenses that are or may become available to the Guarantor by reason of Sections
2787 to 2855, inclusive, of the California Civil Code. 
  

 A-8 

 (c) The Guarantor waives all rights and defenses that the Guarantor may
have because any of the indebtedness is secured by real property. This means, among other things: 
  
 (i) the Bank may collect from the Guarantor without first foreclosing on any real or personal property collateral pledged by the Parent; and (ii) if the Bank forecloses on any real property
collateral pledged by the Parent (1) the amount of the indebtedness may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (2) the Bank may collect
from the Guarantor even if the Bank, by foreclosing on the real property collateral, has destroyed any right the Guarantor may have to collect from the Parent. This is an unconditional and irrevocable waiver of any rights and defenses the Guarantor
may have because any of the indebtedness is secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure.

  
 21. THIS GUARANTY EMBODIES THE FINAL, ENTIRE
AGREEMENT OF THE GUARANTOR WITH RESPECT TO THE GUARANTOR’S GUARANTY OF THE GUARANTEED INDEBTEDNESS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT
MATTER HEREOF. THIS GUARANTY IS INTENDED BY THE GUARANTOR AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THIS GUARANTY, AND NO COURSE OF DEALING BETWEEN THE GUARANTOR AND THE BANK, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT, OR MODIFY ANY TERM OF THIS GUARANTY. THERE ARE NO ORAL AGREEMENTS BETWEEN THE GUARANTOR AND
THE BANK. 
  
 22. THIS GUARANTY SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA AND THE APPLICABLE LAWS OF THE U.S. 
  
 [Remainder of page intentionally left blank] 
  

 A-9 

 EXECUTED as of the 1st day of July, 2005. 
  

			
	 THE GUARANTORS:

	
	 WILLIAMS-SONOMA STORES, INC.
 WILLIAMS-SONOMA DIRECT, INC.
 WILLIAMS-SONOMA RETAIL SERVICES, INC.
 POTTERY BARN, INC.
 POTTERY BARN KIDS, INC.
 POTTERY BARN TEEN, INC.
 WILLIAMS-SONOMA HOME, INC.
 HOLD EVERYTHING, INC.
 WILLIAMS-SONOMA PUBLISHING, INC.
 WEST ELM, INC.
 WILLIAMS-SONOMA GIFT MANAGEMENT, INC.

		
	 By:
	 	 
	 Name:
	 	 Sharon L. McCollam

	 Title:
	 	 Executive Vice President,
 Chief Financial Officer

	
	 WILLIAMS-SONOMA STORES, LLC

	
	 By: WILLIAMS-SONOMA STORES, INC.

	 Its:  Sole Member

  

			
	 By:
	 	 
	 Name:
	 	 Sharon L. McCollam

	 Title:
	 	 Executive Vice President,
 Chief Financial Officer

  

 A-10 

 EXHIBIT B 
  
 JOINDER AGREEMENT 
  
 This Joinder Agreement (this “Agreement”) dated as of
                                , 20     is executed by
the undersigned (the “Debtor”) for the benefit of Wells Fargo Bank, N.A. (the “Bank”) in connection with the Reimbursement Agreement dated as of July 1, 2005 (as such agreement may be amended, restated, or otherwise modified, the
“Reimbursement Agreement”; capitalized terms not otherwise defined herein shall have the same meaning as set forth in the Reimbursement Agreement) between the Bank and Williams-Sonoma, Inc. (the “Borrower”). 
  
 RECITALS: 
  
 A. The Debtor is a Subsidiary of the Borrower. 
  
 B. The Debtor will benefit from the issuance of Letters of Credit to the Borrower under the Reimbursement Agreement.

  
 C. As consideration for the benefits derived by the Debtor as
described in Recital B, the Debtor has agreed to become a party as a “Guarantor” to the Guaranty Agreement (the “Guaranty Agreement”) dated as of July 1, 2005 entered into by various Subsidiaries of the Borrower for the benefit
of the Bank. The Debtor now desires to become a “Guarantor” under the Guaranty Agreement as required by the Reimbursement Agreement. 
  
 NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the Debtor hereby agrees as follows: 
  
 AGREEMENT: 
  
 1. The Debtor hereby assumes all the obligations of a “Guarantor”
under the Guaranty Agreement and agrees that it is a “Guarantor” and bound as a “Guarantor” under the terms of the Guaranty Agreement as if it had been a signatory thereto. In accordance with the foregoing and for valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the Debtor irrevocably and unconditionally guarantees to the Bank the full and prompt payment and performance of the Guaranteed Indebtedness (as defined in the Guaranty
Agreement) upon the terms and conditions set forth in the Guaranty Agreement. 
  
 2. This Agreement shall be deemed to be part of, and a modification to, the Guaranty Agreement and shall be governed by all the terms and provisions of the Guaranty Agreement, which terms are incorporated herein by
reference, are ratified and confirmed and shall continue in full force and effect as valid and binding agreements of the Debtor enforceable against the Debtor. The Debtor hereby waives notice of the Bank’s acceptance of this Agreement.

  

 B-1 

 IN WITNESS WHEREOF, the Debtor has executed this Agreement as of the day and year first written above.

  

			
	 [NAME OF DEBTOR]

		
	By:	 	 
	 Name:
	 	 
	 Title:
	 	 

  

 B-2Stock-Based Compensation Plan

 Exhibit 10(G) 
  
 CARPENTER TECHNOLOGY CORPORATION 
 STOCK-BASED COMPENSATION PLAN FOR 
 NON-EMPLOYEE DIRECTORS 
 Effective October 20, 1997 
 As last
amended October 22, 2001 
  
 1. Purpose: 
  
 The purposes of the Plan are to attract and retain the services of
experienced and knowledgeable non-employee Directors, to encourage Eligible Directors of Carpenter Technology Corporation (the “Company”) to acquire a proprietary and vested interest in the growth and performance of the Company, and to
generate an increased incentive for Directors to contribute to the Company’s future success and prosperity, thus enhancing the value of the Company for the benefit of its stockholders. 
  
 This Plan is an amendment and restatement of the Carpenter Technology
Corporation Non-Qualified Stock Option Plan for Non-Employee Directors as adopted effective August 1, 1990 and last amended October 23, 1995. The rights of any Director whose service as a Director ended on or before October 21, 2001 shall be
governed by the terms of the Plan as in effect when that Director’s service ended. 
  
 2. Definitions: 
  
 As used in the Plan, the
following terms shall have the meanings set forth below: 
  
 a)
“Annual Retainer” shall mean base compensation for services as a Director. Annual Retainer shall not include meeting fees, committee service fees, if any, expense allowances or reimbursements or any other additional compensation for
services as a Director. 
  
 b) “Beneficiary”
means the person that the Eligible Director designates to receive any unpaid portion of the Eligible Director’s Account should the Eligible Director’s death occur before the Eligible Director receives the entire balance to the credit of
such Eligible Director’s Account. If the Eligible Director does not designate a Beneficiary, the Beneficiary shall be the person’s spouse if the person is married at the time of death, or the Eligible Director’s estate if unmarried at
the time of the person’s death. 
  
 c)
“Board” shall mean the Board of Directors of the Company. 
  
 d) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. 
  
 e) “Common Stock” shall mean the Common Stock, $5.00 par value, of the Company. 
  
 f) “Company” shall mean Carpenter Technology Corporation.

  
 g) “Election Date” shall mean with respect to
an Option hereunder the date of the appointment, election, or re-election of the Eligible Director that prompted the grant of such Option. 
  
 h) “Eligible Director” shall mean each Director of the Company who is not an employee of the Company or any of the Company’s
subsidiaries [as defined in section 425 (f) of the Code], or who is not otherwise excluded from participation by agreement. 
  
 i) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 
  
 j) “Fair Market Value” shall mean with respect to the Common
Stock (i) the last sale price of the Common Stock on the date on which such value is determined, as reported on the consolidated tape of New York Stock Exchange issues or, if there shall be no trades on such date, on the date nearest preceding such
date; (ii) if the Common Stock is not then listed for trading on the New York Stock Exchange, the last sale price of the Common Stock on the date of which such value is determined, as reported on another recognized securities exchange or on the
NASDAQ National Market System if the Common Stock shall then be listed and traded upon such exchange or system or, if there shall be no trades on such date, on the date nearest preceding such date; or (iii) the mean between 
  

