Document:

exhibit102.htm

    Exhibit 10.2

     

    
      	
              

            	
               

               

               

              Worldwide
      Pipeline

              Rehabilitation

            	
               

               

               

              17988
      Edison Avenue

              Chesterfield,
      MO  63005-3700

            	
               

               

               

              Tel:  636-530-8000

              Fax:  636-530-8746

            
	
               

            

    

    
      	
               

            

    

    
    

    

    April 4,
2008

     

    
 

    Mr. John
J. Burgess

    1615
Chestnut Grove Lane

    Kingwood,
Texas 77345

    

    Dear
Joe:

    

    We are
pleased to offer you the position of President and Chief Executive Officer of
Insituform Technologies, Inc. (“ITI”, the “Company” or
“Insituform”).  The principal terms and conditions of the offer are as
follows:

    

    1.           Base Salary. You will
be compensated on a salaried basis for your services as President and Chief
Executive Officer at an annual rate of $500,000.00.  Your base salary
will be reviewed on an annual basis by the Compensation Committee of the Board
of Directors of ITI.

    

    2.           Annual Incentive
Bonus. During 2008, you will be eligible to earn an annual incentive
bonus in an amount calculated as a percentage of your base salary determined by
reference to: (i) a range of percentages identified by the Compensation
Committee based upon a center point objective of 100% (intended to provide an
opportunity of up to two times such center point) and (ii) the accomplishment by
ITI of such annual goals attendant to such range as shall also have been
determined by the Compensation Committee and compliance with the terms of this
letter and any performance goals established by the Compensation Committee. The
foregoing annual goals will be determined as reasonable targets given ITI’s
results of operations and prospects, intended to provide you with incentives to
achieve such performance.  The Compensation Committee will review the
amount of and criteria for your annual incentive bonus annually.  Your
2008 award will be pro-rated to reflect your length of employment with
us.  You must be employed as of the date the incentive is to be paid
to be eligible to receive any such payment, and in case of a termination of
employment there is no pro-ration of the incentive for that year. An annual
incentive that is earned will be paid out no later than March 15 of the year
following the end of the calendar year to which the annual incentive
relates.

    

    3.           Long Term Incentives.
You are eligible to participate in the Insituform Technologies, Inc. Executive
Incentive Plan (the “LTIP”), which includes both equity and cash
compensation.  The Compensation Committee on an annual basis
determines LTIP awards for officers and you will be eligible for a new award
each year.  Your 2008 award will have a nominal value of approximately
$1.3 million, and be comprised of non-qualified stock options (50% or $650,000),
restricted stock (35% or $455,000) and long-term performance cash (15% or
$195,000) upon the following terms:

    

    
      	
               

            	
                  (a)    Stock
      options to purchase shares (count to be determined) of ITI Class A common
      shares, $.01 par value (Common Stock”), such options to become exercisable
      with respect to one-third of such shares on each of the first, second and
      third anniversaries of the grant date.  The strike price for the
      options will be the closing market price of the Common Stock on the date
      your options are granted, which is anticipated to be the first day of your
      active employment with ITI.  The options will expire on the
      seventh anniversary of the grant date.  Generally, stock options
      expire as follows: (i) if the employee retires after age 55, options
      expire five years after date of retirement; (ii) if
  the

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      
        Mr. John J. Burgess

        April 4, 2008

        Page 2

      

       

        
          

        

      

       

    

    
      	
               

               

            	
              Company
      terminates employment for a reason other than cause or disability or if
      you terminate your employment voluntarily, options expire 90 days after
      termination of employment; (iii) if employment terminates as a result of
      disability, options expire 90 days after termination of employment; (iv)
      if employment terminates by reason of death, options expire one year
      following death; and (v) if ITI terminates your employment for cause,
      options expire on the date of termination.  The stock options
      will be subject to the terms of a stock option agreement, with customary
      terms and conditions.

               

            
	
               

            	
                  (b)    Restricted
      stock (count to be determined).  The restricted stock will vest
      100% three years after the award date, in a cliff vesting
      arrangement.  The restricted stock may not be sold or
      transferred until at least three years following the award date, and will
      be subject to the terms of a restricted stock agreement, which will
      include a performance restriction tied to the Company’s 2008 business
      plan.  Failure to achieve at least 75% of the 2008 business plan
      will result in forfeiture of the restricted stock award.  At 75%
      of plan, you will be entitled to 50% of the restricted share award
      (subject to the three-year service requirement).  Between 75%
      and 100% of 2008 plan, you will be entitled to receive such number of
      shares based on a straight line between one-half and 100% of the award
      (subject to the three-year service requirement).  The restricted
      stock will be awarded by the Compensation Committee, with such award
      expected to occur on the first day of your active employment with the
      Company.  Among other customary provisions, the restricted stock
      agreement for this award will contain a provision for vesting of a portion
      of the award shares upon the involuntary termination of your employment
      without “Cause” (as defined in Section 9 hereof) at least 18 months after
      the date of award but before the third anniversary of the date of
      award.  The restricted stock agreement for this award also will
      contain a provision for the vesting of all of the award shares upon (i) an
      involuntary termination of your employment without “Cause” on or following
      a “Change in Control” (as defined in Section 9 hereof) or (ii) the
      voluntary termination of your employment for “Good Reason” (as defined in
      Section 9 hereof) on or following a “Change in
  Control.”

            

    

    

    
      	
               

            	
                  (c)    A
      target award of $195,000 under the 2008 – 2010 Long Term Executive Cash
      Performance Program, payable in March 2011 based on the achievement of
      goals to be established by the Compensation Committee for such three-year
      period.

            

    

    

    4.           One Time Stock
Award.  In connection with your commencement of employment you
will be awarded shares of restricted stock with a nominal value of approximately
$1.5 million (number of shares to be awarded shall equal $1.5 million divided by
the closing market price of the Common Stock on the date of the
award).   The restricted stock will vest 100% five years after
the award date, in a cliff vesting arrangement.  The restricted stock
may not be sold or transferred until at least five years following the award
date, and will be subject to the terms of a restricted stock agreement with
customary terms and conditions.  The restricted stock will be awarded
by the Compensation Committee, with such award expected to occur on the first
day of your active employment with the Company.  Among other customary
provisions, the restricted stock agreement for this award will contain a
provision for vesting of a portion of the award shares upon the involuntary
termination of your employment without “Cause” at least 30 months after the date
of award but before the fifth anniversary of the date of award.  The
restricted stock agreement for this award also will contain a provision for
vesting of all of the award shares upon (i) an involuntary termination of your
employment without “Cause” on or following a “Change in Control” or (ii) the
voluntary termination of your employment for “Good Reason” on or following a
“Change in Control.”

    

    5.           Deferred
Compensation. You are eligible to participate in the Senior Management
Voluntary Deferred Compensation Plan (the “DCP”) upon and subject to the terms
and conditions of that plan. Tax deferred contributions may be made into the DCP
after the maximum allowable contribution (as defined by the IRS) has been made
into ITI’s 401(k) plan. 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      
        
          Mr. John
J. Burgess

          April 4, 2008

          Page 3

        

      

       

        
          

        

      

       

      The first
3% of DCP contributions are matched by ITI at 100% and the next 2% of
contributions are matched at a 50% rate. For 2008, the
maximum company match into both the 401(k) and DCP together is
$9,000.

    

    

    6.           Additional
Benefits.

    

    (a)           You
are eligible to participate in the Company’s medical, dental, vision, life
insurance, and long-term disability plans on the same terms as are applicable to
other participants generally (provided the amount of life insurance shall be
$1.0 million), and any future plans and programs implemented by ITI for its
employees generally or by the Compensation Committee for you specifically, and
in the ITI 401(k) Profit Sharing Plan and any future plans or programs
supplemental to the ITI 401(k) Profit Sharing Plan. Details about specific
benefits will be provided to you in benefit plan documents. All such plans and
benefits are subject to cancellation and change from time to time in the
Company’s discretion.

    

    (b)           You
will be reimbursed for country club membership fees (extending to initiation
fees or membership share purchases, up to a maximum amount of $50,000, and to
ongoing dues) for one club of your choice in the St. Louis, Missouri
area.

    

    (c)           You
will receive holidays in accordance with ITI’s policy. During 2008, you will
receive three weeks vacation, pro-rated to reflect your length of employment
with us.  During your fifth year of employment and beyond, you will
receive four weeks vacation.

    

    (d)           You
will be provided relocation assistance as provided for in ITI’s relocation
policy, including reimbursement for the cost of reasonable temporary
accommodations and weekly travel to and from your current home for a period that
shall end no later than August 31, 2008 and prior to relocating your family to
St. Louis.  Your relocation, including the sale of your home, must be
handled through ITI’s relocation coordinator.  Relocation assistance
is subject to repayment according to the terms of the policy if you resign
(excluding a resignation incident to a termination of employment without
“Cause”) or your employment is terminated for “Cause” within two (2) years of
your first day of active employment.

    

    7.           Severance. As
President and Chief Executive Officer, you will report to the Board of Directors
of the Company. Your employment is for no definite term and you will serve at
the pleasure of  ITI’s Board of Directors; however, if your employment
is terminated (i) by ITI for reasons other than “Cause” during your first
twenty-four months of employment or (ii) by you for “Good Reason” during your
first twenty-four months of employment and following a
“Change in Control”, in either instance you will receive, upon the terms
described below, a severance payment equal to twenty-four months’ of your then
current base salary and twenty-four months of the monthly cost the Company then
was paying for health and dental insurance coverage for you; provided, however, the
Company’s obligation to make any payments beyond the initial twelve-month period
shall be reduced by any amount that you receive in compensation from any
successor employer.  This amount will (subject to the provisions
described below) be paid out in twenty-four (24) equal monthly installments
commencing on the Company’s bi-weekly paydays commencing with the first payday
occurring after all required releases have become effective.  If your
employment is terminated by ITI for reasons other than “Cause” after your first
twenty-four months of employment you will receive, upon the terms described
below, a severance payment equal to twelve months’ of your then current base
salary and twelve months of the monthly cost the Company then was paying for
health and dental insurance coverage for you.  This amount will
(subject to the provisions described below) be paid out in twelve (12) equal
monthly installments commencing on the Company’s bi-weekly paydays commencing
with the first payday occurring after all required releases have become
effective.  In all instances, any such payment is conditioned upon (i)
your entering into an enforceable separation agreement 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      
        
          Mr. John
J. Burgess

          April 4, 2008

          Page 4

        

      

       

        
          

        

      

       

      in form
and substance satisfactory to the Company containing a release of all claims you
may have against the Company, it subsidiaries and any of their respective
directors, employees and agents, cooperation, non-disparagement and
confidentiality clauses, and such other terms as are customarily requested by
employers in executive separation agreements, and (ii) your resignation of all
employment and offices and positions, including all directorships, you hold with
the Company and any of its subsidiaries and affiliates within 30 days after your
employment terminates.  A form of separation agreement will be
delivered to you within 30 days after your employment terminates (and if this
does not occur then the provision will be deemed waived), and you must sign and
deliver the agreement within 22 days after it is delivered.  In order
to avoid any tax consequences of Section 409A of the Internal Revenue Code,
payment of any installments may be deferred until the releases and the
separation agreement are enforceable and until the first day following the six
(6) month anniversary of the date you have a separation from service within the
meaning of Section 409A (in which case any deferred installments will be paid
the first pay day after the six (6) month and one (1) day period
expires).  Any termination of employment will also constitute an
automatic resignation from all offices and directorships you may hold with the
Company or any of its subsidiaries or affiliates.

