Document:

exv4w1

 

 

Exhibit
4.1

EDDIE BAUER HOLDINGS, INC.,

THE SUBSIDIARY GUARANTORS PARTIES HERETO

AND

THE BANK OF NEW YORK,

AS TRUSTEE

5.25% Convertible Senior Notes due 2014

INDENTURE

Dated as of April 4, 2007

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	ARTICLE 1	 	 	 	 
	 
	 	Definitions and Incorporation by Reference	 	 	 	 
	 
	 	 	 	 	 	 
	Section 1.01 .
	 	Definitions.	 	 	1	 
	Section 1.02 .
	 	Incorporation by Reference of TIA	 	 	12	 
	Section 1.03 .
	 	Rules of Construction	 	 	13	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 2	 	 	 	 
	 
	 	The Securities	 	 	 	 
	 
	 	 	 	 	 	 
	Section 2.01 .
	 	Title; Amount and Issue of Securities; Principal and Interest	 	 	13	 
	Section 2.02 .
	 	Form of Securities	 	 	14	 
	Section 2.03 .
	 	Legends	 	 	15	 
	Section 2.04 .
	 	Execution and Authentication	 	 	19	 
	Section 2.05 .
	 	Registrar and Paying Agent	 	 	20	 
	Section 2.06 .
	 	Paying Agent to Hold Money in Trust	 	 	20	 
	Section 2.07 .
	 	Holder Lists	 	 	21	 
	Section 2.08 .
	 	General Provisions Relating to Transfer and Exchange	 	 	21	 
	Section 2.09 .
	 	Book-Entry Provisions for the Global Securities	 	 	22	 
	Section 2.10 .
	 	Special Transfer Provisions	 	 	23	 
	Section 2.11 .
	 	Mutilated, Destroyed, Lost or Stolen Securities	 	 	25	 
	Section 2.12 .
	 	Outstanding Securities	 	 	25	 
	Section 2.13 .
	 	Temporary Securities	 	 	26	 
	Section 2.14 .
	 	Cancellation	 	 	26	 
	Section 2.15 .
	 	Payment of Interest; Defaulted Interest	 	 	27	 
	Section 2.16 .
	 	Computation of Interest	 	 	28	 
	Section 2.17 .
	 	CUSIP and ISIN Numbers	 	 	28	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 3	 	 	 	 
	 
	 	Covenants	 	 	 	 
	 
	 	 	 	 	 	 
	Section 3.01 .
	 	Payment of Securities	 	 	28	 
	Section 3.02 .
	 	Financial Statements	 	 	29	 
	Section 3.03 .
	 	Future Subsidiary Guarantors	 	 	29	 
	Section 3.04 .
	 	Maintenance of Office or Agency	 	 	29	 
	Section 3.05 .
	 	Corporate Existence	 	 	30	 
	Section 3.06 .
	 	Payment of Taxes and Other Claims	 	 	30	 
	Section 3.07 .
	 	Compliance Certificate	 	 	30	 
	Section 3.08 .
	 	Further Instruments and Acts	 	 	30	 
	Section 3.09 .
	 	Statement by Officers as to Default	 	 	31	 
	Section 3.10 .
	 	Additional Interest	 	 	31	 

ii

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 3.11 .
	 	Stay, Extension and Usury Laws	 	 	31	 
	Section 3.12 .
	 	No Amendment of Ownership Limitations	 	 	31	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 4	 	 	 	 
	 
	 	Successor Company	 	 	 	 
	 
	 	 	 	 	 	 
	Section 4.01 .
	 	Consolidation, Merger and Sale of Assets of the Company	 	 	31	 
	Section 4.02 .
	 	Consolidation, Merger and Sale
of Assets of the Subsidiary Guarantors	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 5	 	 	 	 
	 
	 	Reserved	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 6	 	 	 	 
	 
	 	Defaults and Remedies	 	 	 	 
	 
	 	 	 	 	 	 
	Section 6.01 .
	 	Events of Default	 	 	33	 
	Section 6.02 .
	 	Acceleration	 	 	35	 
	Section 6.03 .
	 	Other Remedies	 	 	35	 
	Section 6.04 .
	 	Waiver of Past Defaults	 	 	35	 
	Section 6.05 .
	 	Control by Majority	 	 	36	 
	Section 6.06 .
	 	Limitation on Suits	 	 	36	 
	Section 6.07 .
	 	Rights of Holders to Receive Payment	 	 	36	 
	Section 6.08 .
	 	Collection Suit by Trustee	 	 	37	 
	Section 6.09 .
	 	Trustee May File Proofs of Claim	 	 	37	 
	Section 6.10 .
	 	Priorities	 	 	37	 
	Section 6.11 .
	 	Restoration of Rights and Remedies	 	 	38	 
	Section 6.12 .
	 	Undertaking of Costs	 	 	38	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 7	 	 	 	 
	 
	 	Trustee	 	 	 	 
	 
	 	 	 	 	 	 
	Section 7.01 .
	 	Duties of Trustee	 	 	38	 
	Section 7.02 .
	 	Rights of Trustee	 	 	39	 
	Section 7.03 .
	 	Individual Rights of Trustee	 	 	40	 
	Section 7.04 .
	 	Trustee’s Disclaimer	 	 	41	 
	Section 7.05 .
	 	Notice of Defaults	 	 	41	 
	Section 7.06 .
	 	Reports by Trustee to Holders	 	 	41	 
	Section 7.07 .
	 	Compensation and Indemnity	 	 	41	 
	Section 7.08 .
	 	Replacement of Trustee	 	 	42	 
	Section 7.09 .
	 	Successor Trustee by Merger	 	 	43	 
	Section 7.10 .
	 	Eligibility; Disqualification	 	 	43	 
	Section 7.11 .
	 	Preferential Collection of Claims Against Company	 	 	43	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 8	 	 	 	 
	 
	 	Discharge of Indenture	 	 	 	 
	 
	 	 	 	 	 	 
	Section 8.01 .
	 	Discharge of Liability on Securities	 	 	44	 

iii

 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 8.02 .
	 	Reinstatement	 	 	45	 
	Section 8.03 .
	 	Officers’ Certificate; Opinion of Counsel	 	 	45	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 9	 	 	 	 
	 
	 	Amendments	 	 	 	 
	 
	 	 	 	 	 	 
	Section 9.01 .
	 	Without Consent of Holders	 	 	45	 
	Section 9.02 .
	 	With Consent of Holders	 	 	46	 
	Section 9.03 .
	 	Compliance with TIA	 	 	47	 
	Section 9.04 .
	 	Revocation and Effect of Consents and Waivers	 	 	47	 
	Section 9.05 .
	 	Notation on or Exchange of Securities	 	 	48	 
	Section 9.06 .
	 	Trustee to Sign Amendments	 	 	48	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 10	 	 	 	 
	 
	 	Subsidiary Guarantees	 	 	 	 
	 
	 	 	 	 	 	 
	Section 10.01 .
	 	Subsidiary Guarantees	 	 	48	 
	Section 10.02 .
	 	Limitation on Liability; Release and Discharge; Termination	 	 	 	 
	 
	 	on Conversion	 	 	50	 
	Section 10.03 .
	 	Right of Contribution	 	 	51	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 11	 	 	 	 
	 
	 	Purchase at the Option of Holder Upon a Fundamental	 	 	 	 
	 
	 	Change	 	 	 	 
	 
	 	 	 	 	 	 
	Section 11.01 .
	 	Purchase at the Option of the Holder Upon a Fundamental Change	 	 	51	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 12	 	 	 	 
	 
	 	Conversion	 	 	 	 
	 
	 	 	 	 	 	 
	Section 12.01 .
	 	Conversion of Securities	 	 	56	 
	Section 12.02 .
	 	Adjustments to Conversion Rate	 	 	62	 
	Section 12.03 .
	 	Adjustment Upon Certain Fundamental Changes	 	 	69	 
	Section 12.04 .
	 	Effect of Reclassification, Consolidation, Merger or Sale	 	 	70	 
	Section 12.05 .
	 	Responsibility of Trustee	 	 	71	 
	Section 12.06 .
	 	Notice to Holders Prior to Certain Actions	 	 	72	 
	Section 12.07 .
	 	Stockholder Rights Plan	 	 	73	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE 13	 	 	 	 
	 
	 	Miscellaneous	 	 	 	 
	 
	 	 	 	 	 	 
	Section 13.01 .
	 	TIA Controls	 	 	73	 
	Section 13.02 .
	 	Notices	 	 	74	 
	Section 13.03 .
	 	Communication by Holders with other Holders	 	 	74	 
	Section 13.04 .
	 	Certificate and Opinion as to Conditions Precedent	 	 	74	 
	Section 13.05 .
	 	Statements Required in Certificate or Opinion	 	 	75	 
	Section 13.06 .
	 	When Securities Are Disregarded	 	 	75	 

iv

 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 13.07 .
	 	Rules by Trustee, Paying Agent and Registrar	 	 	75	 
	Section 13.08 .
	 	Legal Holidays	 	 	75	 
	Section 13.09 .
	 	Governing Law; Waiver of Jury Trial	 	 	76	 
	Section 13.10 .
	 	No Recourse Against Others	 	 	76	 
	Section 13.11 .
	 	Successors	 	 	76	 
	Section 13.12 .
	 	Multiple Originals	 	 	76	 
	Section 13.13 .
	 	Qualification of Indenture	 	 	76	 
	Section 13.14 .
	 	Table of Contents; Headings	 	 	76	 
	Section 13.15 .
	 	Severability Clause	 	 	76	 
	Section 13.16 .
	 	Calculations	 	 	76	 
	 
	 	 	 	 	 	 
	SCHEDULE A
	 	     Additional Shares	 	 	 	 
	EXHIBIT A
	 	     Form of the Security	 	 	 	 
	EXHIBIT B
	 	     Form of Supplemental Indenture	 	 	 	 

v

 

 

CROSS-REFERENCE TABLE

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TIA	 	 	 	 	 	 	 	Indenture	 	 	 	 
	Section	 	 	 	 	 	 	 	Section	 	 	 	 
	310(a)

	 	 	(1	)	 	 	 	 	7.10	 	 	 	 	 
	(a)

	 	 	(2	)	 	 	 	 	7.10	 	 	 	 	 
	(a)

	 	 	(3	)	 	 	 	 	N.A.	 	 	 	 	 
	(a)

	 	 	(4	)	 	 	 	 	N.A.	 	 	 	 	 
	(a)

	 	 	(5	)	 	 	 	 	7.10	 	 	 	 	 
	(b)

	 	 	 	 	 	 	 	 	7.08;	 	7.10	 	 	 
	(c)

	 	 	 	 	 	 	 	 	N.A.	 	 	 	 	 
	311(a)

	 	 	 	 	 	 	 	 	7.11	 	 	 	 	 
	(b)

	 	 	 	 	 	 	 	 	7.11	 	 	 	 	 
	(c)

	 	 	 	 	 	 	 	 	N.A.	 	 	 	 	 
	312(a)

	 	 	 	 	 	 	 	 	2.07	 	 	 	 	 
	(b)

	 	 	 	 	 	 	 	 	13.03	 	 	 	 	 
	(c)

	 	 	 	 	 	 	 	 	13.03	 	 	 	 	 
	313(a)

	 	 	 	 	 	 	 	 	7.06	 	 	 	 	 
	(b)

	 	 	 	 	 	 	 	 	7.06	 	 	 	 	 
	(c)

	 	 	 	 	 	 	 	 	7.06	 	 	 	 	 
	(d)

	 	 	 	 	 	 	 	 	N.A.	 	 	 	 	 
	314(a)

	 	 	 	 	 	 	 	 	3.02	 	(b);	 	3.07	 
	(b)

	 	 	 	 	 	 	 	 	N.A.	 	 	 	 	 
	(c)

	 	 	 	 	 	 	 	 	13.04	 	 	 	 	 
	(d)

	 	 	 	 	 	 	 	 	N.A.	 	 	 	 	 
	(e)

	 	 	 	 	 	 	 	 	13.05	 	 	 	 	 
	(f)

	 	 	 	 	 	 	 	 	N.A.	 	 	 	 	 
	315(a)

	 	 	 	 	 	 	 	 	7.01	 	 	 	 	 
	(b)

	 	 	 	 	 	 	 	 	7.05	 	 	 	 	 
	(c)

	 	 	 	 	 	 	 	 	7.01	 	 	 	 	 
	(d)

	 	 	 	 	 	 	 	 	7.01	 	 	 	 	 
	(e)

	 	 	 	 	 	 	 	 	6.12	 	 	 	 	 
	316(a)

	 	 	 	 	 	 	 	 	6.04,	 	6.05,	 	13.06	 
	(b)

	 	 	 	 	 	 	 	 	6.07	 	 	 	 	 
	(c)

	 	 	 	 	 	 	 	 	6.05	 	 	 	 	 
	317(a)

	 	 	 	 	 	 	 	 	6.08,	 	6.09	 	 	 
	(b)

	 	 	 	 	 	 	 	 	2.06	 	 	 	 	 
	318(a)

	 	 	 	 	 	 	 	 	13.01	 	 	 	 	 
	(b)

	 	 	 	 	 	 	 	 	N.A.	 	 	 	 	 
	(c)

	 	 	 	 	 	 	 	 	13.01	 	 	 	 	 

     N.A. means Not Applicable.

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be part of this
Indenture.

vi

 

 

     INDENTURE dated as of April 4, 2007, among EDDIE BAUER HOLDINGS, INC., a Delaware corporation
(the “Company”), the Subsidiary Guarantors (as defined below) and THE BANK OF NEW YORK, as Trustee
(the “Trustee”).

     Each party agrees as follows for the benefit of the other parties and for the equal and
ratable benefit of the Holders of the Company’s 5.25% Convertible Senior Notes due 2014 (the
“Securities”) and the Guarantees thereof by certain of the Company’s subsidiaries.

ARTICLE 1

Definitions and Incorporation by Reference

     Section 1.01 . Definitions.

     “Additional Interest” means all amounts, if any, payable pursuant to Section 2 of the
Registration Rights Agreement.

     “Additional Shares” has the meaning specified in Section 12.03(a).

     “Adjustment Event” has the meaning specified in Section 12.02(m).

     “Affiliate” of any specified Person means any other Person directly or indirectly controlling,
controlled by or under direct or indirect common control with such specified Person. For the
purposes of this definition, “control” when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.

     “Agent Members” has the meaning specified in Section 2.09(a).

     “Authenticating Agent” has the meaning specified in Section 2.04.

     “Bankruptcy Law” means Title 11 of the United States Code or any similar federal or state law
for the relief of debtors.

     “Beneficial Owner” shall mean any person who is considered a beneficial owner of a security in
accordance with Rule 13d-3 promulgated by the Commission under the Exchange Act.

     “Bid Solicitation Agent” means the agency appointed by the Company to solicit bids for the
Trading Price of the Securities in accordance with Section 12.01(a)(ii). The Bid Solicitation
Agent appointed by the Company shall initially be the Trustee.

     “Board of Directors” means, as to any Person, the board of directors of such Person or any
duly authorized committee thereof, and, unless specified to the contrary, refers to the Company’s
Board of Directors.

 

2

     “Board Resolution” means a copy of a resolution certified by the Secretary or Assistant
Secretary of a Person to have been duly adopted by the Board of Directors of such Person and to be
in full force and effect on the date of such certification.

     “Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on
which the banking institutions in New York City are authorized or obligated by law or executive
order to close or be closed.

     “Capital Stock” of any Person means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in (however designated)
equity of such Person, including any Preferred Stock, but excluding any debt securities convertible
into such equity.

     “Certificate of Destruction” has the meaning specified in Section 2.14.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Commission” has the meaning specified in Section 1.02.

     “Common Equity” of any Person means Capital Stock of such Person that is generally entitled to
(1) vote in the election of directors of such Person or (2) if such Person is not a corporation,
vote or otherwise participate in the selection of the governing body, partners, managers or others
that will control the management or policies of such Person.

     “Common Stock” means the Company’s Common Stock, par value $0.01 per share, or, subject to
Section 12.04, shares of any class or classes resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the
Company and which are not subject to redemption by the Company; provided that if at any time there
shall be more than one such resulting class, the shares of each such class then so issuable on
exchange shall be substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.

     “Company” means Eddie Bauer Holdings, Inc. or its successors and assigns.

     “Company Notice” has the meaning specified in Section 11.02(a).

     “Company Notice Date” has the meaning specified in Section 11.02(a).

     “Company Order” has the meaning specified in Section 2.04.

     “Continuing Director” means a director who either was a member of the Board of Directors on
April 4, 2007, or who becomes a member of the Board of Directors subsequent to that date and whose
election, appointment or nomination for election by stockholders of the Company, is duly approved
by a majority of the continuing directors on the Board of Directors at

 

3

the time of such approval, either by a specific vote or by approval of the proxy statement
issued by the Company on behalf of the entire Board of Directors in which such individual is named
as nominee for director.

     “Conversion Agent” means the office or agency appointed by the Company where Securities may be
presented for conversion. The Conversion Agent appointed by the Company shall initially be the
Trustee.

     “Conversion Date” has the meaning specified in Section 12.01(b).

     “Conversion Notice” has the meaning specified in Section 12.01(b).

     “Conversion Obligation” has the meaning specified in Section 12.01(a).

     “Conversion Price” means, in respect of each $1,000 principal amount of Securities, $1,000
divided by the Conversion Rate, as may be adjusted from time to time as set forth herein.

     “Conversion Rate” means, in respect of each $1,000 principal amount of Securities, initially
73.8007 shares of Common Stock, subject to adjustments as set forth herein.

     “Conversion Retraction Period” has the meaning specified in Section 12.01(c).

     “Conversion Settlement Distribution” has the meaning specified in Section 12.01(c).

     “Credit Facilities” means (i) the Term Loan Agreement, dated as of June 21, 2005, among the
Company, Eddie Bauer, Inc., certain other subsidiaries parties thereto, JPMorgan Chase Bank, N.A.,
as Administrative Agent, and the lenders parties thereto from time to time, (ii) the Loan and
Security Agreement, dated as of June 21, 2005, among the Company, Eddie Bauer, Inc., certain other
subsidiaries parties thereto, the financial institutions named therein, and Bank of America, N.A.,
as agent, Banc of America Securities LLC, as sole lead arranger and book manager, Fleet Retail
Group, Inc. and The CIT Group/Business Credit, Inc., as co-syndication agents, and General Electric
Capital Corporation, as documentation agent, (iii) any other credit agreement entered into by the
Company or any of its Domestic Subsidiaries and (iv) any amendment, modification, renewal,
extension replacement, refunding or refinancing of such Agreements in whole or in part from time to
time (and whether or not with the original administrative agent and lenders or another
administrative agent or agents or other lenders and whether provided under the original Agreements
or any other credit or other agreements or indentures).

     “Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.

     “Daily Conversion Value” means, for each of the 25 consecutive Trading Days during the
Observation Period, one-twenty-fifth (1/25) of the product of (1) the applicable Conversion Rate
and (2) the Daily VWAP of the Common Stock on such day. Following the occurrence of a
Reorganization Event, to the extent appropriate as determined by the Board of Directors acting in

 

4

good faith, “Reference Property” will be substituted for “Common Stock” for the purposes of
this definition.

     “Daily Settlement Amount,” for each of the 25 Trading Days during the Observation Period,
shall consist of:

     (i) cash equal to the lesser of $40 and the Daily Conversion Value relating to such
day; and

     (ii) to the extent the Daily Conversion Value exceeds $40, a number of shares equal
to (A) the difference between the Daily Conversion Value and $40, divided by (B) the
Daily VWAP of the Common Stock (or the consideration into which the Common Stock has been
exchanged in connection with certain corporate transactions) on such day.

Following the occurrence of a Reorganization Event, to the extent appropriate as determined by the
Board of Directors acting in good faith, “Reference Property” will be substituted for “Common
Stock” for the purposes of this definition

     “Daily VWAP” of the Common Stock means, for each of the 25 consecutive Trading Days during the
Observation Period, the per share volume-weighted average price as displayed under the heading
“Bloomberg VWAP” on Bloomberg Financial Markets page “EBHI<equity> AQR”, or any successor
page, in respect of the period from 9:30 a.m. to 4:00 p.m., New York City time, on such Trading Day
(or if such volume-weighted average price is unavailable, the market value of one share of Common
Stock on such Trading Day as determined using a volume-weighted average method by a nationally
recognized independent investment banking firm selected by the Company for this purpose).
Following the occurrence of a Reorganization Event, to the extent appropriate as determined by the
Board of Directors acting in good faith, “Reference Property” will be substituted for “Common
Stock” for the purposes of this definition and the Bloomberg Financial Markets page reference will
be to the appropriate page displaying the volume weighted average price for the Reference Property.

     “Default” means any event which is, or after notice or passage of time or both would be, an
Event of Default.

     “Defaulted Interest” has the meaning specified in Section 2.15.

     “Definitive Securities” mean certificated Securities that are not Global Securities.

     “Determination Date” has the meaning specified in Section 12.02(m).

     “Domestic Subsidiary” means any Subsidiary of the Company organized under the laws of any
jurisdiction within the United States.

 

5

     “DTC” means The Depository Trust Company, its nominees and their respective successors and
assigns, or such other depository institution hereinafter appointed by the Company pursuant to the
terms of this Indenture.

     “Effective Date” has the meaning specified in Section 12.03(b).

     “Event of Default” has the meaning specified in Section 6.01.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder.

     “Ex-Dividend Date” means, in respect of a dividend or distribution to holders of Common Stock,
the first date upon which a sale of the Common Stock does not automatically transfer the right to
receive the relevant dividend or distribution from the seller of the Common Stock to its buyer.

     “Expiration Time” has the meaning specified in Section 12.02(e).

     “Fair Market Value” means the amount that a willing buyer would pay a willing seller in an
arm’s length transaction.

     A “Fundamental Change” shall be deemed to have occurred at such time after the original
issuance of the Securities as any of the following occurs:

	 	(1)	 	any “person” or “group” within the meaning of Section 13(d) of the Exchange
Act, other than the Company, any Subsidiary of the Company or any employee benefit plan
of the Company or any such Subsidiary, files a Schedule TO or any other schedule, form
or report under the Exchange Act disclosing that such person or group has become the
Beneficial Owner of Common Equity of the Company representing more than 50% of the
ordinary voting power of the Company’s Common Equity;
	 
	 	(2)	 	consummation of any share exchange, consolidation or merger of the Company
pursuant to which the Common Stock will be converted into cash, securities or other
property or any conveyance, transfer, sale, lease or disposition (in one transaction or
a series of transactions) of all or substantially all of the consolidated assets of the
Company and its Subsidiaries, taken as a whole, to any Person other than one of the
Company’s Subsidiaries; provided, however, that a transaction where the holders of more
than 50% of the Company’s Common Equity immediately prior to such transaction own,
directly or indirectly, more than 50% of the ordinary voting power of Common Equity of
the continuing or surviving corporation or transferee or the parent thereof immediately
after such event shall not be a Fundamental Change;
	 
	 	(3)	 	Continuing Directors cease to constitute at least a majority of the Board of
Directors;

 

6

	 	(4)	 	the stockholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company; or
	 
	 	(5)	 	the Common Stock (or other common stock into which the Securities are then
convertible) ceases to be listed on a national securities exchange or quoted on the
NASDAQ Global Market or an established automated over-the-counter trading market in the
United States;

provided, however, that a Fundamental Change shall be deemed not to have occurred if at least 90%
of the consideration received or to be received by the holders of the Common Stock, excluding cash
payments for fractional shares, in connection with the transaction or transactions constituting the
Fundamental Change consists of shares of common stock traded on a U.S. national securities exchange
or quoted on the NASDAQ Global Market or which shall be so traded or quoted when issued or
exchanged in connection with such Fundamental Change (such securities being referred to as
“Publicly Traded Securities”) and as a result of such transaction or transactions the Securities
become convertible into such Publicly Traded Securities pursuant to the terms of this Indenture.

     “Fundamental Change Purchase Date” has the meaning specified in Section 11.01.

     “Fundamental Change Purchase Notice” has the meaning specified in Section 11.01(b).

     “Fundamental Change Purchase Price” has the meaning specified in Section 11.01.

     “GAAP” means generally accepted accounting principles set forth in the opinions and
pronouncements of the (i) Public Company Accounting Oversight Board, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) in such other statements by such
other entity as may be approved by a significant segment of the accounting profession as in effect
from time to time and (iv) the rules and regulations of the Commission governing the inclusion of
financial statements in period reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and similar written
statements from the accounting staff of the Commission.

     “Global Securities” means certificated Securities in global form, without interest coupons,
substantially in the form of Exhibit A hereto and registered in the name of DTC or a nominee of
DTC.

     “Global Security Legend” has the meaning specified in Section 2.03(iv).

     “Guarantee” means any obligation, contingent or otherwise, of any Person directly or
indirectly guaranteeing any debt of any other Person and any obligation, direct or indirect,
contingent or otherwise, of such Person:

	 	(1)	 	to purchase or pay (or advance or supply funds for the purchase or payment of)
such debt of such other Person (whether arising by virtue of partnership

 

7

	 	 	 	arrangements, or 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
	 
	 	(2)	 	entered into for purposes of assuring in any other manner the obligee of such
debt of the payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part);

provided, however, that the term “Guarantee” will not include endorsements for collection or
deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding
meaning.

     “Guaranteed Obligations” has the meaning specified in Section 10.01.

     “Holder” means the Person in whose name a Security is registered in the Securities Register.

     “Indenture” means this Indenture, as amended or supplemented from time to time.

     “Issue Date” means April 4, 2007.

     “Last Reported Sale Price” of the Common Stock on any date means:

     (a) the closing sale price per share (or if no closing sale price is reported, the average of
the bid and ask prices or, if more than one in either case, the average of the average bid and the
average asked prices) on the NASDAQ Global Market on that date (or, if no closing sale price is
reported, the last reported sale price);

     (b) if the Common Stock is not listed for trading on the NASDAQ Global Market, the closing
sale price (or, if no closing sale price is reported, the last reported sale price) as reported on
that date in composite transactions for the principal U.S. national or regional securities exchange
on which the Common Stock is listed;

     (c) if the Common Stock is not so listed on a U.S. national or regional securities exchange,
the last sale price of the Common Stock on that date as reported by the NASDAQ Global Market (to
the extent that the NASDAQ Global Market is not at such time a U.S. national or regional securities
exchange);

     (d) if the Common Stock is not so reported by the NASDAQ Global Market (to the extent that the
NASDAQ Global Market is not at such time a U.S. national or regional securities exchange), the last
quoted bid price for the Common Stock on that date in the over-the-counter market as reported by
Pink Sheets LLC or similar organization; or

     (e) if the Common Stock is not so quoted by Pink Sheets LLC or similar organization, the
average of the mid-point of the last bid and ask prices for the Common Stock

 

8

on that date from a nationally recognized independent investment banking firm selected by the
Company for this purpose.

     For the purposes of Section 12.02(c), the Last Reported Sale Price of the Capital Stock or
similar equity interest distributed to holders of Common Stock shall have the same meaning as set
forth above, substituting the Capital Stock or similar equity interest distributed to holders of
Common Stock for the “Common Stock” referenced in clauses (a) though (e) above. Following the
occurrence of a Reorganization Event, to the extent appropriate as determined by the Board of
Directors acting in good faith, “Reference Property” will be substituted for “Common Stock” for the
purposes of this definition and the Bloomberg Financial Markets page reference will be to the
appropriate page displaying the volume weighted average price for the Reference Property.

     “Legal Holiday” has the meaning specified in Section 13.08.

     “Market Disruption Event” means:

     (a) for the purposes of Section 12.01(a), if the Common Stock is listed on the NASDAQ Global
Market, NYSE or another U.S. national or regional securities exchange, or is quoted on the NASDAQ
Global Market (to the extent that the NASDAQ Global Market is not at such time a U.S. national or
regional exchange), the occurrence or existence during the one half-hour period ending on the
scheduled close of trading on any Trading Day of any material suspension or limitation imposed on
trading (by reason of movements in price exceeding limits permitted by the stock exchange or
otherwise) in the Common Stock or in any options, contracts or future contracts relating to the
Common Stock; and

     (b) for every other purpose (i) failure by the primary U.S. national securities exchange or
market on which the Common Stock is listed or admitted to trading to open for trading during its
regular trading session or (ii) the occurrence or existence prior to 1:00 p.m., New York City time,
on any Trading Day for the Common Stock for an aggregate one half-hour period of any suspension or
limitation imposed on trading (by reason of movements in price exceeding limits permitted by the
stock exchange or otherwise) in the Common Stock or in any options, contracts or future contracts
relating to the Common Stock.

     “Measurement Period” has the meaning specified in Section 12.01(a)(ii).

     “NYSE” means the New York Stock Exchange, Inc.

     “Observation Period” means, with respect to a conversion of any Security, the 25 consecutive
Trading-Day period beginning on and including the second Trading Day immediately following the
Conversion Date for such Security.

     “Officer” means the Chairman of the Board, the Chief Executive Officer, the President, the
Chief Operating Officer, the Chief Financial Officer, any Vice President, the Treasurer or the
Secretary of the Company, and any individuals serving in such positions on an interim basis. The
term Officer of any Subsidiary Guarantor has a correlative meaning.

 

9

     “Officers’ Certificate” means a certificate signed by two Officers of the Company or the
Subsidiary Guarantors, as applicable.

     “Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable
to the Trustee, who may be counsel to the Company or a Subsidiary Guarantor, which opinion may be
subject to customary assumptions and qualifications. The counsel may be an employee of or counsel
to the Company or the Trustee.

     “Paying Agent” has the meaning specified in Section 2.05.

     “Person” means any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, limited liability company, government or
any agency or political subdivision hereof or any other entity.

     “Placement Agents” means J.P. Morgan Securities Inc. and Goldman, Sachs & Co.

     “Preferred Stock”, as applied to the Capital Stock of any corporation, means Capital Stock of
any class or classes (however designated) which is preferred as to the payment of dividends, or as
to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such corporation.

     “Private Placement Memorandum” means the private placement memorandum, dated March 29, 2007,
relating to the offering by the Company of the Securities.

     “Publicly Traded Securities” has the meaning specified in the definition of “Fundamental
Change” in this Section 1.01.

     “Purchase Agreements” means the Purchase Agreements dated March 29, 2007 between the Company
and the investors parties thereto relating to the sale of the Securities.

     “QIB” means any “qualified institutional buyer” as such term is defined in Rule 144A.

     “Record Date” means, in respect of a dividend or distribution to holders of Common Stock, the
date fixed for determination of holders of Common Stock entitled to receive such dividend or
distribution.

     “Reference Property” has the meaning specified in Section 12.04(a).

     “Registrar” has the meaning specified in Section 2.05.

     “Registration Rights Agreement” means the Registration Rights Agreement dated the Issue Date
among the Company, the Subsidiary Guarantors and the Placement Agents.

     “Regular Record Date” for the payment of interest on the Securities (including Additional
Interest, if any), means the March 15 (whether or not a Business Day) immediately

 

10

preceding an interest payment date on April 1 and the September 15 (whether or not a Business
Day) immediately preceding an interest payment date on October 1.

     “Reorganization Event” has the meaning specified in Section 12.04(a).

     “Restricted Securities” has the meaning specified in Section 2.03.

     “Restricted Securities Legend” has the meaning specified in Section 2.03.

     “Restriction Release Date” has the meaning set forth in Article V of the Company’s certificate
of incorporation as of the Issue Date.

     “Rule 144A” means Rule 144A under the Securities Act.

     “Scheduled Trading Day” means a day that is scheduled to be a Trading Day on the primary U.S.
national securities exchange or market on which the Common Stock is listed or admitted for trading.

     “Securities” has the meaning ascribed to it in the second introductory paragraph of this
Indenture.

     “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
of the Commission promulgated thereunder.

     “Securities Custodian” means the custodian with respect to a Global Security (as appointed by
DTC), or any successor Person thereto and shall initially be the Trustee.

     “Securities Register” has the meaning specified in Section 2.05.

     “Settlement Amount” has the meaning specified in Section 12.01(c).

     “Settlement Notice Period” has the meaning specified in Section 12.01(c).

     “Shelf Registration Statement” shall have the meaning contemplated by and in accordance with
the terms of the Registration Rights Agreement.

     “Significant Subsidiary” means any Subsidiary that would be a “Significant Subsidiary” of the
Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the Commission.

     “Special Interest Payment Date” has the meaning specified in Section 2.15(a).

     “Special Record Date” has the meaning specified in Section 2.15(a).

     “Spin-Off” has the meaning specified in Section 12.02(c).

 

11

     “Stated Maturity” means, with respect to any security, the date specified in such security as
the fixed date on which the payment of principal of such security is due and payable, including
pursuant to any mandatory redemption provision, but shall not include any contingent obligations to
repay, redeem or repurchase any such principal prior to the date originally scheduled for the
payment thereof.

     “Stock Price” means, for purposes of Section 12.03, the price per share of Common Stock paid
in connection with a Fundamental Change pursuant to clause (1) or (2) of the definition of
“Fundamental Change”, which shall be equal to (i) if such Fundamental Change is a transaction
pursuant to clause (2) of the definition thereof, and holders of Common Stock receive only cash in
such transaction, the cash amount paid per share of Common Stock and (ii) in all other cases, the
average of the Last Reported Sale Prices of the Common Stock over the five Trading Day period
ending on the Trading Day preceding the Effective Date of such Fundamental Change.

     “Subsidiary” of the Company means (i) a corporation a majority of whose Capital Stock with
voting power, under ordinary circumstances, to elect directors is at the time, directly or
indirectly, owned by the Company, by the Company and one or more Subsidiaries of the Company or by
one or more Subsidiaries of the Company or (ii) any other Person (other than a corporation) in
which the Company, one or more Subsidiaries of the Company or the Company and one or more
Subsidiaries of the Company, directly or indirectly, at the date of determination thereof, has
greater than a 50% ownership interest.

     “Subsidiary Guarantee” means, individually, any Guarantee of the Guaranteed Obligations by a
Subsidiary Guarantor pursuant to the terms of this Indenture and any supplemental indenture hereto,
and, collectively, all such Guarantees.

     “Subsidiary Guarantors” means all existing and future Subsidiaries of the Company that from
time to time are parties to any of the Credit Facilities, whether as a borrower, co-borrower or
guarantor.

     “Successor Company” has the meaning specified in Section 4.01(a).

     “TIA” means the Trust Indenture Act of 1939, as in effect on the Issue Date, except as
provided in Section 9.03.

     “Trading Day” means:

     (a) for the purposes of Section 12.01(a), a day during which (i) trading in the Common Stock
generally occurs on the primary U.S. national securities exchange or market on which the Common
Stock is listed or admitted for trading, (ii) there is no Market Disruption Event and (iii) a Last
Reported Sale Price for the Common Stock is available on the primary U.S. national securities
exchange or market on which the Common Stock of the Company is listed or admitted for trading; and

 

12

     (b) for every other purpose, a day during which (i) trading in the Common Stock generally
occurs on the primary U.S. national securities exchange or market on which the Common Stock is
listed or admitted for trading and (ii) there is no Market Disruption Event.

     “Trading Price” of the Securities on any date of determination means the average of the
secondary market bid quotations obtained by the Bid Solicitation Agent for $5,000,000 aggregate
principal amount of the Securities at approximately 3:30 p.m., New York City time, on such
determination date from three independent nationally recognized securities dealers selected by the
Company; provided that, if only two such bids can reasonably be obtained, then the average of the
two bids shall be used, and if only one such bid can reasonably be obtained, that one bid shall be
used. If the Bid Solicitation Agent cannot reasonably obtain at least one bid for $5,000,000
aggregate principal amount of the Securities, then, for purposes of Section 12.01(a)(ii) only, the
Trading Price per $1,000 principal amount of Securities will be deemed to be less than 98% of the
product of the Last Reported Sale Price of the Common Stock and the applicable Conversion Rate.

     “Trust Officer” means, when used with respect to the Trustee, the officer within the corporate
trust department of the Trustee having direct responsibility for the administration of this
Indenture.

     “Trustee” means the party named as such in this Indenture until a successor replaces it and,
thereafter, means the successor.

     “UCC” means the Uniform Commercial Code as in effect in the State of New York.

     Section 1.02 . Incorporation by Reference of TIA. This Indenture is subject to the mandatory
provisions of the TIA which are incorporated by reference in and made a part of this Indenture.
The following TIA terms have the following meanings:

     “Commission” means the Securities and Exchange Commission.

     “indenture securities” means the Securities.

     “indenture security holder” means a Holder.

     “indenture to be qualified” means this Indenture.

     “indenture trustee” or “institutional trustee” means the Trustee.

     “obligor” on the indenture securities means the Company and any other obligor on the
Securities.

     All other TIA terms used in this Indenture that are defined by the TIA, defined in the TIA by
reference to another statute or defined by Commission rule have the meanings assigned to them by
such definitions.

 

13

     Section 1.03 . Rules of Construction. Unless the context otherwise requires:

     (a) a term has the meaning assigned to it;

     (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with
GAAP;

     (c) “or” is not exclusive;

     (d) “including” means including without limitation;

     (e) words in the singular include the plural and words in the plural include the singular;

(f) the principal amount of any non-interest bearing or other discount security at any date
shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated
such date prepared in accordance with GAAP; and

(g) the principal amount of any Preferred Stock shall be the greater of (i) the maximum
liquidation value of such Preferred Stock and (ii) the maximum mandatory redemption or mandatory
repurchase price with respect to such Preferred Stock.

ARTICLE 2

The Securities

     Section 2.01 . Title; Amount and Issue of Securities; Principal and Interest. The Securities
shall be known and designated as the “5.25% Convertible Senior Notes due 2014” of the Company. The
aggregate principal amount of Securities which may be authenticated and delivered under this
Indenture is limited to $75,000,000, except for Securities authenticated and delivered upon
registration of, transfer of, or in exchange for, or in lieu of other Securities pursuant to
Section 2.03, 2.04, 2.08 2.09, 2.10, 2.11, 2.13, 9.05, or 12.01. The Securities shall be issuable
in denominations of $1,000 or multiples thereof.

     (a) The Securities shall mature on April 1, 2014, unless earlier converted or repurchased in
accordance with the provisions hereof.

     (b) Interest on the Securities shall accrue from and including the date specified in the
Securities until the principal thereof is paid or made available for payment. Interest shall be
payable semiannually in arrears on April 1 and October 1 in each year, commencing October 1, 2007.

     (c) The Securities shall be jointly and severally Guaranteed by the Subsidiary Guarantors as
provided in Article 10.

     (d) A Holder of any Security at 5:00 p.m., New York City time, on a Regular Record Date shall
be entitled to receive interest (including any Additional Interest), on such Security on the
corresponding interest payment date, notwithstanding the conversion of such Securities at

 

14

any time
after 5:00 p.m., New York City time, on such Regular Record Date. Securities surrendered for
conversion during the period after 5:00 p.m., New York City time, on any Regular Record Date to
9:00 a.m., New York City time, on the corresponding interest payment date must be accompanied by
payment of an amount equal to the interest (including any Additional Interest) that the Holder is
to receive on the Securities. Notwithstanding the foregoing, no such payment of interest
(including any Additional Interest) need be made by any converting Holder (i) if the Company has
specified a Fundamental Change Purchase Date that is after a Regular Record Date and on or prior to
the third Trading Day after the corresponding interest payment date, or (ii) to the extent of any
overdue interest (including any Additional Interest) existing at the time of conversion of such
Security. Except as described above, no interest or Additional Interest on converted Securities
will be payable by the Company on any interest payment date subsequent to the date of conversion,
and delivery of the cash and/or shares of Common Stock pursuant to Article 12 hereunder, together
with any cash payment for any fractional share, upon conversion will be deemed to satisfy in full
the Company’s obligation to pay the principal amount of the Securities and accrued and unpaid
interest and Additional Interest, if any, to, but not including, the related Conversion Date (but
excluding overdue interest, if any).

     (e) Principal of and interest (including Additional Interest, if any) on Global Securities
shall be payable to DTC in immediately available funds.

     (f) Principal on Definitive Securities shall be payable at the office or agency of the Company
maintained for such purpose, which initially shall be the corporate trust office of the Trustee at
its agency in New York, New York. Interest (including Additional Interest, if any) on Definitive
Securities will be payable (i) to Holders having an aggregate principal amount of $5,000,000 or
less, by check mailed to the Holders of these Securities and (ii) to Holders having an aggregate
principal amount of more than $5,000,000, either by check mailed to each Holder or, upon
application by a Holder to the Registrar not later than the relevant Regular Record Date, by wire
transfer in immediately available funds to such Holder’s account within the United States, which
application shall remain in effect until the Holder notifies, in writing, the Registrar to the
contrary.

     Section 2.02 . Form of Securities. Except as otherwise provided pursuant to this Section 2.02, the
Securities are issuable in fully registered form without coupons in substantially the form of
Exhibit A hereto, with such applicable legends as are provided for in Section 2.03. The Securities
are not issuable in bearer form. The terms and provisions contained in the form of Security shall
constitute, and are hereby expressly made, a part of this Indenture and to the extent applicable,
the Company, the
Subsidiary Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby. Any of the Securities may have such
letters, numbers or other marks of identification and such notations, legends and endorsements as
the officers executing the same may approve (execution thereof to be conclusive evidence of such
approval) and as are not inconsistent with the provisions of this Indenture, or as may be required
to comply with any law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any securities exchange or

 

15

automated quotation system on which the Securities may be
listed or designated for issuance, or to conform to usage.

     The Securities shall be issued initially in the form of one or more permanent Global
Securities, with the applicable legends as provided in Section 2.03. Each Global Security shall be
duly executed by the Company and authenticated and delivered by the Trustee, and shall be
registered in the name of DTC or its nominee and retained by the Trustee, as Securities Custodian,
at its corporate trust office, for credit to the accounts of the Agent Members holding the
Securities evidenced thereby. The aggregate principal amount of the Global Securities may from
time to time be increased or decreased by adjustments made on the records of the Trustee, as
Securities Custodian, and of DTC or its nominee, as hereinafter provided.

     Section 2.03 . Legends. Each Security issued hereunder shall, upon issuance, bear the legend set
forth in Section 2.03(i), and each Common Stock certificate representing shares of the Common Stock
issued upon conversion of any Security issued hereunder, shall, upon issuance, unless as otherwise
set forth below, bear the legend set forth in Section 2.03(ii) (each such legend, a “Restricted
Securities Legend”), and such legend shall not be removed except as provided in Section 2.03(iii).
Each Security that bears or is required to bear the Restricted Securities Legend set forth in
Section 2.03(i) (together with each Common Stock certificate representing shares of the Common
Stock issued upon conversion of such Security that bears or is required to bear the Restricted
Securities Legend set forth in Section 2.03(ii), collectively, the “Restricted Securities”) shall
be subject to the restrictions on transfer set forth in this Section 2.03 (including the Restricted
Securities Legend set forth below), and the Holder of each such Restricted Security, by such
Holder’s acceptance thereof, shall be deemed to have agreed to be bound by all such restrictions on
transfer.

     As used in Section 2.03, the term “transfer” encompasses any sale, pledge, transfer or other
disposition whatsoever of any Restricted Security.

     (i) Restricted Securities Legend for Securities. Except as provided in Section
2.03(iii), any certificate evidencing such Security (and all Securities issued in
exchange therefor or substitution thereof, other than stock
certificates representing shares of the Common Stock, if any, issued upon conversion thereof which shall bear the
legend set forth in Section 2.03(ii), if applicable) shall bear a Restricted Securities
Legend in substantially the following form:

“THIS SECURITY AND THE RELATED GUARANTEES AND THE SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE RELATED GUARANTEES, THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED
OF IN THE

 

16

ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, REGISTRATION.

THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES THEREOF UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION) (THE “RESALE RESTRICTION PERIOD”), ONLY (A) TO EDDIE BAUER
HOLDINGS, INC. (THE “COMPANY”), OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (C) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, INCLUDING UNDER
RULE 144, IF AVAILABLE, SUBJECT IN EACH OF THE FOREGOING CASES TO ANY REQUIREMENT OF
LAW THAT THE DISPOSITION OF ITS PROPERTY OR THE PROPERTY OF SUCH INVESTOR ACCOUNT OR
ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL. EACH PURCHASER ACKNOWLEDGES
THAT PRIOR TO THE EXPIRATION OF THE RESALE RESTRICTION PERIOD, THE COMPANY AND THE
TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF
THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER
SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER EXPIRATION OF THE
RESALE RESTRICTION PERIOD.”

     (ii) Restricted Securities Legend for the Common Stock Issued Upon Conversion of the
Securities. Each stock certificate representing Common Stock issued upon conversion of
Securities bearing a Restricted Securities Legend will, subject to the availability of a
Shelf Registration Statement and registration thereunder as set forth in the Registration
Rights Agreement, bear the following legend:

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. ACCORDINGLY, NEITHER THIS

 

17

SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.

THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES THEREOF UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION) (THE “RESALE RESTRICTION PERIOD”), ONLY (A) TO EDDIE BAUER
HOLDINGS, INC. (THE “COMPANY”), OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR
(C) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, INCLUDING UNDER RULE 144, IF AVAILABLE, SUBJECT IN EACH OF THE
FOREGOING CASES TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF ITS PROPERTY OR
THE PROPERTY OF SUCH INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN ITS OR
THEIR CONTROL. EACH PURCHASER ACKNOWLEDGES THAT PRIOR TO THE EXPIRATION OF THE
RESALE RESTRICTION PERIOD, THE COMPANY AND THE TRANSFER AGENT RESERVE THE RIGHT TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER EXPIRATION OF THE RESALE RESTRICTION PERIOD.”