 1 

 the bid and asked quotations for such stock on such date (as reported by a recognized stock quotation services) or, in
the event that there shall be no bid or asked quotations on such date, then upon the basis of the mean between the bid and asked quotations on the date nearest preceding such date. 
  
 k) “Grant Date” shall mean with respect to an Option hereunder the date upon which such Option is granted.

  
 l) “Option” shall mean any right granted to
an Eligible Director allowing such Eligible Director to purchase Shares at such price or prices and during such period or periods as set forth under the Plan. All Options shall be non-qualified options not entitled to special tax treatment under
section 422A of the Code. 
  
 m) “Option Letter”
shall mean a written instrument evidencing an Option granted hereunder and signed by an authorized representative of the Company. 
  
 n) “Performance Unit” shall mean the right to receive, following termination of service as an Eligible Director, one share of Common
Stock. Performance Units will be awarded, if at all, based upon the attainment of a specified goal (“Performance Goal”) by the end of a period specified by the Board based upon one or more of the following criteria: (i) price of the Common
Stock, (ii) market share of the Company, (iii) sales by the Company, (iv) earnings per share of the Common Stock, (v) return on shareholder equity of the Company, or (vi) costs of the Company. Such goal shall be pre-determined by the Board at a time
when it is substantially uncertain that the Performance Goals will be met and subject to verification by the Company’s independent auditors using generally accepted accounting principles, consistently applied. For purposes of this Plan,
fractional Performance Units, measured to the nearest four decimal places, may be credited. 
  
 o) “Release Date” shall mean the fifth business day occurring after the Company’s earnings release for the preceding fiscal period. In calculating the Release Date, the day of an earnings release
shall be counted, if the earnings release is made before the opening of trading on the New York Stock Exchange and shall not be counted if such release is made after the opening of trading. 
  
 p) “Retirement” shall mean Retirement from the Board with a
minimum of three years service as an Eligible Director. 
  
 q)
“SAR” or “Stock Appreciation Right” shall mean the right granted to an Eligible Director to receive the increase in the Fair Market Value of a specified number of Shares. 
  
 r) “Shares” shall mean Shares of Common Stock. 

 
 s) “Stock Unit” shall mean the right to receive,
following both service as an Eligible Director for one year following the grant of the Stock Unit and termination of service as an Eligible Director, one share of Common Stock. For purposes of this Plan, fractional Stock Units, measured to the
nearest four decimal places, may be credited. 
  
 t)
“Unit” shall mean a Performance Unit, a Stock Unit, or both, as required by context. 
  
 u) “Window” shall mean a 30 calendar-day period of time beginning on a Release Date. 
  
 3. Administration: 
  
 The Plan shall be administered by the Company. Subject to the terms of the Plan, the Board shall have the power to interpret
the provisions and supervise the administration of the Plan. 
  
  

 2 

 4. Shares Subject to the Plan: 
  
 a) Total Number. Subject to adjustment as provided in this Section, the total number of Shares as to which Options
may be granted, or Performance Units, Stock Units and SARs awarded shall be 329,000. Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued Shares or treasury Shares. 
  
 b) Reduction of Shares Available. 
  
 (i) The grant of an Option will reduce the Shares as to which Options may be
granted by the number of Shares subject to such Option. 
  
 (ii)
Any shares issued by the Company through the assumption or substitution of outstanding grants from an acquired company shall not reduce the Shares available for grants under the Plan. 
  
 (iii) The grant of Performance Units or Stock Units will reduce the number of Shares available for further grants by the
number of Units granted. 
  
 (iv) The exercise of a SAR payable in
Shares will reduce the number of Shares that may be issued upon subsequent exercise of SARs. 
  
 c) Increase of Shares Available. The lapse, cancellation or other termination of an Option, Unit or SAR that has not been fully exercised or paid shall increase the available Shares for such Options, Units or
SARs by the number of Shares that have not been issued upon exercise of such Option or SAR or payment of such Unit. 
  
 d) Other Adjustments. The total number and kind of Shares available for Options, Units or SARs under the Plan or which may be allocated to any one
Eligible Director, the number and kind of Shares subject to outstanding Options, Units or SARs, and the exercise price for such Options or SARs or the value of Units shall be appropriately adjusted by the Board for any increase or decrease in the
number of outstanding Shares resulting from a stock dividend, subdivision, combination of Shares, reclassification, or other change in corporate structure affecting the Shares or for any conversion of the Shares into or exchange of the Shares for
other Shares as a result of any merger or consolidation (including a sale of assets) or other recapitalization as may be necessary to maintain the proportionate interest of the Option, SAR or Unit holder. 
  