    

    

    8.           Confidentiality and
Non-Competition; Code of Conduct; Drug Testing.  Prior to
commencing and as a condition to employment you must sign ITI’s standard
employee confidentiality, work product and non-competition agreement, ITI’s
business code of conduct, ITI’s Code of Ethics (for CEO, CFO and senior
financial employees) and ITI’s recoupment policy.  These policies and
agreements are not superseded or cancelled by this letter, and you agree to
comply with all such agreements and policies.   You also must
successfully pass ITI’s standard drug screen.

    

    9.           Definitions of “Cause,”
“Change in Control” and “Good Reason.”

    

    For
purposes of this letter, “Cause” shall be defined
as:

    

    
      	
               

            	
                  (i)   the willful
      and continued failure by you to perform substantially your duties with ITI
      or any of its affiliates (other than a failure resulting from incapacity
      due to physical or mental illness), after a written demand for substantial
      performance is delivered to you by the Board of Directors which
      specifically identifies the manner in which the Board believes that you
      have not substantially performed your duties and within a period of 30
      days from receipt of said written demand you have not cured said
      performance; or

            

    

    

    
      	
               

            	
                  (ii)   failure or
      refusal to perform any stated duty or directive; misappropriation of
      funds; insubordination; failure to comply with the Company’s Code of
      Conduct or any policy prohibiting sexual harassment or other form of
      harassment, any agreement with the Company or any written policy; or
      engaging in any illegal conduct in connection with your duties for or
      employment with the Company, whether or not in each case subsequently
      discontinued or corrected; or

            

    

    

    
      	
               

            	
                  (iii)    breach
      of fiduciary duty, misconduct, commission of an act of moral turpitude, or
      any act or fraud or knowing misrepresentation or concealment on behalf of
      or to the Company, or to the Board, whether or not in each case
      subsequently discontinued or corrected;
or

            

    

    

    
      	
               

            	
                  (iv)    the
      conviction of, the entering of a guilty plea or plea of nolo contendere or no
      contest (or entering into any pretrial diversion program or agreement or
      suspended imposition of sentence) with respect to, either a felony or a
      crime involving moral turpitude, dishonesty or fraud, or that adversely
      affects the Company; or the institution of criminal charges against you,
      which are not dismissed within one hundred twenty (120) days after
      institution, for fraud, embezzlement, any offense involving dishonesty or
      constituting a breach of trust, or any felony;
  or

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Mr. John
J. Burgess

      April 4, 2008

      Page 5

    

     

    
      

    

    

    
      	
               

            	
                 
       (v)    material
      violation of any federal, state or local law that may result in a direct
      or indirect financial loss to the Company or damage the Company’s
      reputation, or your admission of liability of, or finding of liability
      for, the violation of any state or federal securities laws;
    or

            

    

    

    
      	
               

            	
                     
      (vi)    you become
      unable due to illness or injury to perform your duties on a full time
      basis with reasonable accommodation for a period of four (4) months or
      greater or qualify for benefits under the Company’s group long term
      disability insurance plan.

            

    

    

    The
cessation of employment shall not be deemed to be for “Cause” unless and until
there shall have been delivered to you a copy of a resolution duly adopted by
the affirmative vote of a majority of the entire membership of the Board of
Directors, finding that, in the good faith opinion of the Board of Directors,
you are guilty of the conduct described.

     

    For
purposes of this letter, a “Change in Control” shall be
defined as:

     

    
      	 	
               

            	
                 
       (i)    The acquisition
      by one person, or more than one person acting as a group, of ownership of
      stock of the Company that, together with stock held by such person or
      group, constitutes more than 50% of the total fair market value or total
      voting power of the stock of the Company;
or

            

    

              

    (ii)           The
acquisition by one person, or more than one person acting as a group, of
ownership of stock of the Company, that together with stock of the Company
acquired during the twelve-month period ending on the date of the most recent
acquisition by such person or group, constitutes 30% or more of the total voting
power of the stock of the Company; or

     

                (iii)           A
majority of the members of the Company’s board of directors is replaced during
any twelve-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Company’s board of directors before
the date of the appointment or election.

     

    Persons
will not be considered to be acting as a group solely because they purchase or
own stock of the same corporation at the same time, or as a result of the same
public offering.  However, persons will be considered to be acting as
a group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the Company.

     

    This
definition of Change in Control shall be interpreted in accordance with, and in
a manner that will bring the definition into compliance with, the regulations
under Section 409A of the Internal Revenue Code.

     

    For
purposes of this letter, “Good
Reason” shall be defined as:

     

                  
(i)           a material
reduction in your annual base salary; or

     

              (ii)           a
material reduction in your authority, duties or responsibilities;
or

     

                
(iii)          any other
action or inaction that constitutes a material breach by the Company of it
obligations under this letter.

     

    Any
termination of your employment based upon a good faith determination of “Good
Reason” made by you shall be subject to a delivery of a Notice of Termination by
you to the Company within sixty (60) days of the first occurrence of an event
that would constitute “Good Reason” and subject further to the ability of the
Company to remedy the condition within thirty (30) days of receipt.

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      
        
          Mr. John
J. Burgess

          April 4, 2008

          Page 6

        

      

       

        
          

        

         

      

    

    10.           Duties.     You
will perform your duties and such executive and administrative duties as
may be
assigned to you from time to time by the Board of Directors or the Chairman of
the Board in accordance with applicable law and all written policies and Codes
of Conduct of the Company, and will devote your entire business time and
attention to the performance of your duties (excluding any passive investments).
You will carry out and comply with all lawful directives of the Board of
Directors or the Chairman of the Board and all Company Codes of Conduct and
written policies established from time to time.

    

    11.           Miscellaneous
Provisions.

    

    (a)           The
Company may withhold from any payments and benefits described in this letter
such Federal, state and local taxes as may be required to be withheld pursuant
to any applicable law or regulation. In no event shall the Company be required
to make, or you be required to receive, any payment called for by this letter at
a particular time if such payment at that time shall result in the application
of the tax consequences spelled out in Section 409A of the Code. In that case,
payment will be made at such time as will not result in the imposition of any
adverse tax consequences spelled out in Section 409A of the Code.

    

    (b)           Except
as set forth herein, this letter (and the terms of the plans, documents and
standard agreements referred to herein) contains the entire agreement of the
parties with respect to the subject matter hereof, and supersedes any and all
prior oral or written communications, commitments and agreements with respect
thereto. It is deemed to be entered into and accepted in the State of Missouri
and will be governed by the laws of the State of Missouri without regard to
conflicts of law principles. The terms of this letter (but not the standard
agreements referred to herein) will expire when the severance provisions
expire.

    

    (c)           Your
appointment as President and Chief Executive Officer will not be effective until
your first day of active employment with ITI at its executive offices in
Chesterfield, Missouri, which must occur on or before April 14, 2008. This offer
will expire if it is not accepted and returned to me by April 4,
2008.

    

    (d)           The
Company and you agree that in the event either party shall incur any costs to
enforce the terms of this letter, including reasonable attorneys’ fees, then the
prevailing party in such action shall be entitled to recover all such costs,
including reasonable attorneys’ fees, from the other party.

    

    (e)           This
letter does not constitute an employment agreement.  You shall be an
at-will employee of the Company and your employment may be terminated by the
Company at any time and for any reason.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        Mr. John
J. Burgess

        April 4, 2008

        Page 7

      

      
        

      

    If the
above terms accurately reflect your understanding and
agreement, please sign this letter where indicated below and return it to me
acknowledging your acceptance.

    

    Very
truly yours,

    

    INSITUFORM
TECHNOLOGIES, INC.

    

    

    By:      /s/ Alfred L.
Woods                                      

    Alfred L.
Woods

    Chairman
of the Board of Directors

    

    ACCEPTED
AND AGREED

    TO
AS OF THE DATE OF

    THIS
LETTER:

    

    

    /s/ John J.
Burgess                                                           

    John J.
Burgess

    

    Date:     April
4, 2008FY2007 10K Exhibit 10.56

Exhibit 10.56

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of September 26, 2007

among

GOTTSCHALKS INC.

as Borrower,

THE OTHER CREDIT PARTIES SIGNATORY HERETO,

as Credit Parties,

THE LENDERS SIGNATORY HERETO

FROM TIME TO TIME,

as Lenders,

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Agent and Lender

THE CIT GROUP/BUSINESS CREDIT, INC.,

as Syndication Agent and Lender,

and

GECC CAPITAL MARKETS GROUP, INC.

as Lead Arranger

 TABLE OF CONTENTS 
 

1.AMOUNT AND TERMS OF CREDIT2
1.1Credit Facilities2

1.2Letters of Credit5

1.3Prepayments6

1.4Use of Proceeds8

1.5Interest and Applicable Margins8

1.6Eligible Credit Card Receivables11

1.7Eligible Inventory14

1.8Cash Management Systems15

1.9Fees15

1.10Receipt of Payments16

1.11Application and Allocation of Payments16

1.12Loan Account and Accounting17

1.13Indemnity18

1.14Access19

1.15Taxes19

1.16Capital Adequacy; Increased Costs; Illegality20

1.17Single Loan22

2.CONDITIONS PRECEDENT22
2.1Conditions to the Initial Loans22

2.2Further Conditions to Each Loan23

3.REPRESENTATIONS AND WARRANTIES24
3.1Corporate Existence; Compliance with Law24

3.2Executive Offices, Collateral Locations, FEIN24

3.3Corporate Power, Authorization, Enforceable Obligations25

3.4Financial Statements and Projections25

3.5Material Adverse Effect26

3.6Ownership of Property; Liens26

3.7Labor Matters27

3.8Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness27

3.9Government Regulation27

3.10Margin Regulations28

3.11Taxes28

3.12ERISA28

3.13No Litigation29

3.14Brokers30

3.15Intellectual Property30

3.16Full Disclosure30

3.17Environmental Matters30

3.18Insurance31

3.19Deposit and Disbursement Accounts31

3.20Government Contracts31

3.21Customer and Trade Relations31

3.22Agreements and Other Documents31

3.23Solvency32

3.24[Intentionally Omitted.]32

3.25[Intentionally Omitted.]32

3.26Subordinated Debt and Capital Leases32

4.FINANCIAL STATEMENTS AND INFORMATION32
4.1Reports and Notices32

4.2Communication with Accountants33

5.AFFIRMATIVE COVENANTS33
5.1Maintenance of Existence and Conduct of Business33

5.2Payment of Charges33

5.3Books and Records34

5.4Insurance; Damage to or Destruction of Collateral34

5.5Compliance with Laws35

5.6Supplemental Disclosure36

5.7Intellectual Property36

5.8Environmental Matters36

5.9Landlords' Agreements, Mortgagee Agreements, Bailee Letters and Real Estate Purchases37