     (iii) Removal of the Restricted Securities Legends. The Restricted Securities
Legend may be removed from any Security or any Common Stock
certificate representing shares of the Common Stock issued upon conversion of any Security if there is delivered
to the Company such satisfactory evidence, which may include an opinion of independent
counsel, as may be reasonably required by the Company, that neither such legend nor the
restrictions on transfer set forth therein are required to ensure that transfers of such
Security or shares of the Common Stock issued upon
conversion of Securities, as the case may be, will not violate the registration
requirements of the Securities Act or the registration or qualification requirements
under any state securities laws. Upon provision of such satisfactory evidence, at the
written direction of the Company, (x) in the case of a Security, the Trustee shall
authenticate and deliver in exchange for such Security another Security or Securities
having an equal aggregate principal amount that does not bear such legend or (y) in the
case of a Common Stock certificate representing shares of the Common Stock, the transfer
agent for the Common Stock shall counter-sign and deliver in exchange for the Common
Stock certificate or certificates representing such shares of Common Stock

 

18

bearing such
legend, one or more new Common Stock certificates representing a like
aggregate number of shares of Common Stock that do not bear such legend. If the Restricted Securities Legend
has been removed from a Security or Common Stock certificates representing shares of the
Common Stock issued upon conversion of any Security as provided above, no other Security
issued in exchange for all or any part of such Security, or no other Common Stock
certificates issued in exchange for such Common Stock, shall bear such legend, unless the
Company has reasonable cause to believe that such other Security is a “restricted
security” (or such shares of Common Stock are “restricted securities”) within the meaning
of Rule 144 and instructs the Trustee or the transfer agent for the Common Stock, as
applicable, in writing to cause a Restricted Securities Legend to appear thereon.

     Any Security (or Security issued in exchange or substitution therefor) as to which the
conditions for removal of the Restricted Securities Legend set forth in such Restricted Securities
Legend or Section 2.03(i) have been satisfied may, upon surrender of such Security for exchange to
the Registrar in accordance with the provisions of Section 2.08, be exchanged for a new Security or
Securities, of like tenor and aggregate principal amount, which shall not bear the Restricted
Securities Legend required by Section 2.03(i).

     Any Common Stock certificate representing shares of Common Stock issued upon conversion of any
Security as to which the conditions for removal of the Restricted Securities Legend set forth in
the Restricted Securities Legend or Section 2.03(ii) have been satisfied may, upon surrender of the
Common Stock certificates representing such shares of Common Stock for exchange in accordance with
the procedures of the transfer agent for the Common Stock, be exchanged for a new Common Stock
certificate or certificates representing a like aggregate number of shares of Common Stock, which
shall not bear the Restricted Securities Legend.

     (iv) Global Security Legend. Each Global Security shall also bear the following
legend (the “Global Security Legend”) on the face thereof:

“UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS
OF

 

19

THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO IN THE TERMS OF SECURITIES ATTACHED HERETO.”

     Section 2.04 . Execution and Authentication. One Officer shall sign the Securities for the
Company by manual or facsimile signature. If an Officer whose signature is on a Security no longer
holds that office at the time the Trustee authenticates the Security, the Security shall be valid
nevertheless.

     A Security shall not be valid until an authorized signatory of the Trustee manually
authenticates the Security. Upon the written order of the Company signed by an Officer of the
Company (a “Company Order”), the Trustee shall authenticate a Security executed by the Company.
The signature of the Trustee on a Security shall be conclusive evidence that such Security has been
duly and validly authenticated and issued under this Indenture. A Security shall be dated the date
of its authentication.

     The Trustee may appoint an agent (the “Authenticating Agent”) reasonably acceptable to the
Company to authenticate the Securities. Any such instrument shall be evidenced by an instrument
signed by a Trust Officer of the Trustee, a copy of which shall be furnished to the Company.
Unless limited by the terms of such appointment, any such Authenticating Agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by
the Trustee includes authentication by the Authenticating Agent. An Authenticating Agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and demands.

     In case the Company or any Subsidiary Guarantor, pursuant to Article 4, shall be consolidated
or merged with or into any other Person or shall convey, transfer, sell, lease or otherwise dispose
of its properties and assets substantially as an entirety to any Person, and the successor Person
resulting from such consolidation, or surviving such merger, or into which the Company or any
Subsidiary Guarantor shall have been merged, or the Person which shall have received a conveyance,
transfer, lease or other disposition as aforesaid, shall have executed an indenture supplemental
hereto with the Trustee pursuant to Article 4, any of the Securities authenticated or delivered
prior to such consolidation, merger, conveyance, transfer, sale, lease or other disposition may,
from time to time, at the request of the successor Person, be exchanged for other Securities
executed in the name of the successor Person with such changes in
phraseology and form as may be appropriate, but otherwise in substance of like tenor as the
Securities surrendered for such exchange and of like principal amount; and the Trustee, upon
Company Order of the successor Person, shall authenticate and deliver Securities as specified in
such order for the purpose of such exchange. If Securities shall at any time be authenticated and
delivered in any new name of a successor Person pursuant to this Section 2.04 in exchange or
substitution for or upon registration of transfer of any Securities, such successor Person, at the
option of the Holders but without expense to them, shall provide for the exchange of all Securities
at the time outstanding for Securities authenticated and delivered in such new name.

 

 20 

     Section 2.05 . Registrar and Paying Agent. The Company shall maintain, or cause to be maintained,
an office or agency where Securities may be presented for registration of transfer or for exchange
(the “Registrar”) and an office or agency where Securities may be presented for payment (the
“Paying Agent”). The Registrar shall keep a register of the Securities and of their transfer and
exchange (the “Securities Register”). The Company may have one or more co-registrars and one or
more additional paying agents. The term “Paying Agent” includes any additional paying agent and
the term “Registrar” includes any co-registrar.

     The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent
or co-registrar not a party to this Indenture, which shall incorporate the terms of the TIA. The
agreement shall implement the provisions of this Indenture that relate to such agent. The Company
shall notify the Trustee of the name and address of each such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to
appropriate compensation therefor pursuant to Section 7.07. The Company or any of its wholly owned
Domestic Subsidiaries may act as Paying Agent, Registrar, co-registrar or transfer agent.

     The Company initially appoints the Trustee as Registrar and Paying Agent for the Securities.
The Company may remove any Registrar or Paying Agent upon written notice to such Registrar or
Paying Agent and to the Trustee; provided, however, that no such removal shall become effective
until (i) acceptance of any appointment by a successor as evidenced by an appropriate agreement
entered into by the Company and such successor Registrar or successor Paying Agent, as the case may
be, and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve
as Registrar or Paying Agent until the appointment of a successor in accordance with clause (i)
above. The Registrar or Paying Agent may resign at any time upon written notice to the Company and
the Trustee.

     Section 2.06 . Paying Agent to Hold Money in Trust. By no later than 11:00 a.m., New York City
time, on the date on which any principal of or interest (including any Additional Interest) on any
Security is due and payable, the Company shall deposit with the Paying Agent a sum sufficient in
immediately available funds to pay such principal or interest (including any Additional Interest),
when due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing
that such Paying Agent shall hold
in trust for the benefit of Holders or the Trustee all money held by such Paying Agent for the
payment of principal of or interest (including any Additional Interest) on the Securities and shall
notify the Trustee in writing of any default by the Company in making any such payment. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as Paying
Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent
(other than the Trustee) to pay all money held by it to the Trustee and to account for any funds
disbursed by such Paying Agent. Upon complying with this Section 2.06, the Paying Agent (if other
than the Company or a Subsidiary) shall have no further liability for the money delivered to the
Trustee. Upon any bankruptcy, reorganization or similar proceeding with respect to the Company,
the Trustee shall serve as Paying Agent for the Securities.

 

21

     Any money deposited with the Trustee or any Paying Agent, or then held by the Company or the
Subsidiary Guarantors, in trust for the payment of the principal of or interest (including
Additional Interest, if any) on the Securities and remaining unclaimed for two years after such
principal or interest (including Additional Interest, if any) has become due and payable shall be
paid to the Company or Subsidiary Guarantors on request, or (if then held by the Company or a
Subsidiary Guarantor) shall be discharged from such trust; and the holder of Securities shall
thereafter, as an unsecured general creditor, look only to the Company and the Subsidiary
Guarantors, as the case may be, for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the Company or Subsidiary
Guarantors, as the case may be, as trustee thereof, shall thereupon cease, provided, however, that
the Trustee or such Paying Agent, before being required to make any such repayment, may at the
expense of the Company or Subsidiary Guarantors, as the case may be, cause to be published once, in
any newspaper of general circulation in the borough of Manhattan, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than 30 days from the
date of such publication or mailing, any unclaimed balance of such money then remaining will be
repaid to the Company or Subsidiary Guarantors, as the case may be.

     Section 2.07 . Holder Lists. The Registrar shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of Holders and shall
otherwise comply with TIA § 312(a). If the Trustee is not the Registrar, or to the extent
otherwise required under the TIA, the Company, on its own behalf and on behalf of each of the
Subsidiary Guarantors, shall furnish or cause the Registrar to furnish to the Trustee, in writing
at least five Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Holders and the Company shall otherwise comply
with TIA § 312(a).

     Section 2.08 . General Provisions Relating to Transfer and Exchange. The Securities are issuable
only in registered form. A Holder may transfer a Security only by written application to the
Registrar stating the name of the proposed transferee and otherwise complying with the terms of
this Indenture. No such transfer shall be effected until, and such
transferee shall succeed to the rights of a Holder only upon, final acceptance and registration of
the transfer by the Registrar in the Securities Register. Furthermore, any Holder of a Global
Security shall, by acceptance of such Global Security, agree that transfers of beneficial interests
in such Global Security may be effected only through a book-entry system maintained by the Holder
of such Global Security (or its agent) and that ownership of a beneficial interest in the Global
Security shall be required to be reflected in a book-entry.

     When Securities are presented to the Registrar with a request to register the transfer or to
exchange them for an equal aggregate principal amount of Securities of other authorized
denominations, the Registrar shall register the transfer or make the exchange as requested if its
requirements for such transactions are met (including that such Securities are duly endorsed or
accompanied by a written instrument of transfer duly executed by the Holder thereof or by an
attorney who is authorized in writing to act on behalf of the Holder). Subject to Section 2.04, to

 

22

permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall
authenticate Securities at the Registrar’s request. No service charge shall be made for any
registration of transfer or exchange of the Securities, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or other similar governmental charge payable upon
exchanges in connection with which a Security is issued to a Person other than the Holder
submitting the Security for exchange).

     Neither the Company nor the Registrar shall be required to exchange or register a transfer of
any Securities surrendered for conversion or, if a portion of any Security is surrendered for
conversion, the portion thereof surrendered for conversion.

     The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this Indenture or under applicable law with respect
to any transfer of any interest in any Security (including any transfers between beneficial owners
of any Global Security) other than to require delivery of such certificates and other documentation
or evidence as are expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance as to form with the
express requirements hereof.

     Section 2.09 . Book-Entry Provisions for the Global Securities. (a) The Global Securities
initially shall:

	 	(i)	 	be registered in the name of DTC (or a nominee thereof);
	 
	 	(ii)	 	be delivered to the Trustee as Securities Custodian;
	 
	 	(iii)	 	bear the Restricted Securities Legend set forth in Section 2.03(i); and
	 
	 	(iv)	 	bear the Global Security Legend set forth in Section 2.03(iv).

     Members of, or participants in, DTC (“Agent Members”) shall have no rights under this
Indenture with respect to any Global Security held on their behalf by DTC, or the Trustee as its
custodian, or under such Global Security, and DTC may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of such Global Security for all
purposes whatsoever. Notwithstanding the foregoing, nothing contained herein shall prevent the
Company, the Trustee or any agent of the Company or Trustee from giving effect to any written
certification, proxy or other authorization furnished by DTC or impair, as between DTC and the
Agent Members, the operation of customary practices governing the exercise of the rights of a
Holder of any Security.

     (b) The Holder of a Global Security may grant proxies and otherwise authorize any Person,
including Agent Members and Persons that may hold interests through Agent Members, to take any
action which a Holder is entitled to take under this Indenture or the Securities.

 

23

     (c) A Global Security may not be transferred, in whole or in part, to any Person other than
DTC (or a nominee thereof), and no such transfer to any such other Person may be registered.
Beneficial interests in a Global Security may be transferred in accordance with the rules and
procedures of DTC and the provisions of Section 2.10.

     (d) If at any time:

     (i) DTC notifies the Company in writing that it is unwilling or unable to continue
to act as depositary for the Global Securities and a successor depositary for the Global
Securities is not appointed by the Company within 90 days of such notice;

     (ii) DTC ceases to be registered as a “clearing agency” under the Exchange Act and a
successor depositary for the Global Securities is not appointed by the Company within 90
days of such cessation;

     (iii) the Company, at its option, notifies the Trustee in writing that it elects to
cause the issuance of the Definitive Securities under this Indenture in exchange for all
or any part of the Securities represented by a Global Security or Global Securities,
subject to the procedures of DTC; or

     (iv) an Event of Default has occurred and is continuing and the Registrar has
received a request from DTC or the Company for the issuance of Definitive Securities in
exchange for such Global Security or Global Securities;

DTC shall surrender such Global Security or Global Securities to the Trustee for cancellation and
the Company shall execute, and the Trustee, upon receipt of an Officers’ Certificate and Company
Order for the authentication and delivery of Securities, shall authenticate and make available for
delivery in exchange for such Global Security or Global Securities, Definitive Securities in an
aggregate principal amount equal to the aggregate principal amount of such Global Security or
Global Securities. Such Definitive Securities shall be registered in such
names as DTC shall identify in writing as the beneficial owners of the Securities represented by
such Global Security or Global Securities (or any nominee thereof).

     (e) Notwithstanding the foregoing, in connection with any transfer of beneficial interests in
a Global Security to the beneficial owners thereof pursuant to Section 2.09(d), the Registrar shall
reflect on its books and records the date and a decrease in the principal amount of such Global
Security in an amount equal to the principal amount of the beneficial interests in such Global
Security to be transferred.

     Section 2.10 . Special Transfer Provisions. Unless a Security is no longer a Restricted Security,
the following provisions shall apply to any sale, pledge or other transfer of such Securities:

     (a) Transfer of Securities to a QIB. The following provisions shall apply with respect to the
registration of any proposed transfer of Securities to a QIB:

 

24

     (i) If the Securities to be transferred consist of a beneficial interest in the
Global Securities, the transfer of such interest may be effected only through the
book-entry systems maintained by DTC.

     (ii) If the Securities to be transferred consist of Definitive Securities, the
Registrar shall register the transfer if such transfer is being made by a proposed
transferor who has checked the box provided for on the form of Security stating (or has
otherwise advised the Company and the Registrar in writing) that the sale has been made
in compliance with the provisions of Rule 144A to a transferee who has signed a
certification stating or has otherwise advised the Company and the Registrar in writing
that:

     (A) it is purchasing the Securities for its own account or an account with
respect to which it exercises sole investment discretion;

     (B) it and any such account is a QIB within the meaning of Rule 144A;

     (C) it is aware that the sale to it is being made in reliance on Rule 144A;

     (D) it acknowledges that it has received such information regarding the
Company as it has requested pursuant to Rule 144A or has determined not to request
such information; and

     (E) it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration provided by Rule
144A.

     (b) General. By its acceptance of any Security bearing the Restricted Securities Legend, each
Holder of such a Security acknowledges the restrictions on transfer of such Security set forth in
this Indenture and agrees that it will transfer such Security only as provided in this Indenture.
The Registrar shall not register a transfer of any Security unless such transfer complies with the
restrictions on transfer of such Security set forth in this Indenture. The Registrar shall be
entitled to receive and rely on written instructions from the Company verifying that such transfer
complies with such restrictions on transfer. In connection with any transfer of Securities, each
Holder agrees by its acceptance of the Securities to furnish the Registrar or the Company such
certifications, legal opinions or other information as either of them may reasonably require to
confirm that such transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act; provided that the Registrar shall
not be required to determine (but may rely on a determination made by the Company with respect to)
the sufficiency of any such certifications, legal opinions or other information.

 

25

     The Registrar shall retain copies of all certifications, letters, notices and other written
communications received pursuant to Section 2.09 hereof or this Section 2.10. The Company shall
have the right to inspect and make copies of all such letters, notices or other written
communications at any reasonable time upon the giving of reasonable written notice to the
Registrar.

     Section 2.11 . Mutilated, Destroyed, Lost or Stolen Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the Security has been lost,
destroyed or wrongfully taken, in the absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall issue and the Trustee shall
authenticate a replacement Security if the requirements of Section 8-405 of the UCC are met, such
that the Holder (a) notifies the Company or the Trustee within a reasonable time after such Holder
has notice of such loss, destruction or wrongful taking and the Registrar has not registered a
transfer prior to receiving such notification, (b) makes such request to the Company or Trustee
prior to the Security being acquired by a protected purchaser as defined in Section 8-303 of the
UCC and (c) satisfies any other reasonable requirements of the Trustee. Such Holder shall furnish
an indemnity bond sufficient in the judgment of the Company and the Trustee to protect the Company,
the Trustee, the Paying Agent and the Registrar from any loss which any of them may suffer if a
Security is replaced, and the Company shall execute and upon Company Order the Trustee shall
authenticate and make available for delivery, in exchange for any such mutilated Security or in
lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal
amount, bearing a number not contemporaneously outstanding.

     In case any such mutilated, destroyed, lost or stolen Security has become due and payable, the
Company in its discretion may, instead of issuing a new Security, pay such Security.

     Upon the issuance of any new Security under this Section 2.11, the Company may require the
payment by the Holder of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees and expenses of
the Trustee) in connection therewith.

     Every new Security issued pursuant to this Section 2.11 in lieu of any mutilated, destroyed,
lost or stolen Security shall constitute an original additional contractual obligation of the
Company and any other obligor upon the Securities, whether or not the mutilated, destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits
of this Indenture equally and ratably with any and all other Securities duly issued hereunder.

     The provisions of this Section 2.11 are exclusive and shall preclude (to the extent lawful)
all other rights and remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities.

     Section 2.12 . Outstanding Securities. Securities outstanding at any time are all Securities
authenticated by the Trustee except for those cancelled by it, those delivered to it for
cancellation and those described in this Section 2.12 as not outstanding. A Security does not

 

26

cease to be outstanding in the event the Company or a Subsidiary of the Company holds the Security;
provided, however, that (i) for purposes of determining which Securities are outstanding for
consent or voting purposes hereunder, the provisions of Section 13.06 shall apply and (ii) in
determining whether the Trustee shall be protected in making a determination whether the Holders of
the requisite principal amount of outstanding Securities are present at a meeting of Holders of
Securities for quorum purposes or have consented to or voted in favor of any request, demand,
authorization, direction, notice, consent, waiver, amendment or modification hereunder, or relying
upon any such quorum, consent or vote, only Securities which a Trust Officer of the Trustee
actually knows to be held by the Company or an Affiliate of the Company shall not be considered
outstanding.

     If a Security is replaced, paid pursuant to Section 2.11 or converted and such conversion is
settled under Article 12, and it ceases to be outstanding unless the Trustee and the Company
receive proof satisfactory to them that the replaced Security is held by a bona fide purchaser.

     If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a
Fundamental Change Purchase Date or at Stated Maturity, money sufficient to pay all principal and
interest (including any Additional Interest) payable on that date with respect to the Securities
(or portions thereof) to be purchased or maturing, as the case may be, and the Paying Agent is not
prohibited from paying such money to the Holders on that date pursuant to the terms of this
Indenture, then on and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.

     Section 2.13 . Temporary Securities. In the event that Definitive Securities are to be issued
under the terms of this Indenture, until such Definitive Securities are ready for delivery, the
Company may prepare and upon receipt of a
Company Order the Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of Definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the Company shall
prepare and upon receipt of a Company Order the Trustee shall authenticate Definitive Securities.
After the preparation of Definitive Securities, the temporary Securities shall be exchangeable for
Definitive Securities upon surrender of the temporary Securities at any office or agency maintained
by the Company for that purpose and such exchange shall be without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities, the Company shall execute, and
the Trustee shall authenticate and make available for delivery in exchange therefor, one or more
Definitive Securities representing an equal principal amount of Securities. Until so exchanged,
the Holder of temporary Securities shall in all respects be entitled to the same benefits under
this Indenture as a Holder of Definitive Securities.

     Section 2.14 . Cancellation. The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities
surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else
shall cancel all Securities surrendered for registration of transfer, exchange, payment or
cancellation and dispose of such Securities in accordance with its internal policies and customary
procedures including delivery of a certificate (a “Certificate of Destruction”)

 

27

describing such
Securities disposed of (subject to the record retention requirements of the Exchange Act) or
deliver canceled Securities to the Company pursuant to written direction by an Officer. The
Company may not issue new Securities to replace Securities it has paid for or delivered to the
Trustee for cancellation for any reason other than in connection with a transfer or exchange.

     At such time as all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, transferred, repurchased, canceled or converted, such Global Security shall
be returned by DTC to the Trustee for cancellation or retained and canceled by the Trustee. At any
time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for
Definitive Securities, transferred in exchange for an interest in another Global Security,
repurchased, canceled or converted, the principal amount of Securities represented by such Global
Security shall be reduced and an adjustment shall be made on the books and records of the Trustee
(if it is then the Securities Custodian for such Global Security) with respect to such Global
Security, by the Trustee or the Securities Custodian, to reflect such reduction.

     Any Securities repurchased by the Company may, at its option, be surrendered to the Trustee
for cancellation, but in no event may any such Securities be reissued or resold by the Company.

     Section 2.15 . Payment of Interest; Defaulted Interest. Interest (including any Additional
Interest) on any Security which is payable, and is punctually paid or duly provided for, on any
interest payment date shall be paid to the Person in whose name such Security (or one or more
predecessor Securities) is registered at 5:00 p.m., New York
City time, on the Regular Record Date for such payment at the office or agency of the Company
maintained for such purpose pursuant to Section 2.05; provided, however, that interest will be paid
at the Stated Maturity only to the Person to whom the principal amount is paid.

     Any interest on any Security which is payable, but is not paid when the same becomes due and
payable and such nonpayment continues for a period of 30 calendar days, shall forthwith cease to be
payable to the Holder on the Regular Record Date, and such defaulted interest and (to the extent
lawful) interest on such defaulted interest at the annual rate borne by the Securities plus 1%
(such defaulted interest and interest thereon herein collectively called “Defaulted Interest”)
shall be paid by the Company at its election, in each case, as provided in clause (a) or (b) below:

     (a) The Company may elect to make payment of any Defaulted Interest to the Persons in whose
names the Securities (or their respective predecessor Securities) are registered at 5:00 p.m., New
York City time, on a Special Record Date (as defined below) for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each Security and the date (not
less than 30 calendar days after such notice) of the proposed payment (the “Special Interest
Payment Date”), and at the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee for such deposit prior to the date

 

28

of the proposed
payment, such money when deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a record date
(the “Special Record Date”) for the payment of such Defaulted Interest which shall be not more than
15 calendar days and not less than 10 calendar days prior to the Special Interest Payment Date and
not less than 10 calendar days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special Record Date, and in the
name and at the expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor to be
given in the manner provided for in Section 13.02, not less than 10 calendar days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special
Record Date and Special Interest Payment Date therefor having been so given, such Defaulted
Interest shall be paid on the Special Interest Payment Date to the Persons in whose names the
Securities (or their respective predecessor Securities) are registered at 5:00 p.m., New York City
time, on such Special Record Date and shall no longer be payable pursuant to the following clause
(b).

     (b) The Company may make payment of any Defaulted Interest in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment
shall be deemed practicable by the Trustee.

     Subject to the foregoing provisions of this Section 2.15, each Security delivered under this
Indenture upon registration of, transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest (including any Additional Interest) accrued and unpaid, and
to accrue, which were carried by such other Security.

     Section 2.16 . Computation of Interest. Interest (including any Additional Interest) on the
Securities shall be computed on the basis of a 360-day year of twelve 30-day months.

     Section 2.17 . CUSIP and ISIN Numbers. The Company in issuing the Securities may use “CUSIP” and
“ISIN” numbers (if then generally in use) and, if so, the Trustee shall use “CUSIP” and “ISIN”
numbers in notices as a convenience to Holders; provided, however, that any such notice may state
that no representation is made as to the correctness of such numbers either as printed on the
Securities or as contained in any notice and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such notice shall not be affected by any
defect in or omission of such CUSIP or ISIN numbers. The Company shall promptly notify the Trustee
in writing of any change in the CUSIP and ISIN numbers.

ARTICLE 3

Covenants

     Section 3.01 . Payment of Securities. The Company shall promptly pay the principal of and
interest (including any Additional Interest) on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest (including any Additional
Interest)

 

29

shall be considered paid on the date due if on such date the Trustee or the Paying Agent
holds in accordance with this Indenture immediately available funds sufficient to pay all principal
and interest (including any Additional Interest) then due and the Trustee or the Paying Agent, as
the case may be, is not prohibited from paying such money to the Holders on that date pursuant to
the terms of this Indenture.

     To the extent lawful, the Company shall pay interest on overdue principal at the annual rate
borne by the Securities plus 1%, and it shall pay interest on overdue installments of interest
(including any Additional Interest) at the same rate.

     Notwithstanding anything to the contrary contained in this Indenture, the Company may, to the
extent it is required to do so by law, deduct or withhold income or other similar taxes imposed by
the United States of America from principal or interest (including any Additional Interest)
payments hereunder.

     Section 3.02 . Financial Statements. (a) In the event and for so long as the Company is not subject to Section 13 or 15(d) of the
Exchange Act, the Company shall furnish to any Holder, beneficial owner or prospective purchaser of
the Securities or the Common Stock issued upon conversion of the Securities, upon such Person’s
request, the information, if any, required under Rule 144A(d)(4) under the Securities Act until
such time as such securities are no longer ''restricted securities’’ within the meaning of Rule 144
under the Securities Act, assuming these securities have not been owned by an affiliate of the
Company.

     (b) The Company covenants and agrees to provide to the Trustee such reports, information and
documents, if any, as required by TIA §314(a).

     (c) Delivery of such reports, information and documents to the Trustee is for informational
purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained therein, including the
Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to
rely exclusively on Officers’ Certificates).

     Section 3.03 . Subsidiary Guarantors. The Company will cause each Subsidiary that is not a
Subsidiary Guarantor and that becomes a party to any of the Credit Facilities, whether as a
borrower, a co-borrower or a guarantor, to execute and deliver to the Trustee a supplemental
indenture substantially in the form of Exhibit B pursuant to which such Subsidiary will become a
Subsidiary Guarantor and fully and unconditionally Guarantee, jointly and severally with the other
Subsidiary Guarantors, the Guaranteed Obligations, as provided under Article 10.

     Section 3.04 . Maintenance of Office or Agency. The Company will maintain, or cause to be
maintained, an office or agency where the Securities may be presented or surrendered for payment,
where, if applicable, the Securities may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company will give prompt written notice to the Trustee of any change
in the location of any such office or agency. If at any time the Company shall fail

 

30

to maintain
any such required office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.

     The Company may also from time to time designate one or more other offices or agencies where
the Securities may be presented or surrendered for any or all such purposes and may from time to
time rescind any such designation. The Company will give prompt written notice to the Trustee of
any such designation or rescission and any change in the location of any such other office or
agency.

     Section 3.05 . Corporate Existence. Except as otherwise provided in Article 4, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect (i) its corporate existence and (ii) the
material rights (charter and statutory), licenses and franchises of the Company, except, in the
case of clause (ii), to the extent the Board of Directors determines it no longer desirable (and
the approval by the Board of Directors of any action or omission directly or indirectly resulting
in the loss of any such right, license or franchise shall be conclusive evidence of such
determination, and no specific action of the Board of Directors shall be required to satisfy clause
(ii)).

     Section 3.06 . Payment of Taxes and Other Claims. The Company will pay or discharge or cause to
be paid or discharged, before the same shall become delinquent, (i) all material taxes, assessments
and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income,
profits or property of the Company or any Subsidiary and (ii) all lawful claims for labor,
materials and supplies, which, if unpaid, might by law become a material liability or lien upon the
property of the Company or any Subsidiary; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith by appropriate
proceedings and for which appropriate reserves, if necessary (in the good faith judgment of
management of the Company), are being maintained in accordance with GAAP or where the failure to
effect such payment will not be disadvantageous to the Holders.

     Section 3.07 . Compliance Certificate. The Company shall deliver to the Trustee within 120
calendar days after the end of each fiscal year of the Company a certificate of the principal
executive officer, principal financial officer or principal accounting officer of the Company,
stating whether or not, to the knowledge of such officer, any Default or Event of Default occurred
during such period and if so, describing each Default or Event of Default, its status and the
action the Company is taking or proposes to take with respect thereto. The Company also shall
comply with TIA § 314(a)(4).

     Section 3.08 . Further Instruments and Acts. Upon request of the Trustee, the Company will
execute and deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of this Indenture.

 

31

     Section 3.09 . Statement by Officers as to Default. The Company shall deliver to the Trustee, as
soon as possible and in any event within 30 calendar days after the Company becomes aware of the
occurrence of any Event of Default or Default, an Officers’ Certificate setting forth the details
of such Event of Default or Default, its status and the action which the Company proposes to take
with respect thereto.

     Section 3.10 . Additional Interest. If Additional Interest is payable by the Company pursuant to
the Registration Rights Agreement, the Company shall deliver to the Trustee an Officers’
Certificate to that effect stating (i) the amount of such Additional Interest that is payable and
(ii) the date on which such Additional Interest is payable. Unless and until a Trust Officer of
the Trustee receives such a certificate, the Trustee may assume without inquiry that no Additional
Interest is payable. If the Company has paid Additional Interest directly to the Persons entitled
to it, the Company shall deliver to the Trustee an Officers’ Certificate setting forth the
particulars of such payment.

     Section 3.11 . Stay, Extension and Usury Laws. The Company covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take benefit or advantage of, any stay, extension or usury law or other law which would prohibit
or forgive the Company from paying all or any portion of the principal of or interest (including
any Additional Interest) on the Securities as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of this Indenture.
The Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage
of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee, but will suffer and permit the execution
of every such power as though no such law had been enacted.

     Section 3.12 . No Amendment of Ownership Limitations. The Company covenants that it will take no
action that would have the effect of extending past January 4, 2009, or otherwise imposing,
limitations on ownership and transfer of securities of the Company set forth in the Company’s
certificate of incorporation.

ARTICLE 4

Successor Company

     Section 4.01 . Consolidation, Merger and Sale of Assets of the Company. The Company shall not
consolidate with or merge with or into, or, in one transaction or any series of related
transactions, convey, transfer, sell, lease or dispose of all or substantially all of its
properties and assets to, any Person (if the Company is not the resulting, surviving or transferee
Person), unless:

     (a) the resulting, surviving or transferee Person (the “Successor Company”) is a corporation
or limited liability company organized and existing under the laws of the United States of America,
any State thereof or the District of Columbia, and the Successor Company expressly assumes by
supplemental indenture, executed and delivered to the Trustee, in form reasonably satisfactory to
the Trustee, all of the obligations of the Company under the Securities,

 

32

this Indenture and, to the extent that it is otherwise still operative, by supplemental
agreement all of the Company’s obligations under the Registration Rights Agreement;

     (b) immediately after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing; and

     (c) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, stating that such consolidation, merger, conveyance, transfer, sale, lease or disposition
complies with this Indenture.

     For purposes of this Section 4.01, the conveyance, transfer, sale, lease or disposition of all
or substantially all of the properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or
substantially all of the properties and assets of the Company on a consolidated basis, shall be
deemed to be the transfer of all or substantially all of the properties and assets of the Company.

     The Successor Company will succeed to, and be substituted for, and may exercise every right
and power of, the Company under the Securities and this Indenture with the same effect as if such
Successor Company had been named as the Company in the Indenture. Upon such substitution, except
in the case of a lease, the Company will be released from the obligations under the Securities.

     Section 4.02 . Consolidation, Merger and Sale of Assets of the Subsidiary Guarantors. Subject to
Section 10.02, each Subsidiary Guarantor shall not consolidate with or merge with or into, or
convey, transfer, sell, lease or dispose of all or substantially all its assets to, another Person
(if such Subsidiary Guarantor is not the resulting, surviving or transferee Person), unless:

     (a) the Successor Company is a corporation or limited liability company organized and existing
under the laws of the United States of America, any State thereof or the District of Columbia, and
the Successor Company expressly assumes by supplemental indenture, executed and delivered to the
Trustee, in form reasonably satisfactory to the Trustee, all of the obligations of such Subsidiary
Guarantor under this Indenture and, to the extent not included herein, its Subsidiary Guarantee,
and, to the extent that it is otherwise still operative, by supplemental agreement all of such
Subsidiary Guarantor’s obligations under the Registration Rights Agreement;

     (b) immediately after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing; and

     (c) the Subsidiary Guarantor shall have delivered to the Trustee an Officers’ Certificate and
an Opinion of Counsel, stating that such consolidation, merger, conveyance, transfer, sale, lease
or disposition complies with this Indenture and its Subsidiary Guarantee.

 

33

     The Successor Company will succeed to, and be substituted for, and may exercise every right
and power of, such Subsidiary Guarantor under such Subsidiary Guarantee and this Indenture with the
same effect as if such Successor Company had been named as a Subsidiary Guarantor in the Indenture.
Upon such substitution, except in the case of a lease, the Subsidiary Guarantor will be released
from the obligations under this Indenture and its Subsidiary Guarantee.

ARTICLE 5

Reserved

ARTICLE 6

Defaults and Remedies

     Section 6.01 . Events of Default. Each of the following is an “Event of Default”:

     (a) default in any payment of interest or Additional Interest (as required by the Registration
Rights Agreement) on any Security when the same becomes due and payable, and such default continues
for a period of 30 calendar days;

     (b) default in the payment of the principal of any Security when the same becomes due and
payable at its Stated Maturity, upon required purchase, upon declaration, upon conversion or
otherwise;

     (c) failure by the Company to comply with its obligation to convert the Securities in
accordance with this Indenture, upon exercise of a Holder’s conversion right and such failure
continues for a period of five calendar days;

     (d) failure by the Company to give a Company Notice in connection with a Fundamental Change to
Holders or notice to Holders required pursuant to Section 12.01(a)(iii), in each case on a timely
basis as required under this Indenture;

     (e) failure by the Company to comply with any of its obligations under Article 4;

     (f) failure by the Company to comply with, or a breach by the Company of, any other covenant
or agreement in this Indenture or under the Securities (other than those referred to in Section
6.01(a) through (e)) and such default continues for 60 calendar days after the notice specified
below;

     (g) failure by the Company or any Subsidiary Guarantor or any Significant Subsidiary that is
not a Subsidiary Guarantor to pay any indebtedness for borrowed money within any applicable grace
period after final maturity or the acceleration of any such indebtedness by the holders thereof
because of a default if the total amount of such indebtedness unpaid or
accelerated exceeds $5,000,000 in the aggregate, and such failure continues for ten calendar
days after the notice specified below;

 

34

     (h) a Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or a Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary
Guarantee;

     (i) one or more judgments or decrees shall be entered against the Company or any Guarantor or
any Significant Subsidiary that is not a Subsidiary Guarantor involving in the aggregate a
liability of $5,000,000 or more (to the extent that such amount is not paid or covered by insurance
as to which the relevant insurance company has not disclaimed coverage), and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days
from the entry thereof;

     (j) the Company or any Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law:

     (i) commences a voluntary case or proceeding;

     (ii) consents to the entry of judgment, decree or order for relief against it in an
involuntary case or proceeding;

     (iii) consents to the appointment of a Custodian of it or for any substantial part
of its property;

     (iv) makes a general assignment for the benefit of its creditors;

     (v) consents to or acquiesces in the institution of a bankruptcy or an insolvency
proceeding against it;

     (vi) takes any corporate action to authorize or effect any of the foregoing; or

     (vii) takes any comparable action under any foreign laws relating to insolvency; or

     (k) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

     (i) is for relief against the Company or any Significant Subsidiary in an
involuntary case;

     (ii) appoints a Custodian of the Company or any Significant Subsidiary for all or
substantially all of the Company’s or such Significant Subsidiary’s property; or

     (iii) orders the winding up or liquidation of the Company or any Significant
Subsidiary;

and, in each case, the order or decree or relief remains unstayed and in effect for 90
calendar days.

 

35

     The foregoing will constitute Events of Default whatever the reason for any such Event of
Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body.

     Notwithstanding the foregoing, a Default under clause (f) or (g) of this Section 6.01 will not
constitute an Event of Default until the Trustee or the Holders of 25% or more in principal amount
of the outstanding Securities notify the Company of the Default in writing and the Company does not
cure such Default within the time specified in clause (f) or (g) of this Section 6.01, as
applicable, after receipt of such notice.

     Section 6.02 . Acceleration. If an Event of Default (other than an Event of Default specified in
Section 6.01(j) or 6.01(k) above with respect to the Company) occurs and is continuing, the Trustee
by notice to the Company, or the Holders of at least 25% in outstanding principal amount of the
outstanding Securities by notice to the Company and the Trustee, may, and the Trustee at the
request of such Holders shall, declare the principal of and accrued and unpaid interest (including
any Additional Interest), if any, on all the Securities to be due and payable. Upon such a
declaration, such principal and accrued and unpaid interest (including any Additional Interest), if
any, shall be due and payable immediately. If an Event of Default specified in Section 6.01(j) or
6.01(k) above occurs with respect to the Company and is continuing, the principal of and accrued
and unpaid interest (including any Additional Interest), if any, on all the Securities outstanding
shall be immediately due and payable automatically with no further action by the Trustee or the
Holders.

     Section 6.03 . Other Remedies. If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal of or interest (including any
Additional Interest) on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.

     The Trustee may maintain a proceeding even if it does not possess any of the Securities or
does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder
in exercising any right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive
of any other remedy. All available remedies are cumulative.

     Section 6.04 . Waiver of Past Defaults. The Holders of a majority in principal amount of the
outstanding Securities by notice to the Trustee may:

          (a) waive, by their consent (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Securities), an existing Default or
Event of Default and its consequences except (i) a Default or Event of Default in the payment of
the principal of or interest (including any Additional Interest) on a Security (including payments
pursuant to the required repurchase provisions of such Security, if any, or upon conversion of the
Securities) or (ii) a Default or Event of Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Holder affected; and

 

36

          (b) rescind any such acceleration with respect to the Securities and its consequences if (i)
rescission would not conflict with any judgment or decree of a court of competent jurisdiction and
(ii) all existing Events of Default, other than the nonpayment of the principal of and interest
(including any Additional Interest) on the Securities (including payments pursuant to the required
repurchase provisions of such Securities, if any, or upon conversion of the Securities) that have
become due solely by such declaration of acceleration, have been cured or waived.

When a Default or Event of Default is waived, it is deemed cured, but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any consequent right.

     Section 6.05 . Control by Majority. The Holders of a majority in principal amount of the
outstanding Securities may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture
or, subject to Sections 7.01 and 7.02, that the Trustee determines is unduly prejudicial to the
rights of other Holders or would involve the Trustee in personal liability; provided, however, that
the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with
such direction.

     Section 6.06 . Limitation on Suits. Subject to Section 6.07, a Holder may not pursue any remedy
with respect to this Indenture or the Securities unless:

     (a) such Holder has previously given to the Trustee written notice stating that an Event of
Default is continuing;

     (b) Holders of at least 25% in principal amount of the outstanding Securities have requested
that the Trustee pursue the remedy;

     (c) such Holders have offered to the Trustee security or indemnity reasonably satisfactory to
it against any loss, liability or expense to be incurred in compliance with such request;

     (d) the Trustee has not complied with such request within 60 calendar days after receipt of
the request and the offer of security or indemnity; and

     (e) the Holders of a majority in principal amount of the outstanding Securities have not given
the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such request
within such 60-calendar-day period.

     A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a
preference or priority over another Holder.

     Section 6.07 . Rights of Holders to Receive Payment. Notwithstanding any other provision of this
Indenture (including, without limitation, Section 6.06), the right of any Holder to receive payment
of principal of or interest (including any Additional Interest) on the Securities

 

37

(including
payments pursuant to the required repurchase provisions of such Securities, if any, or upon
conversion of the Securities) held by such Holder, on or after the respective due dates expressed
in the Securities, or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such Holder.

     Section 6.08 . Collection Suit by Trustee. If an Event of Default specified in clauses (a) or (b)
of Section 6.01 occurs and is continuing, the Trustee may recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount then due and owing (together
with interest on any unpaid interest (including any Additional Interest) to the extent lawful) and
the amounts provided for in Section 7.07.

     Section 6.09 . Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings
relative to the Company, its Subsidiaries or its or their respective creditors or properties and,
unless prohibited by law or applicable regulations, may be entitled and empowered to participate as
a member of any official committee of creditors appointed in such matter, and may vote on behalf of
the Holders in any election of a trustee in bankruptcy or other Person performing similar
functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and
any other amounts due to the Trustee under Section 7.07.

     Section 6.10 . Priorities. If the Trustee collects any money or property pursuant to this Article
6, it shall pay out the money or property in the following order:

     FIRST: to the Trustee for amounts due under Section 7.07;

     SECOND: to Holders for amounts due and unpaid on the Securities for principal
(including payments pursuant to the required repurchase provisions of the Securities, if
any, or upon conversion of the Securities) and interest (including any Additional Interest),
ratably, without preference or priority of any kind, according to the amounts due and
payable on the Securities for principal (including payments pursuant to the required
repurchase provisions of the Securities or upon conversion of the Securities) and interest
(including any Additional Interest), respectively; and

     THIRD: to the Company.

     The Trustee may fix a record date and payment date for any payment to Holders pursuant to this
Section 6.10. At least 15 calendar days before such record date, the Company shall mail to each
Holder and the Trustee a notice that states the record date, the payment date and amount to be
paid.

 

38

     Section 6.11 . Restoration of Rights and Remedies. If the Trustee or any Holder has instituted a
proceeding to enforce any right or remedy under this Indenture and the proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to the
Holder, then, subject to any determination in the proceeding, the Company, the Trustee, any
Subsidiary Guarantors and the Holders will be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Company, the Trustee, any
Subsidiary Guarantors and the Holders will continue as though no such proceeding had been
instituted.

     Section 6.12 . Undertaking of Costs. In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee,
a court in its discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.12 does not apply to a suit by the Trustee, a suit by the Company, a suit
by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in outstanding principal
amount of the Securities.

ARTICLE 7

Trustee

     Section 7.01 . Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree
of care and skill in its exercise
as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s
own affairs; provided that if an Event of Default occurs and is continuing, the Trustee will be
under no obligation to exercise any of the rights or powers under this Indenture at the request or
direction of any of the Holders unless such Holders have offered to the Trustee reasonable
indemnity or security against loss, liability or expense that might be incurred in compliance with
such request or direction.

     (b) Except during the continuance of an Event of Default:

     (i) the Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and

     (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions expressed therein,
upon certificates, opinions or orders furnished to the Trustee and conforming to the
requirements of this Indenture. However, in the case of any such certificates, opinions
or orders which by any provisions hereof are specifically required to be furnished to the
Trustee, the Trustee shall examine such certificates and opinions to determine whether or
not they conform to the requirements of this Indenture (but need

 

39

not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

     (c) The Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:

     (i) this paragraph does not limit the effect of paragraph (b) of this Section 7.01;

     (ii) the Trustee shall not be liable for any error of judgment made in good faith by a
Trust Officer of the Trustee unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and

     (iii) the Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to Section 6.05.

     (d) Every provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section 7.01.

     (e) The Trustee shall not be liable for interest on any money received by it except as the
Trustee may agree in writing with the Company.

     (f) Money held in trust by the Trustee need not be segregated from other funds except to the
extent required by law.

     (g) No provision of this Indenture shall require the Trustee to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability is not reasonably
assured to it.

     (h) Every provision of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this Section 7.01 and to
the provisions of the TIA.

     (i) Unless otherwise specifically provided in this Indenture, any demand, request, direction
or notice from the Company shall be sufficient if signed by an Officer of the Company.

     Section 7.02 . Rights of Trustee. Subject to Section 7.01:

     (a) The Trustee may conclusively rely on any document (whether in its original or facsimile
form) reasonably believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the document. The Trustee
shall receive and retain financial reports and statements of the Company as provided

 

40

herein, but
shall have no duty to review or analyze such reports or statements to determine compliance under
covenants or other obligations of the Company.

     (b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate
and/or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on an Officers’ Certificate or Opinion of Counsel.

     (c) The Trustee may act through its attorneys and agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.

     (d) The Trustee shall not be liable for any action it takes or omits to take in good faith
which it believes to be authorized or within its rights or powers, unless the Trustee’s conduct
constitutes willful misconduct or negligence.

     (e) The Trustee may consult with counsel of its selection, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the Securities shall be full
and complete authorization and protection from liability in respect to any action taken, omitted or
suffered by it hereunder in good faith and in accordance with the advice or opinion of such
counsel.

     (f) The Trustee shall not be responsible or liable for special, indirect, or consequential
loss or damage of any kind whatsoever (including, but not limited to, loss of profit) resulting
from actions taken in good faith and which the Trustee believes to be authorized or within its
rights or powers, unless the Trustee’s conduct constitutes willful misconduct or negligence.

     (g) The rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to, and shall be
enforceable by, the Trustee in each of its capacities hereunder, and each agent, Securities
Custodian and other Person employed to act hereunder.

     (h) The Trustee may request that the Company deliver a certificate setting forth the names of
individuals and/or titles of Officers authorized at such time to take specified actions pursuant to
this Indenture.

     Section 7.03 . Individual Rights of Trustee. The Trustee in its individual or any other capacity
may become the owner or pledgee of Securities and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply
with Sections 7.10 and 7.11. In addition, the Trustee shall be permitted to engage in transactions
with the Company; provided, however, that if the Trustee acquires any conflicting interest the
Trustee must (i) eliminate such conflict within 90 calendar days of acquiring such conflicting
interest, (ii) apply to the Commission for permission to continue acting as Trustee or (iii)
resign.

 

41

     Section 7.04 . Trustee’s Disclaimer. The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Securities, shall not be
accountable for the Company’s use of the proceeds from the Securities, shall not be responsible for
the use or application of any money received by any Paying Agent other than the Trustee and shall
not be responsible for any statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the Trustee’s
certificate of authentication.