 5. Initial Options: 
  
 Initial Options shall be granted to Eligible Directors as follows: 
  
 a) Initial Grant. Each Eligible Director who has not previously
received a grant under this Plan shall be granted an Option to acquire 2,000 Shares as follows: (1) on the Election Date in the event that the Election Date occurs during a Window, or (2) on the next Release Date in the event that the Election Date
does not occur during the Window. 
  
 b) Terms and
Conditions. Any Option granted under this Section 5 shall be subject to the following terms and conditions: 
  
 (i) Option Price. The purchase price per Share purchasable under an Option granted under Section 5 shall be 100% of the Fair Market Value of a
Share on the Grant Date. 
  
 (ii) Exercisability. Unless
otherwise provided by this Plan, an Option granted under Section 5 shall become exercisable in whole or in part one year from the Grant Date. 
  

 3 

 6. Annual Options: 
  
 Annual Options shall be granted to Eligible Directors as follows: 
  
 a) Eligible Directors. Each Eligible Director on or after the Effective Date of the Plan shall be granted an Option
to acquire 4,000 Shares immediately after the annual meeting of the Company’s stockholders. 
  
 b) Terms and Conditions. Any Option granted under this Section 6 shall be subject to the following terms and conditions: 
  
 (i) Option Price. The purchase price per Share purchasable under an
Option shall be 100% of the Fair Market Value of a Share on the Grant Date. 
  
 (ii) Exercisability. Unless otherwise provided by this Plan, an Option granted under this Section 6 shall become exercisable in whole or in part one year from the Grant Date. 
  
 7. General Terms: 
  
 The following provisions shall apply to any Option: 
  
 a) Option Period. Each Option shall expire ten years from its Grant Date, subject to earlier termination as
hereinafter provided. 
  
 b) Each Option granted under this Plan
shall become exercisable by the Eligible Director only after the completion of one year of Board service immediately following the Grant Date; provided, however, that for Annual Options under Section 6, uninterrupted Board service by the Eligible
Director until the annual meeting of the Company’s stockholders next following the Grant Date shall be deemed completion of one year of Board service. Exercise of any or all prior existing Options shall not be required. 
  
 c) No Option under this Plan may be transferrable by the Eligible Director
except by will or the laws of descent and distribution. In the event of the death of the Eligible Director more than one year after the Grant Date and not more than three months after the termination of the Eligible Director’s Board service,
the Option may be transferred to the Eligible Director’s personal representative, heirs or legatees (“Transferee”) and may be exercised by the Transferee before the earlier of (i) the expiration of one year from the date of the death
of the Eligible Director or (ii) the expiration of ten years from the Grant Date. In the event of the Retirement from Board service of an Eligible Director, an Option may be exercised prior to its expiration during the five year period beginning
with the date of Retirement; provided, however, that in the event of a retiree’s death during such five year period, unexercised Options may be exercised by the Transferee before the earlier of either items (i) or (ii) of this Section 7(c). In
all other cases of termination of Board service of an Eligible Director except for removal for cause, the Option, if otherwise exercisable by the Eligible Director at the time of such termination, may be exercised within three months after such
termination. In the event of removal for cause, all existing Options shall be of no force and effect. 
  
 d) Method of Exercise. Any Option may be exercised by the Eligible Director in whole or in part at such time or times and by such methods as the
Board may specify. The applicable Option Letter may provide that the Eligible Director may make payment of the Option price in cash, Shares, held for at least six months, or such other consideration as the Board may specify, or any combination
thereof, having a Fair Market Value on the exercise date equal to the total Option price. 
  