5.10[Intentionally Omitted]38

5.11Further Assurances38

5.12Leases38

5.13Condition of the Real Estate40

5.14Payments from Credit Card Issuers and Credit Card Processors41

6.NEGATIVE COVENANTS41
6.1Mergers, Subsidiaries, Etc41

6.2Investments; Loans and Advances41

6.3Indebtedness41

6.4Employee Loans and Affiliate Transactions42

6.5Capital Structure and Business42

6.6Guaranteed Indebtedness43

6.7Liens43

6.8Sale of Stock and Assets43

6.9ERISA44

6.10Financial Covenants44

6.11Hazardous Materials44

6.12Sale-Leasebacks44

6.13Cancellation of Indebtedness44

6.14Restricted Payments45

6.15Change of Corporate Name or Location; Change of Fiscal Year45

6.16[Intentionally Omitted]45

6.17No Speculative Transactions45

6.18Leases; Real Estate Purchases45

6.19Changes Relating to Subordinated Debt; Material Contracts46

6.20Credit Card Notices46

7.TERM46
7.1Termination46

7.2Survival of Obligations Upon Termination of Financing Arrangements46

8.EVENTS OF DEFAULT; RIGHTS AND REMEDIES47
8.1Events of Default47

8.2Remedies48

8.3Waivers by Credit Parties49

9.ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT49
9.1Assignment and Participations49

9.2Appointment of Agent51

9.3Agent's Reliance, Etc52

9.4GE Capital and Affiliates53

9.5Lender Credit Decision53

9.6Indemnification53

9.7Successor Agent53

9.8Setoff and Sharing of Payments54

9.9Advances; Payments; Non-Funding Lenders; Information; Actions in Concert55

9.10Syndication Agent57

10.SUCCESSORS AND ASSIGNS57
10.1Successors and Assigns57

11.MISCELLANEOUS57
11.1Complete Agreement; Modification of Agreement57

11.2Amendments and Waivers58

11.3Fees and Expenses59

11.4No Waiver61

11.5Remedies61

11.6Severability61

11.7Conflict of Terms61

11.8Confidentiality61

11.9GOVERNING LAW62

11.10Notices63

11.11Section Titles63

11.12Counterparts63

11.13WAIVER OF JURY TRIAL63

11.14Press Releases and Related Matters64

11.15Reinstatement64

11.16Advice of Counsel64

11.17No Strict Construction64

                                                   IV

INDEX OF APPENDICES

Annex A (Recitals)-Definitions

Annex B (Section 1.2)-Letters of Credit 

Annex C (Section 1.8)-Cash Management System

Annex D (Section 2.1(a))-Closing Checklist

Annex E (Section 4.1(a))-Financial Statements and Projections - Reporting

Annex F (Section 4.1(b))-Collateral Reports

Annex G (Section 6.10)-Financial Covenants

Annex H (Section 9.9(a))-Lenders' Wire Transfer Information

Annex I (Section 11.10)-Notice Addresses

Annex J (Annex A)-Commitments as of Closing Date

Exhibit 1.1(a)(i)-Form of Notice of Revolving Credit Advance

Exhibit 1.1(a)(ii)-Form of Revolving Note

Exhibit 1.1(c)(ii)-Form of Swing Line Note

Exhibit 1.5(e)-Form of Notice of Conversion/Continuation

Exhibit 4.1(b)-Form of Borrowing Base Certificate

Exhibit 9.1(a)-Form of Assignment Agreement

Schedule 1.1-Agent's Representatives

Disclosure Schedule 3.1-Type of Entity; State of Organization

Disclosure Schedule 3.2-Executive Offices, Collateral Locations, FEIN

Disclosure Schedule 3.4(A)-Financial Statements

Disclosure Schedule 3.4(C)-Projections

Disclosure Schedule 3.6-Real Estate and Leases

Disclosure Schedule 3.7-Labor Matters

Disclosure Schedule 3.8-Ventures, Subsidiaries and Affiliates; Outstanding Stock 

Disclosure Schedule 3.11-Tax Matters

Disclosure Schedule 3.12-ERISA Plans

Disclosure Schedule 3.13-Litigation

Disclosure Schedule 3.15-Intellectual Property

Disclosure Schedule 3.17-Hazardous Materials

Disclosure Schedule 3.18-Insurance

Disclosure Schedule 3.19-Deposit and Disbursement Accounts

Disclosure Schedule 3.21-Customer and Trade Relations

Disclosure Schedule 3.22-Material Agreements

Disclosure Schedule 5.1-Trade Names

Disclosure Schedule 6.3-Indebtedness

Disclosure Schedule 6.4(a)-Transactions with Affiliates

Disclosure Schedule 6.7-Existing Liens

                                                   v

This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"), dated as
of September 26, 2007 among GOTTSCHALKS INC., a Delaware corporation ("Borrower"); the other Credit Parties
signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its individual capacity,
"GE Capital"), for itself, as a Lender, and as Agent for Lenders, THE CIT GROUP/BUSINESS CREDIT, INC., for
itself, as a Lender and in its capacity as syndication agent ("Syndication Agent"), and the other Lenders signatory hereto
from time to time.

RECITALS

WHEREAS, Borrower, Lenders and Agent have entered into that certain Amended and Restated Credit
Agreement (as amended, modified or supplemented to date, the "Original Credit Agreement") dated as of March 1, 2004
pursuant to which the Lenders have made certain credit facilities available to Borrower of up to Two Hundred Million
Dollars ($200,000,000) in the aggregate for the purpose of refinancing certain indebtedness of the Borrower owed to Kimco Capital
Corporation, providing a revolving credit facility of up to One Hundred Ninety-One Million Dollars ($191,000,000), and for working capital
financing and other general corporate financing purposes; 

WHEREAS, as of September 26, 2007, the outstanding principal balance of the Loans under the Original Credit
Agreement is $102,605,505.42, maturing on February 2, 2009;

WHEREAS, Borrower has requested that Lenders continue to provide up to Two Hundred Million Dollars
($200,000,000) of credit facilities to Borrower, consisting of a revolving credit facility of up to Two Hundred Million Dollars ($200,000,000),
including a letter of credit sub-facility of up to Twenty Million Dollars ($20,000,000), to, upon the terms and conditions set forth herein, convert
the term loan outstanding under the Original Credit Agreement into a portion of the Revolving Credit Advances outstanding under this
Agreement, refinance the indebtedness under the New Subordinated Note owed to The Harris Company pursuant to the New Subordinated
Note (as defined herein) pursuant to the terms hereof, repurchase its own publicly traded Stock and provide for working capital financing and
other general corporate financing purposes;

WHEREAS, Borrower has agreed to secure all of its obligations under the Loan Documents by granting to Agent, for
the benefit of Agent and Lenders, a security interest in and lien upon all of its existing and after-acquired personal and real property and by
continuing the prior grant of a security interest in and lien upon all of Borrower's and each Credit Party's existing and after-acquired personal
and real property for the benefit of Agent and Lenders; 

WHEREAS, Borrower, Lenders and Agent now desire to amend and restate the Original Credit Agreement to, among
other things, accomplish the matters set forth above on the terms and subject to the conditions set forth herein; and

WHEREAS, capitalized terms used in this Agreement shall have the meanings ascribed to them in
Annex A and, for purposes of this Agreement and the other Loan Documents, the rules of construction set forth in
Annex A shall govern.  All Annexes, Disclosure Schedules, Exhibits and other attachments (collectively,
"Appendices") hereto, or expressly identified to this

                                                   1

Agreement, are incorporated herein by reference, and taken together
with this Agreement, shall constitute but a single agreement.  These Recitals shall be construed as part of the Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other
good and valuable consideration, the parties hereto agree as follows:

1. AMOUNT AND TERMS OF CREDIT

1.1    Credit Facilities.

	Revolving Credit Facility.

	Subject to the terms and conditions hereof, each Revolving Lender agrees to make available to Borrower from
time to time until the Commitment Termination Date its Pro Rata Share of advances (each, a "Revolving Credit Advance").
The Pro Rata Share of the Revolving Loan of any Revolving Lender shall not at any time exceed its separate Revolving Loan Commitment.
The obligations of each Revolving Lender hereunder shall be several and not joint.  Until the Commitment Termination Date, Borrower may
from time to time borrow, repay and reborrow under this Section 1.1(a); provided that the amount of any Revolving Credit
Advance to be made at any time shall not exceed an amount equal to the Borrowing Availability at such time.  Borrowing Availability may be
reduced by Reserves imposed by Agent in its reasonable credit judgment.  Each Revolving Credit Advance shall be made on notice by
Borrower to one of the representatives of Agent identified in Schedule 1.1 at the address specified therein.  Any such notice
must be given no later than (1) 10:30 a.m. (Los Angeles time) on the Business Day of the proposed Revolving Credit Advance, in
the case of an Index Rate Loan, or (2) 10:30 a.m. (Los Angeles time) on the date which is 3 Business Days prior to the proposed
Revolving Credit Advance, in the case of a LIBOR Loan.  Each such notice (a "Notice of Revolving Credit Advance") must
be given in writing (by telecopy or overnight courier) substantially in the form of Exhibit 1.1(a)(i), and shall include the
information required in such Exhibit and such other information as may be required by Agent.  If Borrower desires to have the Revolving Credit
Advances bear interest by reference to a LIBOR Rate, Borrower must comply with Section 1.5(e).  It is understood and agreed
that all "Revolving Credit Advances" (as defined in the Original Credit Agreement) outstanding as of the date hereof are converted
into and deemed to be Revolving Credit Advances under this Agreement.

	Except as provided in Section 1.12, Borrower shall execute and deliver to each Revolving Lender a
note to evidence the Revolving Loan Commitments of that Revolving Lender.  Each note shall be in the principal amount of the Revolving Loan
Commitment of the applicable Revolving Lender, dated the Closing Date and substantially in the form of Exhibit 1.1(a)(ii) each
a "Revolving Note" and, collectively, the "Revolving Notes"). Each Revolving Note shall represent the
obligation of Borrower to pay the amount of the applicable Revolving Lender's Revolving Loan Commitment or, if less, such Revolving
Lender's Pro Rata Share of the aggregate unpaid principal amount of all Revolving Credit Advances to Borrower together with interest thereon
as prescribed in Section 1.5.  The entire unpaid balance of the aggregate Revolving Loans and all other non-contingent
Obligations shall

                                                   2

be immediately due and payable in full in immediately available funds on the Commitment Termination Date.

	Anything in this Agreement to the contrary notwithstanding, at the request of Borrower, in its discretion Agent may
(but shall have absolutely no obligation to), make Revolving Credit Advances to Borrower on behalf of Revolving Lenders in amounts that
cause the outstanding balance of the aggregate Revolving Loan to exceed the Borrowing Base (less the Swing Line Loan) (any such excess
Revolving Credit Advances are herein referred to collectively as "Overadvances"); provided that (A) no
such event or occurrence shall cause or constitute a waiver of Agent's, the Swing Line Lender's or Revolving Lenders' right to refuse to make
any further Overadvances, Swing Line Advances or Revolving Credit Advances, or incur any Letter of Credit Obligations, as the case may be,
at any time that an Overadvance exists, and (B) no Overadvance shall result in a Default or Event of Default based on Borrower's failure
to comply with Section 1.3(b)(i) for so long as Agent permits such Overadvance to be outstanding, but solely with respect to the
amount of such Overadvance.  In addition, Overadvances may be made even if the conditions to lending set forth in Section 2
have not been met.  All Overadvances shall constitute Index Rate Loans, shall bear interest at the Default Rate and shall be payable on the
earliest of demand, the Commitment Termination Date or the forty-fifth (45th) day after such Overadvance is first made.  Agent
shall not, without the consent of all Revolving Lenders, make an Overadvance if to do so would result in Overadvances outstanding for more
than forty-five (45) days in any consecutive ninety (90) day period.  Except as otherwise provided in Section 1.11(b), the
authority of Agent to make Overadvances is limited to an aggregate amount not to exceed $10,000,000 at any time, shall not cause the
Revolving Loan (together with the Swing Loan) to exceed the Maximum Amount, and may be revoked prospectively by a written notice to
Agent signed by Revolving Lenders holding more than 50% of the Revolving Loan Commitments.