     Section 7.05 . Notice of Defaults. If a Default or Event of Default occurs and is continuing and
if a Trust Officer of the Trustee has actual knowledge thereof, the Trustee shall mail by first
class mail to each Holder at the address set forth in the Securities Register notice of the Default
or Event of Default within 90 calendar days after it occurs. Except in the case of a Default or
Event of Default in payment of principal of or interest (including any Additional Interest) on any
Security (including payments pursuant to the required repurchase provisions of such Security, if
any, or upon conversion of the Securities), the Trustee may withhold the notice if and so long as
its board of directors, a committee of its board of directors or a committee of its Trust Officers
in good faith determines that withholding the notice is in the interests of Holders.

     Section 7.06 . Reports by Trustee to Holders. As promptly as practicable after each May 15
beginning with the May 15 following the date of this Indenture, the Trustee shall mail to each
Holder a brief report dated as of such May 15 that
complies with TIA § 313(a), if required by such TIA § 313(a). The Trustee also shall comply with
TIA § 313(b). The Trustee shall also transmit by mail all reports required by TIA § 313(c).

     Section 7.07 . Compensation and Indemnity. The Company and the Subsidiary Guarantors shall be
jointly and severally liable for paying the Trustee from time to time such compensation for its
acceptance of this Indenture and services hereunder as the Company and the Trustee shall from time
to time agree in writing. The Trustee’s compensation shall not be limited by any law on
compensation of a trustee of an express trust. In addition to such compensation, the Company and
the Subsidiary Guarantors shall be jointly and severally liable for reimbursing the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it. Such expenses shall
include the reasonable compensation and out-of-pocket expenses, disbursements and advances of the
Trustee’s agents, counsel, accountants and experts. The Company and each Subsidiary Guarantor,
jointly and severally, shall indemnify the Trustee against any and all loss, liability, damages,
claims or expense (including reasonable attorneys’ fees and expenses) incurred by it without
negligence or bad faith on its part in connection with the administration of this trust and the
performance of its duties hereunder, including the costs and expenses of enforcing this Indenture
(including this Section 7.07) and of defending itself against any claims (whether asserted by any
Holder, the Company, any Subsidiary Guarantor or otherwise). The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company or any Subsidiary Guarantors of its obligations hereunder.
The Company shall defend the claim and the Trustee shall provide reasonable cooperation at the
Company’s expense in the defense. The Trustee may have separate counsel and the Company and the
Subsidiary Guarantors, as applicable, shall pay the fees and expenses of such counsel, provided
that the Company shall not

 

42

be required to pay such fees and expenses if it assumes the Trustee’s
defense, and, in the reasonable judgment of outside counsel to the Trustee, there is no conflict of
interest between the Company and the Subsidiary Guarantors, as applicable, and the Trustee in
connection with such defense. The Company and the Subsidiary Guarantors need not reimburse any
expense or indemnify against any loss, liability or expense which is finally determined by a court
of competent jurisdiction to have been incurred by the Trustee through the Trustee’s own willful
misconduct, negligence or bad faith.

     To secure the Company’s and the Subsidiary Guarantors’ payment obligations in this Section
7.07, the Trustee shall have a lien prior to the Securities on all money or property held or
collected by the Trustee other than money or property held in trust to pay principal of and
interest (including any Additional Interest) on particular Securities. Such lien shall survive the
satisfaction and discharge of this Indenture. The Trustee’s right to receive payment of any
amounts due under this Section 7.07 shall not be subordinate to any other unsecured liability or
debt of the Company or any Subsidiary Guarantors.

     The Company’s and the Subsidiary Guarantors’ payment obligations pursuant to this Section 7.07
shall survive the discharge of this Indenture. When the Trustee incurs expenses after the
occurrence of a Default specified in Sections 6.01(j) and 6.01(k) with respect to the
Company, the expenses are intended to constitute expenses of administration under any
Bankruptcy Law.

     Section 7.08 . Replacement of Trustee. The Trustee may resign at any time by so notifying the
Company. The Holders of a majority in principal amount of the Securities may remove the Trustee by
so notifying the Trustee and may appoint a successor Trustee. The Company shall remove the Trustee
if:

	 	(a)	 	the Trustee fails to comply with Section 7.10;
	 
	 	(b)	 	the Trustee is adjudged bankrupt or insolvent;
	 
	 	(c)	 	a receiver or other public officer takes charge of the Trustee or its property; or
	 
	 	(d)	 	the Trustee otherwise becomes incapable of acting.

     If the Trustee resigns or is removed by the Company or by the Holders of a majority in
principal amount of the outstanding Securities and such Holders do not reasonably promptly appoint
a successor Trustee, or if a vacancy exists in the office of the Trustee for any reason (the
Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly
appoint a successor Trustee.

     A successor Trustee shall deliver a written acceptance of its appointment to the retiring
Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to

 

43

Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided for in Section 7.07.

     If a successor Trustee does not take office within 60 calendar days after the retiring Trustee
resigns or is removed, the retiring Trustee or the Holders of at least 10% in principal amount of
the outstanding Securities may petition, at the Company’s expense, any court of competent
jurisdiction for the appointment of a successor Trustee.

     If the Trustee fails to comply with Section 7.10, unless the Trustee’s duty to resign is
stayed as provided in TIA § 310(b), any Holder may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.

     Notwithstanding the replacement of the Trustee pursuant to this Section 7.08, the Company’s
obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.

     Section 7.09 . Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all
its corporate trust business or assets to, another corporation or banking association, the
resulting, surviving or transferee corporation without any further act shall be the successor
Trustee.

     In case at the time such successor or successors by merger, conversion or consolidation to the
Trustee shall succeed to the trusts created by this Indenture, any of the Securities shall have
been authenticated but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any successor to the
Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the
name of the successor to the Trustee; provided that the right to adopt the certificate of
authentication of any predecessor Trustee or authenticate Securities in the name of any predecessor
Trustee shall only apply to its successor or successors by merger, consolidation or conversion.

     Section 7.10 . Eligibility; Disqualification. The Trustee shall at all times satisfy the
requirements of TIA § 310(a). The Trustee shall have a combined capital and surplus of at least
$100 million as set forth in its most recent published annual report of condition. The Trustee
shall comply with TIA § 310(b); provided, however, that there shall be excluded from the operation
of TIA § 310(b)(1) any indenture or indentures under which other securities or certificates of
interest or participation in other securities of the Company are outstanding if the requirements
for such exclusion set forth in TIA § 310(b)(1) are met.

     Section 7.11 . Preferential Collection of Claims Against Company. The Trustee shall comply with
TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has
resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.

 

 

 44

ARTICLE 8

Discharge of Indenture

     Section 8.01 . Discharge of Liability on Securities. When:

     (1) the Company shall deliver to the Registrar for cancellation all Securities theretofore
authenticated (other than any Securities which have been destroyed, lost or stolen and in lieu of
or in substitution for which other Securities shall have been authenticated and delivered) and not
theretofore canceled, or

     (2) all the Securities not theretofore canceled or delivered to the Registrar for cancellation
shall have (a) been surrendered for conversion (after all related Observation Periods
have elapsed) and the Company shall have delivered to the Holders cash and shares of Common
Stock, as applicable, sufficient to pay all amounts owing in respect of all Securities (other than
any Securities which shall have been mutilated, destroyed, lost or stolen and in lieu of or in
substitution for which other Securities shall have been authenticated and delivered) not
theretofore canceled or delivered to the Registrar for cancellation or (b) become due and payable
on the Stated Maturity or Fundamental Change Purchase Date, as applicable, and the Company shall
deposit with the Trustee cash sufficient to pay all amounts owing in respect of all Securities
(other than any Securities which shall have been mutilated, destroyed, lost or stolen and in lieu
of or in substitution for which other Securities shall have been authenticated and delivered) not
theretofore canceled or delivered to the Registrar for cancellation, including the principal amount
and interest (including any Additional Interest) accrued and unpaid to such Stated Maturity or
Fundamental Change Purchase Date, as the case may be,

and if in either case (1) or (2) the Company shall also pay or cause to be paid all other sums
payable hereunder by the Company, then this Indenture with respect to the Securities shall cease to
be of further effect (except as to (i) remaining rights of registration of transfer, substitution
and exchange and conversion of Securities; (ii) rights hereunder of Holders to receive from the
Trustee payments of the amounts then due, including interest (including any Additional Interest)
with respect to the Securities and the other rights, duties and obligations of Holders, as
beneficiaries hereof solely with respect to the amounts, if any, so deposited with the Trustee; and
(iii) the rights, obligations and immunities of the Trustee, Authenticating Agent, Paying Agent,
Conversion Agent and Registrar under this Indenture with respect to the Securities), and the
Trustee, on demand of the Company accompanied by an Officers’ Certificate and an Opinion of Counsel
as required by Section 8.03 and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture with respect to the
Securities; however, the Company hereby agrees to reimburse the Trustee, Authenticating Agent,
Paying Agent, Conversion Agent and Registrar for any costs or expenses thereafter reasonably and
properly incurred by the Trustee, Authenticating Agent, Paying Agent, Conversion Agent and
Registrar and to compensate the Trustee, Authenticating Agent, Paying Agent, Conversion Agent and
Registrar for any services thereafter reasonably and properly rendered by the Trustee,
Authenticating Agent, Paying Agent, Conversion Agent and Registrar in connection with this
Indenture with respect to the Securities.

 

45

     Section 8.02 . Reinstatement. If the Trustee or the Paying Agent is unable to apply any money to
the Holders entitled thereto by reason of any order or judgment of any court of governmental
authority enjoining, restraining or otherwise prohibiting such application, the Company’s
obligations under this Indenture with respect to the Securities and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.01 until such time as the
Trustee or the Paying Agent is permitted to apply all such money in accordance with this Indenture
and the Securities to the Holders entitled thereto; provided, however, that if the Company makes
any payment of principal amount of or interest (including any Additional Interest) on any
Securities following the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive such payment from the money held by the Trustee
or Paying Agent.

     Section 8.03 . Officers’ Certificate; Opinion of Counsel. Upon any application or demand by the
Company to the Trustee to take any action under Section 8.01, the Company shall furnish to the
Trustee an Officers’ Certificate or Opinion of Counsel stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been complied with.

ARTICLE 9

Amendments

     Section 9.01 . Without Consent of Holders. The Company, the Subsidiary Guarantors and the Trustee
may amend this Indenture or the Securities without notice to or consent of any Holder:

     (a) to cure any ambiguity, omission, defect or inconsistency;

     (b) to comply with Article 4 in respect of the assumption by a Successor Company of an
obligation of the Company or a Subsidiary Guarantor, as applicable, under this Indenture;

     (c) to provide for uncertificated Securities in addition to or in place of certificated
Securities; provided, however, that the uncertificated Securities are issued in registered form for
purposes of Section 163(f) of the Code or in a manner such that the uncertificated Securities are
described in Section 163(f)(2)(B) of the Code;

     (d) to add Guarantees with respect to the Securities;

     (e) to secure the Securities;

     (f) to add to the covenants of the Company for the benefit of the Holders or to surrender any
right or power herein conferred upon the Company or any Subsidiary Guarantor;

     (g) to make any change that does not materially adversely affect the rights of any Holder; or

 

46

     (h) to comply with any requirement of the Commission in connection with the qualification of
this Indenture under the TIA.

     After an amendment under this Section 9.01 becomes effective, the Company shall mail to
Holders a notice briefly describing such amendment. The failure to give such notice to all
Holders, or any defect therein, shall not impair or affect the validity of an amendment under this
Section 9.01.

     Section 9.02 . With Consent of Holders. The Company, the Subsidiary Guarantors and the Trustee may amend this Indenture or the
Securities without notice to any Holder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange offer for,
Securities) and past Defaults (except (i) a Default or Event of Default in the payment of the
principal of or interest (including any Additional Interest) on a Security (including payments
pursuant to the required repurchase and conversion provisions of such Security, if any, or upon
conversion of the Securities) or (ii) a Default or Event of Default in respect of a provision that
under Section 9.02 cannot be amended without the consent of each Holder affected) or compliance
with the provisions of this Indenture may be waived with the written consent of the Holders of at
least a majority in principal amount of the Securities then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer
for, Securities). However, without the consent of each Holder affected (in addition to the
majority in principal amount of the Securities then outstanding (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange offer for,
Securities), an amendment or waiver may not:

     (a) reduce the amount of Securities whose Holders must consent to an amendment of this
Indenture or to waive any past Defaults;

     (b) reduce the rate of or extend the stated time for payment of interest (including any
Additional Interest) on any Security;

     (c) reduce the principal of or extend the Stated Maturity of any Security;

     (d) make any change that impairs or adversely affects the conversion rights of any Securities;

     (e) reduce the Fundamental Change Purchase Price payable upon the repurchase of any Security
or amend or modify in any manner adverse to holders of the Securities the Company’s obligation to
make such payments, whether through an amendment to or waiver of a provision in the covenants,
definitions or otherwise;

     (f) make any Security payable in money other than that stated in the Security (it being
understood that all references to cash in this Indenture and the Securities are to U.S. legal
tender);

 

47

     (g) impair the right of any Holder to receive payment of principal of and interest (including
any Additional Interest) on such Holder’s Securities on or after the due dates therefor or to
institute suit for the enforcement of any payment on or with respect to such Holder’s Securities;

     (h) make any change to the amendment provisions which require each Holder’s consent or to the
waiver provisions; or

     (i) terminate any Subsidiary Guarantees with respect to the Securities (unless expressly
permitted under this Indenture).

     It shall not be necessary for the consent of the Holders under this Section 9.02 to approve
the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof. A consent to any amendment or waiver under this Indenture by any
Holder of the Securities given in connection with a tender or exchange of such Holder’s Securities
will not be rendered invalid by such tender or exchange.

     After an amendment under this Section 9.02 becomes effective, the Company shall mail to
Holders a notice briefly describing such amendment. The failure to give such notice to all
Holders, or any defect therein, shall not impair or affect the validity of an amendment under this
Section 9.02.

     Section 9.03 . Compliance with TIA. Every amendment or supplement to this Indenture or the
Securities shall comply with the TIA as then in effect.

     Section 9.04 . Revocation and Effect of Consents and Waivers. A consent to an amendment or a
waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of that Security
or portion of the Security that evidences the same debt as the consenting Holder’s Security, even
if notation of the consent or waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder’s Security or portion of the
Security if the Trustee receives the notice of revocation before the date the amendment or waiver
becomes effective or otherwise in accordance with any related solicitation documents. After an
amendment or waiver becomes effective, it shall bind every Holder. An amendment or waiver shall
become effective upon receipt by the Trustee of the requisite number of written consents under
Section 9.01 or 9.02, as applicable.

     The Company may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to give their consent or take any other action described above or
required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be entitled to give such
consent or to revoke any consent previously given or to take any such action, whether or not such
Persons continue to be Holders after such record date. No such consent shall become valid or
effective more than 120 Business Days after such record date.

 

48

     Section 9.05 . Notation on or Exchange of Securities. If an amendment changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The
Trustee may place an appropriate notation on the
Security regarding the changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such amendment.

     Section 9.06 . Trustee to Sign Amendments. The Trustee shall sign any amendment authorized
pursuant to this Article 9 if the amendment does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does adversely affect the rights, duties,
liabilities or immunities of the Trustee, the Trustee may, but need not, sign it. In signing such
amendment the Trustee shall be entitled to receive and (subject to Sections 7.01 and 7.02) shall be
fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture and that such amendment is the legal,
valid and binding obligation of the Company and any Subsidiary Guarantors, enforceable against them
in accordance with its terms, subject to customary exceptions, and complies with the provisions
hereof (including Section 9.03).

ARTICLE 10

Subsidiary Guarantees

     Section 10.01 . Subsidiary Guarantees. Subject to the provisions of this Article 10, the
Subsidiary Guarantors hereby fully and unconditionally Guarantee, jointly and severally, on a
senior basis, to each Holder and to the Trustee and its successors and assigns (i) the full and
punctual payment when due, whether at Stated Maturity, by acceleration, by purchase or otherwise,
of all obligations of the Company under this Indenture (including obligations to the Trustee) and
the Securities, whether for payment of principal of or interest (including any Additional Interest)
on the Securities and all other monetary obligations of the Company under this Indenture and the
Securities and (ii) the full and punctual performance within applicable grace periods of all other
obligations of the Company whether for fees, expenses, indemnification or otherwise under this
Indenture and the Securities (all the foregoing being hereinafter collectively called the
“Guaranteed Obligations”). Subject to Section 10.02, the Subsidiary Guarantors further agree that
the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or
further assent from the Subsidiary Guarantors, and that the Subsidiary Guarantors shall remain
bound under this Article 10 notwithstanding any extension or renewal of any Guaranteed Obligation.

     To the extent permitted by law, each Subsidiary Guarantor waives presentation to, demand of
payment from and protest to the Company of any of the Guaranteed Obligations and also waives notice
of protest for nonpayment. Each Subsidiary Guarantor waives notice of any Default under the
Securities or the Guaranteed Obligations. The obligations of the Subsidiary Guarantors hereunder
shall not be affected by (i) the failure of any Holder or the Trustee to assert any claim or demand
or to enforce any right or remedy against the Company or any other Person

 

49

under this Indenture, the
Securities or any other agreement or otherwise; (ii) any extension or
renewal of any thereof; (iii) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Indenture, the Securities or any other agreement; (iv) the release of
any security held by any Holder or the Trustee for the Guaranteed Obligations or any of them; (v)
the failure of any holder or the Trustee to exercise any right or remedy against any other
Subsidiary Guarantor; or (vi) any change in the ownership of the Subsidiary Guarantors, except as
provided in Section 10.02.

     Each Subsidiary Guarantor agrees that its Subsidiary Guarantee constitutes a Guarantee of
payment, performance and compliance when due (and not a Guarantee of collection) and waives any
right to require that any resort be had by any Holder or the Trustee to any security held for
payment of the Guaranteed Obligations.

     Except as set forth in Section 10.02, the obligations of the Subsidiary Guarantors hereunder
shall not be subject to any reduction, limitation, impairment or termination for any reason (other
than payment of the Guaranteed Obligations in full), including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to any defense of setoff,
counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of the Subsidiary Guarantors herein shall not be discharged or impaired
or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or
to enforce any remedy under this Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or otherwise, in the
performance of the Guaranteed Obligations, or by any other act or thing or omission or delay to do
any other act or thing which may or might in any manner or to any extent vary the risk of the
Subsidiary Guarantors or would otherwise operate as a discharge of the Subsidiary Guarantors as a
matter of law or equity.

     Subject to Section 3.03, each Subsidiary Guarantor agrees that its Subsidiary Guarantee shall
remain in full force and effect until payment in full of all the Guaranteed Obligations or such
Subsidiary Guarantor is released from its Subsidiary Guarantee in compliance with Section 10.02.
Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of
principal of or interest (including any Additional Interest) on any Guaranteed Obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or
reorganization of the Company or otherwise.

     In furtherance of the foregoing and not in limitation of any other right which any Holder or
the Trustee has at law or in equity against the Subsidiary Guarantors by virtue hereof, upon the
failure of the Company to pay any Guaranteed Obligation when and as the same shall become due,
whether at Stated Maturity, by acceleration, by purchase or otherwise, the Subsidiary Guarantors
hereby promise to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause
to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (i) the unpaid
principal amount of such Guaranteed Obligations, (ii) accrued and unpaid interest (including any
Additional Interest) on such Guaranteed Obligations (but only

 

50

to the extent not prohibited by law) and (iii) all other monetary obligations of the Company
to the holders and the Trustee pursuant to this Indenture and the Securities.

     Each Subsidiary Guarantor further agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any Guaranteed Obligations Guaranteed hereby
until payment in full of all Guaranteed Obligations. Each Subsidiary Guarantor further agrees
that, as between such Subsidiary Guarantor, on the one hand, and the Holders and the Trustee, on
the other hand, (i) the maturity of the Guaranteed Obligations Guaranteed hereby may be accelerated
as provided in Article 6 for the purposes of this Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the Guaranteed
Obligations Guaranteed hereby, and (ii) in the event of any declaration of acceleration of such
Guaranteed Obligations as provided in Article 6, such Guaranteed Obligations (whether or not due
and payable) shall forthwith become due and payable by the Subsidiary Guarantor for the purposes of
this Section 10.01.

     Each Subsidiary Guarantor also agrees to pay any and all reasonable costs and expenses
(including reasonable attorneys’ fees and expenses) incurred by the Trustee or any Holder in
enforcing any rights under this Section 10.01.

     Upon request of the Trustee, the Subsidiary Guarantors shall execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.

     Section 10.02 . Limitation on Liability; Release and Discharge; Termination on Conversion.
Any other term or provision of this Indenture to the contrary notwithstanding, the maximum
aggregate amount of the Guaranteed Obligations Guaranteed hereunder by each Subsidiary Guarantor
shall not exceed the maximum amount that can be hereby Guaranteed without rendering this Indenture,
as it relates to such Subsidiary Guarantor, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.

     Each Subsidiary Guarantor shall be deemed to be released from all obligations under this
Indenture, its Subsidiary Guarantee (to the extent not included herein) and the Securities (without
any further action by the Trustee or the Holders) upon (i) the sale or other disposition (including
by way of any merger or consolidation), in one transaction or a series of related transactions, of
a majority of the total voting power of the Capital Stock or other interests of such Subsidiary
Guarantor, (ii) the sale or other disposition of all or substantially all of the assets of the
Subsidiary Guarantor, or (iii) upon the release of such Subsidiary Guarantor from any liability
under the Credit Facilities and any Guarantee or similar obligation in respect thereof, other than,
in each case in clause (i) or (ii), the sale or other disposition to the Company or any Affiliate
of the Company. At the request and at the expense of the Company, the Trustee shall execute and
deliver an appropriate instrument evidencing such release (in the form provided by the Company).

 

51

     Each Subsidiary Guarantor shall also be deemed released from all of its obligations under this
Indenture and its Subsidiary Guarantee and such Subsidiary Guarantee will terminate upon the
discharge of the Securities pursuant to the provisions of Article 8 hereof.

     Each Subsidiary Guarantee with respect to a Security will automatically terminate immediately
prior to such Security’s conversion.

     Section 10.03 . Right of Contribution. Each Subsidiary Guarantor hereby agrees that to the extent
that any Subsidiary Guarantor shall have paid more than its proportionate share of any payment made
on the obligations under the Subsidiary Guarantees, such Subsidiary Guarantor shall be entitled to
seek and receive contribution from and against the Company or any other Subsidiary Guarantor who
has not paid its proportionate share of such payment. The provisions of this Section 10.03 shall
in no respect limit the obligations and liabilities of each Subsidiary Guarantor to the Trustee and
the Holders and each Subsidiary Guarantor shall remain liable to the Trustee and the Holders for
the full amount Guaranteed by such Subsidiary Guarantor hereunder.

ARTICLE 11

Purchase at the Option of Holder Upon a Fundamental

Change

     Section 11.01 . Purchase at the Option of the Holder Upon a Fundamental Change. If a Fundamental
Change shall occur at any time, each Holder shall have the right, at such Holder’s option, to
require the Company to purchase all or a portion of such Holder’s Securities on a date specified by
the Company that is no later than 35 calendar days after the date of the Company Notice of the
occurrence of such Fundamental Change, subject to extension to comply with applicable law (the
“Fundamental Change Purchase Date”). The Securities shall be purchased in multiples of $1,000 of
the principal amount. The Company shall purchase such Securities at a price (the “Fundamental
Change Purchase Price”), which shall be paid in cash, equal to 100% of the principal amount of the
Securities to be purchased plus any accrued and unpaid interest (including any Additional Interest)
to, but not including, the Fundamental Change Purchase Date, unless the Fundamental Change Purchase
Date is between a Regular Record Date and the interest payment date to which it relates, in which
case the Fundamental Change Purchase Price shall equal 100% of the principal amount of Securities
to be purchased and any accrued and unpaid interest (including any Additional Interest) shall be
paid to the Holder of record on the Regular Record Date.

     (a) Notice of Fundamental Change. The Company shall mail to all Holders, the Paying Agent and
the Trustee a Company Notice of the occurrence of a Fundamental Change and of the purchase right
arising as a result thereof, including the information required by Section 11.02(a) hereof, on or
before the 20th calendar day after the occurrence of such Fundamental Change.

     (b) Exercise of Option. For Securities to be so purchased at the option of the Holder, the
Holder must deliver or cause to be effected a book-entry transfer of such Securities to the

 

52

Paying Agent (together with all necessary endorsements) at the offices of the Paying Agent, together with
a written notice of purchase (a “Fundamental Change Purchase Notice”) in the form entitled “Form of
Fundamental Change Purchase Notice” attached to the Securities duly completed, by 5:00 p.m., New
York City time, on the Business Day immediately preceding the Fundamental Change Purchase Date;
provided, however, that the Fundamental Change Purchase Price shall be so paid pursuant to this
Section 11.01 only if the Securities so delivered or transferred to the Paying Agent shall conform
in all respects to the description thereof in the related Fundamental Change Purchase Notice. The
Fundamental Change Purchase Notice shall state:

     (i) if Definitive Securities have been issued, the certificate numbers of the
Securities which the Holder shall deliver to be purchased or, if Definitive Securities
have not been issued, the Fundamental Change Purchase Notice must comply with appropriate
DTC procedures;

     (ii) the portion of the principal amount of the Securities which the Holder shall
deliver to be purchased, which portion must be $1,000 in principal amount or a multiple
thereof; and

     (iii) that such Securities shall be purchased as of the Fundamental Change Purchase
Date pursuant to the terms and conditions specified in paragraph 4 of the Securities and
in this Indenture.

     (c) Procedures. The Company shall purchase from a Holder, pursuant to this Section 11.01,
Securities if the principal amount of such Securities is $1,000 or a multiple of $1,000 if so
requested by such Holder.

     Any purchase by the Company contemplated pursuant to the provisions of this Section 11.01
shall be consummated by the delivery of the Fundamental Change Purchase Price to be received by the
Holder promptly following the later of the Fundamental Change Purchase Date or the time of
book-entry transfer or delivery of the Securities.

     Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the
Fundamental Change Purchase Notice contemplated by this Section 11.01 shall have the right at any
time prior to 5:00 p.m., New York City time, on the Business Day immediately preceding the
Fundamental Change Purchase Date to withdraw such Fundamental Change Purchase Notice (in whole or
in part) by delivery of a written notice of withdrawal to the Paying Agent in accordance with
Section 11.02(b).

     The Paying Agent shall promptly notify the Company of the receipt by it of any Fundamental
Change Purchase Notice or written notice of withdrawal thereof.

     On or before 11:00 a.m., New York City time, on the Fundamental Change Purchase Date, the
Company shall deposit with the Paying Agent (or if the Company or an Affiliate of the Company is
acting as the Paying Agent, shall segregate and hold in trust) cash sufficient to pay

 

53

the aggregate Fundamental Change Purchase Price of the Securities to be purchased pursuant to this Section 11.01.
Payment by the Paying Agent of the Fundamental Change Purchase Price for such Securities shall be
made promptly following the later of the Fundamental Change Purchase Date or the time of book-entry
transfer or delivery of such Securities. If the Paying Agent holds, in accordance with the terms
of this Indenture, cash sufficient to pay the Fundamental Change Purchase Price of such Securities
on the Business Day following the Fundamental Change Purchase Date, then, on and after such date,
such Securities shall cease to be outstanding and interest (including any Additional Interest) on
such Securities shall cease to accrue, whether or not book-entry transfer of such Securities is
made or such Securities are delivered to the Paying Agent, and all other rights of the Holder shall
terminate (other than the right to receive the Fundamental Change Purchase Price and previously
accrued and unpaid interest (including any Additional Interest) upon delivery or transfer of the
Securities). Nothing herein shall preclude any withholding tax required by law.

     The Company shall require each Paying Agent (other than the Trustee) to agree in writing that
the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all cash held by the
Paying Agent for the payment of the Fundamental Change Purchase Price and shall notify the Trustee
of any default by the Company in making any such payment. If the Company or an Affiliate of the
Company acts as Paying Agent, it shall segregate the cash held by it as Paying Agent and hold it as
a separate trust fund. The Company at any time may require a Paying Agent to deliver all cash held
by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon doing so, the
Paying Agent shall have no further liability for the cash delivered to the Trustee.

     Section 11.02 . Further Conditions and Procedures for Purchase at the Option of the Holder Upon a
Fundamental Change .

     (a) Notice of Fundamental Change. The Company shall send notices (each, a “Company
Notice”) to the Holders at their addresses shown in the Securities Register maintained by the
Registrar, and to the Trustee and Paying Agent, on or before the 20th calendar
day after the occurrence of the Fundamental Change (such date of delivery, a “Company Notice
Date”). Each Company Notice shall include a form of Fundamental Change Purchase Notice to be
completed by a Holder and shall state:

     (i) the events causing the Fundamental Change;

     (ii) the date of the Fundamental Change;

     (iii) the last date on which a Holder may exercise its purchase rights under Section
11.01;

     (iv) the applicable Fundamental Change Purchase Price;

     (v) the applicable Fundamental Change Purchase Date;

 

54

     (vi) the name and address of the Paying Agent and the Conversion Agent, if
applicable;

     (vii) if applicable, the conversion rights of the Holders with respect to the
Securities and the Conversion Rate at the time of such notice and any expected
adjustments to the Conversion Rate;

     (viii) the procedures the Holder must follow under Sections 11.01 and 11.02;

     (ix) that Securities must be surrendered to the Paying Agent to collect payment of
the Fundamental Change Purchase Price;

     (x) if applicable, that Securities as to which a Fundamental Change Purchase Notice
has been given may be converted only if the applicable Fundamental Change Purchase Notice
has been withdrawn in accordance with the terms of this Indenture;

     (xi) that the Fundamental Change Purchase Price for any Securities as to which a
Fundamental Change Purchase Notice has been given and not withdrawn shall be paid by the
Paying Agent promptly following the later of the Fundamental Change Purchase Date, or the
time of book-entry transfer or delivery of such Securities;

     (xii) that, unless the Company defaults in making payment of such Fundamental Change
Purchase Price on Securities covered by any Fundamental Change Purchase Notice, interest
(including any Additional Interest) will cease to accrue on and after the Fundamental
Change Purchase Date;

     (xiii) the procedures for withdrawing a Fundamental Change Purchase Notice; and

     (xiv) the CUSIP or ISIN number of the Securities.

     Simultaneously with providing such Company Notice, the Company will publish a notice
containing the information in such Company Notice in a newspaper of general circulation in New York
City or publish such information on its then existing website or through such other public medium
as it may use at the time.

     At the Company’s request, made at least five Business Days prior to the date upon which such
notice is to be mailed, and at the Company’s expense, the Paying Agent shall give the Company
Notice in the Company’s name; provided, however, that, in all cases, the text of the Company Notice
shall be prepared by the Company.

     (b) Effect of Fundamental Change Purchase Notice; Withdrawal; Effect of Event of Default.
Upon receipt by the Company of the Fundamental Change Purchase Notice specified in Section
11.01(b), the Holder of the Securities in respect of which such Fundamental Change Purchase Notice
was given shall (unless such Fundamental Change Purchase Notice is

 

55

withdrawn as specified in the
following two paragraphs) thereafter be entitled to receive solely the Fundamental Change Purchase
Price with respect to such Securities. Such Fundamental Change Purchase Price shall be paid by the
Paying Agent to such Holder promptly following the later of (x) the Fundamental Change Purchase
Date, with respect to such Securities (provided the conditions in this Article 11 have been
satisfied) and (y) the time of delivery or book-entry transfer of such Securities to the Paying
Agent by the Holder thereof in the manner required by Section 11.01. Securities in respect of which
a Fundamental Change Purchase Notice has been given by the Holder thereof may not be converted on
or after the date of the delivery of such Fundamental Change Purchase Notice unless such
Fundamental Change Purchase Notice has first been validly withdrawn as specified in the following
two paragraphs.

     A Fundamental Change Purchase Notice may be withdrawn by means of a written notice of
withdrawal delivered to the office of the Paying Agent at any time prior to 5:00 p.m., New York
City time, on the Business Day immediately preceding the Fundamental Change Purchase Date to which
it relates, specifying:

     (i) the principal amount of the Securities with respect to which such notice of
withdrawal is being submitted;

     (ii) if Definitive Securities have been issued, the certificate number of the
Securities in respect of which such notice of withdrawal is being submitted, or, if
Definitive Securities have not been issued, the written notice of withdrawal must comply
with appropriate DTC procedures; and

     (iii) the principal amount, if any, of such Securities which remains subject to the
original Fundamental Change Purchase Notice and which has been or shall be delivered for
purchase by the Company.

     There shall be no purchase of any Securities pursuant to Section 11.01 if an Event of Default
has occurred and is continuing (other than a default that is cured by the payment of the
Fundamental Change Purchase Price). The Paying Agent shall promptly return to the respective
Holders thereof any Securities (x) with respect to which a Fundamental Change Purchase Notice has
been withdrawn in compliance with this Indenture, or (y) held by it during the continuance of an
Event of Default (other than a default that is cured by the payment of the Fundamental Change
Purchase Price) in which case, upon such return, the Fundamental Change Purchase Notice with
respect thereto shall be deemed to have been withdrawn.

     (c) Securities Purchased in Part. Any Securities that are to be purchased only in part shall
be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or such Holder’s attorney duly
authorized in writing) and the Company shall execute and the Trustee or the Authenticating
Agent shall authenticate and shall make available for delivery to the Holder of such Securities,
without service charge, a new Security or Securities, of any authorized denomination as

 

56

requested
by such Holder in aggregate principal amount equal to, and in exchange for, the portion of the
principal amount of the Securities so surrendered which is not purchased.

     (d) Covenant to Comply with Securities Laws Upon Purchase of Securities. In connection with
any offer to purchase Securities under Section 11.01, the Company shall, to the extent applicable,
(a) comply with Rules 13e-4 and 14e-1 (and any successor provisions thereto) under the Exchange
Act, if applicable; (b) file the related Schedule TO (or any successor schedule, form or report)
under the Exchange Act, if applicable; and (c) otherwise comply with all applicable federal and
state securities laws so as to permit the rights and obligations under Section 11.01 to be
exercised in the time and in the manner specified in Section 11.01.

     (e) Repayment to the Company. The Trustee and the Paying Agent shall return to the Company
any cash or property that remains unclaimed, as provided in paragraph 8 of the Securities, together
with interest that the Trustee or Paying Agent, as the case may be, has expressly agreed in writing
to pay, if any, that is held by them for the payment of a Fundamental Change Purchase Price;
provided, however, that to the extent that the aggregate amount of cash or property deposited by
the Company pursuant to Section 11.01(c) exceeds the aggregate Fundamental Change Purchase Price of
the Securities or portions thereof which the Company is obligated to purchase as of the Fundamental
Change Purchase Date then promptly on and after the Business Day following the Fundamental Change
Purchase Date the Trustee and the Paying Agent shall return any such excess to the Company together
with interest that the Trustee or Paying Agent, as the case may be, has expressly agreed in writing
to pay, if any.

ARTICLE 12

Conversion

     Section 12.01 . Conversion of Securities. (a) Right to Convert. Subject to the procedures for
conversion set forth in this Article 12, prior to the Restriction Release Date, a Holder may
convert all or a portion of its Securities only when the conditions specified in clause (iii) below
are met and only during the related specified time period. Subject to the procedures for
conversion set forth in this Article 12, following the Restriction Release Date, a Holder may
convert all or a portion of its Securities at any time prior to 5:00 p.m., New York City time, on
the Business Day immediately preceding the Stated Maturity at the Conversion Rate; provided,
however, that prior to April 1, 2013, the Holder may convert all or a portion of its Securities
only when any of the conditions specified in clauses (i), (ii) and (iii) below are met and during
the related specified period. Whenever the Securities shall become convertible prior to April 1,
2013, upon the satisfaction of one or more of the conditions stated in clauses (i), (ii) or (iii)
below, the Company or, at the Company’s request, the Trustee in the name and at the expense of the
Company, shall notify, in the case of clause (i) and (ii), promptly, and in the case of clause
(iii), within the time periods specified in clause (iii)(A)(B) and (C), the Trustee, the Conversion
Agent and the Holders of the event triggering such
convertibility in the manner provided in Section 13.02 and the Company shall also publicly announce
such information by publication on the Company’s website or through such other public medium as it
may use at such time. Whenever the Securities shall become convertible upon the satisfaction of
one or more of the

 

57

conditions stated in clauses (iii)(B) or (iii)(C), the Company or, at the
Company’s request, the Trustee in the name and at the expense of the Company, shall also provide
notice of the event triggering such convertibility in accordance with the provisions of Section
11.02. Any notice so given shall be conclusively presumed to have been duly given, whether or not
the Holder receives such notice.

     (i) Conversion Upon Satisfaction of Sale Price Condition. Following the Restriction
Release Date, a Holder may surrender all or a portion of its Securities for conversion
during any calendar quarter (and only during such calendar quarter) commencing after June
30, 2007, if the Last Reported Sale Price for the Common Stock for at least 20 Trading
Days during the period of 30 consecutive Trading Days ending on the last Trading Day of
the immediately preceding calendar quarter is greater than or equal to 120% of the
Conversion Price in effect on such last Trading Day.

     (ii) Conversion Upon Satisfaction of Trading Price Condition. Following the
Restriction Release Date, a Holder may surrender all or a portion of its Securities for
conversion during the five Business Day period after any 10 consecutive Trading Day
period (the “Measurement Period”) in which the Trading Price per $1,000 in principal
amount of a Security, as determined following a request by a Holder in accordance with
the procedures set forth in this Section 12.01(a)(ii), for each day in the Measurement
Period was less than 98% of the product of the Last Reported Sale Price of the Common
Stock and the applicable Conversion Rate. In connection with any conversion in
accordance with this Section 12.01(a)(ii), the Bid Solicitation Agent shall have no
obligation to determine the Trading Price of the Securities unless requested by the
Company; and the Company shall have no obligation to make such request unless a Holder
provides the Company with reasonable evidence that the Trading Price per $1,000 principal
amount of Securities would be less than 98% of the product of the Last Reported Sale
Price of the Common Stock and the applicable Conversion Rate. Promptly after receiving
such evidence, the Company shall instruct the Bid Solicitation Agent to determine the
Trading Price of the Securities beginning on the next Trading Day and on each successive
Trading Day until the Trading Price per $1,000 principal amount of Securities is greater
than or equal to 98% of the product of the Last Reported Sale Price of the Common Stock
and the applicable Conversion Rate.

     (iii) Conversion Upon Specified Corporate Transactions.

     (A) If the Company (1) distributes to all or substantially all holders of
Common Stock rights entitling them to purchase, for a period expiring within 60
calendar days after the date of the distribution, shares of Common Stock at less
than the average of the Last Reported Sale Prices of a share of Common Stock
for the 10 consecutive Trading Day period ending on the Business Day preceding
the announcement of such issuance, or (2) distributes to all or substantially all
holders of Common Stock assets, debt securities or rights to purchase securities

 

58

of the Company, which distribution has a per share Fair Market Value, as reasonably
determined by the Board of Directors, exceeding 10% of the Last Reported Sale Price
of the Common Stock on the Trading Day preceding the declaration date for such
distribution, then, in each case, the Company must notify the Trustee, the
Conversion Agent and the Holders, in the manner provided in Section 13.02, at least
35 Scheduled Trading Days prior to the Ex-Dividend Date for such distribution. Once
the Company has given such notice, Holders may surrender all or a portion of their
Securities for conversion at any time until the earlier of 5:00 p.m., New York City
time, on the Business Day immediately prior to such Ex-Dividend Date or the
Company’s announcement that such distribution will not take place.

     (B) If the Company is party to a transaction described in clause (2) of the
definition of Fundamental Change (without, for the avoidance of doubt, giving
effect to the proviso set forth in the definition thereof relating to Publicly
Traded Securities), the Company must notify the Trustee, the Conversion Agent and
the Holders, in the manner provided in Section 13.02, at least 35 Scheduled Trading
Days prior to the anticipated Effective Date for such transaction. Once the Company
has given such notice, Holders may surrender all or a portion of their Securities
for conversion at any time until 35 calendar days after the actual Effective Date
of such transaction (or if such transaction also constitutes a Fundamental Change
for purposes of Section 11.01, the related Fundamental Change Purchase Date).

     (C) If a Fundamental Change of the type described in clause (1) or (5) in the
definition thereof occurs, the Company must notify the Trustee, the Conversion
Agent and the Holders, in the manner provided in Section 13.02, on or before the
20th calendar day after the occurrence of the Fundamental Change and Holders may
surrender all or a portion of their Securities for conversion at any time beginning
on the actual Effective Date of such Fundamental Change until and including the
later of (i) the date which is 30 calendar days after the actual Effective Date of
such transaction and (ii) the related Fundamental Change Purchase Date.

A Holder may convert a portion of the principal amount of Securities if the portion is $1,000 or a
multiple of $1,000. The cash payable and/or the number of shares of Common Stock issuable upon
conversion of a Security shall be determined as set forth in Section 12.01(c).

Notwithstanding any other provision of the Securities or this Indenture, all Holders’ rights with
respect to conversion of the Securities and the Company’s obligation to deliver shares of Common
Stock at the Conversion Rate upon such conversion (the “Conversion Obligation”),
are subject, in their entirety, to the Company’ right, in its sole and absolute discretion, to
elect to satisfy such Conversion Obligation in any manner permitted pursuant to Section 12.01(c).

 

59

     (b) Conversion Procedures. The following procedures shall apply to the conversion of
Securities:

     (i) In respect of a Definitive Security, a Holder must (A) complete and manually
sign a written notice of conversion (a “Conversion Notice”) in the form entitled “Form of
Conversion Notice” attached to the Security, or facsimile of such Conversion Notice; (B)
deliver such Conversion Notice, which is irrevocable, and the Security to the Conversion
Agent at the office maintained by the Conversion Agent for such purpose; (C) to the
extent any shares of Common Stock issuable upon conversion are to be issued in a name
other than the Holder’s, furnish endorsements and transfer documents as may be required
by the Conversion Agent and, if required pursuant to Section 12.01(e), pay all transfer
or similar taxes or duties; and (D) if required pursuant to Section 2.01(d), pay funds
equal to interest (including any Additional Interest) payable on the next interest
payment date.

     (ii) In respect of a beneficial interest in a Global Security, a Beneficial Owner
must (A) comply with DTC’s procedures for converting a beneficial interest in a Global
Security, (B) to the extent any shares of Common Stock issuable upon conversion are to be
issued in a name other than the Holder’s, if required pursuant to Section 12.01(e), pay
all transfer or similar taxes or duties and (C) if required pursuant to Section 2.01(d),
pay funds equal to interest (including any Additional Interest) payable on the next
interest payment date.

The date a Holder satisfies the foregoing requirements is the “Conversion Date” hereunder.

     If a Holder converts more than one Security at the same time, the cash and number of shares of
Common Stock issuable upon the conversion, if any, shall be based on the total principal amount of
the Securities converted.

     If a Holder has delivered a Fundamental Change Purchase Notice with respect to a Security, the
Holder may not surrender that Security for conversion until the Holder has withdrawn the notice in
accordance with Section 11.02(b).

     Upon surrender of a Security that is converted in part, the Company shall execute, and the
Trustee or the Authenticating Agent shall authenticate and make available for delivery to the
Holder, a new Security in an authorized denomination equal in principal amount to the unconverted
portion of the Security surrendered.

     (c) Settlement Upon Conversion. (i) The Company may elect at any time to settle its
Conversion Obligation with respect to all future conversions solely by the delivery of shares of
Common Stock, solely by the delivery of cash or on a “net share settlement basis” as described in
Section 12.01(c)(iv) below by giving notice to the Trustee and Holders in conformity with the
requirements of Section 12.06; provided, however, that the Company will settle all conversions
occurring before the Restriction Release Date by paying cash and accordingly no irrevocable
election to settle conversion by the delivery of shares of Common Stock or on a “net share

 

60

settlement basis” may be made until after the Restriction Release Date; and provided, further, that
no irrevocable election to settle conversions by the delivery of shares of Common Stock or on a
“net share settlement basis” may be made at any time when the Company may be prevented from
delivering shares of Common Stock by the covenant set forth in Section 12.01(c)(vi).

     (ii) Unless the Company has irrevocably elected a form of settlement pursuant to Section
12.01(c)(i), the Company shall inform the Holders through the Trustee of the method it will choose
to satisfy its Conversion Obligations at any time on or before the date that is two Trading Days
following the applicable Conversion Date (such period, the “Settlement Notice Period”). If the
Company fails to provide notice within the Settlement Notice Period, the Company shall satisfy its
Conversion Obligations only in shares of Common Stock (and cash in lieu of fractional shares),
unless the Company has irrevocably elected a form of settlement pursuant to Section 12.01(c)(i).
If the Company chooses to satisfy any portion of its Conversion Obligations in cash, it will
specify the amount to be satisfied in cash as a percentage of the Conversion Obligations or a fixed
dollar amount. The Company shall treat all Holders converting on the same Trading Day in the same
manner; however, the Company shall not have any obligation to settle Conversion Obligations arising
on different Trading Days in the same manner.

     (iii) If the Company elects to satisfy any portion of its Conversion Obligations in cash
(other than cash in lieu of fractional shares), a Holder may retract its Notice of Conversion at
any time during the two Trading Day period beginning on the Trading Day after the Company has
notified the Trustee of its method of settlement (the “Conversion Retraction Period”), provided
that no such retraction can be made (and a Notice of Conversion shall be irrevocable) if: (i) the
Company has irrevocably elected to pay solely cash or net share settlement upon conversion of the
Securities prior to a Holder’s delivery of a Conversion Notice, (ii) a Holder is converting its
Securities prior to the Restriction Release Date or (iii) a Holder is converting its Securities
during the period beginning 25 Trading Days immediately preceding the Stated Maturity and ending
one Trading Day immediately preceding the Stated Maturity, even if the Company has not otherwise
notified the Holder prior to the Conversion Date of its settlement method election.

     The Company may, in lieu of sending individual notices of its election, send one notice to all
Holders of the method the Company chooses to satisfy its Conversion Obligation for conversions
following delivery of a notice relating to the occurrence of specified events triggering conversion
rights or on or following the 25th Trading Day immediately preceding the Stated
Maturity.