 8. Stock Units: 
  
 a)
Grant of Stock Units. On the date of the annual meeting of stockholders, each Eligible Director shall be awarded each year a number of Stock Units determined by dividing 50% of the Director’s Annual Retainer by the Fair Market Value on
that date. 
  
 b) Election of Stock Units. By written
election filed with the Board before the end of any calendar year, an Eligible Director may elect to increase the percentage in a) above to 100%, and thereby have the entire 
  

 4 

 Director’s Annual Retainer payable in each calendar year beginning after the date of the election awarded in Stock
Units. An election under this Section 8 b) shall remain in effect until changed, in writing, by the Director. Any such change shall be effective in the first calendar year beginning after the date of the written notice of change. 
  
 c) Forfeiture of Stock Units. Stock Units awarded at an annual meeting
of stockholders will be forfeited if the Director terminates service as a Director for any reason other than Board approved Retirement, Board determined disability, or death, before the immediately following annual meeting of stockholders.

  
 d) Stock Units in Lieu of Pension. Effective October
20, 1997, the present value on that date of any Eligible Director’s accrued pension benefit under the Carpenter Technology Corporation Director Retirement Plan, excluding any Eligible Director who is required to retire on or before the 1998
Annual Meeting of Stockholders, shall be converted to Stock Units. The number of Stock Units to be awarded under this Section 8 d) shall be determined by dividing average of the Fair Market Value on the last ten business days of October 1997 into
the present value of each Eligible Director’s accrued pension. The present value will be determined using the UP-84 mortality table and a 7.5% interest rate. Stock Units awarded under this Section 8 d) shall not be subject to the vesting
schedule of Section 8 c). Instead, such Stock Units will be payable upon the earlier of the Director’s Retirement, Board determined disability, or death. 
  

9. Performance Units: 
  
 a) Grant of Performance Units. Performance Units may be granted annually to Eligible Directors in such amounts and subject to such Performance
Goals as shall be determined by the Board. Each Performance Unit shall have an initial value equal to the Fair Market Value of a Share (or similar fractional Share) on the Grant Date. The Board shall set one or more Performance Goals as described in
Section 2(n) of this Plan. The extent to which those Performance Goals are met will determine the number and value of Performance Units that will be paid out to the Eligible Director. 
  
 b) Form and Timing of Payment of Performance Units. Payment of earned Performance Units shall be made as soon as
practicable following the close of the applicable period in a manner designated by the Board, in its sole discretion. The Board, in its sole discretion, may pay earned Performance Units in the form of cash or in Shares (or in a combination thereof)
that have an aggregate Fair Market Value equal to the value of the earned Performance Units at the close of the applicable period. Such Shares may be granted subject to any restrictions deemed appropriate by the Board. 
  
 c) Dividends on Earned but Undistributed Shares. Eligible Directors
shall be entitled to receive any dividends declared with respect to Shares that have been earned in connection with grants of Performance Units, but not yet distributed to Eligible Directors. 
  
 10. Nontransferability of Units: 
  
 Neither Performance Units nor Stock Units may be sold, transferred, pledged,
assigned or otherwise alienated, other than by will or by the laws of descent and distribution. 
  
 11. Dividend Equivalents: 
  
 An Eligible Director who has been awarded Stock Units will also be awarded additional Units, determined on a quarterly basis. The number of additional Units to be awarded will be determined by multiplying the quarterly dividend per Share
for the immediately preceding quarter by the number of Units credited to the Director on the first day of that calendar quarter and dividing the result by the Fair Market Value on the last business day of that quarter. 
  
  

 5 

 12. Payment of Units: 
  
 a) Following an Eligible Director’s Retirement, or termination of service on account of disability, the Director shall be paid a number of Shares
equal to the number of whole Units credited to the Director, with cash paid in lieu of any fractional Units. The amount of cash to be paid will be based on the Fair Market Value on the date of the Director’s termination of service as a
Director. In the case of the Director’s death, the payment will be made to the Director’s Beneficiary. 
  
 b) Manner of Payment. 
  
 (1) An Eligible Director may elect to receive Shares in payment of Units credited to the Director’s account in a lump sum or in annual installments
payable over either ten or fifteen years. 
  
 (2) The election
shall be made by the Director, in writing, filed with the Board no later than the end of the calendar year immediately preceding the Director’s termination of service. If no election is made, the Director’s Units will be paid in a lump sum
as soon as is practicable following the Director’s termination of service. 
  