	Term Loan.  On the Closing Date, (i) the Term Loan (as defined in the Original Credit Agreement), and all
accrued and unpaid interest due thereon, is converted into a Revolving Credit Advance under this Agreement and (ii) each Term Loan
Lender's portion of the Term Loan is deemed converted into an equivalent portion of the Revolving Credit Commitment such that the
aggregate Revolving Credit Commitments, on the Closing Date, are in the amounts set forth in Annex J.  The Borrower acknowledges
and agrees that as of September 26, 2007, the outstanding principal amount of the Term Loan is $9,000,000 and the accrued and unpaid
interest due on the Term Loan is $37,950.

	Swing Line Facility.

	Agent shall notify the Swing Line Lender upon Agent's receipt of any Notice of Revolving Credit Advance.  Subject
to the terms and conditions hereof, the Swing Line Lender may, in its discretion, make available from time to time until the Commitment
Termination Date advances (each, a "Swing Line Advance") in accordance with any such notice.  The provisions of this
Section 1.1(c) shall not relieve Revolving Lenders of their obligations to make Revolving Credit Advances under
Section 1.1(a); provided that if the Swing Line Lender makes a Swing Line Advance pursuant to any such notice, such
Swing Line Advance shall be in lieu of any Revolving Credit Advance that otherwise may be made by Revolving Credit Lenders pursuant to
such notice.  The aggregate amount of Swing Line

                                                   3

Advances outstanding shall not exceed at any time the lesser of (A) the Swing Line
Accommodation and (B) the lesser of the Maximum Amount and (except for Overadvances) the Borrowing Base, in each case, less the
outstanding balance of the Revolving Loan at such time and less the Minimum Excess Availability ("Swing Line
Availability"). Until the Commitment Termination Date, Borrower may from time to time borrow, repay and reborrow under this
Section 1.1(c).  Each Swing Line Advance shall be made pursuant to a Notice of Revolving Credit Advance delivered to Agent
by Borrower in accordance with Section 1.1(a).  Any such notice must be given no later than 10:30 a.m. (Los Angeles
time) on the Business Day of the proposed Swing Line Advance.  Unless the Swing Line Lender has received at least one Business Day's prior
written notice from Requisite Revolving Lenders instructing it not to make a Swing Line Advance, the Swing Line Lender shall, notwithstanding
the failure of any condition precedent set forth in Sections 2.2, be entitled to fund that Swing Line Advance, and to have each
Revolving Lender make Revolving Credit Advances in accordance with Section 1.1(c)(iii) or purchase participating interests in
accordance with Section 1.1(c)(iv).  Notwithstanding any other provision of this Agreement or the other Loan Documents, the
Swing Line Loan shall constitute an Index Rate Loan.  Borrower shall repay the aggregate outstanding principal amount of the Swing Line
Loan upon demand therefor by Agent.

	Borrower shall execute and deliver to the Swing Line Lender a promissory note to evidence the Swing Line
Accommodation.  Such note shall be in the principal amount of the Swing Line Accommodation of the Swing Line Lender, dated the Closing
Date and substantially in the form of Exhibit 1.1(c)(ii) (a "Swing Line Note").  The Swing Line Note shall
represent the obligation of Borrower to pay the amount of the Swing Line Accommodation or, if less, the aggregate unpaid principal amount of
all Swing Line Advances made to Borrower together with interest thereon as prescribed in Section 1.5.  The entire unpaid
balance of the Swing Line Loan and all other noncontingent Obligations shall be immediately due and payable in full in immediately available
funds on the Commitment Termination Date if not sooner paid in full.

	The Swing Line Lender, at any time and from time to time in its sole and absolute discretion, but no less frequently
than once weekly, shall on behalf of Borrower (and Borrower hereby irrevocably authorizes the Swing Line Lender to so act on its behalf)
request each Revolving Lender (including the Swing Line Lender) to make a Revolving Credit Advance to Borrower (which shall be an Index
Rate Loan) in an amount equal to that Revolving Lender's Pro Rata Share of the principal amount of Borrower's Swing Line Loan (the
"Refunded Swing Line Loan") outstanding on the date such notice is given.  Unless any of the events described in
Sections 8.1(h) or 8.1(i) has occurred (in which event the procedures of Section 1.1(c)(iv) shall apply) and
regardless of whether the conditions precedent set forth in this Agreement to the making of a Revolving Credit Advance are then satisfied,
upon Agent's request each Revolving Lender shall disburse directly to Agent, its Pro Rata Share of a Revolving Credit Advance on behalf of
the Swing Line Lender prior to 12:00 p.m. (Los Angeles time) in immediately available funds on the Business Day next succeeding the
date that notice is given.  The proceeds of those Revolving Credit Advances shall be immediately paid to the Swing Line Lender and applied to
repay the Refunded Swing Line Loan of Borrower.

	If, prior to refunding a Swing Line Loan with a Revolving Credit Advance pursuant to
Section 1.1(c)(iii), one of the events described in Sections 8.1(h) or

                                                   4

8.1(i) has occurred, then, subject to the
provisions of Section 1.1(c)(v) below, each Revolving Lender shall, on the date such Revolving Credit Advance was to have
been made for the benefit of Borrower, purchase from the Swing Line Lender an undivided participation interest in the Swing Line Loan to
Borrower in an amount equal to its Pro Rata Share of such Swing Line Loan.  Upon request, each Revolving Lender shall promptly transfer to
the Swing Line Lender, in immediately available funds, the amount of its participation interest.

	Each Revolving Lender's obligation to make Revolving Credit Advances in accordance with
Section 1.1(c)(iii) and to purchase participation interests in accordance with Section 1.1(c)(iv) shall be absolute
and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other
right that such Revolving Lender may have against the Swing Line Lender, Borrower or any other Person for any reason whatsoever;
(B) the occurrence or continuance of any Default or Event of Default; (C) any inability of Borrower to satisfy the conditions
precedent to borrowing set forth in this Agreement at any time or (D) any other circumstance, happening or event whatsoever, whether
or not similar to any of the foregoing.  If any Revolving Lender does not make available to Agent or the Swing Line Lender, as applicable, the
amount required pursuant to Sections 1.1(c)(iii) or 1.1(c)(iv), as the case may be, the Swing Line Lender shall be
entitled to recover such amount on demand from such Revolving Lender, together with interest thereon for each day from the date of
non-payment until such amount is paid in full at the Federal Funds Rate for the first two Business Days and at the Index Rate
thereafter.

	Reliance on Notices.  Agent shall be entitled to rely upon, and shall be fully protected in relying upon, any
Notice of Revolving Credit Advance, Notice of Conversion/Continuation or similar notice believed by Agent to be genuine.  Agent may assume
that each Person executing and delivering any notice in accordance herewith was duly authorized, unless the responsible individual acting
thereon for Agent has actual knowledge to the contrary.

1.2    Letters of Credit.  Subject to and in accordance with the terms
and conditions contained herein and in Annex B, Borrower shall have the right to request, and Revolving Lenders agree to
incur, or purchase participations in, Letter of Credit Obligations in respect of Borrower.  It is understood and agreed that all "Letters
of Credit" and "Letter of Credit Obligations" (each as defined in the Original Credit Agreement) outstanding as of the date
hereof are converted into and deemed to be Letters of Credit and Letter of Credit Obligations under this Agreement.

1.2A    Swap Related Reimbursement Obligations.  

	Borrower agrees to reimburse each Lender in immediately available funds in the amount of any payment made by
such Lender under a Swap Related L/C (such reimbursement obligation, whether contingent upon payment by such Lender under the Swap
Related L/C or otherwise, being herein called a "Swap Related Reimbursement Obligation").  No Swap Related
Reimbursement Obligation for any Swap Related L/C may exceed the amount of the payment obligations owed by Borrower under the interest
rate protection or hedging agreement or transaction supported by the Swap Related L/C.

                                                   5

	A Swap Related Reimbursement Obligation shall be due and payable by Borrower within one (1) Business Day
after the date on which the related payment is made by the applicable Lender under the Swap Related L/C.

	Any Swap Related Reimbursement Obligation shall, during the period in which it is unpaid, bear interest at the rate
per annum equal to the LIBOR Rate plus one percent (1.0%), as if the unpaid amount of the Swap Related Reimbursement Obligation were a
LIBOR Loan, and not any otherwise applicable Default Rate.  Such interest shall be payable upon demand.  The following additional provisions
apply to the calculation and charging of interest by reference to the LIBOR Rate:

	The LIBOR Rate shall be determined for each successive one-month LIBOR Period during which the Swap
Related Reimbursement Obligation is unpaid, notwithstanding the occurrence of any Event of Default and even if the LIBOR Period were to
extend beyond the Commitment Termination Date.

	If a Swap Related Reimbursement Obligation is paid during a monthly period for which the LIBOR Rate is
determined, interest shall be pro-rated and charged for the portion of the monthly period during which the Swap Related Reimbursement
Obligation was unpaid.  Section 1.13(b) shall not apply to any payment of a Swap Related Reimbursement Obligation during the
monthly period.

	Notwithstanding the last paragraph of the definition of "LIBOR Rate", if the LIBOR Rate is no longer
available from Telerate News Service, the LIBOR Rate shall be determined by Agent from such financial reporting service or other information
available to Agent as in Agent's reasonable discretion indicates the applicable Lenders' costs of funds.

	Except as provided in the foregoing provisions of this Section 1.2A and in Section 11.3,
Borrower shall not be obligated to pay to any Lender or any of its Affiliates any Letter of Credit Fee, or any other fees, charges or expenses, in
respect of a Swap Related L/C or arranging for any interest rate protection or hedging agreement or transaction supported by the Swap
Related L/C.  The Lenders and their Affiliates shall look to the beneficiary of a Swap Related L/C for payment of any such letter of credit fees
or other fees, charges or expenses and such beneficiary may factor such fees, charges, or expenses into the pricing of any interest rate
protection or hedging arrangement or transaction supported by the Swap Related L/C.

	If any Swap Related L/C is revocable prior to its scheduled expiry date, the applicable Lenders agree not to revoke
the Swap Related L/C unless the Commitment Termination Date or an Event of Default has occurred.

	The Lenders or any of their respective Affiliates shall be permitted to (i) provide confidential or other information
furnished to it by any of the Credit Parties (including, without limitation, copies of any documents and information in or referred to in the Closing
Checklist, Financial Statements and Compliance Certificates) to a beneficiary or potential beneficiary of a Swap Related L/C and (ii) receive
confidential or other information from the beneficiary or potential beneficiary relating to any agreement or transaction supported

                                                   6

or to be supported by the Swap Related L/C.  However, no confidential information shall be provided to any Person under this paragraph unless the
Person has agreed to comply with the covenant substantially as contained in Section 11.8 of this Agreement.

	Agent shall have the right but not the obligation to establish Reserves in an amount not to exceed $5,000,000
(based upon Agent's reasonable determination of the potential exposure of Borrower in respect of any transactions supported by a Swap
Related L/C) in respect of any transactions supported by a Swap Related L/C then outstanding (such Reserves, the "Swap Related
Reserve").