     (iv) With respect to any Notice of Conversion received by the Company, the consideration to be
distributed (“Conversion Settlement Distribution”) for any Security subject to such Notice of
Conversion shall consist of cash, Common Stock or a combination thereof (as selected by the
Company) as set forth in this clause (iv) and clause (v) below:

     (A) if the Company elects to satisfy the entire Conversion Obligation in shares
of Common Stock, the Conversion Settlement Distribution shall be a number of shares
equal to the product of: (A) the aggregate principal amount of

 

61

the Securities to be converted divided by $1,000, multiplied by (B) the then applicable Conversion Rate,
plus cash for any fractional shares pursuant to Section 12.01(d);

     (B) if the Company elects to satisfy the entire Conversion Obligation in cash,
the Conversion Settlement Distribution shall be cash in an amount equal to the
product of: (A) a number equal to the product of (x) the aggregate principal amount
of Securities to be converted divided by $1,000 multiplied by (y) the then
applicable Conversion Rate, and (B) the average Daily VWAP of the Common Stock
during the Observation Period.

     (C) if the Company elects “net share settlement” with respect to the Conversion
Obligation, the Company will deliver to converting Holders, in respect of each
$1,000 principal amount of Securities being converted, a “Settlement Amount” of cash
and shares of Common Stock, if any, equal to the sum of the Daily Settlement Amounts
for each of the 25 Trading Days during the Observation Period for such Security.

     (v) Settlement by the Company of the Conversion Obligation when the Company has elected to
settle entirely by the delivery of shares of Common Stock will occur as soon as practicable after
the Company is required to notify the Holder that is has chosen this method of settlement but in no
event more than four Trading Days after the relevant Conversion Date. Settlement by the Company of
the Conversion Obligation when the Company must settle entirely in cash or that the Company has
elected to satisfy entirely in cash will occur on the third Trading Day following the final Trading
Day of the relevant Observation Period, unless the Securities have become exchangeable solely for a
fixed amount of cash following the occurrence of a Fundamental Change transaction in which event
settlement will occur in cash on the third Trading Date following the relevant Conversion Date.
Settlement by the Company of the Conversion Obligation when the Company has elected “net share
settlement” will occur on the third Business Day immediately following the final Trading Day of the
related Observation Period.

     (vi) Notwithstanding anything to the contrary, in no event will the Company issue shares of
Common Stock beyond the maximum level permitted by the continued listing standards of The Nasdaq
Stock Market. In accordance with such listing standards, the restriction set forth in this
paragraph will apply at any time when the Securities are outstanding, regardless of whether the
Company then has a class of securities quoted on The Nasdaq Stock Market.

     (d) Cash Payments in Lieu of Fractional Shares. The Company shall not issue a fractional share
of Common Stock upon conversion of Securities. Instead the Company shall deliver cash for the
current market value of the fractional share. The current market value of a fractional share shall
be determined to the nearest 1/10,000th of a share by multiplying the Daily
VWAP of a full share of Common Stock on the final Trading Day immediately preceding the
settlement of such conversion by the fractional amount and rounding the product to the nearest
whole cent.

 

62

     (e) Taxes on Conversion. If a Holder converts Securities, the Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon
the conversion. However, the Holder shall pay any such tax which is due because the Holder requests
the shares to be issued in a name other than the Holder’s name. The Conversion Agent may refuse to
deliver the certificates representing the Common Stock being issued in a name other than the
Holder’s name until the Conversion Agent receives a sum sufficient to pay any tax which shall be
due because the shares are to be issued in a name other than the Holder’s name, but the Conversion
Agent shall have no duty to determine if any such tax is due. Nothing herein shall preclude any
withholding of tax required by law.

     (f) Certain Covenants of the Company.

     (i) The Company shall, prior to issuance of any Securities hereunder, and from time
to time as may be necessary, reserve out of its authorized but
unissued Common Stock or shares of Common Stock held in treasury, a sufficient number of shares of Common Stock,
free of preemptive rights, to permit the conversion of the Securities in accordance with
the terms hereof.

     (ii) All shares of Common Stock delivered upon conversion of the Securities shall be
newly issued shares or shares held in treasury, shall be duly and validly issued and
fully paid and nonassessable and shall be free from preemptive rights and free of any
lien or adverse claim.

     (iii) The Company shall endeavor promptly to comply with all federal and state
securities laws regulating the issuance and delivery of shares of Common Stock upon the
conversion of Securities, if any, and shall cause to have listed or
quoted all such shares of Common Stock on each U.S. national securities exchange or automatic quotation
system or over-the-counter or other domestic market on which the Common Stock is then
listed or quoted.

     Section 12.02 . Adjustments to Conversion Rate. The Conversion Rate shall be adjusted from time
to time by the Company as follows:

     (a) If the Company issues shares of Common Stock as a dividend or distribution on shares of
the Common Stock, or effects a share split or share combination, the Conversion Rate will be
adjusted based on the following formula:

	 	 	 	 	 	 	 
	 

	 	where,	 	 	 	 
	 

	 	CR0
	 	=
	 	the Conversion Rate in effect immediately prior to such
event
	 
	 	 	 	 	 	 
	 

	 	CR'
	 	=
	 	the Conversion Rate in effect immediately after such event

 

63

	 	 	 	 	 	 	 
	 

	 	OS0
	 	=
	 	the number of shares of Common Stock outstanding
immediately prior to such event
	 
	 	 	 	 	 	 
	 

	 	OS'
	 	=
	 	the number of shares of Common Stock outstanding
immediately after such event

Such adjustment shall become effective immediately after 9:00 a.m., New York City time, on the
Business Day following the Record Date for such dividend or distribution, or the date fixed for
determination for such share split or share combination. The Company will not pay any dividend or
make any distribution on shares of Common Stock held in treasury by the Company. If any dividend
or distribution of the type described in this Section 12.02(a) is declared but not so paid or made,
or the outstanding shares of Common Stock are not subdivided or combined, as the case may be, the
Conversion Rate shall again be adjusted, effective as of the date the Board of Directors determines
not to pay such divided or distribution, or subdivide or combine the outstanding shares of Common
Stock, as the case may be, to the Conversion Rate that would then be in effect if such dividend or
distribution, or subdivision or combination, had not been declared.

     (b) If the Company issues to all or substantially all holders of its Common Stock any rights
or warrants entitling them for a period of not more than 60 calendar days to subscribe for or
purchase shares of Common Stock at a price per share less than the average of the Last Reported
Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on the Business
Day immediately preceding the date of announcement of the issuance of such rights or warrants, the
Conversion Rate will be adjusted based on the following formula:

	 	 	 	 	 	 	 
	 

	 	where,	 	 	 	 
	 

	 	CR0
	 	=
	 	the Conversion Rate in effect immediately prior to such
event
	 
	 	 	 	 	 	 
	 

	 	CR'
	 	=
	 	the Conversion Rate in effect immediately after such event
	 
	 	 	 	 	 	 
	 

	 	OS0
	 	=
	 	the number of shares of Common Stock outstanding
immediately prior to such event
	 
	 	 	 	 	 	 
	 

	 	X
	 	=
	 	the total number of shares of Common Stock issuable
pursuant to such rights or warrants
	 
	 	 	 	 	 	 
	 

	 	Y
	 	=
	 	the number of shares of Common Stock equal to the
aggregate price payable to exercise such rights divided
by the average of the Last Reported Sale Prices of the
Common Stock over the 10 consecutive Trading Day period
ending on the Business Day immediately preceding the date
of announcement of the issuance of such rights or
warrants

 

 

64

Such adjustment shall be successively made whenever any such rights or warrants are issued and
shall become effective immediately after 9:00 a.m., New York City time, on the Business Day
following the date fixed for determination of Holders entitled to receive such rights or warrants.
The Company will not issue any such rights or warrants in respect of any shares of Common Stock
held in treasury by the Company. To the extent that shares of Common Stock are not delivered after
the expiration of such rights or warrants, the Conversion Rate shall be readjusted to the
Conversion Rate that would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of delivery of only the number of shares of Common Stock
actually delivered. If such rights or warrants are not so issued, the Conversion Rate shall again
be adjusted to be the Conversion Rate that would then be in effect if such date fixed for the
determination of stockholders entitled to receive such rights or warrants had not been fixed.

In determining whether any rights or warrants entitle the holders to subscribe for or purchase
shares of Common Stock at less than such Last Reported Sale Price, and in determining the aggregate
offering price of such shares of Common Stock, there shall be taken into account any consideration
received by the Company for such rights or warrants and any amount payable on exercise or
conversion thereof, the value of such consideration, if other than cash, to be determined by the
Board of Directors.

     (c) If the Company distributes shares of its Capital Stock, evidences of its indebtedness or
other assets or property of the Company to all or substantially all holders of the Common Stock,
excluding:

     (i) dividends or distributions and rights or warrants referred to in clause (a) or
(b) above; and

     (ii) dividends or distributions paid exclusively in cash;

then the Conversion Rate will be adjusted based on the following formula:

where,

	 	 	 	 	 
	CR0

	 	=
	 	the Conversion Rate in effect immediately prior to such
distribution
	 
	 	 	 	 
	CR'

	 	=
	 	the Conversion Rate in effect immediately after such distribution
	 
	 	 	 	 
	SP0

	 	=
	 	the average of the Last Reported Sale Prices of the Common Stock
over the 10 consecutive Trading Day period ending on the
Business Day immediately preceding the Ex-Dividend Date for such
distribution
	 
	 	 	 	 
	FMV

	 	=
	 	the Fair Market Value (as determined by the Board of Directors)
of the shares of Capital Stock, evidences of indebtedness,
assets or property distributed with respect to each outstanding
share of Common Stock on the Record Date for such distribution.

 

65

Such adjustment shall become effective immediately prior to 9:00 a.m., New York City time, on the
Business Day following the Record Date such distribution.

With respect to an adjustment pursuant to this clause (c) where there has been a payment of a
dividend or other distribution on the Common Stock or shares of Capital Stock of any class or
series, or similar equity interest, of or relating to a Subsidiary or other business unit (a
“Spin-Off”), the Conversion Rate in effect immediately before 5:00 p.m., New York City time, on the
tenth Trading Day immediately following, and including, the effective date for such Spin-Off will
be increased based on the following formula:

where,

	 	 	 	 	 
	CR0

	 	=
	 	the Conversion Rate in effect immediately prior to such
adjustment
	 
	 	 	 	 
	CR'

	 	=
	 	the Conversion Rate in effect immediately after such adjustment
	 
	 	 	 	 
	FMV0

	 	=
	 	the average of the Last Reported Sale Prices of the Capital
Stock or similar equity interest distributed to holders of
Common Stock applicable to one share of Common Stock over the
first 10 consecutive Trading Day period after the effective
date of the Spin-Off
	 
	 	 	 	 
	MP0

	 	=
	 	the average of the Last Reported Sale Prices of Common Stock
over the first 10 consecutive Trading Day period after the
effective date of the Spin-Off.

Such adjustment shall occur on the tenth Trading Day from, and including, the effective date of the
Spin-Off.

     (d) If the Company pays any cash dividend or distribution to all or substantially all holders
of Common Stock, the Conversion Rate will be adjusted based on the following formula:

where,

	 	 	 	 	 
	CR0

	 	=
	 	the Conversion Rate in effect immediately prior to
the Record Date for such distribution

 

66

	 	 	 	 	 
	CR'

	 	=
	 	the Conversion Rate in effect immediately after
the Record Date for such distribution
	 
	 	 	 	 
	SP0

	 	=
	 	the Last Reported Sale Price of the Common Stock
on the Trading Day immediately preceding the
Ex-Dividend Date for such distribution
	 
	 	 	 	 
	C

	 	=
	 	the amount in cash per share the Company
distributes to holders of Common Stock

Such adjustment shall become effective immediately after 5:00 p.m., New York City time, on the
Record Date for such dividend or distribution; provided that if such dividend or distribution is
not so paid or made, the Conversion Rate shall again be adjusted to be the Conversion Rate that
would then be in effect if such dividend or distribution had not been declared.

     (e) If the Company or any of its Subsidiaries make a payment in respect of a tender or
exchange offer for Common Stock, to the extent that the cash and value of any other consideration
included in the payment per share of Common Stock exceeds the Last Reported Sale Price of the
Common Stock on the Trading Day next succeeding the last date on which tenders or exchanges may be
made pursuant to such tender offer or exchange offer (such last date, the “Expiration Time”), the
Conversion Rate will be increased based on the following formula:

where,

	 	 	 	 	 
	CR0

	 	=
	 	the Conversion Rate in effect on the date such
tender offer or exchange offer expires
	 
	 	 	 	 
	CR'

	 	=
	 	the Conversion Rate in effect on the day next
succeeding the date such tender offer or exchange
offer expires
	 
	 	 	 	 
	AC

	 	=
	 	the aggregate value of all cash and any other
consideration (as determined by the Board of
Directors) paid or payable for shares purchased in
such tender offer or exchange offer
	 
	 	 	 	 
	OS0

	 	=
	 	the number of shares of Common Stock outstanding
immediately prior to the date such tender offer or
exchange offer expires

 

67

	 	 	 	 	 
	OS'

	 	=
	 	the number of shares of Common Stock outstanding
immediately after the date such tender offer or
exchange offer expires
	 
	 	 	 	 
	SP’

	 	=
	 	the average of the Last Reported Sale Prices of
Common Stock over the 10 consecutive Trading Day
period commencing on the Trading Day next
succeeding the date such tender offer or exchange
offer expires.

If the Company is obligated to purchase shares pursuant to any such tender offer or exchange offer,
but the Company is permanently prevented by applicable law from effecting any such purchases or all
such purchases are rescinded, the Conversion Rate shall again be adjusted to be
the Conversion Rate that would then be in effect if such tender offer or exchange offer had not
been made.

     (f) [reserved]

     (g) Notwithstanding the foregoing provisions of this Section 12.02, no adjustment shall be
made thereunder, nor shall an adjustment be made to the ability of a Holder to convert, for any
distribution described therein if the Holder, as a result of holding the Securities, will otherwise
participate in the distribution without conversion of such Holder’s Securities.

     (h) The Company may (but is not required to) make such increases in the Conversion Rate, in
addition to those required by clauses (a) through (e) of this Section 12.02 as the Board of
Directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock
or rights to purchase Common Stock in connection with a dividend or distribution of shares (or
rights to acquire shares) or any similar event treated as such for income tax purposes.

     (i) To the extent permitted by applicable law, the Company from time to time may increase the
Conversion Rate by any amount for any period of at least 20 Business Days if the Board of Directors
shall have made a determination that such increase would be in the best interests of the Company,
which determination shall be conclusive.

     (j) Notwithstanding any provision herein to the contrary, no adjustment to the Conversion Rate
need be made:

     (i) upon the issuance of any shares of Common Stock pursuant to any present or
future plan providing for the reinvestment of dividends or interest payable on securities
of the Company and the investment of additional optional amounts in shares of Common
Stock under any plan;

     (ii) upon the issuance of any shares of Common Stock or options or rights to
purchase shares of Common Stock pursuant to any present or future employee, director or
consultant benefit plan or program of or assumed by the Company or any of its
Subsidiaries;

 

68

     (iii) upon the issuance of any shares of Common Stock pursuant to any option,
warrant, right, or exercisable, exchangeable or convertible security not described in
clause (ii) above and outstanding as of the Issue Date;

     (iv) for a change in the par value of the Common Stock; or

     (v) for accrued and unpaid interest (including Additional Interest, if any).

To the extent the Securities become convertible into cash, assets or property (other than Capital
Stock of the Company or securities to which Section 12.03 applies), no adjustment shall be made
thereafter as to the cash, assets or property. Interest shall not accrue on such cash, assets or
property.

     (k) All calculations under this Section 12.02 and Section 12.03 shall be made by the Company
and shall be made to the nearest cent or to the nearest one-ten thousandth (1/10,000) of a share,
as the case may be. Except as described above in this Section 12.02 and Section 12.03, the Company
will not adjust the Conversion Rate.

     (l) Whenever the Conversion Rate is adjusted as herein provided, the Company shall promptly
file with the Trustee and any Conversion Agent other than the Trustee an Officers’ Certificate
setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the
facts requiring such adjustment. Unless and until a Trust Officer of the Trustee shall have
received such Officers’ Certificate, the Trustee shall not be deemed to have knowledge of any
adjustment of the Conversion Rate and may assume that the last Conversion Rate of which it has
knowledge is still in effect. Promptly after delivery of such certificate, the Company shall
prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion
Rate and the date on which each adjustment becomes effective and shall mail such notice of such
adjustment of the Conversion Rate to the Holder of each Security at such Holder’s last address
appearing on the Securities Register provided for in Section 2.05 of this Indenture within 20
Business Days after execution thereof. Failure to deliver such notice shall not affect the
legality or validity of any such adjustment.

     (m) Any case in which this Section 12.02 provides that an adjustment shall become effective
immediately after (i) a Record Date for a dividend or distribution described in Section 12.02(a),
Section 12.02(c) or Section 12.02(d), (ii) the date fixed for the determination of a share split or
combination pursuant to Section 12.02(a), (iii) the date fixed for the determination of Holders
entitled to receive rights or warrants pursuant to 12.02(b) or (iv) the Expiration Time for any
tender or exchange offer pursuant to Section 12.02(e), (each a “Determination Date”), the Company
may elect to defer until the occurrence of the applicable Adjustment Event (as hereinafter defined)
(x) issuing to the Holder of any Security converted after such Determination Date and before the
occurrence of such Adjustment Event, the additional shares of Common Stock or other securities
issuable upon such conversion by reason of the adjustment required by such Adjustment Event over
and above the Common Stock issuable upon such conversion before giving effect to such adjustment
and (y) paying to such Holder any amount in cash in lieu of any

 

69

fraction pursuant to Section 12.01.
For purposes of this Section 12.02(m), the term “Adjustment Event” shall mean:

     (1) in any case referred to in clause (i) hereof, the date any such dividend or
distribution is paid or made;

     (2) in any case referred to in clause (ii) hereof, the occurrence of such event;

     (3) in any case referred to in clause (iii) hereof, the date of expiration of such
rights or warrants;

     (4) in any case referred to in clause (iv) hereof, the date a sale or exchange of
Common Stock pursuant to such tender or exchange offer is consummated and becomes
irrevocable.

     (n) For purposes of this Section 12.02, the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.
The Company will not pay any dividend or make any distribution on shares of Common Stock held in
the treasury of the Company.

     (o) Whenever any provision of this Article 12 requires a calculation of an average of Last
Reported Sale Prices or Daily VWAP over a span of multiple days, the Company will make appropriate
adjustments (determined in good faith by the Board of Directors) to account for any adjustment to
the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion
Rate where the Ex-Dividend Date of the event occurs, at any time during the period from which the
average is to be calculated.

Section 12.03. Adjustment Upon Certain Fundamental Changes. (a) If a Holder elects to convert Securities pursuant to Section 12.01(a)(iii) above in
connection with a transaction described therein and such Fundamental Change pursuant to clause (1)
or (2) of the definition of “Fundamental Change” occurs, the Conversion Rate for such Securities
shall be increased by an additional number of shares of Common Stock (the “Additional Shares”) as
described below. Any conversion will be deemed to have occurred in connection with such Fundamental
Change only if such Securities are surrendered for conversion at a time when the Securities would
be convertible in light of the expected or actual occurrence of a Fundamental Change and
notwithstanding the fact that a Security may then be convertible because another condition to
conversion has been satisfied or no condition to conversion exists.

     (b) The number of Additional Shares by which the Conversion Rate will be increased will be
determined by reference to the table attached as Schedule A hereto, based on the date on which the
Fundamental Change occurs or becomes effective (the “Effective Date”) and the Stock Price with
respect to such transaction; provided that if the Stock Price is between two Stock Price amounts
set forth in such table or the Effective Date is between two Effective Dates in the table, the
number of Additional Shares will be determined by a straight-line interpolation

 

70

between the number
of Additional Shares set forth for the higher and lower Stock Price amounts and the two dates, as
applicable, based on a 365-day year; provided further that if the Stock Price is greater than
$37.00 per share (subject to adjustment as set forth in clause (c) below) or less than $10.84 per
share (subject to adjustment as set forth in clause (c) below), then no Additional Shares will be
added to the Conversion Rate. Notwithstanding the foregoing, in no event will the total number of
shares of Common Stock issuable upon conversion exceed 92.2509 shares per $1,000 principal amount
of Securities, subject to adjustments in the same manner as the Conversion Rate pursuant to Section
12.02.

     (c) The Stock Prices set forth in the first row of the table in Schedule A hereto will be
adjusted as of any date on which the Conversion Rate of the Securities is adjusted pursuant to
Section 12.02. The adjusted Stock Prices will equal the Stock Prices applicable immediately prior
to such adjustment, multiplied by a fraction, the numerator of which is the Conversion Rate
immediately prior to such adjustment and the denominator of which is the Conversion Rate as so
adjusted. The number of Additional Shares set forth in such table will be adjusted in the same
manner as the Conversion Rate as set forth in Section 12.02.

     Section 12.04. Effect of Reclassification, Consolidation, Merger or Sale. (a) If any of the following events occur:

     (i) any recapitalization, reclassification or change of the outstanding shares of Common Stock
(other than a subdivision or combination to which Section 12.02(a) applies);

     (ii) any consolidation, merger, binding share exchange or combination of the Company with
another Person;

     (iii) any conveyance, transfer, sale, lease or other disposition to any other Person of all or
substantially all of the properties and assets of the Company and its Subsidiaries; or

     (iv) any statutory share exchange,

as a result of which holders of Common Stock received cash, securities or other property (or any
combination thereof) with respect to or in exchange for such Common Stock (any such event or
transaction, a “Reorganization Event”), the Securities will become convertible into the kind and
amount of consideration that Holders of Common Stock received in such Reorganization Event (the
“Reference Property”) upon such Reorganization Event by a holder of a number of shares of Common
Stock equal to the Conversion Rate immediately prior to such Reorganization Event and the Company
or successor Person shall execute a supplemental indenture to such effect. For purposes of the
foregoing, the type and amount of consideration that a holder of Common Stock would have been
entitled to receive in the case of any such Reorganization Event that causes the Common Stock to be
converted into the right to receive more than a single type of consideration (determined based in
part upon any form of stockholder election) will be deemed to be the weighted average of the types
and amounts of consideration received by the holders of Common Stock that affirmatively make such
an election; the Holders of the Securities will have no right to make any such election themselves
with respect to the Securities. In all cases, the provisions

 

71

 under Section 12.01(c) shall continue
to apply with respect to the calculation of the Settlement Amount. Such supplemental indenture
shall provide for provisions and adjustments which shall be as nearly equivalent as may be
practicable to the provisions and adjustments provided for in this Article 12, Article 9 and
Article 11 and the definition of Fundamental Change, as appropriate, as determined in good faith by
the Company (which determination shall be conclusive and binding), to make such provisions apply to
such other Person if different from the original issuer of the Securities.

     (b) Following the effective time of any such Reorganization Event, settlement of Securities
converted shall be in cash and/or units of Reference Property determined in accordance with Section
12.01(c) above based on the Daily Conversion Value and Daily VWAP of such Reference Property. For
the purposes of determining such Daily Conversion Value and Daily VWAP, (i) if the Reference
Property includes securities for which the price can be
determined in a manner contemplated by the definition of Daily VWAP, then the value of such
securities shall be determined in accordance with the principles set forth in such definition, as
determined in good faith by the Company (which determination shall be conclusive and binding); (ii)
if the Reference Property includes other property (other than securities as to which clause (i)
applies or cash), then the value of such property shall be the Fair Market Value of such property
as determined by the Company’s Board of Directors in good faith; and (iii) if the Reference
Property includes cash, then the value of such cash shall be the amount thereof.

     (c) Any issuer of securities included in the Reference Property shall execute an amendment to
the Registration Rights Agreement (to the extent any Registrable Securities (as defined therein)
remain outstanding) to make the provisions thereof applicable to such securities included in the
Applicable Consideration.

     (d) The Company shall cause notice of the execution of any supplemental indenture required by
this Section 12.04 to be mailed to each Holder, in the manner provided in Section 13.02, within 20
calendar days after execution thereof. Failure to deliver such notice shall not affect the
legality or validity of such supplemental indenture.

     (e) The above provisions of this Section 12.04 shall similarly apply to successive
Reorganization Events.

     (f) If this Section 12.04 applies to any event or occurrence, Section 12.02 shall not apply in
respect of such event or occurrence.

     (g) The Company shall not become a party to any Reorganization Event unless its terms are
consistent with the foregoing. None of the foregoing provisions shall affect the right of a Holder
of Securities, if any, to convert the Securities as set forth in Section 12.01 prior to the
effective time of such Reorganization Event.

     Section 12.05. Responsibility of Trustee. The Trustee and any other Conversion Agent shall not at any time be under any duty or
responsibility to the Company or any Holder of Securities to determine the Conversion Rate, or
whether any facts exist which may require any

 

72

adjustment of the Conversion Rate, or with respect to
the nature or extent or calculation of any such adjustment when made, or with respect to the method
employed in making the same. The Trustee and any other Conversion Agent shall not be accountable
with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of
any securities or property, which may at any time be issued or delivered upon the conversion of any
Security; and the Trustee and any other Conversion Agent make no representations with respect
thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the
Company to issue, transfer or deliver any cash or shares of Common Stock or stock certificates or
other securities or property upon the surrender of any Security for the purpose of conversion or to
comply with any of the duties, responsibilities or covenants of the Company contained in this
Article 12. Without limiting the generality of the foregoing, neither the Trustee nor any
Conversion Agent shall be under any responsibility to
determine the correctness of any provisions contained in any supplemental indenture entered into
pursuant to Section 12.04 relating either to the kind or amount of shares of stock or securities or
property (including cash) receivable by Holders upon the conversion of their Securities after any
Reorganization Event or to any adjustment to be made with respect thereto, but, subject to the
provisions of Section 7.01, may accept as conclusive evidence of the correctness of any such
provisions, and shall be protected in relying upon, an Officers’ Certificate with respect thereto.

     Section 12.06. Notice to Holders Prior to Certain Actions. Except where notice is required pursuant to Section 12.01(iii)(A), in case:

     (a) the Company shall declare a dividend (or any other distribution) on its Common Stock that
would require an adjustment in the Conversion Rate pursuant to Section 12.02; or

     (b) the Company shall authorize the granting to the holders of all or substantially all of its
Common Stock of rights or warrants to subscribe for or purchase any share of any class or any other
rights or warrants that would require an adjustment in the Conversion Rate pursuant to Section
12.02; or

     (c) of any reclassification or reorganization of the Common Stock of the Company (other than a
subdivision or combination of its outstanding Common Stock, or a change in par value, or from par
value to no par value, or from no par value to par value), or of any consolidation or merger to
which the Company is a party and for which approval of any stockholders of the Company is required,
or of the sale or transfer of all or substantially all of the assets of the Company;

     (d) of the voluntary or involuntary dissolution, liquidation or winding up of the Company;

     (e) of the occurrence of the Restriction Release Date;

     (f) of any irrevocable elections pursuant to Section 12.01(d) with respect to the form of
settlement of conversions;

 

73

the Company shall cause to be filed with the Trustee and to be mailed to each Holder of Securities
in the manner provided in Section 13.02, as promptly as possible but in any event at least three
calendar days prior to the applicable date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution or rights or warrants,
or, if a record is not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distribution or rights are to be determined, (y) the date on which
such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding
up is expected to become effective or occur, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up or (z) the date of the occurrence of the Restriction
Release Date or the date of the Company’s irrevocable settlement election. Failure to give such
notice, or any defect therein, shall not affect the legality or validity of any related dividend,
distribution, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or
winding up. Any notice of the occurrence of the Restriction Release Date shall include a brief
description of the events relating to such occurrence as well as a statement of the effect of the
occurrence of the Restriction Release Date on the conversion rights of Holders of the Securities.
Any notice of an irrevocable settlement election shall indicate the form of settlement irrevocably
elected by the Company and until such notice has been given as provided in this Section 12.06,
converting Holders will retain their rights with respect to the settlement of conversions fully or
partially in cash to retract conversions of Securities as provided in Section 12.01(c).

     Section 12.07. Stockholder Rights Plan. To the extent that the Company has a rights plan in effect upon conversion of the Securities
into Common Stock, the Holders will receive, in addition to the Common Stock, the rights under the
rights plan, unless prior to any conversion, the rights have separated from the Common Stock, in
which case, and only in such case, the Conversion Rate will be adjusted at the time of separation
as if the Company distributed to all or substantially all holders of Common Stock shares of the
Company’s Capital Stock, evidences of indebtedness or assets or property as described in Section
12.02(c) above, subject to readjustment in the event of the expiration, termination or redemption
of such rights. In lieu of any such adjustment, the Company may amend such applicable stockholder
rights agreement to provide that upon conversion of the Securities the Holders will receive, in
addition to the Common Stock issuable upon such conversion, the rights which would have attached to
such Common Stock if the rights had not become separated from the Common Stock under such
applicable stockholder rights agreement.

ARTICLE 13

Miscellaneous

     Section 13.01. TIA Controls. If any provision of this Indenture limits, qualifies or conflicts with another provision which
is required to be included in this Indenture by the TIA, the provision required by the TIA shall
control.

 

74

     Section 13.02. Notices. Any notice or communication shall be in writing (including telecopy promptly confirmed in
writing) and delivered in person or mailed by first-class mail addressed as follows:

if to the Company or any Subsidiary Guarantor:

Eddie Bauer Holdings, Inc.

15010 N.E. 36th Street

Redmond, WA 98052

Attention: General Counsel

Fax number: 425-755-7671

if to the Trustee:

The Bank of New York

101 Barclay Street – Floor 8W

New York, NY 10286

Attention: Corporate Trust Administration

Fax: 212-815-5704

     The Company or the Trustee by notice to the other may designate additional or different
addresses for subsequent notices or communications.

     Any notice or communication mailed to a registered Holder shall be mailed to the Holder at the
Holder’s address as it appears on the registration books of the Registrar and shall be sufficiently
given if so mailed within the time prescribed.

     Failure to mail a notice or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders. If a notice or communication is mailed in the manner
provided above, it is duly given, whether or not the addressee receives it, except that notices to
the Trustee shall be effective only upon receipt.

     Section 13.03. Communication by Holders with other Holders. Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their rights
under this Indenture or the Securities. The Company, the Trustee, the Registrar and anyone else
shall have the protection of TIA § 312(c).

     Section 13.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take or refrain from taking any
action under this Indenture, the Company shall furnish to the Trustee:

     (a) an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee
stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and

 

75

     (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating
that, in the opinion of such counsel, all such conditions precedent have been complied with.

     Section 13.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a covenant or condition provided for
in this Indenture shall include:

     (a) a statement that the individual making such certificate or opinion has read such covenant
or condition;

     (b) a brief statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are based;

     (c) a statement that, in the opinion of such individual, he has made such examination or
investigation as is necessary to enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with; and

     (d) a statement as to whether or not, in the opinion of such individual, such covenant or
condition has been complied with.

     In giving such Opinion of Counsel, counsel may rely as to factual matters on an Officers’
Certificate or on certificates of public officials.

     Section 13.06. When Securities Are Disregarded. In determining whether the Holders of the required principal amount of Securities have concurred
in any direction, waiver or consent, Securities owned by the Company or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common control with the Company
shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver or consent, only
Securities which a Trust Officer of the Trustee actually knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.

     Section 13.07. Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules for action by, or a meeting of, Holders. The Registrar
and the Paying Agent may make reasonable rules for their functions.

     Section 13.08. Legal Holidays. A “Legal Holiday” is a Saturday, a Sunday or other day on which commercial banking institutions
are authorized or required to be closed in New York City. If a payment date is a Legal Holiday,
payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest or
Additional Interest, if any, shall accrue for the intervening period. If a Regular Record Date is
a Legal Holiday, the record date shall not be affected.

 

76

     Section 13.09. Governing Law; Waiver of Jury Trial. THIS INDENTURE AND THE SECURITIES AND SUBSIDIARY GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. EACH OF THE COMPANY, THE SUBSIDIARY
GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OF OR RELATING TO EACH OF
THIS INDENTURE, THE NOTES OR THE SUBSIDIARY GUARANTEES.

     Section 13.10. No Recourse Against Others. An incorporator, director, officer, employee, Affiliate or stockholder of the Company, solely by
reason of this status, shall not have any liability for any obligations of the Company under the
Securities, this Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Holder shall waive and release all
such liability. The waiver and release shall be part of the consideration for the issue of the
Securities.

     Section 13.11. Successors. All agreements of the Company and the Subsidiary Guarantors in this Indenture and the Securities
and the Subsidiary Guarantees shall bind their respective successors. All agreements of the
Trustee in this Indenture shall bind its successors.

     Section 13.12. Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.

     Section 13.13. Qualification of Indenture. The Company shall qualify this Indenture under the TIA in accordance with the terms and
conditions of the Registration Rights Agreement and shall pay all reasonable costs and expenses
(including attorneys’ fees and expenses for the Company, the Trustee and the Holders) incurred in
connection therewith, including, but not limited to, costs and expenses of qualification of this
Indenture and the registration of the resale of the Securities and the Subsidiary Guarantees and
the printing of this Indenture and the Securities.

     Section 13.14. Table of Contents; Headings. The table of contents, cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended to be considered a
part hereof and shall not modify or restrict any of the terms or provisions hereof.

     Section 13.15. Severability Clause. In case any provision in this Indenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby and such provision shall be ineffective only to the extent of such invalidity,
illegality or unenforceability.

     Section 13.16. Calculations. Except as otherwise provided herein, the Company will be responsible for making all calculations
called for under this Indenture and the Securities. The Company will make all such calculations in
good faith and, absent manifest error, its calculations

 

77

will be final and binding on Holders. The
Company upon request will provide a schedule of its calculations to each of the Trustee and the
Conversion Agent, and each of the Trustee and Conversion Agent is entitled to rely conclusively
upon the accuracy of the Company’s calculations without independent verification. The Trustee will
deliver a copy of such schedule to any Holder upon the request of such Holder.

[Remainder of the page intentionally left blank]

 

78

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

	 	 	 	 	 
	 	EDDIE BAUER HOLDINGS, INC.

 	 
	 	By:  	/s/ David Taylor	 
	 	 	Name:  	David Taylor	 
	 	 	Title:  	Interim Chief Financial Officer	 
	 
	 	EDDIE BAUER, INC.

 	 
	 	By:  	/s/ David Taylor	 
	 	 	Name:  	David Taylor	 
	 	 	Title:  	Interim Chief Financial Officer	 
	 
	 	EDDIE BAUER FULFILLMENT SERVICES, INC.

 	 
	 	By:  	/s/ David Taylor	 
	 	 	Name:  	David Taylor	 
	 	 	Title:  	Interim Chief Financial Officer	 
	 
	 	EDDIE BAUER DIVERSIFIED SALES, LLC

 	 
	 	By:  	/s/ David Taylor	 
	 	 	Name:  	David Taylor	 
	 	 	Title:  	Interim Chief Financial Officer	 
	 
	 	EDDIE BAUER SERVICES, LLC

 	 
	 	By:  	/s/ David Taylor	 
	 	 	Name:  	David Taylor	 
	 	 	Title:  	Interim Chief Financial Officer	 
	 

 

79

	 	 	 	 	 
	 	EDDIE BAUER INTERNATIONAL DEVELOPMENT, LLC

 	 
	 	By:  	/s/
David Taylor 	 
	 	 	Name:  	David Taylor 	 
	 	 	Title:  	Interim Chief Financial Officer 	 
	 
	 	EDDIE BAUER INFORMATION TECHNOLOGY, LLC

 	 
	 	By:  	/s/
David Taylor 	 
	 	 	Name:  	David Taylor 	 
	 	 	Title:  	Interim Chief Financial Officer 	 
	 
	 	THE BANK OF NEW YORK, as Trustee

 	 
	 	By:  	/s/
Mary LaGumina 	 
	 	 	Name:  	Mary LaGumina 	 
	 	 	Title:  	Vice President 	 

 

 

	 	 	 	 	 

SCHEDULE A

The following table sets forth the number of shares by which the Conversion Rate will be increased
per $1,000 principal amount of Securities pursuant to Section 12.03 of this Indenture:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Effective date
	 	$	10.84	 	 	$	13.00	 	 	$	15.00	 	 	$	17.00	 	 	$	19.00	 	 	$	21.00	 	 	$	23.00	 	 	$	25.00	 	 	$	27.00	 	 	$	29.00	 	 	$	31.00	 	 	$	33.00	 	 	$	35.00	 	 	$	37.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4/4/2007
	 	 	18.4502	 	 	 	14.3411	 	 	 	11.4148	 	 	 	9.3352	 	 	 	7.7731	 	 	 	6.5512	 	 	 	5.5669	 	 	 	4.7568	 	 	 	4.0794	 	 	 	3.5062	 	 	 	3.0166	 	 	 	2.5955	 	 	 	2.2312	 	 	 	1.9147	 
	4/1/2008
	 	 	18.4502	 	 	 	13.3426	 	 	 	10.5166	 	 	 	8.5659	 	 	 	7.1279	 	 	 	6.0149	 	 	 	5.1228	 	 	 	4.3897	 	 	 	3.7760	 	 	 	3.2555	 	 	 	2.8095	 	 	 	2.4245	 	 	 	2.0901	 	 	 	1.7985	 
	4/1/2009
	 	 	18.4502	 	 	 	12.1469	 	 	 	9.4364	 	 	 	7.6248	 	 	 	6.3284	 	 	 	5.3430	 	 	 	4.5606	 	 	 	3.9200	 	 	 	3.3839	 	 	 	2.9282	 	 	 	2.5365	 	 	 	2.1968	 	 	 	1.9006	 	 	 	1.6410	 
	4/1/2010
	 	 	18.4502	 	 	 	10.8304	 	 	 	8.1458	 	 	 	6.4844	 	 	 	5.3520	 	 	 	4.5169	 	 	 	3.8644	 	 	 	3.3338	 	 	 	2.8903	 	 	 	2.5127	 	 	 	2.1869	 	 	 	1.9031	 	 	 	1.6542	 	 	 	1.4347	 
	4/1/2011
	 	 	18.4502	 	 	 	9.2852	 	 	 	6.5946	 	 	 	5.0940	 	 	 	4.1542	 	 	 	3.4973	 	 	 	2.9979	 	 	 	2.5963	 	 	 	2.2616	 	 	 	1.9764	 	 	 	1.7294	 	 	 	1.5134	 	 	 	1.3228	 	 	 	1.1537	 
	4/1/2012
	 	 	18.4502	 	 	 	7.4856	 	 	 	4.6847	 	 	 	3.3792	 	 	 	2.6878	 	 	 	2.2528	 	 	 	1.9364	 	 	 	1.6849	 	 	 	1.4753	 	 	 	1.2960	 	 	 	1.1403	 	 	 	1.0036	 	 	 	0.8826	 	 	 	0.7748	 
	4/1/2013
	 	 	18.4502	 	 	 	5.3780	 	 	 	2.2301	 	 	 	1.2510	 	 	 	0.9367	 	 	 	0.7877	 	 	 	0.6830	 	 	 	0.5976	 	 	 	0.5252	 	 	 	0.4627	 	 	 	0.4083	 	 	 	0.3605	 	 	 	0.3182	 	 	 	0.2804	 
	4/1/2014
	 	 	18.4502	 	 	 	3.0681	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 

Schedule A

 

 

EXHIBIT A

[FORM OF FACE OF SECURITY]

[Restricted Securities Legend, if applicable]

[Global Security Legend, if applicable]

EDDIE BAUER HOLDINGS, INC.

No. [___]

CUSIP NO.: [                    ]

ISIN: [                    ]

5.25% Convertible Senior Notes due 2014

     Eddie Bauer Holdings, Inc., a Delaware corporation, promises to pay to [                    ], or
registered assigns, the principal sum of [                     Dollars ($                    )][insert in Global Security: ,
as revised by the Schedule of Increases and Decreases in Global Security attached hereto], on April
1, 2014.

     Interest Payment Dates: April 1 and October 1

     Regular Record Dates: March 15 and September 15

     Additional provisions of this Security are set forth on the attached “Terms of Securities.”

 

2

     Dated:

	 	 	 	 	 
	 	EDDIE BAUER HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

THE BANK OF NEW YORK, as Trustee, certifies

that this is one of the Securities referred to

in the Indenture.

	 	 	 	 	 
	 	 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 

 

 

TERMS OF SECURITIES

5.25% Convertible Senior Notes due 2014

     Eddie Bauer Holdings, Inc., a Delaware corporation (such corporation, and its successors and
assigns under the Indenture hereinafter referred to, being herein called the “Company”), issued
these Securities under an Indenture dated as of April 4, 2007 (as it may be amended or supplemented
from time to time in accordance with the terms thereof, the “Indenture”), among the Company, the
Subsidiary Guarantors and the Trustee, to which reference is hereby made for a description of the
rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the
Company, the Subsidiary Guarantors and the Holders. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture
Act of 1939, as amended (15 U.S.C. §§ 77aaa-77bbbb) and the Holders are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of those terms.
Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the
Indenture.

     To Guarantee the due and punctual payment of the principal and interest (including any
Additional Interest), if any, on the Securities and all other amounts payable by the Company under
the Indenture and the Securities when and as the same shall be due and payable, whether at
maturity, by acceleration, by repurchase or otherwise, according to the terms of the Securities and
the Indenture, the Subsidiary Guarantors have fully and unconditionally Guaranteed (and future
guarantors, together with the Subsidiary Guarantors, will fully and unconditionally Guarantee),
jointly and severally, such obligations on a senior basis pursuant to the terms of the Indenture.

1. Interest

     The Company promises to pay interest on the principal amount of this Security at the rate of
5.25% per annum.

     The Company will pay interest semiannually on April 1 and October 1 of each year commencing
October 1, 2007. Interest on the Securities will accrue from the most recent date to which
interest has been paid on the Securities or, if no interest has been paid, from April 4, 2007.
Interest will be computed on the basis of a 360-day year of twelve 30-day months.

2. Method of Payment

     By no later than 11:00 a.m., New York City time, on the date on which any principal of or
interest (including any Additional Interest), on any Security is due and payable, the Company shall
deposit with the Paying Agent money sufficient to pay such amount. The Company will pay principal
and interest in money of the United States that at the time of payment is legal tender for payment
of public and private debts.

     Payments in respect of Securities represented by a Global Security (including principal and
interest (including any Additional Interest)) will be made by wire transfer of immediately

 

2

available funds to the accounts specified by The Depository Trust Company. The Company will
pay principal of Definitive Securities at the office or agency designated by the Company for such
purpose. Interest (including any Additional Interest) on Definitive Securities will be payable (i)
to Holders having an aggregate principal amount of $5,000,000 or less, by check mailed to the
Holders of these Securities and (ii) to Holders having an aggregate principal amount of more than
$5,000,000, either by check mailed to each Holder or, upon application by a Holder to the Registrar
not later than the relevant record date, by wire transfer in immediately available funds to that
Holder’s account within the United States, which application shall remain in effect until the
Holder notifies, in writing, the Registrar to the contrary.

3. Redemption

     No sinking fund is provided for the Securities and the Securities are not redeemable at the
option of the Company prior to maturity.

4. Purchase at the Option of the Holder Upon a Fundamental Change 

     If a Fundamental Change shall occur at any time, each Holder shall have the right, at such
Holder’s option and subject to the terms and conditions of the Indenture, to require the Company to
purchase all or a portion of its Securities at a Fundamental Change Purchase Price specified in the
Indenture.

5. Conversion

     Subject to the conditions and procedures set forth in the Indenture, and, prior to April 1,
2013, upon satisfaction of conditions and during the periods specified in the Indenture, a Holder
may convert Securities, on or prior to 5:00 p.m., New York City time, on the Business Day
immediately preceding Stated Maturity, into shares of Common Stock at the Conversion Rate.

     The initial Conversion Rate is 73.8007 shares of Common Stock per $1,000 principal amount of
Securities, subject to adjustment in certain events described in the Indenture. Upon conversion,
in lieu of delivery of shares of Common Stock in satisfaction of the Company’s obligation
conversion, the Company may elect to deliver cash or a combination of cash and shares of Common
Stock, provided that if the Securities are converted prior to the Restriction Release Date (as
defined in the Indenture), the Company must pay cash in settlement in respect of such converted
Securities. The Company shall deliver cash in lieu of any fractional share of Common Stock.

     A Holder may convert a portion of the Securities only if the principal amount of such portion
is $1,000 or a multiple of $1,000. No payment or adjustment shall be made for dividends on the
Common Stock except as provided in the Indenture.

6. Denominations; Transfer; Exchange

     The Securities are in registered form without coupons in denominations of principal amount of
$1,000 and multiples of $1,000. A Holder may transfer or exchange Securities in

 

3

accordance with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer of or exchange of
Securities surrendered for conversion or, if a portion of any Security is surrendered for
conversion, the portion thereof surrendered for conversion.

7. Persons Deemed Owners

     The registered Holder of this Security may be treated as the owner of it for all purposes.

8. Unclaimed Money

     If money for the payment of principal or interest (including any Additional Interest) remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company.
After any such payment, Holders entitled to the money must look only to the Company and not to the
Trustee for payment.

9. Amendment, Waiver

     Subject to certain exceptions, the Indenture contains provisions permitting an amendment of
the Indenture or the Securities with the written consent of the Holders of at least a majority in
principal amount of the then outstanding Securities and the waiver of any Event of Default (other
than with respect to nonpayment or in respect of a provision that cannot be amended without the
written consent of each Holder affected) or noncompliance with any provision with the written
consent of the Holders of a majority in principal amount of the then outstanding Securities.

     In addition, the Indenture permits an amendment of the Indenture or the Security without the
consent of any Holder under circumstances specified in the Indenture.

10. Defaults and Remedies

     If an Event of Default specified in the Indenture occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare all the Securities by
notice to the Company to be due and payable immediately. In addition, certain specified Events of
Default will cause the Securities to become immediately due and payable without further action by
the Holders.