 (3) If a Director elects installment payments, the amount of each annual installment will be the number of Units to the Director’s credit at the end of the immediately preceding calendar year multiplied by a
fraction the numerator of which is one and the denominator of which is the number of years remaining in the original installment period. Dividend equivalents will continue to be credited to the Director’s account through the end of the calendar
quarter immediately preceding the final installment. 
  
 (4) An
Eligible Director who has elected installment payment of Units may, with the consent of the Board, which may be given or denied in the Board’s sole discretion, change that election and receive a lump sum distribution of all remaining Units
credited to the Director’s account. 
  
 13. Stock Appreciation Rights or
SARs: 
  
 SARs may be granted by the Board from time to time,
subject to the following provisions: 
  
 a) The Board may grant a
SAR either in connection with the grant of an Option (“Tandem SAR”) or independent of the grant of an Option (“Freestanding SAR”). The grant of any Freestanding SAR must be related to the attainment of Performance Goals under
Section 9. Each Tandem SAR shall be exercisable only with the exercise and surrender of the related Option or portion thereof and shall entitle the Eligible Director to receive the excess of the Fair Market Value of the Shares on the date the Tandem
SAR is exercised over the option price under the related Option. The excess is hereafter called the “Spread” for both Tandem SARs and Freestanding SARs. If the Eligible Director elects instead to exercise the related Option, the Tandem SAR
shall be canceled automatically. 
  
 b) A Tandem SAR shall be
exercisable only to the extent and at the same time that the related Option is exercisable. 
  
 c) A Freestanding SAR shall be exercisable pursuant to the terms and conditions that are specified in the agreement in which the Freestanding SAR is granted. 
  
 d) Upon the exercise of a SAR, the Company shall pay to the Eligible Director
an amount equivalent to the spread (less any applicable withholding taxes) in cash, or in Shares, or a combination of both, as the Board shall determine. Such determination may be made at the time of the granting of the SAR. No fractional Shares of
Stock shall be issued and the Board shall determine whether cash shall be given in lieu of such fractional Share or whether such fractional Share shall be eliminated. 
  
 e) A Tandem SAR shall terminate and may no longer be exercised upon the termination or expiration of the related Option.

  
 f) Income attributable to the exercise of a SAR shall not be
included in the calculation of any other benefits payable at any time by reason of the Eligible Director’s service to the Company. 
  
 g) No SAR shall be transferable by the Eligible Director. 
  

 6 

 h) The agreement under which a SAR is granted shall set forth the extent to which the Eligible Director
shall have the right to exercise the SAR following termination of the Eligible Director’s service as a Director. Such provisions shall be determined at the sole discretion of the Board and need not be uniform among all SARs issued pursuant to
this Section 13, and may reflect distinctions based on the reasons for termination of service. 
  
 i) The Board may only grant Freestanding SARs pursuant to the achievement of Performance Goals and it may impose additional restrictions upon the vesting and exercise of such SARs on the attainment of Performance
Goals. For all purposes under this Plan, “Performance Goals” means goals that must be met by the end of a period specified by the Board based upon one or more of the following criteria: (i) price of the Common Stock, (ii) market share of
the Company, (iii) sales by the Company, (iv) earnings per share of the Common Stock, (v) return on shareholder equity of the Company, or (vi) costs of the Company. 
  
 14. Change in Control: 
  
 a) Notwithstanding anything in this Plan to the contrary, in the event of a Change in Control of the Company, the Options granted under Sections 5 and 6
and any SARs granted under Section 13 shall vest and become immediately exercisable and any unvested Stock Units granted under Section 8 shall vest. 
  
 b) For purposes of this Plan, “Change in Control of the Company” means: 
  
 (1) The acquisition by any individual, entity or group [within the meaning of section 13(d)(3) or 14(d)(2) of the Exchange
Act] (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common
Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however,
that, for purposes of this Section 14(b), the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any affiliated company or (iv) any acquisition by any corporation pursuant to a transaction that complies with Sections 14(b)(3)(A), 14(b)(3)(B) and 14(b)(3)(C); 
  
 (2) individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by
the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; 
  