1.3    Prepayments.

	Voluntary Prepayments; Reductions in Revolving Loan Commitments.
Borrower may at any time on at least 10 days' prior written notice by Borrower to Agent terminate the Revolving Loan
Commitment; provided that upon such termination, all Loans and other Obligations shall be immediately due and payable in full and
all Letter of Credit Obligations shall be cash collateralized or otherwise satisfied in accordance with Annex B hereto.  Any such
voluntary prepayment and any such termination of the Revolving Loan Commitment must be accompanied by payment of the Fee required by
Section 1.9(c), if any, plus the payment of any LIBOR funding breakage costs in accordance with
Section 1.13(b), if any.  Upon any such prepayment and termination of the Revolving Loan Commitment, Borrower's right to
request Revolving Credit Advances, or request that Letter of Credit Obligations be incurred on its behalf, or request Swing Line Advances,
shall simultaneously be permanently terminated.

	Mandatory Prepayments.

	If at any time the sum of the outstanding balances of the Revolving Loan and the Swing Line Loan exceeds the
lesser of (A) the Maximum Amount and (B) the Borrowing Base (in each case for (A) and (B) less the Minimum Excess
Availability) Borrower shall immediately repay the aggregate outstanding Revolving Credit Advances to the extent required to eliminate such
excess.  If any such excess remains after repayment in full of the aggregate outstanding Revolving Credit Advances, Borrower shall provide
cash collateral for the Letter of Credit Obligations in the manner set forth in Annex B to the extent required to eliminate such
excess.  Notwithstanding the foregoing, any Overadvance made pursuant to Section 1.1(a)(iii) shall be repaid in accordance
with Section 1.1(a)(iii).

	Immediately upon receipt by any Credit Party of cash proceeds of any asset disposition (excluding proceeds of
asset dispositions permitted by Sections 6.8(a)) or any sale of Stock of any Subsidiary of any Credit Party, Borrower shall
prepay the Loans in an amount equal to all such proceeds, net of (A) commissions and other reasonable and customary transaction
costs, fees and expenses properly attributable to such transaction and payable by Borrower in connection therewith (in each case, paid to non-
Affiliates), (B) transfer and income taxes, and (C) amounts payable to holders of senior Liens (to the extent such Liens constitute
Permitted Encumbrances hereunder), if any; provided, however,

                                                   7

with respect to (X) any disposition of Eligible
Mortgaged Property, that portion of such net cash proceeds in excess of the amount of Revolving Credit Advances outstanding with respect to
such Eligible Mortgaged Property immediately prior to such sale shall not be required to be used to prepay the Obligations pursuant to this
Section 1.3(b)(ii) so long as: (1) no Default or Event of Default shall then have occurred and be continuing, (2) the aggregate
proceeds of all such sales of Eligible Mortgaged Property since the date hereof do not exceed $5,000,000 and (3) all such excess net cash
proceeds are used by the Borrower to purchase assets used or useful in the Borrower's business within one (1) year after the initial receipt of
such proceeds and (Y) any other disposition of assets which do not exceed, in the aggregate since the date hereof, $20,000,000, the net
cash proceeds of such disposition shall not be required to be used to prepay the Obligations to the extent (1) no Default or Event
of Default shall then have occurred and be continuing and (2) such net cash proceeds are used by the Borrower to purchase assets
used or useful in the Borrower's business within one hundred eighty (180) days after the initial receipt of such proceeds.  Any
prepayment pursuant to this Section 1.3(b)(ii) shall be applied in accordance with Section 1.3(c).

	If Borrower issues Stock, no later than the Business Day following the date of receipt of any cash proceeds
thereof, Borrower shall prepay the Loans in an amount equal to all such proceeds, net of underwriting discounts and commissions and other
reasonable costs paid to non-Affiliates in connection therewith.  Any such prepayment shall be applied in accordance with
Section 1.3(c).

	Application of Certain Mandatory Prepayments.  

	So long as no Event of Default has occurred or is continuing, any prepayments made by Borrower pursuant to
Sections 1.3(b)(ii) or (b)(iii) that consist of proceeds of Collateral shall be applied as follows:  first, to Fees and
reimbursable expenses of Agent then due and payable pursuant to any of the Loan Documents; second, to interest then due and
payable on the Swing Line Loan; third, to the principal balance of the Swing Line Loan until the same has been repaid in full;
fourth, to interest then due and payable on Revolving Credit Advances; fifth, to the outstanding principal balance of
Revolving Credit Advances (first to Index Rate Loans and second to LIBOR Loans) until the same has been paid in full; and sixth, to
any Letter of Credit Obligations to provide cash collateral therefor in the manner set forth in Annex B, until all such Letter of
Credit Obligations have been fully cash collateralized in the manner set forth in Annex B. 

	[Intentionally Omitted.]

	Neither the Revolving Loan Commitment nor the Swing Line Accommodation shall be permanently reduced by the
amount of any such prepayments.  At any time that an Event of Default has occurred or is continuing, any prepayments made by Borrower
pursuant to Sections 1.3(b)(ii) or (b)(iii) above shall be applied in accordance with Section 1.11(a). 

	Application of Prepayments from Insurance and Condemnation Proceeds.  Prepayments from insurance
or condemnation proceeds in accordance with Section 5.4(d) and the Mortgage(s), respectively, shall be applied to the
Obligations in the order

                                                   8

set forth above in Section 1.3(c).  At any time an Event of Default has occurred or is continuing, prepayments
from insurance or condemnation proceeds in accordance with Section 5.4(d) and the Mortgage(s), respectively, shall be
applied to the Obligations in the order set forth in Section 1.11(a).  Neither the Revolving Loan Commitment nor the Swing Line
Accommodation shall be permanently reduced by the amount of any such prepayments.  

	No Implied Consent.  Nothing in this Section 1.3 shall be construed to constitute Agent's
or any Lender's consent to any transaction that is not permitted by other provisions of this Agreement or the other Loan
Documents.

1.4    Use of Proceeds.  Borrower shall utilize the proceeds of the
Revolving Loan and Swing Line Loan for (a) the financing of Borrower's ordinary working capital and general corporate needs and other lawful
purposes not prohibited under this Agreement, (b) to refinance the Indebtedness under the New Subordinated Note to the extent permitted by
Sections 6.3(b) and 6.14 and (c) to repurchase Borrower's own publicly traded Stock to the extent permitted by Section
6.14.

1.5    Interest and Applicable Margins.

	Borrower shall pay interest to Agent, for the ratable benefit of Lenders in accordance with the various Loans
being made by each Lender, in arrears on each applicable Interest Payment Date, at the following rates:  (i) with respect to the
Revolving Credit Advances, the Index Rate plus the Applicable Revolver Index Margin per annum or, at the election of Borrower, the
applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum; and (ii) with respect to the Swing Line Loan, the Index
Rate plus the Applicable Revolver Index Margin per annum.
As of the Closing Date, the Applicable Margins shall be determined pursuant to the grids set forth below.  The
Applicable Margins identified below may hereafter be adjusted (up or down) prospectively on a quarterly basis as determined by the average
Borrowing Availability for the most recently ended Fiscal Quarter, commencing with the first day of each Fiscal Quarter.  Such
adjustments in Applicable Margins shall be determined by reference to the following grids:

	
If Borrowing Availability is:
	
Level of

                   Applicable Margins:

	
Less than $10,000,000

	
Level I

	
Greater than or equal to

  $10,000,000 but less than

  $20,000,000
	
Level II

	
Greater than or equal to 

  $20,000,000, but less than

  $30,000,000
	
Level III

                                                   9

	
Greater than or equal to 

  $30,000,000, but less than 

  $40,000,000
	
Level IV

	
Greater than or equal to 

  $40,000,000, but less than

  $50,000,000
	
Level V

	
Greater than or equal to

 $50,000,000
	
Level VI

	 	
Level I
	
Level II
	
Level III
	
Level IV 
	
Level V
	
Level VI

	
Applicable Revolver

Index Margin
	
0.50%
	
0.25%
	
0.00%
	
0.00%
	
0.00%
	
0.00%

	
Applicable Revolver LIBOR Margin
	
2.50%
	
2.25%
	
2.00%
	
1.75%
	
1.50%
	
1.25%

	
Applicable L/C Margin
	
Documentary

1.00%

Stand-by

2.50%
	
Documentary

1.00%

Stand-by

2.25%
	
Documentary

1.00%

Stand-by

2.00%
	
Documentary

1.00%

Stand-by

1.75%

	
Documentary

1.00%

Stand-by

1.50%
	
Documentary

1.00%

Stand-by

1.25%

	
Applicable Unused Line Fee Margin
	
0.20%
	
0.20%
	
0.20%
	
0.20%
	
0.20%
	
0.20%

If there is a disparity between the Borrowing Availability as calculated by Agent and as calculated by Borrower, the
calculation resulting in the greater level of Applicable Margins will prevail.

All adjustments in the Applicable Margins pursuant to the grids above shall be implemented quarterly on a prospective
basis, commencing with the first day of each Fiscal Quarter.  On each Business Day, Borrower shall deliver to Agent and Lenders a Borrowing
Base Certificate as provided in Annex F.  If a Default or an Event of Default has occurred and is continuing at the time any
reduction in the Applicable Margins is to be implemented, that reduction shall be deferred until the first day of the first calendar month following
the date on which such Default or Event of Default is waived or cured.

	If any payment on any Loan becomes due and payable on a day other than a Business Day, the maturity thereof
will be extended to the next succeeding Business Day (except as set forth in the definition of LIBOR Period) and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during such extension.

	All computations of Fees calculated on a per annum basis and interest shall be made by Agent on the basis of a
360-day year, in each case for the actual number of days occurring in the period for which such interest and Fees are payable.  The Index
Rate is a floating rate determined for each day.  Each determination by Agent of an interest rate and Fees hereunder shall be presumptive
evidence of the correctness of such rates and Fees.

                                                   10

	So long as an Event of Default has occurred and is continuing under Section 8.1(a), (h) or
(i) or so long as any other Event of Default has occurred and is continuing and at the election of Agent (or upon the written request
of Requisite Lenders) confirmed by written notice from Agent to Borrower, the interest rates applicable to the Loans and the Letter of Credit
Fees shall be increased by two percentage points (2%) per annum ("Default Rate") above the rates of interest or
the rate of such Fees otherwise applicable hereunder, and all outstanding Obligations shall bear interest at the Default Rate applicable to such
Obligations. Interest and Letter of Credit Fees at the Default Rate shall accrue from the initial date of such Event of Default until that Event of
Default is cured or waived and shall be payable upon demand. 

	Subject to the conditions precedent set forth in Section 2.2, Borrower shall have the option to
(i) request that any Revolving Credit Advance be made as a LIBOR Loan, (ii) convert at any time all or any part of outstanding
Loans (other than the Swing Line Loan) from Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan,
subject to payment of LIBOR breakage costs in accordance with Section 1.13(b) if such conversion is made prior to the
expiration of the LIBOR Period applicable thereto, or (iv) continue all or any portion of any Loan (other than the Swing Line Loan) as a
LIBOR Loan upon the expiration of the applicable LIBOR Period and the succeeding LIBOR Period of that continued Loan shall commence on
the first day after the last day of the LIBOR Period of the Loan to be continued.  Any Loan or group of Loans having the same proposed LIBOR
Period to be made or continued as, or converted into, a LIBOR Loan must be in a minimum amount of $5,000,000 and integral multiples of
$500,000 in excess of such amount.  Any such election must be made by 10:30 a.m. (Los Angeles time) on the 3rd Business
Day prior to (1) the date of any proposed Advance which is to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period
with respect to any LIBOR Loans to be continued as such, or (3) the date on which Borrower wishes to convert any Index Rate Loan to a
LIBOR Loan for a LIBOR Period designated by Borrower in such election.  If no election is received with respect to a LIBOR Loan by
10:30 a.m. (Los Angeles time) on the 3rd Business Day prior to the end of the LIBOR Period with respect thereto (or if a Default or an
Event of Default has occurred and is continuing or if the additional conditions precedent set forth in Section 2.2 shall not have
been satisfied), that LIBOR Loan shall be converted to an Index Rate Loan at the end of its LIBOR Period.  Borrower must make such election
by notice to Agent in writing, by telecopy or overnight courier.  In the case of any conversion or continuation, such election must be made
pursuant to a written notice (a "Notice of Conversion/Continuation") in the form of Exhibit 1.5(e).