     Holders may not enforce the Indenture or the Securities except as provided in the Indenture.
The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable
indemnity or security. Subject to certain limitations, Holders of a majority in principal amount
of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing Default or Event of Default (except a Default or
Event of Default in payment of principal or interest (including any Additional Interest)) if it
determines that withholding notice is in their interest.

 

4

11. Trustee Dealings with the Company

     Subject to certain limitations set forth in the Indenture, the Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of Securities and may
otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates with the same rights it would have if it were not
Trustee.

12. No Recourse Against Others

     An incorporator, director, officer, employee, Affiliate, agent or stockholder, of the Company,
solely by reason of this status, shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Holder waives and releases all such
liability. The waiver and release are part of the consideration for the issue of the Securities.

13. Authentication

     This Security shall not be valid until an authorized signatory of the Trustee manually
authenticates this Security.

14. Abbreviations

     Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=
tenants in common), TEN ENT (= tenants by the entirety), JT TEN (= joint tenants with rights of
survivorship and not as tenants in common), CUST (=custodian) and U/G/M/A (= Uniform Gift to Minors
Act).

15. CUSIP Numbers

     Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Securities and has directed
the Trustee to use CUSIP numbers in notices as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Securities or as contained in any
notice, and reliance may be placed only on the other identification numbers placed thereon.

16. Governing Law

     This Security shall be governed by, and construed in accordance with, the law of the State of
New York.

     The Company will furnish to any Holder upon written request and without charge to the Holder a
copy of the Indenture which has in it the text of this Security. Requests may be made to
Eddie Bauer Holdings, Inc., 15010 N.E. 36th Street, Redmond, WA 98052, Attention:
General Counsel, Fax number: 425-755-7671.

 

5

[TO BE ATTACHED TO GLOBAL SECURITIES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

     The following increases or decreases in this Global Security have been made:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Principal Amount of this Global	 	 	Signature of authorized	 
	 	 	Amount of decrease in Principal	 	 	Amount of increase in Principal	 	 	Security following such	 	 	signatory of Trustee or	 
	Date	 	Amount of this Global Security	 	 	Amount of this Global Security	 	 	decrease or increase	 	 	Securities Custodian	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

6

ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

 

(Print or type assignee’s name, address and zip code)

 

(Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint                      agent to transfer this Security on the

books of the Company. The agent may substitute another to act for him.

 

	 	 	 	 	 	 	 
	Date:

	 	 	 	     Your Signature:	 	 
	 

	 	 
	 	 	 	 

	 	 	 
	Signature Guarantee:

	 	 
	 

	 	 
	(Signature must be guaranteed)

 

Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers,
savings and loan associations and credit unions) with membership in an approved signature guarantee
medallion program, pursuant to S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced by this certificate
occurring prior to the date that is two years after the later of the date of original issuance of
such Securities and the last date, if any, on which such Securities were owned by the Company or
any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

	o 	 	 acquired for the undersigned’s own account, without transfer; or
	 
	o 	 	 transferred to the Company or one of its subsidiaries; or
	 
	o 	 	 transferred pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the “Securities Act”); or
	 
	o 	 	transferred pursuant to and in compliance with Rule 144A under the Securities
Act; or
	 
	o 	 	 transferred pursuant to another available exemption from the registration
requirements of the Securities Act.

Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities
evidenced by this certificate in the name of any Person other than the registered Holder thereof;
provided, however, that if the final box is checked, the Trustee or the Company may require,

 

7

prior to registering any such transfer of the Securities, in their sole discretion, such legal
opinions, certifications and other information as the Trustee or the Company may reasonably request
to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act, such as the exemption provided by
Rule 144 under such Act.

	 	 	 	 	 
	 

	 	 

Signature:
	 	 

Signature Guarantee:

	 	 	 	 	 	 	 
	 

(Signature must be guaranteed)

	 	 	 	 

Signature:
	 	 

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers,
savings and loan associations and credit unions) with membership in an approved signature guarantee
medallion program, pursuant to S.E.C. Rule 17Ad-15.

TO BE COMPLETED BY PURCHASER IF THE FOURTH BOX ABOVE IS CHECKED.

The undersigned represents and warrants that it is purchasing this Security for its own account or
an account with respect to which it exercises sole investment discretion and that it and any such
account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities
Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned’s foregoing representations in order to
claim the exemption from registration provided by Rule 144A.

                                                            

Dated:

 

 

FORM OF CONVERSION NOTICE

To: Eddie Bauer Holdings, Inc.

     The undersigned registered Holder of this Security hereby exercises the option to convert this
Security, or portion hereof (which is $1,000 principal amount or a multiple thereof) designated
below, for cash, shares of Common Stock of Eddie Bauer Holdings, Inc., or a combination of cash and
shares of Common Stock of Eddie Bauer Holdings, Inc. in accordance with the terms of the Indenture
referred to in this Security, and directs that cash and/or the shares issuable and deliverable upon
such conversion, and any Securities representing any unconverted principal amount hereof, be issued
and delivered to the registered Holder hereof unless a different name has been indicated below. If
cash, shares or any portion of this Security not converted are to be issued in the name of a Person
other than the undersigned, the undersigned shall pay all transfer taxes payable with respect
thereto.

     This notice shall be deemed to be an irrevocable exercise of the option to convert this
Security.

Dated:

	 	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Signature(s)	 	 
	 

	 	 	 	The signature(s) should be guaranteed by
an eligible guarantor institution (banks,
stockbrokers, savings and loan
associations and credit unions) with
membership in an approved signature
guarantee medallion program, pursuant to
S.E.C. Rule 17Ad-15.	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

Signature Guarantee
	 	 
	 
	 	 	 	 	 	 
	Fill in for registration of
shares if to be delivered, and
Securities if to be issued
other than to and in the name
of registered holder:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

(Name)

	 	 	 	 Principal
amount to be converted (if less
than all): $                    	 	 
	 
	 	 	 	 	 	 
	 

(Street Address)

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

(City state and zip code)

	 	 	 	 

Social Security or Other Taxpayer Number
	 	 
	Please print name and address
	 	 	 	 	 	 

 

 

FORM OF FUNDAMENTAL CHANGE PURCHASE NOTICE

To:      Eddie Bauer Holdings, Inc.

     The undersigned registered Holder of this Security hereby acknowledges receipt of a notice
from Eddie Bauer Holdings, Inc. (the “Company”) as to the occurrence of a Fundamental Change with
respect to the Company and requests and instructs the Company to repurchase this Security, or the
portion hereof (which is $1,000 principal amount or a multiple thereof) designated below, in
accordance with the terms of the Indenture referred to in this Security and directs that the check
in payment for this Security or the portion thereof and any Securities representing any
unrepurchased principal amount hereof, be issued and delivered to the registered Holder hereof
unless a different name has been indicated below. If any portion of this Security not repurchased
is to be issued in the name of a Person other than the undersigned, the undersigned shall pay all
transfer taxes payable with respect thereto.

Dated:

	 	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Signature(s)	 	 
	 

	 	 	 	The signature(s) should be guaranteed by
an eligible guarantor institution (banks,
stockbrokers, savings and loan
associations and credit unions) with
membership in an approved signature
guarantee medallion program, pursuant to
S.E.C. Rule 17Ad-15.	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

Signature Guarantee
	 	 
	 
	 	 	 	 	 	 
	Fill in if a check is to be
issued, or Securities are to
be issued, other than to and
in the name of registered
Holder:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

(Name)

	 	 	 	 Principal
amount to be purchased
(if less than all): $                    	 	 
	 
	 	 	 	 	 	 
	 

(Street Address)

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

(City, state and zip code)

	 	 	 	 

Social Security or Other Taxpayer Number
	 	 
	Please print name and address
	 	 	 	 	 	 

 

 

EXHIBIT B

FORM OF INDENTURE SUPPLEMENT TO ADD SUBSIDIARY GUARANTORS

     This Supplemental Indenture, dated as of                      (this “Supplemental Indenture” or
“Guarantee”), among [name of future Subsidiary Guarantor] (the “Additional
Guarantor”), Eddie Bauer Holdings, Inc. (together with its successors and assigns, the
“Company”), each other then-existing Subsidiary Guarantor under the Indenture referred to
below, and The Bank of New York, as Trustee under the Indenture referred to below.

W I T N E S S E T H:

     WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have heretofore executed and
delivered an Indenture, dated as of April 4, 2007 (as amended, supplemented, waived or otherwise
modified, the “Indenture”), providing for the issuance of 5.25% Convertible Senior Notes
due 2014 of the Company (the “Securities”);

     WHEREAS, Section 3.03 of the Indenture provides that the Company is required to cause each
Subsidiary that is not a Subsidiary Guarantor and that becomes a party to any of the Credit
Facilities, whether as a borrower, a co-borrower or a guarantor, to execute and deliver to the
Trustee a supplemental indenture pursuant to which such Subsidiary will unconditionally Guarantee,
on a joint and several basis with the other Subsidiary Guarantors, the Guaranteed Obligations, as
provided under Article 10 of the Indenture; and

     WHEREAS, pursuant to Section 9.01(d) of the Indenture, the Trustee, the Company and the
Subsidiary Guarantors are authorized to execute and deliver this Supplemental Indenture to amend
the Indenture, without the consent of any Holder;

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Additional Guarantor, the Company,
the other Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and
ratable benefit of the Holders of the Securities as follows:

ARTICLE I

Definitions

     SECTION 1.1. Defined Terms. As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or
recital hereto are used herein as therein defined, except that the term “Holders” in this Guarantee
shall refer to the term “Holders” as defined in the Indenture and the Trustee acting on behalf or
for the benefit of such Holders. The words “herein,” “hereof” and “hereby” and other words of
similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole
and not to any particular section hereof.

 

 

2

ARTICLE II

Agreement to be Bound; Subsidiary Guarantee

     SECTION 2.1. Agreement to be Bound. The Additional Guarantor hereby becomes a party to the Indenture as a Subsidiary Guarantor and
as such will have all of the rights and be subject to all of the obligations and agreements of a
Subsidiary Guarantor under the Indenture. The Additional Guarantor agrees to be bound by all of
the provisions of the Indenture applicable to a Subsidiary Guarantor and to perform all of the
obligations and agreements of a Subsidiary Guarantor under the Indenture.

     SECTION 2.2. Subsidiary Guarantee. The Additional Guarantor fully and unconditionally Guarantees to each Holder of the Securities
and the Trustee the Guaranteed Obligations pursuant to Article 10 of the Indenture on a senior
basis.

ARTICLE III

Miscellaneous

     SECTION 3.1. Notices. All notices and other communications to the Additional Guarantor shall be given as provided in
the Indenture to the Additional Guarantor, at its address set forth below, with a copy to the
Company as provided in the Indenture for notices to the Company.

     SECTION 3.2. Parties. Nothing expressed or mentioned herein is intended or shall be construed to give any Person,
other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in
respect of this Supplemental Indenture or the Indenture or any provision herein or therein
contained.

     SECTION 3.3. Governing Law; Waiver of Jury Trial. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK. EACH OF THE COMPANY, THE ADDITIONAL GUARANTOR, THE OTHER SUBSIDIARY
GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OF OR RELATING TO EACH OF
THIS SUPPLEMENTAL INDENTURE.

     SECTION 3.4. Severability Clause. In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby and such provision shall be ineffective only to the extent of such
invalidity, illegality or unenforceability.

     SECTION 3.5. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and

 

3

all the terms, conditions and provisions thereof shall remain in full force and effect. This
Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of
Securities heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee
makes no representation or warranty as to the validity or sufficiency of this Supplemental
Indenture.

     SECTION 3.6. Counterparts. The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts,
all of which together shall constitute one and the same agreement.

     SECTION 3.7. Headings. The headings of the Articles and the sections in this Supplemental Indenture are for convenience
of reference only and shall not be deemed to alter or affect the meaning or interpretation of any
provisions hereof.

 

4

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

	 	 	 	 	 
	 	[NEW SUBSIDIARY GUARANTOR],

as a Subsidiary Guarantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	Address: 	 	 
	 
	 	EDDIE BAUER HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[EXISTING SUBSIDIARY GUARANTORS]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	THE BANK OF NEW YORK, as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:exv10w1

 

Exhibit
10.1

EXECUTION VERSION

 

$225,000,000

AMENDED AND RESTATED TERM LOAN AGREEMENT

among

EDDIE BAUER HOLDINGS, INC.,

EDDIE BAUER, INC.,

as Borrower,

The Several Lenders from Time to Time Parties Hereto,

GOLDMAN SACHS CREDIT PARTNERS L.P.,

as Syndication Agent,

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

Dated as of June 21, 2005

 Amended and Restated as of April 4, 2007

 

J.P. MORGAN SECURITIES INC. AND GOLDMAN SACHS CREDIT PARTNERS L.P.,

as Joint Lead Arrangers and Joint Bookrunners

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	SECTION 1. DEFINITIONS
	 	 	 	 
	 
	 	 	 	 
	1.1 Defined Terms
	 	 	1	 
	1.2 Other Definitional Provisions
	 	 	18	 
	 
	 	 	 	 
	SECTION 2. AMOUNT AND TERMS OF TERM COMMITMENTS
	 	 	 	 
	 
	 	 	 	 
	2.1 Refinance of Existing Loans and Term Commitments
	 	 	18	 
	2.2 Procedure for Loan Borrowing
	 	 	18	 
	2.3 Repayment of Loans
	 	 	19	 
	2.4 Fees, etc.
	 	 	19	 
	2.5 Optional Prepayments
	 	 	19	 
	2.6 Mandatory Prepayments
	 	 	20	 
	2.7 Conversion and Continuation Options
	 	 	21	 
	2.8 Limitations on Eurodollar Tranches
	 	 	21	 
	2.9 Interest Rates and Payment Dates
	 	 	22	 
	2.10 Computation of Interest and Fees
	 	 	22	 
	2.11 Inability to Determine Interest Rate
	 	 	22	 
	2.12 Pro Rata Treatment and Payments
	 	 	23	 
	2.13 Requirements of Law
	 	 	24	 
	2.14 Taxes
	 	 	25	 
	2.15 Indemnity
	 	 	26	 
	2.16 Change of Lending Office
	 	 	27	 
	2.17 Replacement of Lenders
	 	 	27	 
	 
	 	 	 	 
	SECTION 3. REPRESENTATIONS AND WARRANTIES
	 	 	 	 
	 
	 	 	 	 
	3.1 Financial Condition
	 	 	27	 
	3.2 No Change
	 	 	28	 
	3.3 Existence; Compliance with Law
	 	 	28	 
	3.4 Power; Authorization; Enforceable Obligations
	 	 	28	 
	3.5 No Legal Bar
	 	 	29	 
	3.6 Litigation
	 	 	29	 
	3.7 No Default
	 	 	29	 
	3.8 Ownership of Property; Liens
	 	 	29	 
	3.9 Intellectual Property
	 	 	29	 
	3.10 Taxes
	 	 	29	 
	3.11 Federal Regulations
	 	 	30	 
	3.12 Labor Matters
	 	 	30	 
	3.13 ERISA
	 	 	30	 
	3.14 Investment Company Act; Other Regulations
	 	 	30	 
	3.15 Subsidiaries
	 	 	30	 
	3.16 Use of Proceeds
	 	 	31	 
	3.17 Environmental Matters
	 	 	31	 
	3.18 Accuracy of Information, etc
	 	 	31	 
	3.19 Security Documents
	 	 	32	 
	3.20 Solvency
	 	 	32	 

i

 

 

	 	 	 	 	 
	 	 	Page
	3.21 Regulation H
	 	 	32	 
	3.22 Certain Documents
	 	 	32	 
	 
	 	 	 	 
	SECTION 4. CONDITIONS PRECEDENT
	 	 	 	 
	 
	 	 	 	 
	4.1 Conditions to the Restatement Effective Date
	 	 	33	 
	 
	 	 	 	 
	SECTION 5. AFFIRMATIVE COVENANTS
	 	 	 	 
	 
	 	 	 	 
	5.1 Financial Statements
	 	 	35	 
	5.2 Certificates; Other Information
	 	 	36	 
	5.3 Payment of Obligations
	 	 	37	 
	5.4 Maintenance of Existence; Compliance
	 	 	37	 
	5.5 Maintenance of Property; Insurance
	 	 	37	 
	5.6 Inspection of Property; Books and Records; Discussions
	 	 	38	 
	5.7 Notices
	 	 	38	 
	5.8 Environmental Laws
	 	 	39	 
	5.9 [Intentionally Omitted]
	 	 	39	 
	5.10 Additional Collateral, etc
	 	 	39	 
	5.11 Passive Company Status
	 	 	41	 
	5.12 Post Closing Matters
	 	 	41	 
	 
	 	 	 	 
	SECTION 6. NEGATIVE COVENANTS
	 	 	 	 
	 
	 	 	 	 
	6.1 Financial Condition Covenants
	 	 	41	 
	6.2 Indebtedness
	 	 	43	 
	6.3 Liens
	 	 	44	 
	6.4 Fundamental Changes
	 	 	46	 
	6.5 Disposition of Property
	 	 	46	 
	6.6 Restricted Payments
	 	 	47	 
	6.7 Capital Expenditures
	 	 	47	 
	6.8 Investments
	 	 	48	 
	6.9 Optional Payments and Modifications of Certain Debt Instruments
	 	 	49	 
	6.10 Transactions with Affiliates
	 	 	50	 
	6.11 Sales and Leasebacks
	 	 	50	 
	6.12 Swap Agreements
	 	 	50	 
	6.13 Changes in Fiscal Periods
	 	 	50	 
	6.14 Negative Pledge Clauses
	 	 	50	 
	6.15 Clauses Restricting Subsidiary Distributions
	 	 	50	 
	6.16 Lines of Business
	 	 	51	 
	6.17 Environmental Matters
	 	 	51	 
	6.18 Transactions Relating to Spiegel Acceptance Corporation
	 	 	51	 
	 
	 	 	 	 
	SECTION 7. EVENTS OF DEFAULT
	 	 	 	 
	 
	 	 	 	 
	SECTION 8. THE AGENTS
	 	 	 	 
	 
	 	 	 	 
	8.1 Appointment
	 	 	54	 
	8.2 Delegation of Duties
	 	 	54	 
	8.3 Exculpatory Provisions
	 	 	54	 
	8.4 Reliance by Administrative Agent
	 	 	54	 

ii

 

 

	 	 	 	 	 
	 	 	Page
	8.5 Notice of Default
	 	 	55	 
	8.6 Non-Reliance on Agents, Arrangers and Other Lenders
	 	 	55	 
	8.7 Indemnification
	 	 	55	 
	8.8 Agent in Its Individual Capacity
	 	 	56	 
	8.9 Successor Administrative Agent
	 	 	56	 
	8.10 Syndication Agent and Arrangers
	 	 	56	 
	 
	 	 	 	 
	SECTION 9. MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 
	9.1 Amendments and Waivers
	 	 	56	 
	9.2 Notices
	 	 	57	 
	9.3 No Waiver; Cumulative Remedies
	 	 	58	 
	9.4 Survival of Representations and Warranties
	 	 	58	 
	9.5 Payment of Expenses and Taxes
	 	 	58	 
	9.6 Successors and Assigns; Participations and Assignments
	 	 	59	 
	9.7 Adjustments; Set-off
	 	 	62	 
	9.8 Counterparts
	 	 	62	 
	9.9 Severability
	 	 	62	 
	9.10 Integration
	 	 	63	 
	9.11 GOVERNING LAW
	 	 	63	 
	9.12 Submission To Jurisdiction; Waivers
	 	 	63	 
	9.13 Acknowledgements
	 	 	63	 
	9.14 Releases of Guarantees and Liens
	 	 	64	 
	9.15 Confidentiality
	 	 	64	 
	9.16 Patriot Act
	 	 	64	 
	9.17 WAIVERS OF JURY TRIAL
	 	 	65	 

iii

 

 

 SCHEDULES:

	 	 	 
	1.1A

	 	Commitments
	1.1B

	 	Mortgaged Property
	3.2

	 	Changes
	3.4

	 	Consents, Authorizations, Filings and Notices
	3.7

	 	Defaults
	3.9

	 	Intellectual Property Litigation
	3.15

	 	Subsidiaries
	3.19(a)

	 	UCC Filing Jurisdictions
	3.19(b)

	 	Mortgage Filing Jurisdictions
	6.2(d)

	 	Existing Indebtedness
	6.3(f)

	 	Existing Liens
	6.8(h)

	 	Existing Investments

EXHIBITS:

	 	 	 
	A

	 	Form of Assignment and Assumption
	B

	 	Form of Compliance Certificate
	C

	 	Form of Guarantee and Collateral Agreement
	D

	 	Form of Exemption Certificate
	E

	 	Form of Closing Certificate
	F

	 	Form of Mortgage

iv

 

 

          AMENDED AND RESTATED TERM LOAN AGREEMENT (this “Agreement”), dated as of June 21, 2005
and amended and restated as of April 4, 2007, among EDDIE BAUER HOLDINGS, INC., a Delaware
corporation (“Holdings”), EDDIE BAUER, INC., a Delaware corporation (the
“Borrower”), the several banks and other financial institutions or entities from time to
time parties to this Agreement (collectively, the “Lenders”), GOLDMAN SACHS CREDIT PARTNERS
L.P., as syndication agent (in such capacity, the “Syndication Agent”), and JPMORGAN CHASE
BANK, N.A., as administrative agent (in such capacity, the “Administrative Agent”).

W I T N E S S E T H:

          WHEREAS, Holdings, the Borrower, certain of the Lenders and the Administrative Agent are
parties to that certain Term Loan Agreement, dated as of June 21, 2005 (as heretofore modified and
supplemented and in effect immediately before giving effect to the amendment and restatement
contemplated hereby, the “Existing Loan Agreement”);

          WHEREAS, the Borrower has requested that the Existing Loan Agreement be amended and restated
to, among other things, authorize the issuance of not less than $75,000,000 of Convertible Notes
(as defined herein) and to extend the maturity date of, and refinance, the loans outstanding
thereunder (the “Existing Term Loans”), in each case to occur contemporaneously with the
Restatement Effective Date; and

          WHEREAS, the Borrower has also requested that the Existing Loan Agreement be restated in its
entirety to read as provided herein.

          Accordingly, effective on the Restatement Effective Date (as defined herein), the Existing
Loan Agreement shall be amended and restated in its entirety as follows:

SECTION 1. DEFINITIONS

          1.1 Defined Terms. As used in this Agreement, the terms listed in this Section 1.1
shall have the respective meanings set forth in this Section 1.1.

          “ABL Facility”: the revolving credit facility provided to the Borrower and certain of
its Subsidiaries pursuant to the ABL Facility Agreement and any refinancings, renewals or
extensions thereof in accordance with Section 6.2.

          “ABL Facility Agent”: Bank of America, N.A., in its capacity as agent under the ABL
Facility Agreement, and any successor agent thereto.

          “ABL Facility Agreement”: the Loan and Security Agreement, dated as of June 21, 2005,
among the Borrower, Holdings, the Subsidiaries of the Borrower party thereto, the financial
institutions named therein, and Bank of America, N.A., as agent, Banc of America Securities LLC, as
sole lead arranger and book manager, Fleet Retail Group, Inc. and The CIT Group/Business Credit,
Inc., as co-syndication agents, and General Electric Capital Corporation, as documentation agent,
together with all instruments and other agreements entered into by any Group Member in connection
therewith, in each case, as in effect on the date hereof and as hereafter amended, supplemented or
otherwise modified from time to time in accordance with Section 6.9 or refinanced, renewed or
extended in accordance with Section 6.2.

          “ABR”: for any day, a rate per annum (rounded upwards, if necessary, to the next
1/100 of 1%) equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective

 

2

Rate in effect on such day plus 1/2 of 1%. Any change in the ABR due to a change in
the Prime Rate or the Federal Funds Effective Rate shall be effective as of the opening of business
on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.

          “ABR Loans”: Loans the rate of interest applicable to which is based upon the ABR.

          “Administrative Agent”: JPMorgan Chase Bank, N.A., together with its affiliates, as
the arranger of the Term Commitments and as the administrative agent for the Lenders under this
Agreement and the other Loan Documents, together with any of its successors.

          “Affiliate”: as to any Person, any other Person that, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person. For purposes of this
definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10%
or more of the securities having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.

          “Agents”: the collective reference to the Syndication Agent and the Administrative
Agent.

          “Agreement”: as defined in the preamble hereto.

          “Applicable Margin”: for each Loan, the rate per annum equal to (a) 3.25%, in the
case of Eurodollar Loans, and (b) 2.25%, in the case of ABR Loans; provided that from and
after the delivery of certificates pursuant to Section 5.2 for the fiscal quarter ended June 30,
2007, the Applicable Margin with respect to the Loans will be determined pursuant to the Pricing
Grid.

          “Approved Fund”: as defined in Section 9.6(b).

          “Arrangers”: J.P. Morgan Securities Inc. and Goldman Sachs Credit Partners L.P., as
joint lead arrangers and joint bookrunners.

          “Asset Sale”: any Disposition of property or series of related Dispositions of
property (excluding any such Disposition permitted by clause (a), (b), (c) or (d) of Section 6.5)
that yields gross proceeds to any Group Member (valued at the initial principal amount thereof in
the case of non-cash proceeds consisting of notes or other debt securities and valued at fair
market value in the case of other non-cash proceeds) in excess of $1,000,000.

          “Assignee”: as defined in Section 9.6(b).

          “Assignment and Assumption”: an Assignment and Assumption, substantially in the form
of Exhibit A.

          “Benefitted Lender”: as defined in Section 9.7(a).

          “Board”: the Board of Governors of the Federal Reserve System of the United States
(or any successor).

          “Borrower”: as defined in the preamble hereto.

 

3

          “Business Day”: a day other than a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to close, provided, that with
respect to notices and determinations in connection with, and payments of principal and interest
on, Eurodollar Loans, such day is also a day for trading by and between banks in Dollar deposits in
the interbank eurodollar market.

          “Capital Expenditures”: for any period, with respect to any Person, the aggregate of
all expenditures by such Person and its Subsidiaries for the acquisition or leasing (pursuant to a
capital lease) of fixed or capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries; provided that the foregoing
shall exclude the effects of improvements on real property leased by the Borrower or any of its
Subsidiaries which are funded by the applicable landlords and which are accounted for as capital
improvements and deferred rent obligations.

          “Capital Lease Obligations”: as to any Person, the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes
of this Agreement, the amount of such obligations at any time shall be the capitalized amount
thereof at such time determined in accordance with GAAP.

          “Capital Stock”: any and all shares of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any and all warrants,
rights or options to purchase any of the foregoing.

          “Cash Equivalents”: (a) marketable direct obligations issued by, or unconditionally
guaranteed by, the United States Government or issued by any agency thereof and backed by the full
faith and credit of the United States, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank
deposits having maturities of twelve months or less from the date of acquisition issued by any
Lender or by any commercial bank organized under the laws of the United States or any state thereof
having combined capital and surplus of not less than $500,000,000; (c) commercial paper of an
issuer rated at least A-1 by Standard & Poor’s Ratings Services (“S&P”) or P-1 by Moody’s
Investors Service, Inc. (“Moody’s”), or carrying an equivalent rating by a nationally
recognized rating agency, if both of the two named rating agencies cease publishing ratings of
commercial paper issuers generally, and maturing within six months from the date of acquisition;
(d) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of
clause (b) of this definition, having a term of not more than 30 days, with respect to securities
issued or fully guaranteed or insured by the United States government; (e) securities with
maturities of one year or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign government, the securities
of which state, commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities with
maturities of six months or less from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; (g) money market mutual or similar funds that invest exclusively in assets satisfying
the requirements of clauses (a) through (f) of this definition; or (h) money market funds that (i)
comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as
amended, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least
$5,000,000,000.

          “Closing Date”: shall mean June 21, 2005.

 

4

          “Code”: the Internal Revenue Code of 1986, as amended from time to time.

          “Collateral”: all property of the Loan Parties, now owned or hereafter acquired, upon
which a Lien is purported to be created by any Security Document.

          “Commonly Controlled Entity”: an entity, whether or not incorporated, that is under
common control with the Borrower within the meaning of Section 4001(a)(14) of ERISA or is part of a
group that includes the Borrower and that is treated as a single employer under Section 414(b) or
(c) of the Code.

          “Compliance Certificate”: a certificate duly executed by a Responsible Officer
substantially in the form of Exhibit B.

          “Conduit Lender”: any special purpose corporation organized and administered by any
Lender for the purpose of making Loans otherwise required to be made by such Lender and designated
by such Lender in a written instrument; provided, that the designation by any Lender of a
Conduit Lender shall not relieve the designating Lender of any of its obligations to fund a Loan
under this Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the
designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to
deliver all consents and waivers required or requested under this Agreement with respect to its
Conduit Lender, and provided, further, that no Conduit Lender shall (a) be entitled
to receive any greater amount pursuant to Sections 2.13, 2.14, 2.15 or 9.5 than the designating
Lender would have been entitled to receive in respect of the Loans made by such Conduit Lender or
(b) be deemed to have any Commitment.

          “Confidential Information Memorandum”: the Confidential Information Memorandum dated
March 2007 and furnished to certain Lenders on March 9, 2007.

          “Consolidated Current Assets”: at any date, all amounts (other than cash and Cash
Equivalents) that would, in conformity with GAAP, be set forth opposite the caption “total current
assets” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries
at such date.

          “Consolidated Current Liabilities”: at any date, all amounts that would, in
conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like
caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date, but
excluding the current portion of any Funded Debt of the Borrower and its Subsidiaries.

          “Consolidated EBITDA”: for any period, Consolidated Net Income for such period plus,
without duplication and to the extent reflected as a charge in the statement of such Consolidated
Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization
or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and
charges associated with Indebtedness (including the Loans), (c) depreciation and amortization
expense, (d) amortization of intangibles (including, but not limited to, goodwill) and organization
costs, (e) non-cash writedowns of tangible or intangible assets, (f) non-cash expenses related to
stock options and restricted stock grants accounted for pursuant to SFAS 123 or similar accounting
standards, (g) non-cash expenses related to the amortization of lease obligations, (h) non-cash
expenses related to loss recorded on equity share of foreign joint ventures, (i) any extraordinary,
unusual or non-recurring non-cash expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income for such period,
non-cash losses on sales of assets outside of the ordinary course of business), provided
that the amounts referred to in this clause (i) shall not, in the aggregate, exceed $10,000,000 for
any fiscal year of the Borrower, (j) any cash received during such period in respect of items
described in clause (A)(ii) below subsequent to the fiscal quarter in which the relevant

 

5

non-cash income or gain was reflected in the statement of Consolidated Net Income, and (k)
cash expenses arising during the first quarter of the 2007 fiscal year in an amount not to exceed
(x) $5,000,000 in connection with that certain merger agreement among the Borrower, Sun Capital
Partners and Golden Gate Partners and (y) $5,200,000 for severance payments arising in connection
with the departure of the chief executive officer in February 2007, and minus, (A) to the
extent included in the statement of such Consolidated Net Income for such period, the sum of (i)
interest income, (ii) any extraordinary, unusual or non-recurring income or gains (including,
whether or not otherwise includable as a separate item in the statement of such Consolidated Net
Income for such period, gains on the sales of assets outside of the ordinary course of business),
(iii) income tax credits (to the extent not netted from income tax expense) and (iv) any other
non-cash income, (B) any cash payments made during such period in respect of items described in
clause (i) above subsequent to the fiscal quarter in which the relevant non-cash expenses or losses
were reflected as a charge in the statement of Consolidated Net Income and (C) to the extent
included in the statement of such Consolidated Net Income for such period, any cash charges
associated with lease obligations which do not appear on the statement of profit and loss, all as
determined on a consolidated basis.

          “Consolidated EBITDAR”: for any period, Consolidated EBITDA for such period
plus Consolidated Rent Expense for such period.

          “Consolidated Fixed Charge Coverage Ratio”: for any period, the ratio of (a)
Consolidated EBITDAR for such period to (b) the sum (without duplication) of (i) Consolidated
Interest Expense for such period, (ii) Consolidated Rent Expense for such period, (iii) the
aggregate amount actually paid by the Borrower and its Subsidiaries during such period on account
of Capital Expenditures (excluding the principal amount of Indebtedness (other than any Loans)
incurred in connection with such expenditures) and (iv) scheduled payments made during such period
on account of principal of Indebtedness of the Borrower or any of its Subsidiaries (including
scheduled principal payments in respect of the Loans).

          “Consolidated Interest Expense”: for any period, total cash interest expense
(including that attributable to Capital Lease Obligations) of the Borrower and its Subsidiaries for
such period with respect to all outstanding Indebtedness of the Borrower and its Subsidiaries
(including all commissions, discounts and other fees and charges owed with respect to letters of
credit and bankers’ acceptance financing and net costs under Swap Agreements in respect of interest
rates to the extent such net costs are allocable to such period in accordance with GAAP).

          “Consolidated Net Income”: for any period, the consolidated net income (or loss) of
the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP;
provided that there shall be excluded (a) the income (or deficit) of any Person accrued
prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with
the Borrower or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a
Subsidiary of the Borrower) in which the Borrower or any of its Subsidiaries has an ownership
interest, except to the extent that any such income is actually received by the Borrower or such
Subsidiary in the form of dividends or similar distributions, and (c) the undistributed earnings of
any Subsidiary of the Borrower to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by the terms of any
Contractual Obligation (other than under any Loan Document) or Requirement of Law applicable to
such Subsidiary.

          “Consolidated Rent Expense”: for any period, the aggregate amount of fixed and
contingent rentals payable by the Borrower and its Subsidiaries for such period with respect to
leases of real and personal property, determined on a consolidated basis in accordance with GAAP,
excluding non-cash expenses related to the amortization of lease obligations.

 

6

          “Consolidated Senior Secured Debt”: at any time, the aggregate amount of Consolidated
Total Debt, excluding (x) the Convertible Notes, (y) any Permitted Junior Lien Debt and (z)
Indebtedness that is not secured by a Lien.

          “Consolidated Senior Secured Leverage Ratio”: as at the last day of any period, the
ratio of (a) Consolidated Senior Secured Debt on such day to (b) Consolidated EBITDA for such
period.

          “Consolidated Total Debt”: at any date, the aggregate principal amount of all
Indebtedness of the Borrower and its Subsidiaries at such date, determined on a consolidated basis
in accordance with GAAP; provided that at any such date the amount of Indebtedness
outstanding under the ABL Facility shall be calculated as an average of the principal amount
outstanding at the end of each day for the prior 365 days.

          “Consolidated Working Capital”: at any date, the excess of Consolidated Current
Assets on such date over Consolidated Current Liabilities on such date.

          “Continuing Directors”: the directors of Holdings on the Restatement Effective Date,
and each other director, if, in each case, such other director’s nomination for election to the
board of directors of Holdings is recommended by at least
662/3% of the then Continuing Directors.

          “Contractual Obligation”: as to any Person, any provision of any security issued by
such Person or of any agreement, instrument or other undertaking to which such Person is a party or
by which it or any of its property is bound.

          “Convertible Notes Documents”: the Indenture, dated as of April 4, 2007 among
Holdings, the subsidiary guarantors parties thereto and the trustee therefor, and any documentation
executed by Holdings in connection with Indebtedness permitted pursuant to Section 6.2(k), in each
case as such agreement may be amended, supplemented or otherwise modified from time to time in
accordance with Section 6.9.

          “Convertible Notes”: the convertible notes issued by Holdings pursuant to the
Convertible Notes Documents.

          “Default”: any of the events specified in Section 7, whether or not any requirement
for the giving of notice, the lapse of time, or both, has been satisfied.

          “Disposition”: with respect to any property, any sale, lease, sale and leaseback,
assignment, conveyance, transfer or other disposition thereof. The terms “Dispose” and
“Disposed of” shall have correlative meanings.

          “Dollars” and “$”: dollars in lawful currency of the United States.

          “Domestic Subsidiary”: any Subsidiary of the Borrower organized under the laws of any
jurisdiction within the United States.

          “ECF Percentage”: 50%; provided, that, with respect to each fiscal year of
the Borrower ending after December 31, 2007, the ECF Percentage shall be reduced to 25% if the
Consolidated Senior Secured Leverage Ratio as of the last day of such fiscal year is not greater
than 2.00 to 1.00.

          “Eddie Bauer Canada”: Eddie Bauer of Canada, Inc.

 

7

          “Environmental Laws”: any and all foreign, Federal, state, local or municipal laws,
rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental
Authority or other Requirements of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of the environment, or of human health as
such relates to exposure to hazardous or deleterious materials, or employee health and safety as
such relates to exposure to hazardous or deleterious materials, as has been, is now or may at any
time hereafter be in effect.

          “Environmental Permits”: any and all permits, licenses, approvals, registrations,
notifications, exemptions and any other authorization required under any Environmental Law.

          “ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to
time.

          “Eurocurrency Reserve Requirements”: for any day as applied to a Eurodollar Loan, the
aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including basic, supplemental, marginal and emergency reserves)
under any regulations of the Board or other Governmental Authority having jurisdiction with respect
thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the
Federal Reserve System.

          “Eurodollar Base Rate”: with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period commencing on the first day of such
Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two
Business Days prior to the beginning of such Interest Period. In the event that such rate does not
appear on Page 3750 of the Telerate screen (or otherwise on such screen), the “Eurodollar Base
Rate” shall be determined by reference to such other comparable publicly available service for
displaying eurodollar rates as may be selected by the Administrative Agent or, in the absence of
such availability, by reference to the rate at which the Administrative Agent is offered Dollar
deposits at or about 11:00 A.M., New York City time, two Business Days prior to the beginning of
such Interest Period in the interbank eurodollar market where its eurodollar and foreign currency
and exchange operations are then being conducted for delivery on the first day of such Interest
Period for the number of days comprised therein.

          “Eurodollar Loans”: Loans the rate of interest applicable to which is based upon the
Eurodollar Rate.

          “Eurodollar Rate”: with respect to each day during each Interest Period pertaining to
a Eurodollar Loan, a rate per annum determined for such day in accordance with the following
formula (rounded upward to the nearest 1/100th of 1%):

                         Eurodollar Base Rate                         

1.00 — Eurocurrency Reserve Requirements

          “Eurodollar Tranche”: the collective reference to Eurodollar Loans the then current
Interest Periods with respect to all of which begin on the same date and end on the same later date
(whether or not such Loans shall originally have been made on the same day).

          “Event of Default”: any of the events specified in Section 7, provided that
any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

 

8

          “Excess Cash Flow”: for any fiscal year of the Borrower, the excess, if any, of (a)
the sum, without duplication, of (i) Consolidated Net Income for such fiscal year or such period,
as applicable, (ii) the amount of all non-cash charges (including depreciation and amortization)
deducted in arriving at such Consolidated Net Income, (iii) decreases in Consolidated Working
Capital for such fiscal year or such period, as applicable, (iv) the aggregate net amount of
non-cash loss on the Disposition of property by the Borrower and its Subsidiaries during such
fiscal year or such period, as applicable (other than sales of inventory in the ordinary course of
business), to the extent deducted in arriving at such Consolidated Net Income and (v) income tax
expense of the Borrower and its Subsidiaries for such fiscal year or such period, as applicable,
over (b) the sum, without duplication, of (i) the amount of all non-cash credits included
in arriving at such Consolidated Net Income, (ii) the aggregate amount actually paid by the
Borrower and its Subsidiaries in cash during such fiscal year or such period, as applicable, on
account of Capital Expenditures (excluding the principal amount of Indebtedness incurred in
connection with such expenditures and any such expenditures financed with the proceeds of any
Reinvestment Deferred Amount), (iii) the aggregate amount of all regularly scheduled principal
payments of Funded Debt (including the Loans) of the Borrower and its Subsidiaries made during such
fiscal year or such period, as applicable (other than in respect of any revolving credit facility
to the extent there is not an equivalent permanent reduction in commitments thereunder), (iv)
increases in Consolidated Working Capital for such fiscal year or such period, as applicable, (v)
the aggregate net amount of gain on the Disposition of (or Recovery Event with respect to) property
by the Borrower and its Subsidiaries during such fiscal year or such period, as applicable (other
than sales of inventory in the ordinary course of business), to the extent included in arriving at
such Consolidated Net Income, (vi) income taxes actually paid by the Borrower and its Subsidiaries
during such fiscal year or such period, as applicable, and (vii) amounts paid to holders of
Convertible Notes to the extent permitted by the proviso to Section 6.9(f); provided that
with respect to the Securitization Subsidiaries, Excess Cash Flow shall include the excess, if any,
of (x) the aggregate amounts actually received in cash by the Securitization Subsidiaries or
Holdings, less any amounts Holdings has any reasonable cause to believe may be subject to an in rem
claim of a third party or a preferential or fraudulent transfer claim of a third party, during such
fiscal year or period, as applicable, over (y) the aggregate amounts actually paid in cash
by the Securitization Subsidiaries or Holdings on account of the Securitization Note during such
fiscal year or period, as applicable.

          “Excess Cash Flow Application Date”: as defined in Section 2.6(d).

          “Excluded Foreign Subsidiary”: any Foreign Subsidiary in respect of which either (a)
the pledge of all of the Capital Stock of such Subsidiary as Collateral or (b) the guaranteeing by
such Subsidiary of the Obligations, would, in the good faith judgment of the Borrower, result in
adverse tax consequences to the Borrower or could reasonably be expected to violate any Requirement
of Law binding on such Foreign Subsidiary or its property or directors.

          “Facility”: the Term Commitments and the Loans made thereunder.

          “Federal Funds Effective Rate”: for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by JPMorgan Chase Bank, N.A. from three
federal funds brokers of recognized standing selected by it.

          “Foreign Subsidiary”: any Subsidiary of the Borrower that is not a Domestic
Subsidiary.

          “Funded Debt”: as to any Person, all Indebtedness of such Person that matures more
than one year from the date of its creation or matures within one year from such date but is
renewable or

 

9

extendible, at the option of such Person, to a date more than one year from such date or
arises under a revolving credit or similar agreement that obligates the lender or lenders to extend
credit during a period of more than one year from such date, including all current maturities and
current sinking fund payments in respect of such Indebtedness whether or not required to be paid
within one year from the date of its creation and, in the case of the Borrower, Indebtedness in
respect of the Loans.

          “Funding Office”: the office of the Administrative Agent specified in Section 9.2 or
such other office as may be specified from time to time by the Administrative Agent as its funding
office by written notice to the Borrower and the Lenders.

          “GAAP”: generally accepted accounting principles in the United States as in effect
from time to time, except that for purposes of Section 6.1, GAAP shall be determined on the basis
of such principles in effect on the date hereof and consistent with those used in the preparation
of the most recent audited financial statements referred to in Section 3.1(b). In the event that
any “Accounting Change” (as defined below) shall occur and such change results in a change in the
method of calculation of financial covenants, standards or terms in this Agreement, then the
Borrower and the Administrative Agent agree to enter into negotiations in order to amend such
provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired
result that the criteria for evaluating the Borrower’s financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made. Until such time as such
an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and
the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue
to be calculated or construed as if such Accounting Changes had not occurred. “Accounting Changes”
refers to changes in accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants or, if applicable, the SEC.

          “Governmental Authority”: any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).

          “Group Members”: the collective reference to Holdings, the Borrower and their
respective Subsidiaries.

          “Guarantee and Collateral Agreement”: the Guarantee and Collateral Agreement, dated
as of June 21, 2005 and amended and restated as of April 4, 2007, substantially in the form of
Exhibit C, among Holdings, the Borrower and each Subsidiary Guarantor and any amendment, waiver,
supplement or any other modification to the foregoing.

          “Guarantee Obligation”: as to any Person (the “guaranteeing person”), any
obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing
Person that guarantees or in effect guarantees, or which is given to induce the creation of a
separate obligation by another Person (including any bank under any letter of credit) that
guarantees or in effect guarantees, any Indebtedness (the “primary obligations”) of any
other third Person (the “primary obligor”) in any manner, whether directly or indirectly,
including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any
such primary obligation or any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation of the ability of
the

 

10

primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of business. The
amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of
(a) an amount equal to the stated or determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing
person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation,
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 Obligation shall
be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as
determined by the Borrower in good faith.

          “Guarantors”: the collective reference to Holdings and the Subsidiary Guarantors.

          “Holdings”: as defined in the preamble hereto.

          “Indebtedness”: of any Person at any date, without duplication, (a) all indebtedness
of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase
price of property or services (other than trade payables incurred in the ordinary course of such
Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or
other similar instruments, (d) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), (e) all Capital Lease Obligations of such
Person, (f) all obligations of such Person, contingent or otherwise, as an account party or
applicant under or in respect of acceptances, letters of credit, surety bonds or similar
arrangements, (g) the liquidation value of all mandatorily redeemable preferred Capital Stock of
such Person, (h) all Guarantee Obligations of such Person in respect of obligations of the kind
referred to in clauses (a) through (g) above, (i) all obligations of the kind referred to in
clauses (a) through (h) above secured by (or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts
and contract rights) owned by such Person (other than Liens of the types described in Section
6.3(b), (c), (d) and (i)), whether or not such Person has assumed or become liable for the payment
of such obligation, and (j) for the purposes of Section 7(e) only, all obligations of such Person
in respect of Swap Agreements. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such Indebtedness expressly
provide that such Person is not liable therefor.

          “Insolvency”: with respect to any Multiemployer Plan, the condition that such
Multiemployer Plan is insolvent within the meaning of Section 4245 of ERISA.

          “Insolvent”: pertaining to a condition of Insolvency.

          “Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or
in equity for any infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.

 

11

          “Intercreditor Agreement”: an Intercreditor Agreement, dated as of June 21, 2005,
among the Borrower, each Guarantor, the ABL Facility Agent and the Administrative Agent and any
amendment, waiver, supplement or other modification to the foregoing.

          “Interest Payment Date”: (a) as to any ABR Loan, the last day of each March, June,
September and December to occur while such Loan is outstanding and the final maturity date of such
Loan, (b) as to any Eurodollar Loan having an Interest Period of three months or less, the last day
of such Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer than three
months, each day that is three months, or a whole multiple thereof, after the first day of such
Interest Period and the last day of such Interest Period and (d) as to any Loan, the date of any
repayment or prepayment made in respect thereof.