 (3) consummation of a
reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of the assets or stock of another entity (a “Business Combination”), in each case, unless,
following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets
either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as
the case may be, (B) no Person [excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination] beneficially owns,
directly or indirectly, 20% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation,
except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or 
  

 7 

 (4) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

  
 c) Payment for Performance Units. Within 30 days
following a Change in Control of the Company, as defined in Section 14(b) of this Plan, there shall be paid in cash to Eligible Directors holding Performance Units a pro rata amount based upon the assumed achievement of all relevant Performance
Goals at target levels, and upon the length of time with the performance period that has elapsed before the Change in Control of the Company; provided, however, that if the Board determines that actual performance to the date of the Change in
Control of the Company exceeds targeted levels, the prorated payouts shall be made using the actual performance data; and provided further, that there shall not be an accelerated payout with respect to Performance Units that qualify as
“Derivative Securities” under Section 16 of the Exchange Act that were granted less than six months before the Change in Control of the Company. 
  
 15. Amendments and Termination: 
  
 a) Board Authority. The Board may amend or terminate the Plan at any time; provided that no amendment may be made (i) without the appropriate
approval of the Company’s stockholders if such approval is necessary to comply with any tax or other regulatory requirement, including any stockholder approval required as a condition to exemptive relief under section 16(b) of the Exchange Act;
(ii) which would adversely impair or affect, without the consent of the Eligible Director, any rights or obligations under any Option, Unit or SAR theretofore granted to such Eligible Director; or (iii) more than once every six months with respect
to the timing, amount and price of Options or SARs to be awarded to Eligible Directors, other than to comport with changes to the Code, the Employee Retirement Income Security Act, or the rules thereunder. 
  
 b) Prior Stockholder and Eligible Director Approval. Anything herein
to the contrary notwithstanding, in the event that amendments to the Plan are required in order that the Plan or any other stock-based compensation plan of the Company comply with the requirements of Rule 16b-3 issued under the Exchange Act, as
amended from time to time, or any successor rules promulgated by the Securities and Exchange Commission related to the treatment of benefit and compensation plans under section 16 of the Exchange Act, the Board is authorized to make such amendments
without the consent of Eligible Directors or the stockholders of the Company. 
  
 16. General Provisions: 
  
 a) Compliance
Regulations. All certificates for Shares delivered under this Plan pursuant to any Option, Unit or SAR shall be subject to such stock-transfer orders and other restrictions as the Board may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable federal or state securities law, and the Board may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions. The Company shall not be required to issue or deliver any Shares under the Plan prior to the completion of any registration or qualification of such Shares under any federal or state law, or under any
ruling or regulations of any governmental body or national securities exchange that the Board in its sole discretion shall deem to be necessary or appropriate. 
  

b) Other Plans. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required by applicable law or the rules of any stock exchange on which the Common Stock is then listed; and such arrangements may be either generally applicable or applicable only in specific cases.

  
 c) Governing Law. The validity, construction, and
effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Delaware and applicable federal law. 
  
 d) Conformity With Law. If any provision of this Plan is or becomes or is deemed invalid, illegal, or unenforceable
in any jurisdiction, or would disqualify the Plan or any Option under any law deemed applicable by 
  

 8 

 the Board, such provision shall be construed or deemed amended in such jurisdiction to conform to applicable laws or if
it cannot be construed or deemed amended without, in the determination of the Board, materially altering the intent of the Plan, it shall be stricken and the remainder of the Plan shall remain in full force and effect. 
  
 e) Insufficient Shares. In the event there are insufficient Shares
remaining to satisfy all of the grants of Options, Units or SARs made on the same day, such Options, Units or SARs shall be reduced pro-rata. 
  
 17. Effective Date and Termination: 
  
 The Plan’s original effective date, as approved by the Board, was August 9, 1990, and last amended by the Board on August 10, 1995; and ratified by
the stockholders at the Annual Meeting held October 23, 1995. The effective date of this amendment is October 22, 2001, while the effective date of the latest restatement was October 20, 1997, as ratified by the Company’s stockholders at the
Annual Meeting held on October 20, 1997. The Plan will terminate upon the date on which all outstanding Options have expired or terminated, and all outstanding Units and SARs have been paid or otherwise provided for. 
  

 9

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