	Notwithstanding anything to the contrary set forth in this Section 1.5, if a court of competent
jurisdiction determines in a final order that the rate of interest payable hereunder exceeds the highest rate of interest permissible under law
(the "Maximum Lawful Rate"), then so long as the Maximum Lawful Rate would be so exceeded, the rate of interest
payable hereunder shall be equal to the Maximum Lawful Rate; provided, however, that if at any time thereafter the rate of interest
payable hereunder is less than the Maximum Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum Lawful Rate until
such time as the total interest received by Agent, on behalf of Lenders, is equal to the total interest that would have been received had the
interest rate payable hereunder been (but for the operation of this paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement.  In no event shall the total interest received by any Lender pursuant to the terms

                                                     11

hereof exceed the amount that
such Lender could lawfully have received had the interest due hereunder been calculated for the full term hereof at the Maximum Lawful
Rate.

1.6    Eligible Credit Card Receivables.  For purposes of this
Agreement, "Eligible Credit Card Receivables" shall mean the Dollar amount of Credit Card Receivables (determined,
without duplication, net of any credits, fees, rebates, charges, charge backs, "contra accounts" and any other amounts owed by a
Credit Party to the Credit Card Issuer or Credit Card Processor, net of any commissions payable by any Credit Party to any third Persons in
respect thereof, and net of unapplied cash and credits in respect thereof) owned by Borrower and reflected in the most recent Borrowing Base
Certificate delivered by Borrower to Agent, except any Credit Card Receivables to which any of the exclusionary criteria set forth below
applies.  Agent shall have the right to establish, modify or eliminate Reserves against Eligible Credit Card Receivables from time to time in its
reasonable credit judgment.  In addition, Agent reserves the right, at any time and from time to time after the Closing Date, to adjust any of the
criteria set forth below, to establish new criteria and to adjust advance rates with respect to Eligible Credit Card Receivables, in its reasonable
credit judgment, subject to the approval of all of the Revolving Lenders in the case of changes in advance rates which have the effect of
making more credit available. Eligible Credit Card Receivables shall not include any Credit Card Receivable that:

	is not owned by Borrower;

	does not represents a complete bona fide transaction;

	requires further acts on the part of Borrower to make such Credit Card Receivable payable by the Credit Card
Issuer or Credit Card Processor;

	has been outstanding for more than five (5) Business Days;

	is evidenced by chattel paper or an instrument of any kind unless such chattel paper or instrument is in the
possession of Agent, endorsed, if applicable, payable to the order of  Agent;

	arises from a Credit Card Issuer or a Credit Card Processor or arises from an Account Debtor of a Credit Card
Issuer or a Credit Card Processor that is the subject of any proceeding under any bankruptcy law or any other federal, state, or foreign
(including any provincial) receivership, insolvency relief or other law or laws for the relief of debtors;

	is owed by a Credit Card Issuer or processed by a Credit Card Processor that is located outside of the
U.S.;

	is not a valid, legally enforceable obligation of the applicable Credit Card Issuer or Credit Card
Processor;

	such Credit Card Receivable is subject to any present or contingent (and no facts exist that are the basis for any
future) offset, deduction or counterclaim, dispute or other defense on the part of the applicable issuer or in respect of the applicable Credit Cart

                                                     12

Processor, unless any such offset, deduction or counterclaim, dispute or other defense is noted in the Borrowing Base Certificate and a
reasonable amount satisfactory to Agent has been deducted from such Credit Card Receivable in respect thereof, provided that such deducted
amount shall not exceed the Dollar amount (to the extent determinable) of such offset, deduction or counterclaim, dispute or other
defense;

	is not subject to a first priority perfected security interest in favor of Agent;

	is not evidenced by a Credit Card Agreement in form and substance satisfactory to Agent or is not subject to a
Credit Card Notice in form and substance satisfactory to Agent;

	Borrower is in breach of any express or implied representation, warranty, covenant or other agreement with
respect to the Credit Card Receivable or the payment processing thereof;

	results from a  Credit Card Issuer or Credit Card Processor  located in any state denying creditors access to its
courts in the absence of qualification to transact business in such state or the filing of a notice of business activities report or other similar filing,
unless (i) Borrower has either qualified as a foreign corporation authorized to transact business in such state or has filed any such notice or
similar filing with the applicable Governmental Authority for the then current year, or (ii) Borrower is not required to be so qualified as a
condition to allowing its creditors access to such courts;

	does not comply with all applicable laws, including, without limitation, usury laws, the Federal Truth in Lending Act,
and Regulation Z of the Board of Governors of the Federal Reserve System;

	has been or is required to be charged or written off as uncollectible in accordance with GAAP;

	is payable in currency other than Dollars;

	arises out of a contract that, by its terms, prohibits or makes void or unenforceable the grant of a security interest
by Borrower in and to such Credit Card Receivable;

	is owed by an Affiliate of Borrower;

	results from a private label credit card issued or guaranteed by Borrower or its Affiliates; 

	as to which any of the representations or warranties in the Loan Documents are untrue; 

	is an obligation of a Credit Card Issuer or Credit Card Processor if 50% of more of the Dollar amount of all Credit
Card Receivables owed by such Credit Card

                                                     13

Issuer or such Credit Card Processor are ineligible under the other criteria set forth in this
Section 1.6;

	is an obligation of a Credit Card Issuer or Credit Card Processor that is unacceptable to Agent; or

	is otherwise unacceptable to Agent in its reasonable credit judgment.

1.7    Eligible Inventory.  All of the Inventory owned by Borrower and
reflected in the most recent Borrowing Base Certificate delivered by Borrower to Agent shall be "Eligible Inventory" for
purposes of this Agreement, except any Inventory to which any of the exclusionary criteria set forth below applies.  Agent shall have the right
to establish, modify or eliminate Reserves against Eligible Inventory from time to time in its reasonable credit judgment.  In addition, Agent
reserves the right, at any time and from time to time after the Closing Date, to adjust any of the criteria set forth below, to establish new criteria
(including, without limitation, determining that custom or excess Inventory is partially or fully ineligible) and to adjust advance rates with respect
to Eligible Inventory, in its reasonable credit judgment, subject to the approval of all of the Revolving Lenders in the case of changes in
advance rates which have the effect of making more credit available.  Eligible Inventory shall not include any Inventory of Borrower
that:

	is not owned by Borrower free and clear of all Liens and rights of any other Person (including the rights of a
purchaser that has made progress payments and the rights of a surety that has issued a bond to assure Borrower's performance with respect
to that Inventory), except (i) the Liens in favor of Agent, on behalf of itself and Lenders, (ii) Permitted Encumbrances in favor of
landlords and bailees to the extent permitted in Section 5.9 hereof or (iii) Permitted Encumbrances in favor of carriers,
subject to, in the case of Permitted Encumbrances of landlords, bailees and carriers, Reserves established by Agent in accordance with
Section 5.9 hereof;

	(i) is not located on premises owned, leased or rented by Borrower and set forth in Disclosure
Schedule (3.2), or (ii) is stored at a leased location, unless Agent has given its prior consent thereto and unless (x) a
reasonably satisfactory landlord waiver has been delivered to Agent, (y) Reserves reasonably satisfactory to Agent have been
established with respect thereto in accordance with statutory requirements, or (z) Agent has agreed that Inventory at such location
constitutes Eligible Inventory, or (iii) is stored with a bailee or warehouseman unless a reasonably satisfactory, acknowledged bailee
letter has been received by Agent and Reserves reasonably satisfactory to Agent have been established with respect thereto, or (iv) is
located at an owned location subject to a mortgage in favor of a lender other than Agent unless a reasonably satisfactory mortgagee waiver
has been delivered to Agent, or (v) is located at any site not set forth on Disclosure Schedule (3.2) if the aggregate book
value of Inventory at any such location is less than $100,000 unless Agent has given its prior written consent with respect thereto under this
Section 1.7(b)(v);

                                                     14

	is placed or accepted on consignment or is in transit, except for Eligible In-Transit Inventory in transit between
locations of Credit Parties as to which Agent's Liens have been perfected at origin and destination;

	is covered by a negotiable document of title, unless such document has been delivered to Agent or to a custom
broker for which Agent has received a custom brokerage agreement in form and substance acceptable to Agent, together with all necessary
endorsements, free and clear of all Liens except those in favor of Agent and Lenders;

	is layaway, monogrammed, obsolete, shopworn, seconds, damaged or unfit for sale;

	consists of display items or packing or shipping materials, manufacturing supplies, work-in-process Inventory or
replacement parts;

	consists of goods which have been returned by the buyer;

	is not of a type held for sale in the ordinary course of Borrower's business;

	is not subject to a first priority lien in favor of Agent on behalf of itself and Lenders, subject to Permitted
Encumbrances;

	breaches any of the representations or warranties pertaining to Inventory set forth in the Loan
Documents;

	consists of any and all internal expenses of Borrower or other expenses not included in landed costs as
determined in accordance with GAAP whether or not classified by Borrower as "unicap";

	consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily
available; 

	is not covered by casualty insurance reasonably acceptable to Agent; 

	located in any store of Borrower which has been closed for business for more than 20 days in any Fiscal
Quarter;

	does not meet standards, rules and regulations applicable to such goods for their use or sale imposed by any
Person having regulatory authority over such matters;

	was produced in violation of Fair Labor Standards Act  or subject to the so-called "hot goods" provision
contained in Title 29, Chapter 8, U.S.C.   215(a); 

	is not currently usable or merchantable and readily saleable to the public, at prices approximating at least the cost
thereof, in the normal course of Borrower's business; or

                                                     15

	is otherwise unacceptable to Agent in its reasonable credit judgment.

1.8    Cash Management Systems.  On or prior to the Closing Date,
Borrower will establish and will maintain until the Termination Date, the cash management systems described in Annex C (the
"Cash Management Systems"). 

1.9    Fees.

	Borrower shall pay to GE Capital, individually, the Fees specified in that certain fee letter dated as of
September 26, 2007 among Borrower and GE Capital (the "GE Capital Fee Letter"), at the times specified for
payment therein. 

	As additional compensation for the Revolving Lenders, Borrower shall pay to Agent, for the ratable benefit of such
Revolving Lenders, in arrears, on the first Business Day of each month prior to the Commitment Termination Date and on the Commitment
Termination Date, a Fee for Borrower's non-use of available funds in an amount equal to the Applicable Unused Line Fee Margin per annum
(calculated on the basis of a 360 day year for actual days elapsed) multiplied by the difference between (x) the Maximum Amount (as it
may be reduced from time to time) and (y) the average for the period of the daily closing balances of the aggregate Revolving Loan and
the Swing Line Loan outstanding during the period for which such Fee is due.