          “Interest Period”: as to any Eurodollar Loan, (a) initially, the period commencing on
the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and
ending one, two, three or six (or, if agreed to by all Lenders, nine or twelve) months thereafter,
as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be,
given with respect thereto; and (b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or six (or,
if agreed to by all Lenders, nine or twelve) months thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent not later than 1:00 P.M., New York City time, on the
date that is three Business Days prior to the last day of the then current Interest Period with
respect thereto; provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:

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

     (ii) the Borrower may not select an Interest Period that would extend beyond the date
final payment is due on the Loans; and

     (iii) any Interest Period that begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Business Day of a calendar month.

          “Investments”: as defined in Section 6.8.

          “Joint Ventures”: the joint ventures pursuant to the joint venture agreements as in
effect on the Closing Date (other than any modifications from time to time after the Closing Date
with respect to the rate of royalties to be paid by such joint ventures to the Borrower in
connection with the use of trademarks and logos of the Borrower) with Eddie Bauer Japan, Inc. and
Eddie Bauer GmbH Germany.

          “Joint Venture Investments”: Investments in the Joint Ventures.

          “Lenders”: as defined in the preamble hereto; provided that unless the
context otherwise requires, each reference herein to the Lenders shall be deemed to include any
Conduit Lender.

          “Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge or other security interest or any preference,
priority or other security agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement and any capital lease having
substantially the same

 

12

economic effect as any of the foregoing). For purposes hereof, any licenses granted by a Loan
Party to third parties to use Intellectual Property owned or developed by such Loan Party shall not
constitute a “Lien” on such Intellectual Property.

          “Loan”: any loan made by any Lender pursuant to this Agreement.

          “Loan Documents”: this Agreement, the Security Documents, the Notes, all other
agreements executed in connection with this Agreement in favor of the Administrative Agent and
other agents and arrangers party hereto or thereto, and any amendment, waiver, supplement or other
modification to any of the foregoing.

          “Loan Parties”: each Group Member that is a party to a Loan Document.

          “Material Adverse Effect”: a material adverse effect on (a) the business, property,
operations, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries,
taken as a whole or (b) the validity or enforceability of this Agreement or the other Loan
Documents taken as a whole or the rights or remedies of the Administrative Agent or the Lenders
hereunder or thereunder taken as a whole.

          “Materials of Environmental Concern”: any gasoline or petroleum (including crude oil
or any fraction thereof) or petroleum products, asbestos, molds, polychlorinated biphenyls,
urea-formaldehyde insulation, radioactivity or any other substances, materials or wastes that is
regulated pursuant to or could reasonably be expected to give rise to liability under any
applicable Environmental Law.

          “Maturity Date”: April 1, 2014.

          “Minority Banks”: as defined in Section 9.1(b).

          “Moody’s”: Moody’s Investor Service, Inc.

          “Mortgage”: each of the mortgages and deeds of trust made by any Loan Party in favor
of, or for the benefit of, the Administrative Agent for the benefit of the Lenders, filed by the
Administrative Agent in connection with the Closing Date, as amended and restated in connection
with the Restatement Effective Date, and any amendment, waiver, supplement or other modification to
the foregoing and any subsequent mortgages and deeds of trust substantially in the form of Exhibit
F (with such changes thereto as shall be advisable under the law of the jurisdiction in which such
mortgage or deed of trust is to be recorded).

          “Mortgaged Property”: the real property listed on Schedule 1.1B, as to which the
Administrative Agent for the benefit of the Lenders shall be granted a Lien pursuant to the
Mortgage.

          “Multiemployer Plan”: a multiemployer plan as defined in Section 4001(a)(3) of ERISA,
and which is subject to Title IV of ERISA, to which the Borrower or any Commonly Controlled Entity
is making or accruing an obligation to make contributions, or has within any of the preceding six
plan years made or accrued an obligation to make contributions.

          “Net Cash Proceeds”: (a) in connection with any Asset Sale or any Recovery Event, the
proceeds thereof in the form of cash and Cash Equivalents (including any such proceeds received by
way of deferred payment of principal pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but only as and when received), net of attorneys’ fees,
accountants’ fees,

 

13

investment banking fees, amounts required to be applied to the repayment of Indebtedness
secured by a Lien expressly permitted hereunder on any asset that is the subject of such Asset Sale
or Recovery Event (other than any Lien pursuant to a Security Document), all distributions and
other payments required to be made pursuant to partnership agreements, limited liability company
organizational documents, joint venture agreements or similar agreements to minority interest
holders in Subsidiaries as a result of such Asset Sale or Recovery Event, any amounts reserved for
purchase price adjustments and post-closing liabilities in connection with any such transaction
(but such amounts shall be included if released or no longer reserved), and other arm’s-length
costs, and other customary fees and expenses actually incurred in connection therewith and net of
taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements) and (b) in connection with
any issuance or sale of Capital Stock or any incurrence of Indebtedness, the cash proceeds received
from such issuance or incurrence, net of attorneys’ fees, investment banking fees, accountants’
fees, underwriting discounts and commissions and other arm’s –length costs and expenses actually
incurred in connection therewith; provided that there shall be excluded any funds received in
connection with the exercise of any stock option or similar equity rights granted to employees or
directors of Holdings or any of its Subsidiaries.

          “Non-Excluded Taxes”: as defined in Section 2.14(a).

          “Non-U.S. Lender”: as defined in Section 2.14(d).

          “Notes”: the collective reference to any promissory note evidencing Loans.

          “Obligations”: the unpaid principal of and interest on (including interest accruing
after the maturity of the Loans and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such
proceeding) the Loans and all other obligations and liabilities of the Borrower to the
Administrative Agent or to any Lender, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, any other Loan Document or any other document made, delivered or
given in connection herewith or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including all fees, charges and disbursements of
counsel to the Administrative Agent or to any Lender that are required to be paid by the Borrower
pursuant hereto) or otherwise.

          “Other Taxes”: any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or from
the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.

          “Participant”: as defined in Section 9.6(c).

          “Patriot Act”: the USA Patriot Act, Title III of Pub. L. 107-56, signed into law on
October 26, 2001.

          “PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A
of Title IV of ERISA (or any successor).

          “Pension Act”: the Pension Protection Act of 2006, as it presently exists or as it may
be amended from time to time.

 

14

          “Permitted Exceptions”: as defined in the Mortgages.

          “Permitted Junior Lien Debt”: Indebtedness of the Borrower that is secured by Liens
junior and subordinated to the Liens securing the Obligations and (i) is on terms that are not more
restrictive, taken as a whole, on the Borrower than the terms of this Agreement, as determined in
the reasonable judgment of the Administrative Agent, (ii) has a final maturity date not earlier
than October 1, 2014, and (iii) is subject to an intercreditor agreement to be agreed among the
Administrative Agent and the agent thereof.

          “Person”: an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.

          “Plan”: at a particular time, any employee benefit plan that is covered by ERISA and
in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were
terminated at such time, would reasonably be expected to, under Section 4069 of ERISA, be deemed to
be) an “employer” as defined in Section 3(5) of ERISA.

          “Plan Effective Date”: June 21, 2005.

          “Plan of Reorganization”: the “Modified First Amended Joint Plan of Reorganization
under Chapter 11 of the Bankruptcy Code” for the Borrower and its affiliates, dated as of May 23,
2005, and subject to that certain order of the United States Bankruptcy Court for the Southern
District of New York, dated May 27, 2005.

          “Pricing Grid”: the table set forth below.

	 	 	 	 	 	 	 	 	 
	Consolidated Senior	 	Applicable Margin for	 	Applicable Margin for
	Secured Leverage Ratio	 	Eurodollar Loans	 	ABR Loans
	greater than or equal
to 3.25 to 1.00
	 	 	3.25	%	 	 	2.25	%
	less than 3.25 to 1.00
	 	 	3.00	%	 	 	2.00	%

          Any change in the calculation of the Applicable Margin that is caused by a change in the
Consolidated Senior Secured Leverage Ratio will become effective on the date that the Borrower
delivers a certificate pursuant to Section 5.2 setting forth the change in the Consolidated Senior
Secured Leverage Ratio. In addition, at all times while an Event of Default shall have occurred
and be continuing, the highest rate set forth in each column of the Pricing Grid shall apply.

          “Prime Rate”: the rate of interest per annum publicly announced from time to time by
JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City (the
Prime Rate not being intended to be the lowest rate of interest charged by JPMorgan Chase Bank,
N.A. in connection with extensions of credit to debtors).

          “Pro Forma Balance Sheet”: as defined in Section 3.1(a).

 

15

          “Pro Forma Statement of Operations”: as defined in Section 3.1(a).

          “Projections”: as defined in Section 5.2(c).

          “Recovery Event”: any settlement of or payment in excess of $1,000,000 in respect of
any property or casualty insurance claim or any condemnation proceeding relating to any asset of
any Group Member.

          “Register”: as defined in Section 9.6(b).

          “Regulation U”: Regulation U of the Board as in effect from time to time.

          “Reinvestment Deferred Amount”: with respect to any Reinvestment Event, the aggregate
Net Cash Proceeds received by any Group Member in connection therewith that are not applied to
prepay the Loans pursuant to Section 2.6(c) as a result of the delivery of a Reinvestment Notice.

          “Reinvestment Event”: any Asset Sale or Recovery Event in respect of which the
Borrower has delivered a Reinvestment Notice.

          “Reinvestment Notice”: a written notice executed by a Responsible Officer stating
that no Event of Default has occurred and is continuing and that the Borrower (directly or
indirectly through a Subsidiary) intends and expects to use all or a specified portion of the Net
Cash Proceeds of an Asset Sale or Recovery Event to acquire or repair assets useful in its
business.

          “Reinvestment Prepayment Amount”: with respect to any Reinvestment Event, the
Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant
Reinvestment Prepayment Date to acquire or repair assets useful in the Borrower’s (or a
Subsidiary’s) business.

          “Reinvestment Prepayment Date”: with respect to any Reinvestment Event, the earlier
of (a) the date occurring six months after such Reinvestment Event; provided that such
period may be extended, for a period of up to an additional three months, if at the time of
expiration of such six months the Borrower or the relevant Subsidiary has entered into an agreement
to acquire or repair assets useful in its business with the relevant Reinvestment Deferred Amount
and (b) the date on which the Borrower shall have determined not to acquire or repair assets useful
in the Borrower’s business with all or any portion of the relevant Reinvestment Deferred Amount.

          “Reorganization”: with respect to any Multiemployer Plan, the condition that such
plan is in reorganization within the meaning of Section 4241 of ERISA.

          “Reportable Event”: any of the events set forth in Section 4043(c) of ERISA, other
than those events as to which the thirty day notice period is waived
under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.

          “Required Lenders”: at any time, the holders of more than 50% of (a) until the
Restatement Effective Date, the Term Commitments then in effect and (b) thereafter, the aggregate
unpaid principal amount of the Loans then outstanding.

          “Requirement of Law”: as to any Person, the certificate of incorporation and by-laws
or other organizational or governing documents of such Person, and any law, treaty, rule or
regulation or

 

16

determination of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which such Person or any of
its property is subject.

          “Responsible Officer”: the chief executive officer, president, vice president and
controller, or chief financial officer of the Borrower, but in any event, with respect to financial
matters, the chief financial officer, treasurer, vice president and controller or chief accounting
officer of the Borrower.

          “Restatement Effective Date” April 4, 2007, the date on which the conditions
precedent set forth in Section 4.1 shall have been satisfied.

          “Restricted Payments”: as defined in Section 6.6.

          “S&P”: Standard & Poor’s Ratings Service.

          “SEC”: the Securities and Exchange Commission, any successor thereto and any
analogous Governmental Authority.

          “Securitization Note”: that certain promissory note, dated the Plan Effective Date,
issued by Holdings entitling the holder of the note to receive Net Securitization Interests
Payments (as defined therein) paid from funds received from the Securitization Subsidiaries in
respect of any securitization interests held by either Securitization Subsidiary as of the Plan
Effective Date.

          “Securitization Subsidiaries”: the collective reference to Spiegel Acceptance
Corporation and Financial Services Acceptance Corporation, each a Delaware corporation and a direct
Subsidiary of Holdings.

          “Security Documents”: the collective reference to the Guarantee and Collateral
Agreement, the Mortgage and all other security documents previously or hereafter delivered to the
Administrative Agent granting a Lien on any property of any Person to secure the obligations and
liabilities of any Loan Party under any Loan Document and any amendment, waiver, supplement or any
other modification to any of the foregoing.

          “Single Employer Plan”: any Plan that is covered by Title IV of ERISA, but that is
not a Multiemployer Plan.

          “Solvent”: when used with respect to any Person, means that, as of any date of
determination, (a) the amount of the “present fair saleable value” of the assets of such Person
will, as of such date, exceed the amount of all “liabilities of such Person, contingent or
otherwise”, as of such date, as such quoted terms are determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater than the amount that
will be required to pay the liability of such Person on its debts as such debts become absolute and
matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital
with which to conduct its business, and (d) such Person will be able to pay its debts as they
mature. For purposes of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim”
means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

 

17

          “Specified Change of Control”: a “Change of Control” (or any other defined term having
a similar purpose) as defined in any ABL Facility, the Convertible Notes Documents or any
documentation governing any Permitted Junior Lien Debt.

          “Subsidiary”: as to any Person, a corporation, partnership, limited liability company
or other entity of which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such
Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.

          “Subsidiary Guarantor”: each Subsidiary of the Borrower other than any Excluded
Foreign Subsidiary.

          “Swap Agreement”: any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any
similar transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or any of its Subsidiaries
shall be a “Swap Agreement”.

          “Syndication Agent”: as defined in the preamble hereto.

          “Term Commitment”: as to any Lender, the obligation of such Lender to make a Loan to
the Borrower in a principal amount not to exceed the amount set forth under the heading “Term
Commitment” opposite such Lender’s name on Schedule 1.1A. The aggregate amount of the Term
Commitments as of the Restatement Effective Date is $225,000,000.

          “Term Percentage”: as to any Lender at any time, the percentage which such Lender’s
Term Commitment then constitutes of the Term Commitments (or, at any time after the Restatement
Effective Date, the percentage which the aggregate principal amount of such Lender’s Loans then
outstanding constitutes of the aggregate principal amount of the Loans then outstanding).

          “Transactions”: collectively, (i) the issuance of not less than $75,000,000 of
Convertible Notes, (ii) the repayment of Existing Term Loans from the proceeds of such Convertible
Notes, (iii) the amendment and restatement of the Existing Loan Agreement pursuant to this
Agreement, (iv) the Loans made hereunder and (v) the payment of fees, costs and expenses related to
the foregoing.

          “Transferee”: any Assignee or Participant.

          “Type”: as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.

          “United States”: the United States of America.

          “Wholly Owned Subsidiary”: as to any Person, any other Person all of the Capital
Stock of which (other than directors’ qualifying shares required by law) is owned by such Person
directly and/or through other Wholly Owned Subsidiaries.

 

18

          “Wholly Owned Subsidiary Guarantor”: any Subsidiary Guarantor that is a Wholly Owned
Subsidiary of the Borrower.

          1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms
defined in this Agreement shall have the defined meanings when used in the other Loan Documents or
any certificate or other document made or delivered pursuant hereto or thereto.

          (b)   As used herein and in the other Loan Documents, and any certificate or other document
made or delivered pursuant hereto or thereto, (i) accounting terms relating to any Group Member not
defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP, (ii) the words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii)
the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respect
of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings),
(iv) the words “asset” and “property” shall be construed to have the same meaning and effect and to
refer to any and all tangible and intangible assets and properties, including cash, Capital Stock,
securities, revenues, accounts, leasehold interests and contract rights, and (v) references to
agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer
to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise
modified from time to time.

          (c)   The words “hereof”, “herein” and “hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.

          (d)   The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.

          SECTION 2. AMOUNT AND TERMS OF TERM COMMITMENTS

          2.1 Refinance of Existing Loans and Term Commitments. Pursuant to the Existing Loan
Agreement, the Lenders thereunder made Existing Term Loans to the Borrower on the Closing Date in
the aggregate principal amount of $300,000,000, and $273,750,000 of the Existing Term Loans remain
outstanding immediately before giving effect to this Agreement. On the Restatement Effective Date,
the Borrower shall refinance $225,000,000 of the Existing Term Loans with Loans made under this
Agreement and shall repay any remaining obligations arising under the Existing Loan Agreement with
the proceeds of Convertible Notes issued immediately prior to, or contemporaneously with, the
Restatement Effective Date. To effectuate the refinance of the Existing Term Loans, subject to the
terms and conditions hereof, each Lender severally agrees to make a term loan to the Borrower on
the Restatement Effective Date in an amount equal to the amount of the Term Commitment of such
Lender. The Loans may from time to time be Eurodollar Loans or ABR Loans, as determined by the
Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 2.7.

          2.2 Procedure for Loan Borrowing. The Borrower shall give the Administrative Agent
irrevocable notice (which notice must be received by the Administrative Agent prior to 1:00 P.M.,
New York City time, one Business Day prior to the anticipated Restatement Effective Date) requesting that the Lenders make the
Loans on the Restatement Effective Date. The Loans made on the Restatement Effective Date shall
initially be ABR Loans and, unless otherwise agreed by the Administrative Agent in its sole
discretion, no Loan may be converted into or continued as a Eurodollar Loan at any time prior to
the third Business Day after the Restatement Effective Date (the “Eurodollar Date”) and no
Loan may be converted into or continued as a Eurodollar Loan having an Interest Period in excess of
one month

 

19

prior to the date that is 30 days after the Eurodollar Date. Upon receipt of such notice
the Administrative Agent shall promptly notify each Lender thereof. Not later than 1:00 P.M., New
York City time, on the Restatement Effective Date each Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available funds equal to the
Loan to be made by such Lender. The Administrative Agent shall credit the account of the Borrower
on the books of such office of the Administrative Agent with the aggregate of the amounts made
available to the Administrative Agent by the Lenders in immediately available funds.

          2.3 Repayment of Loans. The Loans of each Lender shall mature in 24 consecutive
quarterly installments, each of which shall be in an amount equal to such Lender’s Term Percentage
multiplied by the amount set forth below opposite such installment:

	 	 	 	 	 
	Installment	 	Principal Amount
	June 30, 2007
	 	$	562,500	 
	September 30, 2007
	 	$	562,500	 
	December 31, 2007
	 	$	562,500	 
	March 31, 2008
	 	$	562,500	 
	June 30, 2008
	 	$	562,500	 
	September 30, 2008
	 	$	562,500	 
	December 31, 2008
	 	$	562,500	 
	March 31, 2009
	 	$	562,500	 
	June 30, 2009
	 	$	562,500	 
	September 30, 2009
	 	$	562,500	 
	December 31, 2009
	 	$	562,500	 
	March 31, 2010
	 	$	562,500	 
	June 30, 2010
	 	$	562,500	 
	September 30, 2010
	 	$	562,500	 
	December 31, 2010
	 	$	562,500	 
	March 31, 2011
	 	$	562,500	 
	June 30, 2011
	 	$	562,500	 
	September 30, 2011
	 	$	562,500	 
	December 31, 2011
	 	$	562,500	 
	March 31, 2012
	 	$	562,500	 
	June 30, 2012
	 	$	562,500	 
	September 30, 2012
	 	$	562,500	 
	December 31, 2012
	 	$	562,500	 
	March 31, 2013
	 	$	562,500	 
	June 30, 2013
	 	$	562,500	 
	September 30, 2013
	 	$	562,500	 
	December 31, 2013
	 	$	562,500	 
	Maturity Date
	 	$	209,812,500	 

          2.4 Fees, etc.
The Borrower agrees to pay the fees in the amounts and on the dates as set forth in any fee
agreements between the Borrower and the Administrative Agent or among the Borrower, the Agents and
the Arrangers, and to perform any other obligations contained therein.

          2.5 Optional Prepayments. The Borrower may at any time and from time to time prepay
the Loans, in whole or in part, without premium or penalty, upon irrevocable notice delivered to
the Administrative Agent no later than 1:00 P.M., New York City time, three Business Days prior
thereto, in the case of Eurodollar Loans, and no later than 1:00 P.M., New York City time, one
Business Day prior thereto, in the case of ABR Loans, which notice shall specify the date and
amount of prepayment and

 

20

whether the prepayment is of Eurodollar Loans or ABR Loans; provided that
if a Eurodollar Loan is prepaid on any day other than the last day of the Interest Period
applicable thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.15. Upon
receipt of any such notice the Administrative Agent shall promptly notify each Lender. If any such
notice is given, the amount specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to such date on the amount prepaid. Partial prepayments of
Loans shall be in an aggregate principal amount of $1,000,000 or a whole multiple thereof.

          2.6 Mandatory Prepayments. (a) If any Capital Stock shall be issued or sold by any
Loan Party (other than (i) Capital Stock issued to a Loan Party, (ii) Capital Stock issued pursuant
to or in connection with any employee or director stock plan, stock option plan or similar plan,
and (iii) Capital Stock issued pursuant to the Convertible Notes Documents), an amount equal to 50%
of the Net Cash Proceeds thereof shall be applied within two (2) Business Days of receipt by any
Loan Party of the Net Cash Proceeds from such issuance or sale toward the prepayment of the Loans
as set forth in Section 2.6(e); provided that no prepayments of Net Cash Proceeds from such sale or
issuance of any such Capital Stock shall be applied to prepay the Loans if, at the time of such
sale or issuance, the Consolidated Senior Secured Leverage Ratio is less than 2.00 to 1.00;
provided, however, that the Borrower shall not be required to apply to the
prepayment of the Loans such Net Cash Proceeds from the issuance of Capital Stock to the extent
such Net Cash Proceeds are applied to pay, prepay, repurchase or redeem the Convertible Notes to
the extent permitted under the proviso in Section 6.9(f).

          (b)   If any Indebtedness shall be incurred by any Loan Party (excluding any Indebtedness
incurred in accordance Section 6.2, other than Section 6.2(j)(i)), an amount equal to 100% of the
Net Cash Proceeds thereof shall be applied within two (2) Business Days of such incurrence toward
the prepayment of the Loans as set forth in Section 2.6(e); provided that, after Net Cash
Proceeds of at least $50,000,000 of Indebtedness incurred pursuant to Section 6.2(j)(i) shall have
been applied to prepay the Loans, Net Cash Proceeds of up to $50,000,000 of Indebtedness incurred
pursuant to Section 6.2(j)(i) may be excluded from the foregoing requirement during the term of
this Agreement.

          (c)   If on any date any Loan Party shall receive Net Cash Proceeds from any Asset Sale or
Recovery Event then, unless a Reinvestment Notice shall be delivered in respect thereof, an amount
equal to such Net Cash Proceeds shall be applied, within two (2) Business Days of receipt by any
Loan Party of the Net Cash Proceeds, toward the prepayment of the Loans as set forth in Section
2.6(e); provided, that, notwithstanding the foregoing, (i) the aggregate Net Cash Proceeds
of Asset Sales (other than Asset Sales of the type described in clause (ii) of this proviso) that
may be excluded from the foregoing requirement pursuant to a Reinvestment Notice shall not exceed
$1,000,000 in any fiscal year of the Borrower, (ii) the aggregate Net Cash Proceeds of any Asset
Sale in respect of real property with a fair market value less than $3,000,000 may be excluded from
the foregoing requirement pursuant to a
Reinvestment Notice during the term of this Agreement so long as the applicable Loan Party
reinvests such Net Cash Proceeds in real property of like kind and value and (iii) on each
Reinvestment Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with respect to
the relevant Reinvestment Event shall be applied toward the prepayment of the Loans as set forth in
Section 2.6(e); provided further that notwithstanding anything herein to the
contrary, Net Cash Proceeds from any Asset Sale or Recovery Event in respect of the Revolving
Lender Priority Collateral (as defined in the Intercreditor Agreement) shall be applied,
first, to the payment of the principal amount outstanding under the ABL Facility to the
extent required under the ABL Facility Agreement and, second, to the prepayment of the
Loans.

          (d)   If, for any fiscal year of the Borrower commencing with the fiscal year ending December
31, 2007, there shall be Excess Cash Flow, the Borrower shall, on the relevant Excess Cash Flow
Application Date, apply the ECF Percentage of such Excess Cash Flow toward the prepayment of the
Loans as set forth in Section 2.6(e), if and to the extent that such amount exceeds the amount of

 

21

voluntary prepayments of the Loans made during such fiscal year. Each such prepayment shall be
made on a date (an “Excess Cash Flow Application Date”) no later than five Business Days
after the earlier of (i) the date on which the financial statements of the Borrower referred to in
Section 5.1(a), for the fiscal year with respect to which such prepayment is made, are required to
be delivered to the Administrative Agent and (ii) the date such financial statements are actually
delivered.

          (e)   Amounts to be applied in connection with prepayments made pursuant to this Section 2.6
shall be applied to the prepayment of the Loans in accordance with Section 2.12(b). The
application of any prepayment pursuant to this Section 2.6 shall be made, first, to ABR
Loans and, second, to Eurodollar Loans. Each prepayment of the Loans under this Section
2.6 shall be accompanied by accrued interest to the date of such prepayment on the amount prepaid.
If, pursuant to this Section 2.6, Eurodollar Loans are required to be prepaid on a day no more than
three Business Days prior to the last day of an Interest Period with respect thereto, the Borrower
may deposit cash in a cash collateral account established with the Administrative Agent, for the
benefit of the Lenders, on terms and conditions satisfactory to the Administrative Agent to be held
for application to such Eurodollar Loans on the last day of the Interest Period with respect
thereto. Interest on any such Eurodollar Loans shall be payable at the then applicable rate during
the period that such cash remains in the cash collateral account.

          2.7 Conversion and Continuation Options. (a) The Borrower may elect from time to
time to convert Eurodollar Loans to ABR Loans by giving the Administrative Agent prior irrevocable
notice of such election no later than 1:00 P.M., New York City time, on the Business Day preceding
the proposed conversion date, provided that any such conversion of Eurodollar Loans other
than on the last day of an Interest Period with respect thereto shall be subject to Section 2.15.
The Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans by giving the
Administrative Agent prior irrevocable notice of such election no later than 1:00 P.M., New York
City time, on the third Business Day preceding the proposed conversion date (which notice shall
specify the length of the initial Interest Period therefor), provided that no ABR Loan may be
converted into a Eurodollar Loan when any Event of Default has occurred and is continuing and the
Administrative Agent or the Required Lenders have determined in its or their sole discretion not to
permit such conversions. Upon receipt of any such notice the Administrative Agent shall promptly
notify each Lender thereof.

          (b)   Any Eurodollar Loan may be continued as such upon the expiration of the then current
Interest Period with respect thereto by the Borrower giving irrevocable notice to the
Administrative Agent, in accordance with the applicable provisions of the term “Interest Period”
set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Loans,
provided that no
Eurodollar Loan may be continued as such when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Required Lenders have determined in its or their
sole discretion not to permit such continuations, and provided, further, that if
the Borrower shall fail to give any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso such Loans shall be automatically
converted to ABR Loans on the last day of such then expiring Interest Period. Upon receipt of any
such notice the Administrative Agent shall promptly notify each Lender thereof.

          2.8 Limitations on Eurodollar Tranches. Notwithstanding anything to the contrary in
this Agreement, all borrowings, conversions and continuations of Eurodollar Loans and all
selections of Interest Periods shall be in such amounts and be made pursuant to such elections so
that, (a) after giving effect thereto, the aggregate principal amount of the Eurodollar Loans
comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000
in excess thereof and (b) no more than five Eurodollar Tranches shall be outstanding at any one
time.

 

22

          2.9 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear interest
for each day during each Interest Period with respect thereto at a rate per annum equal to the
Eurodollar Rate determined for such day plus the Applicable Margin.

          (b)   Each ABR Loan shall bear interest at a rate per annum equal to the ABR plus the
Applicable Margin.

          (c)   (i) If all or a portion of the principal amount of any Loan shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), all outstanding Loans (whether or
not overdue) shall bear interest at a rate per annum equal to the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section 2.9 plus 2% and
(ii) if all or a portion of any interest payable on any Loan, any fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate then
applicable to ABR Loans plus 2%, in each case, with respect to clauses (i) and (ii) above,
from the date of such non-payment until such amount is paid in full (as well after as before
judgment).

          (d)   Interest shall be payable in arrears on each Interest Payment Date, provided
that interest accruing pursuant to paragraph (c) of this Section 2.9 shall be payable from time to
time on demand.

          2.10 Computation of Interest and Fees. (a) Interest and fees payable pursuant hereto
shall be calculated on the basis of a 360-day year for the actual days elapsed, except that, with
respect to ABR Loans the rate of interest on which is calculated on the basis of the Prime Rate,
the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of each determination of a Eurodollar Rate. Any change in the
interest rate on a Loan resulting from a change in the ABR or the Eurocurrency Reserve Requirements
shall become effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the Borrower and the
relevant Lenders of the effective date and the amount of each such change in interest rate.

          (b)   Each determination of an interest rate by the Administrative Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the
absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver
to the Borrower a statement showing the quotations used by the Administrative Agent in determining
any interest rate pursuant to Section 2.9(a).

          2.11 Inability to Determine Interest Rate. If prior to the first day of any Interest
Period:

     (a)   the Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for such Interest Period, or

     (b)   the Administrative Agent shall have received notice from the Required Lenders
that the Eurodollar Rate determined or to be determined for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Loans during such Interest Period,

 

23

the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the
Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans
requested to be made on the first day of such Interest Period shall be made as ABR Loans, (y) any
Loans that were to have been converted on the first day of such Interest Period to Eurodollar Loans
shall be continued as ABR Loans and (z) any outstanding Eurodollar Loans shall be converted, on the
last day of the then-current Interest Period, to ABR Loans. Until such notice has been withdrawn
by the Administrative Agent, no further Eurodollar Loans shall be made or continued as such, nor
shall the Borrower have the right to convert ABR Loans to Eurodollar Loans.

          2.12 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower from the
Lenders hereunder and each payment by the Borrower on account of any fee payable to the Lenders
shall be made pro rata according to the respective Term Percentages of the Lenders.

          (b)   Each payment (including each prepayment) by the Borrower on account of principal of and
interest on the Loans shall be made pro rata according to the outstanding principal
amounts of the Loans then held by the Lenders. Prepayments of the Loans pursuant to Section 2.5
shall be applied, first, to the immediately succeeding twelve months’ scheduled
amortization payments in direct order of maturity and, second, to reduce all remaining
respective installments thereof ratably according to the amounts of such installments after giving
effect to all prior reductions thereto. The amount of each principal prepayment of the Loans being
made pursuant to Section 2.6 shall be applied to reduce the then remaining installments of the
Loans pro rata based upon the then remaining principal amounts thereof after giving
effect to all prior reductions thereto. Amounts prepaid on account of the Loans may not be
reborrowed.

          (c)   All payments (including prepayments) to be made by the Borrower hereunder, whether on
account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and
shall be made prior to 2:00 P.M., New York City time, on the due date thereof to the Administrative
Agent, for the account of the Lenders, at the Funding Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the Lenders promptly
upon receipt in
like funds as received. If any payment hereunder (other than payments on the Eurodollar
Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended
to the next succeeding Business Day. If any payment on a Eurodollar Loan becomes due and payable
on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding
Business Day unless the result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the immediately preceding Business
Day. In the case of any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during such extension.

          (d)   Unless the Administrative Agent shall have been notified in writing by any Lender prior
to a borrowing that such Lender will not make the amount that would constitute its share of such
borrowing available to the Administrative Agent, the Administrative Agent may assume that such
Lender is making such amount available to the Administrative Agent, and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If
such amount is not made available to the Administrative Agent by the required time on the
Restatement Effective Date therefor, such Lender shall pay to the Administrative Agent, on demand,
such amount with interest thereon, at a rate equal to the greater of (i) the Federal Funds
Effective Rate and (ii) a rate determined by the Administrative Agent in according with banking
industry rules on interbank compensation, for the period until the Lender makes such amount
immediately available to the Administrative Agent. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this paragraph shall be conclusive
in the absence of manifest error. If such Lender’s share of such borrowing is not made available
to the Administrative Agent by such Lender within three Business Days

 

24

after the Restatement
Effective Date, the Administrative Agent shall also be entitled to recover such amounts with
interest thereon at the rate per annum applicable to ABR Loans, on demand, from the Borrower.

          (e)   Unless the Administrative Agent shall have been notified in writing by the Borrower
prior to the date of any payment due to be made by the Borrower hereunder that the Borrower will
not make such payment to the Administrative Agent, the Administrative Agent may assume that the
Borrower is making such payment, and the Administrative Agent may, but shall not be required to, in
reliance upon such assumption, make available to the Lenders their respective pro
rata shares of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days after such due date, the Administrative Agent
shall be entitled to recover, on demand, from each Lender to which any amount which was made
available pursuant to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing herein shall be deemed to
limit the rights of the Administrative Agent or any Lender against the Borrower.

          2.13 Requirements of Law. (a) If the adoption of or any change in any Requirement of
Law or in the interpretation or application thereof or compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof:

          (i)   shall subject any Lender to any tax of any kind whatsoever with respect to this
Agreement or any Eurodollar Loan made by it, or change the basis of taxation of payments to
such Lender in respect thereof (except for Non-Excluded Taxes covered by Section 2.14 and
changes in the rate of tax on the overall net income of such Lender);

          (ii)   shall impose, modify or hold applicable any reserve, special deposit, compulsory
loan or similar requirement against assets held by, deposits or other liabilities in or for
the account of, advances, loans or other extensions of credit by, or any other acquisition
of funds by, any office of such Lender that is not otherwise included in the determination
of the Eurodollar Rate; or

          (iii)   shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender, by an amount that
such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar
Loans, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the
Borrower shall promptly pay such Lender, upon its demand, any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable. If any Lender becomes
entitled to claim any additional amounts pursuant to this paragraph, it shall promptly notify the
Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so
entitled.

          (b)   If any Lender shall have determined that the adoption of or any change in any
Requirement of Law regarding capital adequacy or in the interpretation or application thereof or
compliance by such Lender or any corporation controlling such Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from any Governmental Authority
made subsequent to the date hereof shall have the effect of reducing the rate of return on such
Lender’s or such corporation’s capital as a consequence of its obligations hereunder to a level
below that which such Lender or such corporation could have achieved but for such adoption, change
or compliance (taking into consideration such Lender’s or such corporation’s policies with respect
to capital adequacy) by an amount deemed by such Lender to be material, then from time to time,
after submission by such Lender to the

 

25

Borrower (with a copy to the Administrative Agent) of a written request therefor, the Borrower
shall pay to such Lender such additional amount or amounts as will compensate such Lender or such
corporation for such reduction.

          (c) A certificate as to any additional amounts payable pursuant to this Section submitted by
any Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in the
absence of manifest error. Notwithstanding anything to the contrary in this Section, the Borrower
shall not be required to compensate a Lender pursuant to this Section for any amounts incurred more
than six months prior to the date that such Lender notifies the Borrower of such Lender’s intention
to claim compensation therefor; provided that, if the circumstances giving rise to such
claim have a retroactive effect, then such six-month period shall be extended to include the period
of such retroactive effect. The obligations of the Borrower pursuant to this Section shall survive
the termination of this Agreement and the payment of the Loans and all other amounts payable
hereunder.

          2.14 Taxes  (a) All payments made by the Borrower under this Agreement shall be made
free and clear of, and without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority,
excluding net income taxes and franchise or margin taxes (imposed in lieu of net income taxes)
imposed on the Administrative Agent or any Lender as a result of a present or former connection
between the Administrative Agent or such Lender and the jurisdiction of the Governmental Authority
imposing such tax or any political subdivision or taxing authority thereof or therein (other than
any such connection arising solely from the Administrative Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced, this Agreement or
any other Loan Document). If any such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions or withholdings (“Non-Excluded Taxes”) or Other Taxes are required to be
withheld from any amounts payable to the Administrative Agent or any Lender hereunder, the amounts
so payable to the Administrative Agent or such Lender shall be increased to the extent necessary to
yield to the Administrative Agent or such Lender (after payment of all Non-Excluded Taxes and Other
Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement, provided, however, that the Borrower shall not be required to increase
any such amounts payable to any Lender with respect to any Non-Excluded Taxes (i) that are
attributable to such Lender’s failure to comply with the requirements of paragraph (d) or (e) of
this Section or (ii) that are United States withholding taxes imposed on amounts payable to such
Lender at the time such Lender becomes a party to this Agreement, except to the extent that such
Lender’s assignor (if any) was entitled, at the time of assignment, to receive additional amounts
from the Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph.

          (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

          (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly
as possible thereafter the Borrower shall send to the Administrative Agent for its own account or
for the account of the relevant Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof to the extent such receipt is
reasonably available. If the Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due
to the appropriate taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, the Borrower shall indemnify the Administrative
Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by
the Administrative Agent or any Lender as a result of any such failure.

 

26

          (d) Each Lender (or Transferee) that is not a “U.S. Person” as defined in Section 7701(a)(30)
of the Code (a “Non-U.S. Lender”) shall deliver to the Borrower and the Administrative
Agent (or, in the case of a Participant, to the Lender from which the related participation shall
have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statement
substantially in the form of Exhibit D and a Form W-8BEN, or any subsequent versions thereof or
successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrower
under this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-U.S.
Lender on or before the date it becomes a party to this Agreement (or, in the case of any
Participant, on or before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall
promptly notify the Borrower at any time it determines that it is no longer in a position to
provide any previously delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of
this paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant to this
paragraph that such Non-U.S. Lender is not legally able to deliver.

          (e) A Lender that is entitled to an exemption from or reduction of non-U.S. withholding tax
under the law of the jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable
law or reasonably requested by the Borrower, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without withholding or at a
reduced rate, provided that such Lender is legally entitled to complete, execute and
deliver such documentation and in such Lender’s judgment such completion, execution or submission
would not materially prejudice the legal position of such Lender.

          (f) If the Administrative Agent or any Lender determines, in its sole discretion, that it has
received a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by
the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this
Section 2.14, it shall pay over such refund to the Borrower (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section 2.14 with respect to
the Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent or such Lender and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund); provided, that
the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the
amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund to such Governmental
Authority. This paragraph shall not be construed to require the Administrative Agent or any Lender
to make available its tax returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.

          (g) The agreements in this Section shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.

          2.15 Indemnity The Borrower agrees to indemnify each Lender for, and to hold each
Lender harmless from, any loss or expense that such Lender may sustain or incur as a consequence of
(a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar
Loans after the Borrower has given a notice requesting the same in accordance with the provisions
of this

 

27

Agreement, (b) default by the Borrower in making any prepayment of or conversion from
Eurodollar Loans after the Borrower has given a notice thereof in accordance with the provisions of
this Agreement or (c) the making of a prepayment of Eurodollar Loans on a day that is not the last
day of an Interest Period with respect thereto. Such indemnification may include an amount equal
to the excess, if any, of (i) the amount of interest that would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of such Interest
Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate of interest for
such Loans provided for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) that would have accrued
to such Lender on such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. A certificate as to any amounts payable pursuant
to this Section 2.15 submitted to the Borrower by any Lender shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.

          2.16 Change of Lending Office. Each Lender agrees that, upon the occurrence of any
event giving rise to the operation of Section 2.13 or 2.14(a) with respect to such Lender, it will,
if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such designation is made on terms
that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no
economic, legal or regulatory disadvantage, and provided, further, that nothing in this Section
2.16 shall affect or postpone any of the obligations of the Borrower or the rights of any Lender
pursuant to Section 2.13 or 2.14(a).

          2.17 Replacement of Lenders. The Borrower shall be permitted to replace any Lender
that (a) requests reimbursement for amounts owing pursuant to Section 2.13 or 2.14(a) or (b)
defaults in its obligation to make Loans hereunder, with a replacement financial institution;
provided that (i) such replacement does not conflict with any Requirement of Law, (ii) no Event of
Default shall have occurred and be continuing at the time of such replacement, (iii) the
replacement financial institution shall purchase, at par, all Loans and other amounts owing to such
replaced Lender on or prior to the date of replacement, (iv) the Borrower shall be liable to such
replaced Lender under Section 2.15 if any Eurodollar Loan owing to such replaced Lender shall be
purchased other than on the last day of the Interest Period relating thereto, (v) the replacement
financial institution, if not already a Lender, shall be reasonably satisfactory to the
Administrative Agent, (vi) the replaced Lender shall be obligated to make such replacement in
accordance with the provisions of Section 9.6 (provided that the Borrower shall be obligated to pay
the registration and processing fee referred to therein), (vii) until such time as such replacement
shall be consummated, the Borrower shall pay all additional amounts (if any) required pursuant to
Section 2.13 or 2.14(a), as the case may be, and (viii) any such replacement shall not be deemed to
be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall
have against the replaced Lender.

SECTION 3. REPRESENTATIONS AND WARRANTIES

          To induce the Administrative Agent and the Lenders to enter into this Agreement and to make
the Loans, Holdings and the Borrower hereby jointly and severally represent and warrant to the
Administrative Agent and each Lender that:

          3.1 Financial Condition. (a) The unaudited pro forma consolidated balance sheet of
Holdings and its consolidated Subsidiaries as at December 30, 2006 (including the notes thereto)
(the “Pro Forma Balance Sheet”), copies of which have heretofore been furnished to each
Lender, has been

 

28

prepared giving effect (as if such events had occurred on such date) to the Transactions. The
Pro Forma Balance Sheet has been prepared in good faith upon reasonable assumptions at the time
made and presents fairly on a pro forma basis the estimated financial position of Holdings and its
consolidated Subsidiaries as at December 30, 2006, assuming that the Transactions had actually
occurred at such date. The pro forma statement of operations for the twelve-month period ending on
December 30, 2006 (the “Pro Forma Statement of Operations”), copies of which have
heretofore been furnished to each Lender, has been prepared giving effect (as if such events had
occurred on December 30, 2006) to the Transactions. The Pro Forma Statement of Operations has been
prepared in good faith upon reasonable assumptions at the time made and presents fairly on a pro
forma basis the estimated financial position of Holdings and its consolidated Subsidiaries as at
December 30, 2006, assuming that the events specified in the preceding sentence had actually
occurred on December 30, 2006.

          (b) The audited consolidated balance sheets of Holdings and its consolidated Subsidiaries as
at January 1, 2005, December 31, 2005, and December 30, 2006, and the related combined statements
of operations, stockholders’ equity and comprehensive income and cash flows for the three fiscal
years ended on January 1, 2005, December 31, 2005, and December 30, 2006, reported on by BDO
Seidman, LLP, present fairly in all material respects the consolidated financial condition of
Holdings and its consolidated Subsidiaries as at such date, and the consolidated results of its
operations and its consolidated cash flows for the respective fiscal years then ended. All such
financial statements, including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved (except as approved by
the aforementioned firm of accountants and disclosed therein). No Loan Party has any material
Guarantee Obligations, contingent liabilities and liabilities for taxes, or any long-term leases or
unusual forward or long-term commitments, including any interest rate or foreign currency swap or
exchange transaction or other obligation in respect of derivatives, which are not reflected in the
most recent financial statements referred to in this paragraph.

          3.2 No Change. Other than as described on Schedule 3.2, since December 30, 2006, there
has been no development or event that has had or could reasonably be expected to have a Material
Adverse Effect.

          3.3 Existence; Compliance with Law. Each Loan Party (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization, (b) has the
power and authority, and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign corporation or other organization and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or the conduct of its
business requires such qualification and (d) is in compliance with all Requirements of Law except
to the extent that the failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.

          3.4 Power; Authorization; Enforceable Obligations. Each Loan Party has the power and
authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a
party and, in the case of the Borrower, to obtain extensions of credit hereunder. Each Loan Party
has taken all necessary organizational action to authorize the execution, delivery and performance
of the Loan Documents to which it is a party and, in the case of the Borrower, to authorize the
extensions of credit on the terms and conditions of this Agreement. No consent or authorization
of, filing with, notice to or other act by or in respect of, any Governmental Authority or any
other Person (each, a “Filing”) is required in connection with the Transactions and the
extensions of credit hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Loan Documents, except (i) consents, authorizations,
filings and notices described in Schedule 3.4, which consents, authorizations, filings and notices
have been obtained or made and are in full force and effect, (ii) the filings referred to in
Sections 3.19, 5.4 and 5.8 and any other Filings contemplated by this Agreement or any other Loan

 

29

Document, and (iii) any antitrust Filings required to be made to foreclose on the Collateral.
Each Loan Document has been duly executed and delivered on behalf of each Loan Party party thereto.
This Agreement constitutes, and each other Loan Document upon execution will constitute, a legal,
valid and binding obligation of each Loan Party party thereto, enforceable against each such Loan
Party in accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).

          3.5 No Legal Bar. The execution, delivery and performance of this Agreement and the
other Loan Documents, the borrowings hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or any Contractual Obligation of any Group Member and will not result in, or
require, the creation or imposition of any Lien on any of their respective properties or revenues
pursuant to any Requirement of Law or any such Contractual Obligation (other than the Liens created
by the Security Documents or the ABL Facility Agreement). No Requirement of Law or Contractual
Obligation applicable to the Borrower or any of its Subsidiaries could reasonably be expected to
have a Material Adverse Effect.

          3.6 Litigation. No litigation, investigation or proceeding of or before any arbitrator
or Governmental Authority is pending or, to the knowledge of Holdings or the Borrower, threatened
by or against any Group Member or against any of their respective properties or revenues (a) with
respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or
(b) that could reasonably be expected to have a Material Adverse Effect.

          3.7 No Default. Other than as disclosed on Schedule 3.7, no Group Member is in default
under or with respect to any of its Contractual Obligations in any respect that could reasonably be
expected to have a Material Adverse Effect. Upon the consummation of the Transactions, no Default
or Event of Default will be continuing.

          3.8 Ownership of Property; Liens. Except as could not reasonably be expected to have a
Material Adverse Effect, each Group Member has title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to, or a valid leasehold interest in, all its
other property, and such property is free and clear of any Liens except Liens permitted by Section
6.3.

          3.9 Intellectual Property Each Group Member owns, or is licensed to use, all
Intellectual Property included in the Collateral. Except as described in Schedule 3.9, no material
claim has been asserted and is pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does
Holdings or the Borrower know of any valid basis for any such claim. To the knowledge of each
Group Member, the use of such Intellectual Property by such Group Member does not infringe on the
rights of any Person in any material respect.

          3.10 Taxes. Each Group Member has (i) filed or caused to be filed all Federal and
other material tax returns that are required to be filed and (ii) paid all taxes shown to be due
and payable on said returns or, except as could not be reasonably expected to have a Material
Adverse Effect, on any assessments made against it or any of its property and all other taxes, fees
or other charges imposed on it or any of its property by any Governmental Authority (in the case of
the foregoing clauses (i) and (ii), other than any the amount or validity of which are currently
being contested in good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the relevant Group Member); no tax Lien has
been filed, and, to the knowledge of Holdings and the Borrower, no claim is being asserted, with
respect to any such tax, fee or other charge.

 

30

          3.11 Federal Regulations. No part of the proceeds of any Loans, and no other
extensions of credit hereunder, will be used (a) for “buying” or “carrying” any “margin stock”
within the respective meanings of each of the quoted terms under Regulation U as now and from time
to time hereafter in effect for any purpose that violates the provisions of the Regulations of the
Board or (b) for any purpose that violates the provisions of the Regulations of the Board. If
requested by any Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in Regulation U.

          3.12 Labor Matters. Except as, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect: (a) there are no strikes or other labor disputes against any Group
Member pending or, to the knowledge of Holdings or the Borrower, threatened; (b) hours worked by
and payments made to employees of each Group Member have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such matters; and (c) all
payments due from any Group Member on account of employee health and welfare insurance have been
paid or accrued as a liability on the books of the relevant Group Member.

          3.13 ERISA. Neither a Reportable Event nor an “accumulated funding deficiency” (within
the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred since the Closing Date
with respect to any Single Employer Plan, and none is reasonably expected to occur. No termination
of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen,
during such period. With respect to each Plan, Holdings, the Borrower, and each Commonly
Controlled Entity has complied in all material respects with the applicable provisions of ERISA and
the Code. On and after the effectiveness of the Pension Act, there has been no failure of any
Single Employer Plan to satisfy the minimum funding standards (within the meaning of Section 412 of
the Code or Section 302 of ERISA) applicable to such Single Employer Plan and no determination that
any Single Employer Plan is, or is expected to be, in “at risk” status within the meaning of Title
IV of ERISA. The present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Single Employer Plans) did not, as of the last annual valuation
date prior to the date on which this representation is made or deemed made, exceed the value of the
assets of such Single Employer Plan allocable to such accrued benefits by $15,000,000. Neither the
Borrower nor any Commonly Controlled Entity has received any written notification, or has
knowledge, that any Multiemployer Plan is, or is expected to be, in reorganization or in endangered
or critical status (within the meaning of Section 432 of the Code or Section 305 or Title IV of
ERISA) or has been, or is to be, terminated within the meaning of Title IV of ERISA. Neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan that has resulted or could reasonably be expected to result in a material
liability under ERISA, and no Multiemployer Plan exists.

          3.14 Investment Company Act; Other Regulations. No Loan Party is an “investment
company”, or a company “controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended. No Loan Party is subject to regulation under any
Requirement of Law (other than Regulation X of the Board) that limits its ability to incur
Indebtedness.

          3.15 Subsidiaries. Except as disclosed to the Administrative Agent by the Borrower in
writing from time to time after the Restatement Effective Date, (a) Schedule 3.15 sets forth the
name and jurisdiction of incorporation of each Subsidiary and, as to each such Subsidiary, the
percentage of each class of Capital Stock owned by any Loan Party and (b) there are no outstanding
subscriptions, options, warrants, calls, rights or other agreements or commitments (other than
stock options granted to employees or directors and directors’ qualifying shares) of any nature
relating to any Capital Stock of the Borrower or any Subsidiary, except as created by the Loan
Documents or the ABL Facility Agreement.

 

31

          3.16 Use of Proceeds. The proceeds of the Loans shall be used to fund the
Transactions.

          3.17 Environmental Matters. Except as, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect:

          (a) each Group Member: (i) is in compliance with all applicable Environmental Laws, and
within the period of all applicable statutes of limitation has been in compliance with all
applicable Environmental Laws, except for any past noncompliance that has been fully and finally
resolved without continued or future effect to any Group Member; (ii) holds all Environmental
Permits (each of which is in full force and effect) required for any of its current operations or
for any property owned, leased, or otherwise operated by it; and (iii) is in compliance with all of
its Environmental Permits, and within the period of all applicable statutes of limitation has been
in compliance with all of its Environmental Permits, except for any past noncompliance that has
been fully and finally resolved without continued or future effect to any Group Member;

          (b) Materials of Environmental Concern are not present at, on, under, in, or about any real
property now or formerly owned, leased or operated by any Group Member or at any other location
(including, without limitation, any location to which Materials of Environmental Concern have been
sent by or on behalf of any Group Member for re-use or recycling or for treatment, storage, or
disposal) which could reasonably be expected to (i) give rise to liability of the Borrower under
any applicable Environmental Law or otherwise result in costs to the Borrower, or (ii) interfere
with the Borrower’s continued operations or (iii) to the knowledge of Holdings and the Borrower,
impair the fair saleable value of any Mortgaged Property;

          (c) no judicial or arbitral proceeding or governmental or administrative action (including
any notice of violation or alleged violation) is pending or, to the knowledge of Holdings and the
Borrower, threatened, under or relating to any Environmental Law to which any Group Member is or,
to the knowledge of Holdings and the Borrower, will be named as a party, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law;

          (d) no Group Member has received any written request for information, or been notified that
it is a potentially responsible party under or relating to the federal Comprehensive Environmental
Response, Compensation, and Liability Act or any similar Environmental Law, or with respect to any
Materials of Environmental Concern; and

          (e) no Group Member has assumed or retained, by contract or, to the knowledge of Holdings and
the Borrower, operation of law, any liabilities of another Person of any kind, fixed or contingent,
known or unknown under any Environmental Law or with respect to any Material of Environmental
Concern.

          3.18 Accuracy of Information, etc. No statement or information contained in this
Agreement, any other Loan Document, the Confidential Information Memorandum or any other document,
certificate or statement furnished by or on behalf of any Loan Party to the Administrative Agent or
the Lenders, or any of them, for use in connection with the transactions contemplated by this
Agreement or the other Loan Documents, contained as of the date such statement, information,
document or certificate was so furnished (or, in the case of the Confidential Information
Memorandum, as of the date of this Agreement), any untrue statement of a fact or omitted to state a
fact necessary to make the statements contained herein or therein not materially misleading in
light of the circumstances under which such statements are made, taken as a whole. The projections
and pro forma financial information

 

32

contained in the materials referenced above are based upon good faith estimates and
assumptions believed by management of the Borrower to be reasonable at the time made, it being
recognized by the Lenders that such financial information as it relates to future events is not to
be viewed as fact and that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a material amount. There is
no fact known to any Loan Party that would reasonably be expected to have a Material Adverse Effect
that has not been expressly disclosed herein, in Holdings’ SEC filings, in the other Loan
Documents, in the Confidential Information Memorandum or in any other documents, certificates and
statements furnished to the Administrative Agent and the Lenders for use in connection with the
transactions contemplated hereby and by the other Loan Documents.

          3.19 Security Documents. (a) The Guarantee and Collateral Agreement is effective to
create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable security interest in the Collateral described therein and proceeds thereof. In the
case of the Pledged Stock described in the Guarantee and Collateral Agreement, when stock
certificates representing such Pledged Stock are delivered to the Administrative Agent, and in the
case of the other Collateral described in the Guarantee and Collateral Agreement, when financing
statements and other filings specified on Schedule 3.19(a) in appropriate form are filed in the
offices specified on Schedule 3.19(a), the Guarantee and Collateral Agreement shall constitute a
fully perfected Lien on, and security interest in, all right, title and interest of the Loan
Parties in such Collateral and the proceeds thereof, as security for the Obligations (as defined in
the Guarantee and Collateral Agreement), in each case prior and superior in right to any other
Person (except, Liens permitted by Sections 6.3(a) and (l) and, in the case of Collateral other
than Pledged Stock, Liens permitted by Section 6.3, including the Liens securing the obligations
under the ABL Facility Agreement).

          (b) The Mortgage is effective to create in favor of the Administrative Agent, for the benefit
of the Lenders, a legal, valid and enforceable Lien on the Mortgaged Property described therein and
proceeds thereof, and when the Mortgage is filed in the offices specified on Schedule 3.19(b), such
Mortgage shall constitute a fully perfected Lien on, and security interest in, all right, title and
interest of the Loan Parties in the Mortgaged Property and the proceeds thereof, as security for
the Obligations (as defined in the relevant Mortgage), in each case prior and superior in right to
any other Person, and is free and clear of any Liens except Liens permitted by Section 6.3.
Schedule 1.1B lists, as of the Restatement Effective Date, each parcel of owned real property
located in the United States and held by the Borrower or any of its Subsidiaries that has a fair
market value, in the reasonable opinion of the Borrower, in excess of $1,000,000, except the real
property located in Westmont, Illinois (as to which no Mortgage is required as of the Restatement
Effective Date).

          3.20 Solvency. After giving effect to the Transactions and the incurrence of all
Indebtedness and obligations being incurred in connection herewith and therewith, each Loan Party
will be Solvent.

          3.21 Regulation H. The Mortgage does not encumber improved real property that is
located in an area that has been identified by the Secretary of Housing and Urban Development as an
area having special flood hazards and in which flood insurance has been made available under the
National Flood Insurance Act of 1968.

          3.22 Certain Documents. The Borrower has delivered to the Administrative Agent a
complete and correct copy of the Convertible Notes Documents and all amendments to the ABL Facility
Agreement executed contemporaneously with the Restatement Effective Date.

 

33

SECTION 4. CONDITIONS PRECEDENT

          4.1 Conditions to the Restatement Effective Date. The agreement of each Lender to make
the extension of credit requested to be made by it is subject to the satisfaction, prior to or
concurrently with the making of such extension of credit on the Restatement Effective Date, of the
following conditions precedent:

          (a) Loan Documents. The Administrative Agent shall have received (i) this
Agreement, executed and delivered by the Administrative Agent, Holdings, the Borrower and
each Person listed on Schedule 1.1A, (ii) the Guarantee and Collateral Agreement, executed
and delivered by each Loan Party, and (iii) the Mortgage, executed and delivered by Eddie
Bauer Fulfillment Services, Inc.

          (b) Pro Forma Balance Sheet; Financial Statements. The Lenders shall have
received (i) a reasonably satisfactory Pro Forma Balance Sheet, (ii) reasonably satisfactory
audited consolidated financial statements of Holdings and its consolidated Subsidiaries for
the 2004, 2005 and 2006 fiscal years, and (iii) a reasonably satisfactory Pro Forma
Statement of Operations.

          (c) Projections. The Lenders shall have received reasonably satisfactory
projections through 2012.

          (d) Approvals. All governmental and third party approvals necessary in
connection with the Transactions, the financing contemplated thereby and hereby and the
continuing operations of the Loan Parties (including shareholder approvals, if any) shall
have been obtained on satisfactory terms and shall be in full force and effect, and all
applicable waiting periods shall have expired without any action being taken or threatened
by any competent authority that would restrain, prevent or otherwise impose adverse
conditions on any of the transactions contemplated hereby.

          (e) Lien Searches. The Administrative Agent shall have received the results
of a recent lien search in each relevant jurisdictions where the Loan Parties are
incorporated, and such search shall reveal no liens on any of the assets of the Loan Parties
except for liens permitted by Section 6.3.

          (f) Fees. The Agents and the Arrangers shall have received all fees required
to be paid, and all expenses for which invoices have been presented (including the
reasonable fees and expenses of legal counsel), three Business Days before the Restatement
Effective Date.

          (g) Closing Certificate; Certified Certificate of Incorporation; Good Standing
Certificates. The Administrative Agent shall have received (i) a certificate of each
Loan Party, dated the Restatement Effective Date, substantially in the form of Exhibit E,
with appropriate insertions and attachments, including the certificate of incorporation of
each Loan Party that is a corporation certified by the relevant authority of the
jurisdiction of organization of such Loan Party, and (ii) a long form good standing
certificate for each Loan Party from its jurisdiction of organization. The Administrative
Agent shall be reasonably satisfied with the form and substance of the certificates of
incorporation and by-laws or other applicable organizational documents of each Loan Party.

          (h) Legal Opinions. The Administrative Agent shall have received the
following executed legal opinions:

 

34

	 	i.	 	the legal opinion of Akin Gump Strauss Hauer & Feld
LLP, counsel to Holdings, the Borrower and its Subsidiaries; and
	 
	 	ii.	 	the legal opinion of local counsel in Ohio.

Each such legal opinion shall cover such matters incident to the transactions contemplated
by this Agreement as the Administrative Agent may reasonably require.

          (i) Pledged Stock; Stock Powers; Pledged Notes. The Administrative Agent
shall have received (i) the certificates representing the shares of Capital Stock pledged
pursuant to the Guarantee and Collateral Agreement together with an undated stock power for
each such certificate executed in blank by a duly authorized officer of the pledgor thereof
and (ii) each promissory note (if any) pledged to the Administrative Agent pursuant to the
Guarantee and Collateral Agreement endorsed (without recourse) in blank (or accompanied by
an executed transfer form in blank) by the pledgor thereof.

          (j) Filings, Registrations and Recordings. Each document (including any
Uniform Commercial Code financing statement) required by the Security Documents or under law
or reasonably requested by the Administrative Agent to be filed, registered or recorded in
order to create in favor of the Administrative Agent, for the benefit of the Lenders, a
perfected Lien on the Collateral described therein, prior and superior in right to any other
Person (other than with respect to Liens expressly permitted by Section 6.3), shall be in
proper form for filing, registration or recordation.

          (k) Real Estate. The Administrative Agent shall have received in respect of
the Mortgaged Property an updated mortgagee’s title insurance policy (or policies) or marked
up unconditional binder for such insurance. Each such policy shall (A) be in an amount
reasonably satisfactory to the Administrative Agent; (B) be issued at ordinary rates; (C)
insure that the Mortgage insured thereby creates a valid first Lien on the Mortgaged
Property free and clear of all defects and encumbrances, except Permitted Exceptions and as
disclosed therein; (D) name the Administrative Agent for the benefit of the Lenders as the
insured thereunder; (E) be in the form of ALTA Loan Policy — 1970 (Amended 10/17/70 and
10/17/84) (or equivalent policies); (F) contain such endorsements and affirmative coverage
as the Administrative Agent may reasonably request and (G) be issued by title companies
reasonably satisfactory to the Administrative Agent (including any such title companies
acting as co-insurers or reinsurers, at the option of the Administrative Agent). The
Administrative Agent shall have received evidence reasonably satisfactory to it that all
premiums in respect of each such policy, all charges for mortgage recording tax, and all
related expenses, if any, have been paid.

          (l) Insurance. The Administrative Agent shall have received insurance
certificates satisfying the requirements of Section 5.2(b) of the Guarantee and Collateral
Agreement.

          (m) Credit Rating. The Facility shall have received a rating from Moody’s and
S&P.

          (n) Repayment of Existing Term Loans. Holdings shall have received gross
proceeds of not less than $75,000,000 from the issuance of Convertible Notes and the
Administrative Agent under, and as defined in, the Existing Loan Agreement shall have
received the proceeds thereof, which shall be applied to repay Existing Term Loans.

          (o) Other Documents. The Administrative Agent shall have received such
documents and other instruments as the Administrative Agent or its counsel may reasonably
request.

 

35

          (p) Representations and Warranties. Each of the representations made by any
Loan Party in or pursuant to the Loan Documents shall be true and correct in all material
respects as of the Restatement Effective Date.

          (q) No Default. No Default or Event of Default shall be continuing on the
Restatement Effective Date after giving effect to the Transactions.

SECTION 5. AFFIRMATIVE COVENANTS

          Holdings and the Borrower hereby jointly and severally agree that, so long as any Loan or
other amount is owing to any Lender or the Administrative Agent hereunder, each of Holdings and the
Borrower shall and shall cause each of its Subsidiaries to:

          5.1 Financial Statements. Furnish to the Administrative Agent on behalf of each
Lender:

          (a) as soon as available, but in any event within 90 days after the end of each fiscal
year of Holdings, a copy of the audited consolidated and unaudited consolidating balance
sheet of Holdings and its consolidated Subsidiaries as at the end of such year and the
related audited consolidated and unaudited consolidating statements of income and of cash
flows for such year, setting forth in each case in comparative form the figures for the
previous year, reported on by BDO Seidman, LLP or other independent certified public
accountants of nationally recognized standing;

          (b) as soon as available, but in any event not later than 45 days after the end of
each of the first three quarterly periods of each fiscal year of Holdings, the unaudited
consolidated and consolidating balance sheet of Holdings and its consolidated Subsidiaries
as at the end of such quarter and the related unaudited consolidated and consolidating
statements of income and of cash flows for such quarter and the portion of the fiscal year
through the end of such quarter, setting forth in each case in comparative form the figures
for the previous year, certified by a Responsible Officer as fairly presenting, in all
material respects, the consolidated and consolidating financial condition of Holdings and
its consolidated Subsidiaries as at such date, and the consolidated and consolidating
results of its operations and its consolidated and consolidating cash flows for such period
(subject to normal year-end audit adjustments); and

          (c) as soon as available, but in any event not later than 30 days after the end of
each month occurring during each fiscal year of Holdings (other than the third, sixth, ninth
and twelfth such month), the unaudited consolidated and consolidating balance sheets of
Holdings and its consolidated Subsidiaries as at the end of such month and the related
unaudited consolidated and consolidating statements of income and of cash flows for such
month and the portion of the fiscal year through the end of such month, setting forth in
each case in comparative form the figures for the previous year, certified by a Responsible
Officer as fairly presenting, in all material respects, the consolidated and consolidating
financial condition of Holdings and its consolidated Subsidiaries as at such date, and the
consolidated and consolidating results of its operations and its consolidated and
consolidating cash flows for such period (subject to normal year-end audit adjustments).

All such financial statements shall be prepared in reasonable detail and in accordance with GAAP
applied (except as approved by such accountants or officer, as the case may be, and disclosed in
reasonable detail therein) consistently throughout the periods reflected therein and with prior
periods. The Administrative Agent will provide the financial statements and other materials
required to be furnished by the Borrower

 

36

pursuant to this Section 5.1 to the Lenders by posting such financial statements and materials on a
secure Intralinks site.

          5.2 Certificates; Other Information. Furnish to the Administrative Agent on behalf of
each Lender (or, in the case of clause (g), to the relevant Lender):

          (a) concurrently with the delivery of the financial statements referred to in Section
5.1(a), a certificate of the independent certified public accountants reporting on such
financial statements stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default pursuant to Section 6.1, except as specified
in such certificate;

          (b) concurrently with the delivery of any financial statements pursuant to Section
5.1, (i) a certificate of a Responsible Officer stating that such Responsible Officer has
obtained no knowledge of any Default or Event of Default except as specified in such
certificate and (ii) in the case of quarterly or annual financial statements, a Compliance
Certificate containing (A) all information and calculations necessary for determining
compliance by each Group Member with the provisions of this Agreement referred to therein as
of the last day of the fiscal quarter or fiscal year of Holdings, as the case may be, (B) to
the extent not previously disclosed to the Administrative Agent, a description of any change
in the jurisdiction of organization, the name or corporate structure of any Loan Party and a
list of any Intellectual Property acquired by any Loan Party since the date of the most
recent report delivered pursuant to this clause (B) (or, in the case of the first such
report so delivered, since the Restatement Effective Date) and (C) to the extent not
previously disclosed to the Administrative Agent, statements that (w) no property of the
type described in Section 5.10 as to which the Administrative Agent is required to have a
perfected Lien pursuant to the Security Documents has been acquired, (x) no fee interest in
any real property having a value (together with improvements thereon) of at least $1,000,000
has been acquired, (y) no Subsidiary has been formed or acquired or, if any such Subsidiary
has been formed or acquired, the Borrower has complied with the requirements of Section 5.10
with respect thereto and (z) no Excluded Foreign Subsidiary has been formed or acquired;

          (c) as soon as available, and in any event no later than 60 days after the end of each
fiscal year of Holdings, a detailed consolidated budget for the following fiscal year
(including a projected consolidated balance sheet of the Borrower and its Subsidiaries as of
the end of the following fiscal year, the related consolidated statements of projected cash
flow, projected changes in financial position and projected income and a description of the
underlying assumptions applicable thereto, all on a monthly basis), and, as soon as
available, significant revisions, if any, of such budget and projections with respect to
such fiscal year (collectively, the “Projections”), which Projections shall in each
case be accompanied by a certificate of a Responsible Officer stating that such Projections
are based on reasonable estimates, information and assumptions available at such time and
that such Responsible Officer has no reason to believe that such Projections are incorrect
or misleading in any material respect;

          (d) concurrently with the delivery of any financial statements pursuant to Section
5.1, (i) a narrative discussion and analysis of the financial condition and results of
operations of the Borrower and its Subsidiaries for the most recent month covered by such
financial statements and for the period from the beginning of the then current fiscal year
to the end of such month, (ii) a comparison of the financial condition and result of
operations of the Borrower and its Subsidiaries for such month and for the period from the
beginning of the then current fiscal year to the end of such month to the comparable periods
of the previous year, together with a detailed explanation of any variances, (iii) in the
case of financial statements delivered pursuant to Section 5.1(a) and (b), a comparison of
the financial condition and results of operations of the Borrower

 

37

and its Subsidiaries for the most recent fiscal quarter covered by such financial
statements and for the period from the beginning of the then current fiscal year to the end
of such quarter to the portion of the Projections covering such periods, together with a
detailed explanation of any variances, and (iv) information, in detail reasonably
satisfactory to the Administrative Agent, regarding sales by sales channels and comparable
store sales, for the most recent month covered by such financial statements (it being
understood that the Borrower’s report on a Form 10-Q or Form 10-K that includes a management
discussion and analysis shall be deemed to satisfy the requirement under clauses (i) and
(iii) of this Section 5.2(d));

          (e) no later than five Business Days prior to the expected effectiveness thereof,
copies of substantially final drafts of any proposed amendment, supplement, waiver or other
modification with respect to the ABL Facility, the Securitization Note, the Convertible
Notes Documents or documents in connection with Permitted Junior Lien Debt;

          (f) within five Business Days after the same are sent, copies of all financial
statements and reports that Holdings or the Borrower sends to the holders of any class of
its debt securities or public equity securities and, within five Business Days after the
same are filed, copies of all financial statements and reports that Holdings or the Borrower
may make to, or file with, the SEC;

          (g) promptly, such additional financial and other information as any Lender may from
time to time reasonably request; and

          (h) as soon as available, but in any event not later than 15 days after Holdings’, the
Borrower’s or any of its Subsidiaries’ receipt thereof, a copy of all management reports and
management letters prepared for Holdings, the Borrower or any of its Subsidiaries by any
independent certified public or chartered accountants of Holdings, the Borrower or any of
its Subsidiaries.

The Administrative Agent will provide the certificates and other information required to be
furnished by the Borrower pursuant to this Section 5.2 (other than any information obtained by a
Lender pursuant to clause (g)) to the Lenders by posting such certificates and other information on
a secure Intralinks site.

          5.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity
or before they become delinquent, as the case may be, all its material obligations of whatever
nature, except where the amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the relevant Group Member.

          5.4 Maintenance of Existence; Compliance. (a)(i) Preserve, renew and keep in full
force and effect its organizational existence and (ii) take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal conduct of its business,
except, in each case, as otherwise permitted by Section 6.4 and except, in the case of clause (ii)
above, to the extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect; and (b) comply with all Contractual Obligations and Requirements of Law except to
the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect.

          5.5 Maintenance of Property; Insurance. (a) Keep all property useful and necessary in
its business in good working order and condition, ordinary wear and tear excepted and (b) maintain
with financially sound and reputable insurance companies insurance on all its property in at least
such amounts and against at least such risks (but including in any event public liability, product
liability and

 

38

business interruption) as are usually insured against in the same general area by companies
engaged in the same or a similar business.

          5.6 Inspection of Property; Books and Records; Discussions. (a) Keep proper books of
records and account in which full, true and correct entries of all dealings and transactions in
relation to its business and activities shall be made in conformity with GAAP and all Requirements
of Law and (b) no more frequently than once per fiscal year at any reasonable time during normal
business hours and upon reasonable notice permit representatives of any Lender to visit and inspect
any of its properties and examine and make abstracts from any of its books and records and to
discuss the business, operations, properties and financial and other condition of the Group Members
with officers of the Group Members and with their independent certified public accountants;
provided that at any time after the occurrence and during the continuance of an Event of Default,
there shall not be any limit to the number of visits and inspections; provided further that
any representative of a Lender visiting the property as provided herein shall use all reasonable
efforts to minimize disturbances.

          5.7 Notices. Promptly give notice to the Administrative Agent of:

          (a) the occurrence of any Default or Event of Default;

          (b) any (i) default or event of default under any Contractual Obligation of any Loan
Party or (ii) litigation, investigation or proceeding that may exist at any time between any
Group Member and any Governmental Authority, that in either case, if not cured or if
adversely determined, as the case may be, could reasonably be expected to have a Material
Adverse Effect;

          (c) any litigation or proceeding affecting any Group Member (i) in which the amount
involved is $5,000,000 or more and not covered by insurance, (ii) in which injunctive or
similar relief is sought or (iii) which relates to any Loan Document;

          (d) the following events, as soon as possible and in any event within 30 days after
the Borrower knows or has reason to know thereof: (i) the occurrence of any Reportable
Event with respect to any Single Employer Plan, (ii) a failure to make any material required
contribution to a Plan or, on and after the effectiveness of the Pension Act, any failure by
any Single Employer Plan to satisfy the minimum funding standards (within the meaning of
Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, (iii) the creation
of any Lien in favor of the PBGC or a Single Employer Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or the institution of
proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Single Employer Plan or Multiemployer
Plan; or (iv) on and after the effectiveness of the Pension Act, receipt of (x) a
determination that any Single Employer plan is, or is expected to be, in “at risk” status
(within the meaning of title IV of ERISA), (y) any determination that a Multiemployer Plan
is, or is expected to be, in endangered or critical status, within the meaning of Section
305 of ERISA, or (z) any (I) documents described in Section 101(k) of ERISA that Holdings,
the Borrower or any Commonly Controlled Entity may request with respect to any Multiemployer
Plan and (II) any notices described in Section 101(l) of ERISA that Holdings, the Borrower
or any Commonly Controlled Entity may request with respect to any Single Employer Plan;
provided, that if Holdings, the Borrower or any Commonly Controlled Entity has not requested
such documents or notices from the administrator or sponsor of the applicable Single
Employer Plan, Holdings, the Borrower or the Commonly Controlled Entity(ies) shall promptly
make a request for such documents or notices from such administrator or sponsor and shall
provide copies of such documents and notices promptly after receipt thereof; and

 

39

          (e) any development or event that has had or would reasonably be expected to have a
Material Adverse Effect.

Each notice pursuant to this Section 5.7 shall be accompanied by a statement of a Responsible
Officer setting forth details of the occurrence referred to therein and stating what action the
relevant Group Member proposes to take with respect thereto. The Administrative Agent shall
provide notices and other materials required to be furnished pursuant to this Section 5.7 to the
Lenders by posting such financial statements and materials on a secured Intralinks site.

          5.8 Environmental Laws. (a) Comply in all material respects with, and use
commercially reasonable efforts to ensure compliance in all material respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws, and obtain and comply in all material
respects with and maintain, and use commercially reasonable efforts to ensure that all tenants and
subtenants obtain and comply in all material respects with and maintain, any and all licenses,
approvals, notifications, registrations or permits required by applicable Environmental Laws.

          (b) Take reasonable efforts to prevent any other person from generating, using, treating,
storing, releasing, disposing of, or otherwise managing Materials of Environmental Concern in a
manner that could reasonably be expected to result in a material liability to, or materially affect
any real property owned or operated by, any Group Member.

          (c) Conduct and complete all investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws and promptly comply in all material
respects with all orders and directives of all Governmental Authorities regarding Environmental
Laws, except for any such orders and directives that are being challenged or appealed in good faith
in the applicable administrative or judicial body, and with respect to which any appropriate
reserves are maintained and provided that the pendency of such challenges or appeals could not
reasonably be expected to give rise to a Material Adverse Effect.

          5.9 [Intentionally Omitted].

          5.10 Additional Collateral, etc. (a) With respect to any property acquired after the
Closing Date by any Group Member other than the Securitization Subsidiaries (other than (v)
interests in real property, (w) personal property of a type excluded from the definition of
“Collateral” in the Guarantee and Collateral Agreement, (x) any property described in paragraph (c)
or (d) below, (y) any property subject to a Lien expressly permitted by Section 6.3(g) or 6.3(i)
and (z) property acquired by any Excluded Foreign Subsidiary) as to which the Administrative Agent,
for the benefit of the Lenders, does not have a perfected Lien, promptly (i) execute and deliver to
the Administrative Agent such amendments to the Guarantee and Collateral Agreement or such other
documents as the Administrative Agent reasonably deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a security interest in such property and (ii)
take all actions necessary or advisable to grant to the Administrative Agent, for the benefit of
the Lenders, a perfected first or second priority security interest in such property (subject to
any Liens permitted by Section 6.3 solely to the extent that such Liens have priority under
applicable law), as applicable, in such property, including the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the Guarantee and Collateral
Agreement or by law or as may be reasonably requested by the Administrative Agent.

          (b) With respect to any fee interest in any real property having a value (together with
improvements thereof) of at least $1,000,000 acquired after the Closing Date by any Group Member
other than the Securitization Subsidiaries (other than (x) any such real property subject to a
Lien expressly permitted by Section 6.3(g), (y) any real property of like kind and value which is
purchased with the Net

 

40

Cash Proceeds of an Asset Sale in respect of real property with a fair market value less than
$3,000,000 pursuant to Section 2.6(c)(ii) and (z) real property acquired by any Excluded Foreign
Subsidiary), promptly (i) execute and deliver a first priority Mortgage (subject only to Liens of
the types described in Sections 6.3(a), (e) and (m)), in favor of the Administrative Agent, for the
benefit of the Lenders, covering such real property, (ii) if requested by the Administrative Agent,
provide the Lenders with (x) title and extended coverage insurance covering such real property in
an amount at least equal to the purchase price of such real property (or such other amount as shall
be reasonably specified by the Administrative Agent) as well as a current ALTA survey thereof,
together with a surveyor’s certificate and (y) any consents or estoppels reasonably deemed
necessary or advisable by the Administrative Agent in connection with such Mortgage, each of the
foregoing in form and substance reasonably satisfactory to the Administrative Agent and (iii) if
requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating
to the matters described above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.

          (c) With respect to any new Subsidiary (other than an Excluded Foreign Subsidiary) created or
acquired after the Closing Date by any Group Member (other than by any Group Member that is an
Excluded Foreign Subsidiary), promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative Agent reasonably deems
necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a
perfected first priority security interest in the Capital Stock of such new Subsidiary that is
owned by any Group Member, (ii) deliver to the Administrative Agent the certificates representing
such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of the relevant Group Member, (iii) cause such new Subsidiary (A) to become a
party to the Guarantee and Collateral Agreement, (B) to take such actions necessary or advisable to
grant to the Administrative Agent for the benefit of the Lenders a perfected first or second
priority security interest in the Collateral (subject to any Liens permitted by Section 6.3 solely
to the extent that such Liens have priority under applicable law), as applicable, described in the
Guarantee and Collateral Agreement with respect to such new Subsidiary, including the filing of
Uniform Commercial Code financing statements in such jurisdictions as may be required by the
Guarantee and Collateral Agreement or by law or as may be reasonably requested by the
Administrative Agent and (C) to deliver to the Administrative Agent a certificate of such
Subsidiary, substantially in the form of Exhibit E, with appropriate insertions and attachments,
and (iv) if requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be in form and substance,
and from counsel, reasonably satisfactory to the Administrative Agent.

          (d) With respect to any new Excluded Foreign Subsidiary created or acquired after the Closing
Date by any Group Member (other than by any Group Member that is an Excluded Foreign Subsidiary),
promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and
Collateral Agreement as the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest
in the Capital Stock of such new Subsidiary that is owned by any such Group Member (provided that
in no event shall more than 66% of the total outstanding voting Capital Stock of any such new
Subsidiary be required to be so pledged), (ii) deliver to the Administrative Agent the certificates
representing such Capital Stock, together with undated stock powers, in blank, executed and
delivered by a duly authorized officer of the relevant Group Member, and take such other action as
may be necessary or, in the reasonable opinion of the Administrative Agent, desirable to perfect
the Administrative Agent’s security interest therein, and (iii) if requested by the Administrative
Agent, deliver to the Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.

 

41

          5.11 Passive Company Status. In the case of Holdings, it shall not (i) conduct,
transact or otherwise engage in, or commit to conduct, transact or otherwise engage in, any
material business or operations other than (y) those incidental to its ownership of the Capital
Stock of the Borrower and the Securitization Subsidiaries and (z) those contemplated by Section
6.2(g) and (k) and 6.6, (ii) incur, create, assume or suffer to exist any material Indebtedness or
other liabilities or financial obligations, except (w) those contemplated by Sections 6.2(c), (g)
and (k) and Section 6.6, (x) nonconsensual obligations imposed by operation of law, (y) obligations
pursuant to the Loan Documents to which it is a party and (z) obligations with respect to its
Capital Stock, or (iii) own, lease, manage or otherwise operate any material properties or assets
(including cash (other than cash received in connection with dividends made by the Borrower in
accordance with Section 6.6 pending application in the manner contemplated by such Section 6.6) and
cash equivalents or distributions made by the Securitization Subsidiaries permitted hereunder)
other than the ownership of shares of Capital Stock of the Borrower and the Securitization
Subsidiaries.

          5.12 Post Closing Matters. On or prior to May 30, 2007, the Administrative Agent shall
have received a written environmental assessment with respect to the Borrower’s distribution center
in Groveport, Ohio prepared by an environmental consultant reasonably acceptable to the
Administrative Agent, which assessment shall be in form, scope and substance reasonably
satisfactory to the Administrative Agent.

SECTION 6. NEGATIVE COVENANTS

          Holdings and the Borrower hereby jointly and severally agree that, so long as any Loan or
other amount is owing to any Lender or the Administrative Agent hereunder, each of Holdings and the
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly:

          6.1 Financial Condition Covenants.

          (a) Consolidated Senior Secured Leverage Ratio. Permit the Consolidated Senior
Secured Leverage Ratio as at the last day of any period of four consecutive fiscal quarters of the
Borrower ending with any fiscal quarter set forth below to exceed the ratio set forth below
opposite such fiscal quarter:

	 	 	 
	 	 	Consolidated Senior Secured
	Fiscal Quarter	 	Leverage Ratio
	March 31, 2007

	 	5.75 to 1.00
	June 30, 2007

	 	5.75 to 1.00
	September 30, 2007

	 	5.75 to 1.00
	December 31, 2007

	 	5.75 to 1.00
	March 31, 2008

	 	5.50 to 1.00
	June 30, 2008

	 	5.50 to 1.00
	September 30, 2008

	 	5.25 to 1.00
	December 31, 2008

	 	5.00 to 1.00
	March 31, 2009

	 	4.00 to 1.00
	June 30, 2009

	 	4.00 to 1.00
	September 30, 2009

	 	3.75 to 1.00
	December 31, 2009

	 	3.50 to 1.00
	March 31, 2010

	 	3.25 to 1.00
	June 30, 2010

	 	3.25 to 1.00
	September 30, 2010

	 	3.25 to 1.00

 

42

	 	 	 
	 	 	Consolidated Senior Secured
	Fiscal Quarter	 	Leverage Ratio
	December 31, 2010

	 	3.25 to 1.00
	March 31, 2011

	 	3.00 to 1.00
	June 30, 2011

	 	3.00 to 1.00
	September 30, 2011

	 	3.00 to 1.00
	December 31, 2011

	 	3.00 to 1.00
	March 31, 2012

	 	2.50 to 1.00
	June 30, 2012

	 	2.50 to 1.00
	September 30, 2012

	 	2.50 to 1.00
	December 31, 2012

	 	2.50 to 1.00
	March 31, 2013

	 	2.50 to 1.00
	June 30, 2013

	 	2.50 to 1.00
	September 30, 2013

	 	2.50 to 1.00
	December 31, 2013

	 	2.50 to 1.00
	March 31, 2014

	 	2.50 to 1.00

          (b) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge
Coverage Ratio for any period of four consecutive fiscal quarters of the Borrower ending with any
fiscal quarter set forth below to be less than the ratio set forth below opposite such fiscal
quarter:

	 	 	 
	 	 	Consolidated Fixed
	Fiscal Quarter	 	Charge Coverage Ratio
	March 31, 2007

	 	0.75 to 1.00
	June 30, 2007

	 	0.75 to 1.00
	September 30, 2007

	 	0.75 to 1.00
	December 31, 2007

	 	0.75 to 1.00
	March 31, 2008

	 	0.80 to 1.00
	June 30, 2008

	 	0.90 to 1.00
	September 30, 2008

	 	0.90 to 1.00
	December 31, 2008

	 	0.90 to 1.00
	March 31, 2009

	 	0.95 to 1.00
	June 30, 2009

	 	0.95 to 1.00
	September 30, 2009

	 	0.975 to 1.00
	December 31, 2009

	 	0.975 to 1.00
	March 31, 2010

	 	1.00 to 1.00
	June 30, 2010

	 	1.00 to 1.00
	September 30, 2010

	 	1.00 to 1.00
	December 31, 2010

	 	1.00 to 1.00
	March 31, 2011

	 	1.05 to 1.00
	June 30, 2011

	 	1.05 to 1.00
	September 30, 2011

	 	1.05 to 1.00
	December 31, 2011

	 	1.05 to 1.00
	March 31, 2012

	 	1.10 to 1.00
	June 30, 2012

	 	1.10 to 1.00
	September 30, 2012

	 	1.10 to 1.00
	December 31, 2012

	 	1.10 to 1.00
	March 31, 2013

	 	1.10 to 1.00
	June 30, 2013

	 	1.10 to 1.00
	September 30, 2013

	 	1.10 to 1.00
	December 31, 2013

	 	1.10 to 1.00

 

43

	 	 	 
	 	 	Consolidated Fixed
	Fiscal Quarter	 	Charge Coverage Ratio
	March 31, 2014

	 	1.10 to 1.00

          6.2 Indebtedness. Create, issue, incur, assume, become liable in respect of or suffer
to exist any Indebtedness, except:

          (a) Indebtedness of any Loan Party pursuant to any Loan Document;

          (b) Indebtedness of (i) the Borrower to any Subsidiary, (ii) any Wholly Owned
Subsidiary Guarantor to the Borrower or any other Subsidiary, (iii) any Loan Party to any
other Loan Party and (iv) any Subsidiary that is not a Loan Party to any other Subsidiary
that is not a Loan Party;

          (c) Guarantee Obligations incurred in the ordinary course of business by (i) the
Borrower or any of its Subsidiaries of obligations of any Wholly Owned Subsidiary Guarantor,
(ii) the Borrower of obligations of Eddie Bauer Canada and Eddie Bauer Customer Services
Inc. in an aggregate amount at any one time outstanding not to exceed $20,000,000 and (iii)
Holdings of obligations of its Subsidiaries in an aggregate amount at any one time
outstanding not to exceed $10,000,000;

          (d) Indebtedness outstanding on the Restatement Effective Date and listed on Schedule
6.2(d) and any refinancings, refundings, renewals or extensions thereof (without increasing
the principal amount, or shortening the maturity thereof, at the time of such refinancing,
renewal or extension thereof);

          (e) Indebtedness (including, without limitation, Capital Lease Obligations and
refinancings thereof) secured by Liens permitted by Section 6.3(g) in an aggregate principal
amount at any one time outstanding not to exceed $10,000,000;

          (f) (i) Indebtedness of the Borrower in respect of the ABL Facility in an aggregate
principal amount at any one time outstanding not to exceed $150,000,000, provided
that the Borrower may increase the aggregate principal amount of Indebtedness at any one
time outstanding in respect of the ABL Facility by $75,000,000, subject to the Intercreditor
Agreement, and any refinancings, renewals or extensions thereof (without increasing the
principal amount, or shortening the maturity, thereof) and (ii) Guarantee Obligations of any
Guarantor in respect of such Indebtedness;

          (g) Indebtedness of Holdings in respect of the Securitization Note;

          (h) Indebtedness of the Joint Ventures to the Borrower and Guarantee Obligations by
the Borrower of obligations of the Joint Ventures; provided that in any fiscal year
the aggregate principal amount of such Indebtedness and such Guarantee Obligations do not,
when added to Investments made in accordance with Section 6.8(g), exceed the aggregate
amount received by the Borrower and its Subsidiaries in such fiscal year from Eddie Bauer
Japan, Inc. and Eddie Bauer GmbH Germany by more than $2,500,000;

 

44

          (i) Indebtedness owed to any Loan Party by Eddie Bauer Canada and Eddie Bauer Customer
Services Inc. in an aggregate principal amount not to exceed $20,000,000 at any one time
outstanding;

          (j) additional unsecured Indebtedness of the Borrower and its Subsidiaries (i) in an
aggregate principal amount (as to the Borrower and all such Subsidiaries) not to exceed
$100,000,000 at any one time outstanding provided that amounts incurred hereunder
shall be applied in accordance with Section 2.6(b) and (ii) the proceeds of which are
applied to pay, prepay, repurchase or redeem Convertible Notes to the extent permitted under
the proviso to Section 6.9(f);

          (k) Indebtedness of Holdings on account of Convertible Notes (i) issued on or
immediately prior to the Restatement Effective Date, (ii) issued after the Restatement
Effective Date, in an aggregate principal amount not to exceed $100,000,000 at any one time
outstanding and (iii) the proceeds of which are applied to pay, prepay, repurchase or redeem
Convertible Notes to the extent permitted under the proviso to Section 6.9(f);

          (l) (i) Permitted Junior Lien Debt and any refinancings, refundings, renewals or
extensions thereof (without increasing the principal amount, or shortening the maturity,
thereof) in an aggregate principal amount not to exceed $75,000,000 at any one time
outstanding and (ii) Permitted Junior Lien Debt the proceeds of which are applied to pay,
prepay, repurchase or redeem Convertible Notes to the extent permitted under the proviso to
Section 6.9(f);

          (m) the financing of insurance premiums with the providers of such insurance or their
affiliates in the ordinary course of business;

          (n) secured Indebtedness of Excluded Foreign Subsidiaries in an aggregate principal
amount at any one time outstanding not to exceed $20,000,000 (or the equivalent thereof in
other currencies, measured in Dollars in each case at the time of incurrence thereof, or, in
the case of revolving loans, at the time of establishment of such commitment or facility);
and

          (o) Indebtedness representing deferred compensation to employees of any Group Member in
an aggregate principal amount at any one time outstanding not to exceed $2,500,000.

          6.3 Liens. Create, incur, assume or suffer to exist any Lien upon any of its property,
whether now owned or hereafter acquired, except:

          (a) Liens for taxes not yet delinquent or that are being contested in good faith by
appropriate proceedings, provided that adequate reserves with respect thereto are
maintained on the books of the Borrower or its Subsidiaries, as the case may be, in
conformity with GAAP;

          (b) carriers’, warehousemen’s, mechanics’, materialmen’s, landlords’, repairmen’s or
other like Liens arising in the ordinary course of business that are not overdue for a
period of more than 45 days or that are being contested in good faith by appropriate
proceedings or, in the case of mechanics’, materialmen’s or repairmen’s Liens that arise as
a result of a failure of a general contractor to pay its subcontractors, that are otherwise
being expeditiously dealt with in an appropriate manner by the Borrower;

          (c) pledges or deposits in connection with workers’ compensation, unemployment
insurance and other social security legislation;

 

45

          (d) deposits to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of business;

          (e) easements, rights-of-way, restrictions and other similar encumbrances incurred in
the ordinary course of business that, in the aggregate, do not in any case materially
detract from the value of the property subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or any of its Subsidiaries;

          (f) Liens in existence on the Restatement Effective Date listed on Schedule 6.3(f),
securing Indebtedness permitted by Section 6.2(d); provided that no such Lien is
spread to cover any additional property after the Closing Date (other than additions and
accessions thereto) and that the principal amount of Indebtedness secured thereby is not
increased;

          (g) Liens securing Indebtedness of the Borrower or any other Subsidiary incurred
pursuant to Section 6.2(e) to finance the acquisition of fixed or capital assets, or to
refinance such Indebtedness; provided that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or capital assets, (ii) such
Liens do not at any time encumber any property other than the property financed by such
Indebtedness (other than additions and accessions thereto and the proceeds thereof) and
(iii) the amount of Indebtedness secured thereby is not increased;

          (h) Liens created pursuant to the Security Documents;

          (i) any interest or title of a lessor under any lease entered into by the Borrower or
any Subsidiary in the ordinary course of its business and covering only the assets so
leased, including the filing of UCC financing statements as a precautionary measure in
connection with operating leases or consignment of goods;

          (j) Liens securing (i) (x) the Indebtedness under the ABL Facility permitted pursuant
to Section 6.2(f) hereof and (y) Swap Agreements with lenders (or affiliates thereof) under
the ABL Facility, to the extent permitted pursuant to Section 6.12 hereof, in each case
subject to the Intercreditor Agreement and (ii) Indebtedness permitted under Section 6.2(l)
hereof;

          (k) Liens on assets of the Securitization Subsidiaries related to the Securitization
Interests, as defined in the Plan of Reorganization;

          (l) Liens arising from judgments and attachments in connection with court proceedings;
provided that (i) the attachment or enforcement of such Liens would not result in an
Event of Default hereunder, (ii) such Liens are being contested in good faith by appropriate
proceedings, (iii) adequate reserves have been set aside for such court proceeding, (iv) no
material assets or property of any Loan Party is subject to a material risk of loss or
forfeiture as a result of any such judgment or attachment, (v) the claims in respect of such
Liens are fully covered by insurance (subject to ordinary and customary deductibles) and
(vi) a stay of execution pending appeal or proceeding in respect of any such judgment or
attachment for review is in effect;

          (m) Permitted Exceptions;

          (n) Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation of goods;

 

46

          (o) Liens securing insurance premium financing arrangements entered into in the
ordinary course of business; and

          (p) bankers’ liens, rights of set-off and similar rights and remedies as to deposit
accounts or other funds maintained with a financial institution.