	If Borrower pays after acceleration or prepays the Revolving Loan and terminates the Revolving Loan
Commitment, whether voluntarily or involuntarily and whether before or after acceleration of the Obligations, or if any of the Commitments are
otherwise terminated, Borrower shall pay to Agent, for the benefit of Revolving Lenders as liquidated damages and compensation for the costs
of being prepared to make funds available hereunder an amount equal to the Applicable Percentage (as defined below) multiplied by the
Maximum Amount.  As used herein, the term "Applicable Percentage" shall mean (i) 1%, in the case of a
prepayment on or prior to the first anniversary of the Closing Date, (ii) .75%, in the case of a prepayment after the first anniversary of the
Closing Date but on or prior to the second anniversary thereof, and (iii) 0.50%, in the case of a prepayment after the second anniversary
of the Closing Date but on or prior to the Commitment Termination Date.  The Credit Parties agree that the Applicable Percentages are a
reasonable calculation of Revolving Lenders' lost profits in view of the difficulties and impracticality of determining actual damages resulting
from an early termination of the Commitments.  Notwithstanding the foregoing, no prepayment fee shall be payable by Borrower upon a
mandatory prepayment made pursuant to Sections 1.3(b), 1.3(d) or 1.16(c); provided that Borrower does not
permanently reduce or terminate the Revolving Loan Commitment upon any such prepayment and, in the case of prepayments made pursuant
to Sections 1.3(b)(ii) or (b)(iii), the transaction giving rise to the applicable prepayment is expressly permitted under
Section 6.

	Borrower shall pay to Agent, for the ratable benefit of Revolving Lenders, the Letter of Credit Fee as provided in
Annex B.

                                                     16

1.10    Receipt of Payments.  Borrower shall make each payment under
this Agreement not later than 11:00 a.m. (Los Angeles time) on the day when due in immediately available funds in Dollars to the
Collection Account.  For purposes of computing interest and Fees and determining Borrowing Availability as of any date, all payments shall be
deemed received on the Business Day on which immediately available funds therefor are received in the Collection Account prior to
11:00 a.m. (Los Angeles time).  Payments received after 11:00 a.m. (Los Angeles time) time on any Business Day or on a day
that is not a Business Day shall be deemed to have been received on the following Business Day.

1.11    Application and Allocation of Payments.

Any amounts received by Agent or the Lenders (including any voluntary and mandatory prepayments at any time
when an Event of Default shall have occurred and be continuing), shall be applied as follows: (A) first, to Fees due to the Revolving
Lenders and Agent and reimbursable expenses of Agent then due and payable pursuant to any of the Loan Documents until paid in full; (B)
second, to interest then due and payable on the Swing Line Loan until paid in full; (C) third, to the principal balance of the
Swing Line Loan until the same shall have been paid in full; (D) fourth, to interest then due and payable on the Revolving Credit
Advances and unpaid Swap Related Reimbursement Obligations (in an amount up to the amount of the Swap Related Reserve then extant),
ratably in proportion to the interest accrued as to each Revolving Credit Advance and such unpaid Swap Related Reimbursement Obligations,
as applicable, until paid in full; (E) fifth, to the principal balance of the Revolving Credit Advances and unpaid Swap Related
Reimbursement Obligations (in an amount up to the Swap Related Reserve then extant), ratably to the aggregate, combined principal balance
of the Revolving Credit Advances and such unpaid Swap Related Reimbursement Obligations, until paid in full; (F) sixth, to any Letter
of Credit Obligations to provide cash collateral therefor in the manner set forth in Annex B; and (G) seventh, to all
other Obligations including, without limitation, all unpaid Swap Related Reimbursement Obligations and expenses of the Lenders to the extent
reimbursable under Section 11.3.  So long as no Default or Event of Default shall have occurred and be continuing
(i) voluntary prepayments shall be applied in accordance with the provisions of Section 1.3(a); and (ii) mandatory
prepayments shall be applied as set forth in Sections 1.3(c) and 1.3(d).  All payments and prepayments applied to a
particular Loan shall be applied ratably to the portion thereof held by each Lender as determined by its Pro Rata Share.  As to all
payments made when a Default or Event of Default has occurred and is continuing or following the Commitment Termination Date, Borrower
hereby irrevocably waives the right to direct the application of any and all payments received from or on behalf of Borrower, and Borrower
hereby irrevocably agrees that Agent shall have the continuing exclusive right to apply any and all such payments against the Obligations of
Borrower as set forth above notwithstanding any previous entry by Agent in the Loan Account or any other books and records.

1.12    Loan Account and Accounting.  Agent shall maintain a loan
account (the "Loan Account") on its books to record:  all Advances, all payments made by Borrower, and all other debits
and credits as provided in this Agreement with respect to the Loans or any other Obligations.  All entries in the Loan Account shall be made in
accordance with Agent's customary accounting practices as in effect from time to time.  The balance in the Loan Account, as recorded on
Agent's most recent printout or other written statement, shall, absent manifest error, be presumptive evidence of the amounts due and owing to
Agent and Lenders by

                                                     17

Borrower; provided that any failure to so record or any error in so recording shall not limit or otherwise affect Borrower's
duty to pay the Obligations.  Agent shall render to Borrower a monthly accounting of transactions with respect to the Loans setting forth the
balance of the Loan Account as to Borrower for the immediately preceding month.  Unless Borrower notifies Agent in writing of any objection to
any such accounting (specifically describing the basis for such objection), within 60 days after the date thereof, each and every such
accounting shall be presumptive evidence of all matters reflected therein.  Only those items expressly objected to in such notice shall be
deemed to be disputed by Borrower.  Notwithstanding any provision herein contained to the contrary, any Lender may elect (which election
may be revoked) to dispense with the issuance of Notes to that Lender and may rely on the Loan Account as evidence of the amount of
Obligations from time to time owing to it.

1.13    Indemnity.

	Each Credit Party that is a signatory hereto shall jointly and severally indemnify and hold harmless each of
Agent, Lenders and their respective Affiliates, and each such Person's respective officers, directors, employees, attorneys, agents and
representatives (each, an "Indemnified Person"), from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) that may be instituted or asserted against or incurred by any such Indemnified Person as the result
of credit having been extended, suspended or terminated under this Agreement and the other Loan Documents and the administration of such
credit, and in connection with or arising out of the transactions contemplated hereunder and thereunder and any actions or failures to act in
connection therewith, including any and all Environmental Liabilities and legal costs and expenses arising out of or incurred in connection with
disputes between or among any parties to any of the Loan Documents (collectively, "Indemnified Liabilities");
provided, that no such Credit Party shall be liable for any indemnification to an Indemnified Person to the extent that any such suit,
action, proceeding, claim, damage, loss, liability or expense results from that  Indemnified Person's gross negligence or willful misconduct.  NO
INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT
OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

	To induce Lenders to provide the LIBOR Rate option on the terms provided herein, if (i) any LIBOR Loans
are repaid in whole or in part prior to the last day of any applicable LIBOR Period (whether that repayment is made pursuant to any provision of
this Agreement or any other Loan Document or occurs as a result of acceleration, by operation of law or otherwise); (ii) Borrower shall
default in payment when due of the principal amount of or interest on any LIBOR Loan; (iii) Borrower shall refuse to accept any
borrowing of, or shall request a termination of, any borrowing of, conversion into or continuation of, LIBOR Loans after Borrower has given
notice requesting the same in accordance herewith; or (iv) Borrower

                                                     18

shall fail to make any prepayment of a LIBOR Loan after Borrower
has given a notice thereof in accordance herewith, then Borrower shall indemnify and hold harmless each Lender from and against all losses,
costs and expenses resulting from or arising from any of the foregoing.  Such indemnification shall include any loss (including loss of margin)
or expense arising from the reemployment of funds obtained by it or from fees payable to terminate deposits from which such funds were
obtained.  For the purpose of calculating amounts payable to a Lender under this subsection, each Lender shall be deemed to have actually
funded its relevant LIBOR Loan through the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount of that
LIBOR Loan and having a maturity comparable to the relevant LIBOR Period; provided, that each Lender may fund each of its LIBOR
Loans in any manner it sees fit, and the foregoing assumption shall be utilized only for the calculation of amounts payable under this
subsection.  This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable
hereunder.  As promptly as practicable under the circumstances, each Lender shall provide Borrower with its written calculation of all amounts
payable pursuant to this Section 1.13(b), and such calculation shall be binding on the parties hereto unless Borrower shall
object in writing within 30 Business Days of receipt thereof, specifying the basis for such objection in detail.

1.14    Access.  Each Credit Party that is a party hereto shall during
normal business hours, from time to time upon two Business Day's prior notice as frequently as Agent reasonably determines to be
appropriate:  (a) provide Agent and any of its officers, employees and agents access to its properties, facilities, advisors and employees
(including officers) of each Credit Party and to the Collateral, (b) permit Agent, and any of its officers, employees and agents, to inspect,
audit and make extracts from any Credit Party's books and records, and (c) permit Agent, and its officers, employees and agents, to
inspect, review, evaluate and make test verifications and counts of the Accounts, Inventory and other Collateral of any Credit Party; provided
that inspections and audits shall be conducted by Agent or any officer, employee or agent of Agent no more frequently than two times in each
Fiscal Year, provided, however, that (x) during the occurrence or continuance of any Default or Event of Default or (y) at any
time that Borrowing Availability is less than $20,000,000, Agent or any officer, employee or agent of Agent shall be permitted to conduct
inspections or audits as often as it deems appropriate.  Notwithstanding anything to contrary contained herein, if a Default or Event of Default
has occurred and is continuing or if access is necessary to preserve or protect the Collateral as determined by Agent, each such Credit Party
shall provide such access to Agent and to each Lender at all times and without advance notice.  Furthermore, so long as any Event of Default
has occurred and is continuing, Borrower shall provide Agent and each Lender with access to its suppliers and customers.  Each Credit Party
shall promptly make available to Agent and its counsel originals or copies of all books and records that Agent may reasonably request.  Each
Credit Party shall deliver any document or instrument necessary for Agent, as it may from time to time reasonably request, to obtain records
from any service bureau or other Person that maintains records for such Credit Party and shall maintain duplicate records or supporting
documentation on media, including computer tapes and discs owned by such Credit Party.  Agent will give Lenders at least 5 Business Days'
prior written notice of regularly scheduled audits.  Representatives of other Lenders may accompany Agent's representatives on regularly
scheduled audits at no charge to Borrower.

1.15    Taxes.

                                                     19

	Any and all payments by Borrower hereunder or under the Notes shall be made, in accordance with this
Section 1.15, free and clear of and without deduction for any and all present or future Taxes.  If Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder or under the Notes, (i) the sum payable shall be increased as
much as shall be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this
Section 1.15) Agent or Lenders, as applicable, receive an amount equal to the sum they would have received had no such
deductions been made, (ii) Borrower shall make such deductions, and (iii) Borrower shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law.  Within 30 days after the date of any payment of Taxes, Borrower
shall furnish to Agent the original or a certified copy of a receipt, copy of cancelled check or federal wire or other evidence satisfactory to Agent
evidencing payment thereof.  Agent and Lenders shall not be obligated to return or refund any amounts received pursuant to this
Section.

	Each Credit Party that is a signatory hereto shall jointly and severally indemnify and, within 10 days of demand
therefor, pay Agent and each Lender for the full amount of Taxes (including any Taxes imposed by any jurisdiction on amounts payable under
this Section 1.15) paid by Agent or such Lender, as appropriate, and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally asserted.