          6.4 Fundamental Changes. Enter into any merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of all
or substantially all of its property or business, except that:

          (a) any Subsidiary of the Borrower may be merged or consolidated with or into the
Borrower (provided that the Borrower shall be the continuing or surviving
corporation) or with or into any Wholly Owned Subsidiary Guarantor (provided that
the Wholly Owned Subsidiary Guarantor shall be the continuing or surviving corporation);

          (b) any Subsidiary of the Borrower may Dispose of any or all of its assets (i) to the
Borrower or any Wholly Owned Subsidiary Guarantor (upon voluntary liquidation or otherwise)
or (ii) pursuant to a Disposition permitted by Section 6.5; and

          (c) any Investment expressly permitted by Section 6.8 may be structured as a merger,
consolidation or amalgamation.

          6.5 Disposition of Property. Dispose of any of its property, whether now owned or
hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such
Subsidiary’s Capital Stock to any Person, except:

          (a) the Disposition of obsolete or worn out property in the ordinary course of
business;

          (b) the sale of inventory in the ordinary course of business;

          (c) Dispositions permitted by clause (i) of Section 6.4(b);

          (d) the sale or issuance of any Subsidiary’s Capital Stock to the Borrower or any
Wholly Owned Subsidiary Guarantor;

          (e) sales or closings by the Borrower and its Subsidiaries of their retail or outlet
stores;

          (f) the Disposition for cash of a registered trademark or application for registration
of a trademark (other than a material trademark) that the applicable Loan Party determines,
in the exercise of good business judgment, is no longer beneficial, appropriate or
consistent with such Loan Party’s merchandise assortment or brand image;

          (g) Dispositions of any interest of a Loan Party in any Joint Venture Investments;
provided that such sale is made at arm’s length and for fair market value;

          (h) the Disposition of other property (other than accounts or inventory) having a fair
market value not to exceed $5,000,000 in the aggregate during the term of this Agreement;
and

          (i) the Disposition of the Borrower’s distribution center in Groveport, Ohio;
provided that such Disposition is (x) pursuant to an arm’s length transaction, (y)
for fair market value as determined as of a date within 12 months of the proposed date of
such Disposition by the

 

47

appraisers and (z) for cash consideration paid upon consummation of such transaction,
which cash consideration shall not be less than 100% of the total consideration received;
provided further that the Net Cash Proceeds therefrom shall be applied to
prepay the Loans in accordance with Section 2.6(c) (without giving effect to any ability to
reinvest such proceeds pursuant to a Reinvestment Notice).

          6.6 Restricted Payments. Declare or pay any dividend (other than dividends payable
solely in common stock of the Person making such dividend) on, or make any payment on account of,
or set apart assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of, any Capital Stock of any Group Member, whether now
or hereafter outstanding, or make any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of any Group Member (collectively,
“Restricted Payments”), except that:

          (a) any Subsidiary may make Restricted Payments to the Borrower or any Wholly Owned
Subsidiary Guarantor;

          (b) so long as no Default or Event of Default shall have occurred and be continuing,
the Borrower may pay dividends to Holdings to permit Holdings to purchase Holdings’ common
stock or common stock options from present or former officers or employees of any Group
Member (or their respective estates, heirs or legatees) upon the death, disability or
termination of employment of such officer or employee or cancel any Indebtedness owed by any
present or former officers or employees of any Group Member (or their respect estates, heirs
or legatees), provided that the aggregate amount of payments after the Restatement
Effective Date (net of any proceeds received by Holdings and contributed to the Borrower
after the Restatement Effective Date in connection with resales of any common stock or
common stock options so purchased) shall not exceed $5,000,000 during any fiscal year; and

          (c) the Borrower may pay dividends to Holdings to permit Holdings to (i) pay corporate
overhead expenses incurred in the ordinary course of business, (ii) pay any taxes that are
due and payable by Holdings and the Borrower as part of a consolidated group, (iii) pay
interest on Indebtedness permitted under Section 6.2(k), and (iv) pay, prepay, repurchase or
redeem Convertible Notes to the extent permitted under the proviso to Section 6.9(f); and

          (d) the Securitization Subsidiaries may make distributions to Holdings of any amounts
received in respect of any Securitization Interests, as defined in the Plan of
Reorganization.

          6.7 Capital Expenditures. Make or commit to make any Capital Expenditure, except
Capital Expenditures of the Borrower and its Subsidiaries in the ordinary course of business not to
exceed the amount set forth in the column opposite each fiscal year of the Borrower set forth
below:

	 	 	 	 	 
	Fiscal Year	 	Maximum Capital Expenditures
	2007
	 	$	45,000,000	 
	2008
	 	$	50,000,000	 
	2009
	 	$	60,000,000	 
	2010
	 	$	70,000,000	 
	2011
	 	$	70,000,000	 
	2012
	 	$	70,000,000	 
	2013
	 	$	70,000,000	 
	2014
	 	$	70,000,000	 

 

48

; provided, that up to 50% of any such amount referred to above, if not so expended in the
fiscal year for which it is permitted, may be carried over for expenditure in the next succeeding
fiscal year.

          6.8 Investments. Make any advance, loan, extension of credit (by way of guaranty or
otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures or
other debt securities of, or any assets constituting a business unit of, or make any other
investment in, any Person (all of the foregoing, “Investments”), except:

          (a) extensions of trade credit in the ordinary course of business;

          (b) investments in Cash Equivalents;

          (c) Guarantee Obligations permitted by Section 6.2;

          (d) loans and advances to employees of any Group Member in the ordinary course of
business (including for travel, entertainment and relocation expenses) in an aggregate
amount for all Group Members not to exceed $250,000 at any one time outstanding;

          (e) Investments in assets useful in the business of the Borrower and its Subsidiaries
made by the Borrower or any of its Subsidiaries with the proceeds of any Reinvestment
Deferred Amount;

          (f) intercompany Investments by any Group Member in (i) any Loan Party and (ii) any
Subsidiary that is not, prior to such Investment, a Loan Party, in an aggregate amount for
all such Investments pursuant to this clause (f)(ii) (which, for avoidance of doubt,
excludes Investments constituting Guarantee Obligations permitted under clause (c) above)
not to exceed $10,000,000 at any one time outstanding (each such Investment to be valued at
cost at the time made);

          (g) Joint Venture Investments; provided that in any fiscal year the aggregate
amount of such Investments does not, when added to Indebtedness and Guarantee Obligations
incurred pursuant to Section 6.2(h), exceed the aggregate amount received by the Borrower
and its Subsidiaries in such fiscal year from Eddie Bauer Japan, Inc. and Eddie Bauer GmbH
Germany by more than $2,500,000;

          (h) Investments outstanding on the Restatement Effective Date and listed on Schedule
6.8(h);

          (i) Indebtedness permitted under Section 6.2(i);

          (j) Investments received in connection with the bankruptcy or reorganization of, or
settlement of delinquent accounts and disputes with, customers and suppliers, in each case
in the ordinary course of business;

          (k) Investments received by the Borrower or any Subsidiary as consideration in
connection with any Disposition permitted under Section 6.5 to the extent non-cash
consideration is permitted hereunder;

          (l) Investments pursuant to Swap Agreements permitted under Section 6.12; and

          (m) in addition to Investments otherwise expressly permitted by this Section 6.8,
Investments by the Borrower or any of its Subsidiaries in an aggregate amount (each such

 

49

Investment to be valued at cost at the time made) not to exceed $5,000,000 at any one
time outstanding during the term of this Agreement.

          6.9 Optional Payments and Modifications of Certain Debt Instruments. (a) Make or
offer to make any optional or voluntary payment, prepayment, repurchase or redemption of or
otherwise optionally or voluntarily defease or segregate funds with respect to the Securitization
Note;

          (b) amend, modify, waive or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to, any of the material terms of the Securitization Note
(other than any such amendment, modification, waiver or other change that (i) would extend the
maturity or reduce the amount of any payment of principal thereof or reduce the rate or extend any
date for payment of interest thereon and (ii) does not involve the payment of a consent fee); or

          (c) amend, modify, waive or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to, any of the terms of the ABL Facility Agreement other than
as permitted under the Intercreditor Agreement;

          (d) make any cash (i) optional or voluntary payment, prepayment, repurchase or redemption of
any Convertible Notes or (ii) optional payments on account of or for a sinking or other analogous
fund for the repurchase, redemption, defeasance or other acquisition of any Convertible Notes, in
each case other than a refinancing or refunding thereof with the proceeds of Indebtedness permitted
under Section 6.2 (but if such Indebtedness is incurred in reliance upon Section 6.2(k), then (A)
the differences between the documentation governing such new Section 6.2(k) Indebtedness and the
Convertible Notes Documents shall be deemed to be modifications of the Convertible Notes Documents,
which modifications must comply with the requirements of Section 6.9(e), and (B) after the
consummation of such refinancing or refunding, such new documentation shall be deemed to be the
“Convertible Notes Documents” for purposes of Section 6.9(e), and all amendments, supplements,
modifications and waivers of such documentation shall be subject thereto);

          (e) make any amendment, supplement, modification or waiver of any of the terms of any
Convertible Notes or the Convertible Notes Documents not expressly required pursuant to the terms
of the Convertible Notes or the Convertible Notes Documents (i) which shortens the fixed maturity
of or increases the aggregate principal amount thereof to an amount in excess of the aggregate
amount of Convertible Notes permitted to be incurred pursuant to Section 6.2(k), or increases the
rate or shortens the time of payment of interest on, or increases the amount or shortens the time
of payment of any principal or premium payable, at a date fixed for prepayment or by acceleration
or otherwise prior to maturity thereof or increases the amount of, or accelerates the time of
payment of, any fees or other amounts payable in connection therewith to any holder thereof; (ii)
which relates to any material affirmative or negative covenants or any events of default or
remedies thereunder and the effect of which is to subject Holdings, or any of its Subsidiaries, to
any more onerous or more restrictive provisions; or (iii) which otherwise adversely affects the
interests of the Lenders hereunder in any material respect; or

          (f) except in connection with a refinancing or refunding thereof permitted under Section
6.9(d), repurchase any Convertible Notes at any time when the Borrower has Excess Cash Flow in an
amount less than the outstanding Obligations; provided however that notwithstanding Section
6.9(d) and so long as no Default or Event of Default has occurred and is continuing, and to the
extent required as a result of the application of NASDAQ Rule 4350(i), Holdings may pay, prepay,
repurchase or redeem Convertible Notes in an amount not to exceed (i) $15,000,000 plus (ii)
100% of the Net Cash Proceeds from the (x) incurrence by Borrower of any Permitted Junior Lien Debt
and unsecured Indebtedness and (y) the issuance by Holdings of Capital Stock and Convertible Notes
(in excess of the Convertible Notes outstanding as of the Restatement Effective Date), plus
(iii) 50% of Consolidated Net Income for the

 

50

period (treated as one accounting period) from the beginning of the last fiscal quarter of
2008 to end of the most recent fiscal quarter ending prior to the date of such payment for which
financial statements are in existence.

          6.10 Transactions with Affiliates. Enter into any transaction, including any purchase,
sale, lease or exchange of property, the rendering of any service or the payment of any management,
advisory or similar fees, with any Affiliate (other than Holdings, the Borrower or any Wholly Owned
Subsidiary Guarantor) unless such transaction is (a) otherwise permitted under this Agreement, (b)
in the ordinary course of business of the relevant Group Member and (c) upon fair and reasonable
terms no less favorable to the relevant Group Member than it would obtain in a comparable arm’s
length transaction with a Person that is not an Affiliate. Notwithstanding the foregoing, Eddie
Bauer Canada and Eddie Bauer Customer Services Inc. may maintain cash management arrangements with
the Borrower in the ordinary course of business consistent with past practice and in accordance
with applicable law.

          6.11 Sales and Leasebacks. Enter into any arrangement with any Person providing for
the leasing by any Group Member of real or personal property that has been or is to be sold or
transferred by such Group Member to such Person or to any other Person to whom funds have been or
are to be advanced by such Person on the security of such property or rental obligations of such
Group Member, other than a transaction arising out of the continued use of the Groveport, Ohio
distribution center after a Disposition thereof.

          6.12 Swap Agreements. Enter into any Swap Agreement, except (a) Swap Agreements
entered into to hedge or mitigate risks to which the Borrower or any Subsidiary has actual exposure
(other than those in respect of Capital Stock) and (b) Swap Agreements entered into in order to
effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating
rate to another floating rate or otherwise) with respect to any interest-bearing liability or
investment of the Borrower or any Subsidiary.

          6.13 Changes in Fiscal Periods. Permit the fiscal year of Holdings or the Borrower to
end on a day other than the last Saturday nearest to December 31 or change the Borrower’s method of
determining fiscal quarters.

          6.14 Negative Pledge Clauses. Enter into or suffer to exist or become effective any
agreement that prohibits or limits the ability of any Group Member other than the Securitization
Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its property or
revenues, whether now owned or hereafter acquired, to secure its obligations under the Loan
Documents to which it is a party other than (a) this Agreement and the other Loan Documents, (b)
the ABL Facility Agreement, (c) the Convertible Notes Documents, (d) documentation in connection
with Permitted Junior Lien Debt and (e) any agreements governing any purchase money Liens or
Capital Lease Obligations otherwise permitted hereby (in which case, any prohibition or limitation
shall only be effective against the assets financed thereby) and leases and licenses arising in the
ordinary course of business.

          6.15 Clauses Restricting Subsidiary Distributions. Enter into or suffer to exist or
become effective any consensual encumbrance or restriction on the ability of any Subsidiary of the
Borrower (other than the Securitization Subsidiaries) to (a) make Restricted Payments in respect of
any Capital Stock of such Subsidiary held by, or pay any Indebtedness owed to, the Borrower or any
other Subsidiary of the Borrower, (b) make loans or advances to, or other Investments in, the
Borrower or any other Subsidiary of the Borrower or (c) transfer any of its assets to the Borrower
or any other Subsidiary of the Borrower, except for such encumbrances or restrictions existing
under or by reason of (i) any restrictions existing under the Loan Documents, the ABL Facility
Agreement, the Convertible Notes Documents or documentation in connection with Permitted Junior
Lien Debt, (ii) any restrictions with

 

51

respect to a Subsidiary imposed pursuant to an agreement that has been entered into in
connection with the Disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary and (iii) leases and licenses arising in the ordinary course of business.

          6.16 Lines of Business. Enter into any business, either directly or through any
Subsidiary, except for those businesses in which the Borrower and its Subsidiaries are engaged on
the date of this Agreement or that are reasonably related thereto.

          6.17 Environmental Matters. Generate, use, treat, store, release, dispose of, or
otherwise manage Materials of Environmental Concern in a manner that would reasonably be expected
to result in a material liability to any Group Member or to materially affect any real property
owned or leased by any of them.

          6.18 Transactions Relating to Spiegel Acceptance Corporation. Notwithstanding anything
herein to the contrary, the following transactions shall be permitted: (a) distribution by Spiegel
Credit Card Master Note Trust (the “Note Trust”) to Spiegel Acceptance Corporation of all
of the assets of the Note Trust (the “Trust Assets”), (b) the sale, transfer or assignment
by the Note Trust or Spiegel Acceptance Corporation, as the case may be, of the Trust Assets or any
interest therein, or the sale of Spiegel Acceptance Corporation, to a third-party purchaser
pursuant to an arm’s length transaction, (c) the dissolution or liquidation of the Note Trust or
Spiegel Acceptance Corporation, as the case may be, following such sale of the Trust Assets, and
(d) the execution and delivery by the Note Trust and Spiegel Acceptance Corporation of any and all
consents, certificates, guaranties, indemnities or other agreements deemed reasonably necessary to
accomplish the transactions described in this Section.

SECTION 7. EVENTS OF DEFAULT

          If any of the following events shall occur and be continuing:

          (a) the Borrower shall fail to pay (i) any principal of any Loan when due in
accordance with the terms hereof; (ii) any interest on any Loan within three Business Days
after any such interest becomes due in accordance with the terms hereof; or (iii) any other
amount payable hereunder or under any other Loan Document within five Business Days after
any such other amount becomes due in accordance with the terms hereof; or

          (b) any representation or warranty made or deemed made by any Loan Party herein or in
any other Loan Document or that is contained in any certificate, document or financial or
other statement furnished by it at any time under or in connection with this Agreement or
any such other Loan Document shall prove to have been inaccurate in any material respect on
or as of the date made or deemed made; or

          (c) (i) any Loan Party shall default in the observance or performance of any
agreement contained in clause (i) or (ii) of Section 5.4(a) (with respect to Holdings and
the Borrower only), Section 5.7(a) or Section 6 of this Agreement or Sections 5.5 and 5.7(b)
of the Guarantee and Collateral Agreement, (ii) an “Event of Default” under and as defined
in any Mortgage shall have occurred and be continuing, or (iii) Holdings shall default in
the observance or performance of any agreement contained in Section 5.11 of this Agreement
and such default shall continue unremedied for a period of three days; or

          (d) any Loan Party shall default in the observance or performance of any other
agreement contained in this Agreement or any other Loan Document (other than as provided in

 

52

paragraphs (a) through (c) of this Section 7), and such default shall continue
unremedied for a period of 30 days; or

          (e) any Group Member shall (i) default in making any payment of any principal of any
Indebtedness (including any Guarantee Obligation, but excluding the Loans) on the scheduled
or original due date with respect thereto; or (ii) default in making any payment of any
interest on any such Indebtedness beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created; or (iii) default in the
observance or performance of any other agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with
the giving of notice if required, such Indebtedness to become due prior to its stated
maturity or (in the case of any such Indebtedness constituting a Guarantee Obligation) to
become payable; provided, that a default, event or condition described in clause
(i), (ii) or (iii) of this paragraph (e) shall not at any time constitute an Event of
Default unless, at such time, one or more defaults, events or conditions of the type
described in clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and be
continuing with respect to Indebtedness the outstanding principal amount of which exceeds in
the aggregate $5,000,000; or

          (f) (i) any Group Member shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or any Group Member shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against any Group Member any
case, proceeding or other action of a nature referred to in clause (i) above that (A)
results in the entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed or undischarged for a period of 60 days; or (iii) there shall be
commenced against any Group Member any case, proceeding or other action seeking issuance of
a warrant of attachment, execution, distraint or similar process against all or any
substantial part of its assets that results in the entry of an order for any such relief
that shall not have been vacated, discharged, or stayed or bonded pending appeal within 60
days from the entry thereof; or (iv) any Group Member shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth
in clause (i), (ii), or (iii) above; or (v) any Group Member shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as they become due;
or

          (g) (i) any Person shall engage in any “prohibited transaction” (as defined in Section
406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding
deficiency” (as defined in Section 302 of ERISA), or, on and after the effectiveness of the
Pension Act, any failure to satisfy the minimum funding standards (within the meaning of
Section 412 of the Code or Section 302 of ERISA), whether or not waived, shall exist with
respect to any Single Employer Plan or any Lien in favor of the PBGC or a Single Employer
Plan or Multiemployer Plan shall arise on the assets of any Group Member or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings
shall commence to have a trustee appointed, or a trustee shall be appointed, to administer
or to terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of

 

53

such Single Employer Plan for purposes of Title IV of ERISA, (iv) any Single Employer
Plan shall terminate for purposes of Title IV of ERISA, (v) any Group Member or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required Lenders is likely to,
incur any liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) on and after the effectiveness of the
Pension Act, there is a determination that any Single Employer Plan is, or is expected to
be, in “at risk” status (within the meaning of Title IV of ERISA) or that a Multiemployer
Plan is, or is expected to be, in endangered or critical status, within the meaning of
Section 305 of ERISA, or (vii) any other event or condition shall occur or exist with
respect to a Plan; and in each case in clauses (i) through (vii) above, such event or
condition, together with all other such events or conditions, if any, could, in the sole
reasonable judgment of the Required Lenders, reasonably be expected to have a Material
Adverse Effect; or

          (h) one or more judgments or decrees shall be entered against any Group Member
involving in the aggregate a liability (to the extent not paid or covered by insurance as to
which the relevant insurance company has not disclaimed coverage) of $5,000,000 or more, and
all such judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 30 days from the entry thereof; or

          (i) any of the Security Documents shall cease, for any reason (other than the express
release thereof), to be in full force and effect, or any Loan Party or any Affiliate of any
Loan Party shall so assert, or any Lien created by any of the Security Documents shall cease
to be enforceable and of the same effect and priority purported to be created thereby; or

          (j) the guarantee contained in Section 2 of the Guarantee and Collateral Agreement
shall cease, for any reason (other than the express release thereof), to be in full force
and effect or any Loan Party or any Affiliate of any Loan Party shall so assert; or

          (k) (i)(A) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) shall
become, or obtain rights (whether by means of warrants, options or otherwise) to become the
“beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act),
directly or indirectly, of more than 35% of the outstanding common stock of Holdings, (B)
the board of directors of Holdings shall cease to consist of a majority of Continuing
Directors, or (C) Holdings shall cease to own and control, of record and beneficially, 100%
of each class of outstanding Capital Stock of the Borrower free and clear of all Liens
(except Liens created by the Guarantee and Collateral Agreement or Liens securing the
Indebtedness under the ABL Facility) or (ii) a Specified Change of Control shall occur; or

          (l) the Lien subordination provisions or any other provision of the Intercreditor
Agreement shall cease for any reason to be valid or any Loan Party or any of its
Subsidiaries shall so assert in writing;

then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or
(ii) of paragraph (f) above with respect to the Borrower, automatically the Loans (with accrued
interest thereon) and all other amounts owing under this Agreement and the other Loan Documents
shall immediately become due and payable, and (B) if such event is any other Event of Default, with
the consent of the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Loans
(with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan
Documents to be due and payable forthwith, whereupon the same shall immediately become due and
payable. Except as expressly provided

 

54

above in this Section 7, presentment, demand, protest and all other notices of any kind are hereby
expressly waived by the Borrower.

SECTION 8. THE AGENTS

          8.1 Appointment. Each Lender hereby irrevocably designates and appoints the
Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents,
and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take
such action on its behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers and perform such duties as are expressly delegated to the Administrative
Agent by the terms of this Agreement and the other Loan Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Administrative Agent shall not have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Administrative Agent.

          8.2 Delegation of Duties. The Administrative Agent may execute any of its duties under
this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.

          8.3 Exculpatory Provisions. None of any Agent or any Arranger or any of their
respective officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document (except to the extent that any of the
foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from its or such Person’s own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements, representations or
warranties made by any Loan Party or any officer thereof contained in this Agreement or any other
Loan Document or in any certificate, report, statement or other document referred to or provided
for in, or received by the Agents or the Arrangers under or in connection with, this Agreement or
any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party a
party thereto to perform its obligations hereunder or thereunder. The Agents and the Arrangers
shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this Agreement or any other
Loan Document, or to inspect the properties, books or records of any Loan Party.

          8.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to
rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of legal counsel
(including counsel to Holdings or the Borrower), independent accountants and other experts selected
by the Administrative Agent. The Administrative Agent may deem and treat the payee of any Note as
the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Administrative Agent. The Administrative Agent shall be
fully justified in failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if
so specified by this Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability

 

55

and expense that may be incurred by it by reason of taking or continuing to take any such
action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement and the other Loan Documents in accordance with a request of the
Required Lenders (or, if so specified by this Agreement, all Lenders), and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.

          8.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default unless the Administrative Agent has
received notice from a Lender, Holdings or the Borrower referring to this Agreement, describing
such Default or Event of Default and stating that such notice is a “notice of default”. In the
event that the Administrative Agent receives such a notice, the Administrative Agent shall give
notice thereof to the Lenders. The Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so
specified by this Agreement, all Lenders); provided that unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.

          8.6 Non-Reliance on Agents, Arrangers and Other Lenders. Each Lender expressly
acknowledges that none of the Agents or the Arrangers or any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any representations or
warranties to it and that no act by any Agent or any Arranger hereafter taken, including any review
of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by any Agent or any Arranger to any Lender. Each Lender represents to
the Agents and the Arrangers that it has, independently and without reliance upon any Agent, any
Arranger or any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their affiliates and
made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon any Agent, any Arranger or any
other Lender, and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial and other condition
and creditworthiness of the Loan Parties and their affiliates. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of any Loan Party or any affiliate of a
Loan Party that may come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.

          8.7 Indemnification. The Lenders agree to indemnify each Agent and Arranger in its
capacity as such (to the extent not reimbursed by Holdings or the Borrower and without limiting the
obligation of Holdings or the Borrower to do so), ratably according to their respective Term
Percentages in effect on the date on which indemnification is sought under this Section 8.7 (or, if
indemnification is sought after the date upon which the Loans shall have been paid in full, ratably
in accordance with such Term Percentages immediately prior to such date), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever that may at any time (whether before or after the
payment of the Loans) be imposed on, incurred by or asserted against such Agent or Arranger in any
way relating to or arising out of this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or

 

56

therein or the transactions contemplated hereby or thereby or any action taken or omitted by
such Agent or Arranger under or in connection with any of the foregoing; provided that no Lender
shall be liable for the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final
and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent’s
or Arranger’s gross negligence or willful misconduct. The agreements in this Section shall survive
the payment of the Loans and all other amounts payable hereunder.

          8.8 Agent in Its Individual Capacity. Each Agent and Arranger and its affiliates may
make loans to, accept deposits from and generally engage in any kind of business with any Loan
Party as though such Agent or Arranger were not an Agent or an Arranger, respectively. With
respect to its Loans made or renewed by it, each Agent and Arranger shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as
though it were not an Agent or an Arranger, and the terms “Lender” and “Lenders” shall include each
Agent in its individual capacity.

          8.9 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 10 days’ notice to the Lenders and the Borrower. If the Administrative
Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then
the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 7(a) or Section 7(f) with respect
to the Borrower shall have occurred and be continuing) be subject to approval by the Borrower
(which approval shall not be unreasonably withheld or delayed), whereupon such successor agent
shall succeed to the rights, powers and duties of the Administrative Agent, and the term
“Administrative Agent” shall mean such successor agent effective upon such appointment and
approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent
shall be terminated, without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement or any holders of the Loans. If no
successor agent has accepted appointment as Administrative Agent by the date that is 10 days
following a retiring Administrative Agent’s notice of resignation, the retiring Administrative
Agent’s resignation shall nevertheless thereupon become effective, and the Lenders shall assume and
perform all of the duties of the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above. After any retiring
Administrative Agent’s resignation as Administrative Agent, the provisions of this Section 8 shall
inure to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.

          8.10 Syndication Agent and Arrangers. Neither the Syndication Agent nor any Arranger
shall have any duties or responsibilities hereunder in its capacity as such.

SECTION 9. MISCELLANEOUS

          9.1 Amendments and Waivers. (a) Neither this Agreement, any other Loan Document, nor
any terms hereof or thereof may be amended, supplemented or modified except in accordance with the
provisions of this Section 9.1. The Required Lenders and each Loan Party party to the relevant
Loan Document may, or, with the written consent of the Required Lenders, the Administrative Agent
and each Loan Party party to the relevant Loan Document may, from time to time, (a) enter into
written amendments, supplements or modifications hereto and to the other Loan Documents for the
purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on
such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be,
may specify in such instrument, any of the requirements of this Agreement or the other Loan
Documents or

 

57

any Default or Event of Default and its consequences; provided, however, that
no such waiver and no such amendment, supplement or modification shall (i) forgive the principal
amount of any Loan or extend the final scheduled date of maturity of any Loan, extend the scheduled
date of any amortization payment in respect of any Loan, reduce the stated rate of any interest or
fee payable hereunder (except (x) in connection with the waiver of applicability of any
post-default increase in interest rates and (y) that any amendment or modification of defined terms
used in the financial covenants in this Agreement shall not constitute a reduction in the rate of
interest or fees for purposes of this clause (i)) without the written consent of each Lender
directly affected thereby; (ii) eliminate or reduce the voting rights of any Lender under this
Section 9.1 without the written consent of such Lender; (iii) reduce any percentage specified in
the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of
its rights and obligations under this Agreement and the other Loan Documents, release all or
substantially all of the Collateral or release all or substantially all of the Subsidiary
Guarantors from their obligations under the Guarantee and Collateral Agreement, in each case
without the written consent of all Lenders; or (iv) amend, modify or waive any provision of Section
8 without the written consent of the Agents. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding upon the Loan Parties,
the Lenders, the Agents and all future holders of the Loans. In the case of any waiver, the Loan
Parties, the Lenders and the Administrative Agent shall be restored to their former position and
rights hereunder and under the other Loan Documents, and any Default or Event of Default waived
shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent
or other Default or Event of Default, or impair any right consequent thereon.

          (b) Notwithstanding anything to the contrary contained in Section 9.1(a), in the event that
the Borrower requests that any provision of this Agreement be amended, modified or waived in a
manner which would require the unanimous consent of all of the Lenders and such amendment,
modification or waiver is agreed to by the Required Lenders, then with the consent of the Borrower
and the Required Lenders, the Borrower and the Required Lenders shall be permitted to amend the
Agreement without the consent of the Lender or Lenders which did not agree to the amendment,
modification or waiver requested by the Borrower (such Lender or Lenders, the “Minority
Banks”) to provide for (x) the addition to this Agreement of one or more other financial
institutions (each of which shall be an Assignee), or an increase in the Loans of one or more of
the Required Lenders, so that the aggregate of the Loans after giving effect to such amendment
shall be in the same amount as the aggregate of the Loans immediately before giving effect to such
amendment, (y) the making of such additional Loans by such new financial institutions or Required
Lenders as may be necessary to repay in full the outstanding Loans of the Minority Banks
immediately before giving effect to such amendment and (z) such other modifications to this
Agreement as may be appropriate.

          9.2 Notices. All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered, or three Business
Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of Holdings, the Borrower and the Administrative Agent,
and as set forth in an administrative questionnaire delivered to the Administrative Agent in the
case of the Lenders, or to such other address as may be hereafter notified by the respective
parties hereto:

	 	 	 
	     Holdings:

	 	Eddie Bauer Holdings, Inc.
	 

	 	15010 NE 36th Street
	 

	 	Redmond, Washington 98052
	 

	 	Attention: Chief Financial Officer, with a copy to the same
	 

	 	address, Attention: General Counsel
	 

	 	Telecopy: (425) 755-7671

 

58

	 	 	 
	 

	 	Telephone – Chief Financial Officer: (425) 755-4891
	 

	 	Telephone – General Counsel: (425) 755-6179
	 
	 	 
	     Borrower:

	 	Eddie Bauer, Inc.
	 

	 	15010 NE 36th Street
	 

	 	Redmond, Washington 98052
	 

	 	Attention: Chief Financial Officer, with a copy to the same
	 

	 	address, Attention: General Counsel
	 

	 	Telecopy: (425) 755-7671
	 

	 	Telephone – Chief Financial Officer: (425) 755-4891
	 

	 	Telephone – General Counsel: (425) 755-6179
	 
	 	 
	     Administrative Agent:

	 	JPMorgan Chase Bank, N.A.
	 

	 	277 Park Avenue
	 

	 	New York, New York 10172
	 

	 	Attention: James A. Knight
	 

	 	Telecopy: (646) 534-3081
	 

	 	Telephone: (212) 622-8486

provided that any notice, request or demand to or upon the Administrative Agent or the
Lenders shall not be effective until received.

          Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative Agent;
provided that the foregoing shall not apply to notices pursuant to Section 2 unless
otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent
or the Borrower may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or communications.

          9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising,
on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

          9.4 Survival of Representations and Warranties. All representations and warranties
made hereunder, in the other Loan Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the execution and delivery of this
Agreement and the making of the Loans.

          9.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or reimburse each
Agent for all its reasonable out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment, supplement or modification to, this
Agreement and the other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions contemplated hereby and
thereby, including the reasonable fees and disbursements of counsel to such Agent and filing and
recording fees and expenses, with statements with respect to the foregoing to be submitted to the
Borrower prior to the Restatement Effective Date (in the case of amounts to be paid on the
Restatement Effective Date) and

 

59

from time to time thereafter on a quarterly basis or such other periodic basis as such Agent
shall deem appropriate, (b) to pay or reimburse each Lender and Agent for all its out-of-pocket
costs and expenses incurred in connection with the enforcement or preservation of any rights under
this Agreement, the other Loan Documents and any such other documents, or in connection with any
insolvency or bankruptcy of any Group Member or in connection with any work-out or restructuring of
the transactions contemplated hereby, including the fees and disbursements of financial advisors
and counsel to each Lender and Agent, (c) to pay, indemnify, and hold each Lender and Agent
harmless from, any and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other taxes, if any, that may be payable
or determined to be payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and hold each Lender and Agent
and its respective officers, directors, employees, affiliates, agents and controlling persons
(each, an “Indemnitee”) harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, the other Loan Documents and any
such other documents, including any of the foregoing relating to the use of proceeds of the Loans
or the violation of, noncompliance with or liability under, any Environmental Law applicable to the
operations of any Group Member, or any actual or alleged presence or release of Materials of
Environmental Concern on or from any property currently or formerly owned or operated by any Group
Member, and the reasonable fees and expenses of legal counsel in connection with claims, actions or
proceedings by any Indemnitee against any Loan Party under any Loan Document (all the foregoing in
this clause (d), collectively, the “Indemnified Liabilities”), provided that the Borrower
shall have no obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the
extent such Indemnified Liabilities are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from the gross negligence or willful misconduct of such
Indemnitee. Without limiting the foregoing, and to the extent permitted by applicable law, the
Borrower agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and
agrees to cause its Subsidiaries to waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities, settlements, damages,
costs and expenses of whatever kind or nature, under or related to Environmental Laws, that any of
them might have by statute or otherwise against any Indemnitee, except with respect to any such
claims, demands, penalties, fines, liabilities, settlements, damages, costs or expenses to the
extent they are found by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from the gross negligence or willful misconduct of such Indemnitee. All amounts due
under this Section 9.5 shall be payable not later than 10 days after written demand therefor.
Statements payable by the Borrower pursuant to this Section 9.5 shall be submitted to the Borrower
as set forth in Section 9.2, or to such other Person or address as may be hereafter designated by
the Borrower in a written notice to the Administrative Agent. The agreements in this Section 9.5
shall su
rvive repayment of the Loans and all other amounts payable hereunder.

          9.6 Successors and Assigns; Participations and Assignments. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that (i) the Borrower may not assign or
otherwise transfer any of its rights or obligations hereunder without the prior written consent of
each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this Section 9.6.

          (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may
assign to one or more assignees (each, an “Assignee”) all or a portion of its rights and
obligations under

 

60

this Agreement (including all or a portion of the Loans at the time owing to it) with the
prior written consent of:

          (A) the Borrower (such consent not to be unreasonably withheld), provided that
no consent of the Borrower shall be required for an assignment to a Lender, an affiliate of
a Lender, an Approved Fund (as defined below) or, if any Event of Default has occurred and
is continuing, any other Person; and

          (B) the Administrative Agent, provided that no consent of the Administrative
Agent shall be required for an assignment of all or any portion of a Loan to a Lender, an
affiliate of a Lender or an Approved Fund.

          (ii) Assignments shall be subject to the following additional conditions:

          (A) except in the case of an assignment to a Lender, an affiliate of a Lender or an
Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s
Loans, the amount of the Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $1,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that (1) no such
consent of the Borrower shall be required if any Event of Default has occurred and is
continuing and (2) such amounts shall be aggregated in respect of each Lender and its
affiliates or Approved Funds, if any, so long as the amount of the Loans held by each such
Lender, affiliate or Approved Fund shall not be less than $500,000;

          (B) the parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation fee of
$3,500; and

          (C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an administrative questionnaire.

               For the purposes of this Section 9.6, “Approved Fund” means any Person (other than a
natural person) that is engaged in making, purchasing, holding or investing in bank loans and
similar extensions of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an affiliate of a Lender or (c) an entity or an affiliate of an entity
that administers or manages a Lender.

               (iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below, from
and after the effective date specified in each Assignment and Assumption the Assignee thereunder
shall be a party hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption,
be released from its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of
Sections 2.13, 2.14, 2.15 and 9.5). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 9.6 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.

               (iv) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a
register for

 

61

the recordation of the names and addresses of the Lenders, and the principal amount of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for inspection by the
Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

          (v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an Assignee, the Assignee’s completed administrative questionnaire (unless the Assignee
shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register. No assignment shall be effective for purposes of
this Agreement unless it has been recorded in the Register as provided in this paragraph.

          (c) (i) Any Lender may, without the consent of the Borrower or the Administrative Agent,
sell participations to one or more banks or other entities (a “Participant”) in all or a
portion of such Lender’s rights and obligations under this Agreement (including all or a portion of
the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement
shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations and (C) the Borrower, the Administrative Agent and the
other Lenders shall continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. Any agreement pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the sole right to enforce
this Agreement and to approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver that (1) requires the
consent of each Lender directly affected thereby pursuant to the proviso to the second sentence of
Section 9.1 and (2) directly affects such Participant. Subject to paragraph (c)(ii) of this
Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections
2.13, 2.14 and 2.15 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 9.7(b) as though it were a Lender,
provided such Participant shall be subject to Section 9.7(a) as though it were a Lender.

          (ii) A Participant shall not be entitled to receive any greater payment under Section 2.13 or
2.14 than the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to such Participant is
made with the Borrower’s prior written consent. Any Participant that is a Non-U.S. Lender shall
not be entitled to the benefits of Section 2.14 unless such Participant complies with Section
2.14(d).

          (d) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or Assignee for such Lender as a party hereto.

          (e) The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue
Notes to any Lender requiring Notes to facilitate transactions of the type described in paragraph
(d) above.

 

62

          (f) Notwithstanding the foregoing, any Conduit Lender may assign any or all of the Loans it
may have funded hereunder to its designating Lender without the consent of the Borrower or the
Administrative Agent and without regard to the limitations set forth in Section 9.6(b). Each of
Holdings, the Borrower, each Lender and the Administrative Agent hereby confirms that it will not
institute against a Conduit Lender or join any other Person in instituting against a Conduit Lender
any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any state
bankruptcy or similar law, for one year and one day after the payment in full of the latest
maturing commercial paper note issued by such Conduit Lender; provided, however, that each
Lender designating any Conduit Lender hereby agrees to indemnify, save and hold harmless each other
party hereto for any loss, cost, damage or expense arising out of its inability to institute such a
proceeding against such Conduit Lender during such period of forbearance.

          9.7 Adjustments; Set-off. (a) Except to the extent that this Agreement expressly
provides for payments to be allocated to a particular Lender, if any Lender (a “Benefitted
Lender”) shall receive any payment of all or part of the Obligations owing to it, or receive
any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in Section 7(f), or otherwise), in a greater
proportion than any such payment to or collateral received by any other Lender, if any, in respect
of the Obligations owing to such other Lender, such Benefitted Lender shall purchase for cash from
the other Lenders a participating interest in such portion of the Obligations owing to each such
other Lender, or shall provide such other Lenders with the benefits of any such collateral, as
shall be necessary to cause such Benefitted Lender to share the excess payment or benefits of such
collateral ratably with each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted Lender, such purchase shall
be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but
without interest.

          (b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall
have the right, without prior notice to Holdings or the Borrower, any such notice being expressly
waived by Holdings and the Borrower to the extent permitted by applicable law, upon any amount
becoming due and payable by Holdings or the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise), to set off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final, but excluding deposits held in
a fiduciary capacity), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at
any time held or owing by such Lender or any branch or agency thereof to or for the credit or the
account of Holdings or the Borrower, as the case may be. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application made by such Lender;
provided that the failure to give such notice shall not affect the validity of such setoff
and application.

          9.8 Counterparts. This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts, and all of said counterparts taken together shall
be deemed to constitute one and the same instrument. Delivery of an executed signature page of
this Agreement by facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be
lodged with the Borrower and the Administrative Agent.

          9.9 Severability. Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.

 

63

          9.10 Integration. This Agreement and the other Loan Documents represent the entire
agreement of Holdings, the Borrower, the Administrative Agent and the Lenders with respect to the
subject matter hereof and thereof, and there are no promises, undertakings, representations or
warranties by the Administrative Agent or any Lender relative to the subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.

          9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.

          9.12 Submission To Jurisdiction; Waivers. Each of Holdings and the Borrower hereby
irrevocably and unconditionally:

          (a) submits for itself and its property in any legal action or proceeding relating to
this Agreement and the other Loan Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of
the courts of the State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;

          (b) consents that any such action or proceeding may be brought in such courts and
waives any objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;

          (c) agrees that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to Holdings or the Borrower, as the case may be at its address set
forth in Section 9.2 or at such other address of which the Administrative Agent shall have
been notified pursuant thereto;

          (d) agrees that nothing herein shall affect the right to effect service of process in
any other manner permitted by law or shall limit the right to sue in any other jurisdiction;
and

          (e) waives, to the maximum extent not prohibited by law, any right it may have to
claim or recover in any legal action or proceeding referred to in this Section any special,
exemplary, punitive or consequential damages.

          9.13 Acknowledgements. Each of Holdings and the Borrower hereby acknowledges that:

          (a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents;

          (b) neither the Administrative Agent nor any Lender has any fiduciary relationship
with or duty to Holdings or the Borrower arising out of or in connection with this Agreement
or any of the other Loan Documents, and the relationship between Administrative Agent and
Lenders, on one hand, and Holdings and the Borrower, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and

 

64

          (c) no joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Lenders or among
Holdings, the Borrower and the Lenders.

          9.14 Releases of Guarantees and Liens. (a) Notwithstanding anything to the contrary
contained herein or in any other Loan Document, the Administrative Agent is hereby irrevocably
authorized by each Lender (without requirement of notice to or consent of any Lender except as
expressly required by Section 9.1) to take any action requested by the Borrower having the effect
of releasing any Collateral or guarantee obligations (i) to the extent necessary to permit
consummation of any transaction not prohibited by any Loan Document or that has been consented to
in accordance with Section 9.1 or (ii) under the circumstances described in paragraph (b) below.

          (b) At such time as the Loans and the other obligations under the Loan Documents (other than
obligations under or in respect of Swap Agreements) shall have been paid in full, (i) the
Collateral shall be released from the Liens created by the Security Documents, and the Security
Documents and all obligations (other than those expressly stated to survive such termination) of
the Administrative Agent and each Loan Party under the Security Documents shall terminate, all
without delivery of any instrument or performance of any act by any Person and (ii) at the expense
of the Borrower, with no representation or warranty by the Administrative Agent or any Lender, the
Administrative Agent shall deliver any collateral then in its possession and any termination
statements or documents as the Borrower may from time to time reasonably request to effectuate, or
reflect of public record, the release and discharge of the security interests and liens described
in clause (i) above.

          9.15 Confidentiality. Each of the Administrative Agent and each Lender agrees to keep
confidential all non-public information provided to it by any Loan Party, the Administrative Agent
or any Lender pursuant to or in connection with this Agreement that is designated by the provider
thereof as confidential; provided that nothing herein shall prevent the Administrative Agent or any
Lender from disclosing any such information (a) to the Administrative Agent, any other Lender or
any affiliate thereof, (b) subject to an agreement to comply with provisions no less restrictive
than this Section, to any actual or prospective Transferee or any direct or indirect counterparty
to any Swap Agreement (or any professional advisor to such counterparty), (c) to its employees,
directors, agents, attorneys, accountants and other professional advisors or those of any of its
affiliates, (d) upon the request or demand of any Governmental Authority, (e) in response to any
order of any court or other Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (f) if requested or required to do so in connection with any litigation or
similar proceeding, (g) that has been publicly disclosed, (h) to the National Association of
Insurance Commissioners or any similar organization or any nationally recognized rating agency that
requires access to information about a Lender’s investment portfolio in connection with ratings
issued with respect to such Lender, or (i) in connection with the exercise of any remedy hereunder
or under any other Loan Document.

          9.16 Patriot Act. Each Lender that is subject to the requirements of the Patriot Act
and the Administrative Agent (on behalf of itself and not on behalf of any Lender) hereby notifies
the Borrower and each other Loan Party that pursuant to the requirements of the Patriot Act, it is
required to obtain, verify and record information that identifies the Borrower and each other Loan
Party, which information includes the name and address of the Borrower and each other Loan Party
and other information that will allow such Lender or the Administrative Agent, as applicable, to
identify the Borrower and each other Loan Party in accordance with the Patriot Act. The Borrower
and each other Loan Party shall, and shall cause each of its Subsidiaries to, provide, to the
extent commercially reasonable, such information and take such actions as are reasonably requested
by each Lender and the Administrative Agent to maintain compliance with the Patriot Act.

 

65

          9.17 WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE ADMINISTRATIVE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

66

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

	 	 	 	 	 
	 	EDDIE BAUER HOLDINGS, INC.

 	 
	 	By:  	/s/ David Taylor	 
	 	 	Name: David Taylor	 	 
	 	 	Title: Interim Chief Financial Officer	 	 
	 
	 	EDDIE BAUER, INC.

 	 
	 	By:  	/s/ David Taylor	 
	 	 	Name: David Taylor	 	 
	 	 	Title: Interim Chief Financial Officer	 	 
	 
	 	JPMORGAN CHASE BANK, N.A., as Administrative Agent
and as a Lender

 	 
	 	By:  	 	 
	 	 	Name: 	 	 
	 	 	Title: 	 	 
	 
	 	GOLDMAN SACHS CREDIT PARTNERS L.P., as Syndication
Agent

 	 
	 	By:  	 	 
	 	 	Name: 	 	 
	 	 	Title:

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