	No person residing or organized under the laws of a jurisdiction outside the United States (a "Foreign
Person") may become a Lender under this Agreement and, notwithstanding anything in this Agreement to the contrary, no Foreign
Person may acquire any participation in any portion of a Lender's Loans or Commitments unless, on or prior to the date of the proposed
assignment or sale, (i) all payments to be made under this Agreement or under the Notes to such Foreign Person or to such Lender on
behalf of such Foreign Person are completely exempt from United States withholding tax under an applicable statute or tax treaty and
(ii) such Foreign Person has provided to Borrower and Agent properly completed and executed copies of IRS Form W-8ECI or Form W-8BEN
or other applicable form, certificate or document prescribed by the IRS or the United States or reasonably required by Borrower
certifying as to such Foreign Person's entitlement to such exemption (a "Certificate of Exemption").  Any Foreign Person
that seeks to become a Lender or purchase a participation from a Lender under this Agreement shall provide a Certificate of Exemption to
Borrower and Agent prior to becoming a Lender or purchasing a participation hereunder.  No Foreign Person may become a Lender or
purchase a participation from a Lender hereunder if such Person fails to deliver a Certificate of Exemption in advance of becoming a Lender or
purchasing a participation.

1.16   
Capital Adequacy; Increased Costs; Illegality.

	If any law, treaty, governmental (or quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, reserve requirements or similar requirements or compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having the force of law), in each case, adopted after the Closing Date,
from any central bank or other Governmental Authority increases or would have the effect of increasing the amount of capital, reserves or

                                                     20

other funds required to be maintained by such Lender and thereby reducing the rate of return on such Lender's capital as a consequence of its
obligations hereunder, then Borrower shall from time to time upon demand by such Lender (with a copy of such demand to Agent) pay to
Agent, for the account of such Lender, additional amounts sufficient to compensate such Lender for such reduction.  A certificate as to the
amount of that reduction and showing the basis of the computation thereof submitted by such Lender to Borrower and to Agent shall be
presumptive evidence of the  matters set forth therein.

	If, due to either (i) the introduction of or any change in any law or regulation (or any change in the
interpretation thereof) or (ii) the compliance with any guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), in each case adopted after the Closing Date, there shall be any increase in the cost to any Lender of
agreeing to make or making, funding or maintaining any Loan, then Borrower shall from time to time, upon demand by such Lender (with a
copy of such demand to Agent), pay to Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such
increased cost.  A certificate as to the amount of such increased cost, submitted to Borrower and to Agent by such Lender, shall be
presumptive evidence of the  matters set forth therein.  Each Lender agrees that it shall, as promptly as practicable after it becomes aware of
any circumstances referred to above which would result in any such increased cost, to the extent not inconsistent with such Lender's internal
policies of general application, use reasonable commercial efforts to minimize costs and expenses incurred by it and payable to it by Borrower
pursuant to this Section 1.16(b).

	Notwithstanding anything to the contrary contained herein, if the introduction of or any change in any law or
regulation (or any change in the interpretation thereof) shall make it unlawful, or any central bank or other Governmental Authority shall assert
that it is unlawful, for any Lender to agree to make or to make or to continue to fund or maintain any LIBOR Loan, then, unless that Lender is
able to make or to continue to fund or to maintain such LIBOR Loan at another branch or office of that Lender without, in that Lender's opinion,
adversely affecting it or its Loans or the income obtained therefrom, on notice thereof and demand therefor by such Lender to Borrower
through Agent, (i) the obligation of such Lender to agree to make or to make or to continue to fund or maintain LIBOR Loans shall
terminate and (ii) Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing by Borrower to such Lender, together with
interest accrued thereon, unless Borrower, within 5 Business Days after the delivery of such notice and demand, converts all LIBOR Loans into
Index Rate Loans, in each case with payment of any LIBOR breakage costs as described in Section 1.13(b).

	Within 15 days after receipt by Borrower of written notice and demand from any Lender (an "Affected
Lender") for payment of additional amounts or increased costs as provided in Sections 1.15(a), 1.16(a) or 1.16(b),
Borrower  may, at its option, notify Agent and such Affected Lender of its intention to replace the Affected Lender.  So long as no Default or
Event of Default has occurred and is continuing, Borrower, with the consent of Agent, may obtain, at Borrower's expense, a replacement
Lender ("Replacement Lender") for the Affected Lender, which Replacement Lender must be reasonably satisfactory to
Agent.  If Borrower obtains a Replacement Lender within 90 days following notice of its intention to do so, the Affected Lender must sell
and assign its Loans and Commitments to such Replacement Lender for an amount equal to the principal balance of all Loans held by the Affected Lender and

                                                     21

all accrued interest and Fees with respect thereto through the date of such sale and such assignment shall not require the
payment of an assignment fee to Agent; provided, that Borrower shall have reimbursed such Affected Lender for the additional
amounts or increased costs that it is entitled to receive under this Agreement through the date of such sale and assignment.  Notwithstanding
the foregoing, Borrower shall not have the right to obtain a Replacement Lender if the Affected Lender rescinds its demand for increased costs
or additional amounts within 15 days following its receipt of Borrower's notice of intention to replace such Affected Lender.  Furthermore, if
Borrower gives a notice of intention to replace and does not so replace such Affected Lender within 90 days thereafter, Borrower's rights under
this Section 1.16(d) shall terminate with respect to such Affected Lender and Borrower shall promptly pay all increased costs or
additional amounts demanded by such Affected Lender pursuant to Sections 1.15(a), 1.16(a) and
1.16(b).

	Borrower shall not be required to compensate a Lender pursuant to Section 1.16(a) or Section
1.16(b) for any increased cost or reduction in respect of a period occurring more than 180 days prior to the date that such Lender notifies
Borrower of such Lender's intention to claim compensation therefor unless the circumstances giving rise to such increased cost or reduction
became applicable retroactively, in which case no such time limitation shall apply so long as such Lender requests compensation within 180
days from the date such circumstances become applicable.

1.17   
Single Loan.  All Loans to Borrower and all of the other
Obligations of Borrower arising under this Agreement and the other Loan Documents shall constitute one general obligation of that Borrower
secured, until the Termination Date, by all of the Collateral.

2.   
CONDITIONS PRECEDENT

2.1   
Conditions to the Initial Loans.  No Lender shall be obligated to make
any Loan or incur any Letter of Credit Obligations on the Closing Date, or to take, fulfill, or perform any other action hereunder, until the
following conditions have been satisfied or provided for in a manner satisfactory to Agent, or waived in writing by Agent:  

	Credit Agreement; Loan Documents.  This Agreement or counterparts hereof shall have been duly
executed by, and delivered to, Borrower, each other Credit Party, Agent and Lenders; and Agent shall have received such documents,
instruments, agreements and legal opinions as Agent shall reasonably request in connection with the transactions contemplated by this
Agreement and the other Loan Documents, including all those listed in the Closing Checklist attached hereto as Annex D, each
in form and substance reasonably satisfactory to Agent. 

	Approvals.  Agent shall have received (i) satisfactory evidence that the Credit Parties have
obtained all required consents and approvals of all Persons including all requisite Governmental Authorities, to the execution, delivery and
performance of this Agreement and the other Loan Documents and the consummation of the Related Transactions or (ii) an officer's
certificate in form and substance reasonably satisfactory to Agent affirming that no such consents or approvals are required.

                                                     22

	Opening Availability.  After giving effect to the amendments set forth in this Agreement, the Eligible Credit
Card Receivables and Eligible Inventory supporting the initial Revolving Credit Advance and the initial Letter of Credit Obligations incurred and
the amount of the Reserves to be established on the Closing Date shall be sufficient in value, as determined by Agent, to provide Borrower
with Borrowing Availability, after giving effect to the initial Revolving Credit Advance and the incurrence of any initial Letter of Credit Obligations
(on a pro forma basis, with trade payables being paid currently, and expenses and liabilities being paid in the ordinary course of business and
without acceleration of sales), of at least $45,000,000.

	Payment of Fees.  Borrower shall have paid the Fees required to be paid on the Closing Date in the
respective amounts specified in Section 1.9 (including the Fees specified in the GE Capital Fee Letter), and shall have
reimbursed Agent for all fees, costs and expenses of closing presented as of the Closing Date.

	Capital Structure; Other Indebtedness.  The capital structure of each Credit Party and the terms and
conditions of all Indebtedness of each Credit Party shall be acceptable to Agent in its sole discretion.

	Due Diligence.  Agent shall have completed its business and legal due diligence, including a roll forward
of its previous Collateral audit, with results reasonably satisfactory to Agent.

	Credit Card Proceeds.  To the extent such arrangements have not previously been implemented and
remain in effect, all Credit Card Issuers and Credit Card Processors shall have been irrevocably directed by Borrower and such Credit Card
Issuers and Credit Card Processors shall agree that all proceeds of the Credit Card Receivables shall be remitted to a Concentration Account
or the Collection Account.

	Cash Management Systems.  To the extent such arrangements have not previously been implemented
and remain in effect, Borrower shall have established its Cash Management System upon terms and conditions satisfactory to Agent.

	No Default under Original Credit Agreement.  No Default or Event of Default shall have occurred or be
continuing under the Original Credit Agreement.

2.2   
Further Conditions to Each Loan.  Except as otherwise expressly
provided herein, no Lender shall be obligated to fund any Advance, convert or continue any Loan as a LIBOR Loan or incur any Letter of
Credit Obligation, if, as of the date thereof:

	(i) any representation or warranty by any Credit Party contained herein or in any other Loan Document is untrue or
incorrect as of such date, except to the extent that such representation or warranty expressly relates to an earlier date and except for changes
therein expressly permitted or expressly contemplated by this Agreement and (ii) Agent or Requisite Revolving Lenders have determined not
to make such Advance, convert or continue any Loan as LIBOR Loan or incur such Letter of Credit Obligation as a result of the fact that such
warranty or representation is untrue or incorrect; 

                                                     23

	(i) any event or circumstance having a Material Adverse Effect has occurred since the Closing Date as determined
by the Requisite Revolving Lenders, and (ii) Agent or Requisite Revolving Lenders have determined not to make such Advance, convert or
continue any Loan as a LIBOR Loan or incur such Letter of Credit Obligation as a result of the fact that such event or circumstance has
occurred; 

	(i) any Default or Event of Default has occurred and is continuing or would result after giving effect to any Advance
(or the incurrence of any Letter of Credit Obligation), and (ii) Agent or Requisite Revolving Lenders shall have determined not to make any
Advance, convert or continue any Loan as a LIBOR Loan or incur any Letter of Credit Obligation as a result of that Default or Event of Default;
or

	after giving effect to any Advance (or the incurrence of any Letter of Credit Obligations), the outstanding principal
amount of the Revolving Loans would exceed the lesser of the Borrowing Base and the Maximum Amount, in each case, less the then
outstanding principal amount of the Swing Line Loan and, in each case, less the Minimum Excess Availability.

The request and acceptance by Borrower of the proceeds of any Advance, the incurrence of any Letter of Credit
Obligations or the conversion or continuation of any Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of the date thereof,
(i) a representation and warranty by Borrower that the conditions in this Section 2.2 (without reference to clauses
(a)(ii), (b)(ii) and (c)(ii) of this Section 2.2 or any determination by Agent or any Lender with respect to any
such condition) have been satisfied (including, without limitation, a representation and warranty as to the accuracy of representations and
warranties (pursuant to terms of clause (a)(i) above), the absence of a Material Adverse Effect since the Closing Date and the
absence of any Default or Event of Default (pursuant to terms of clause (c)(i) above)), and (ii) a reaffirmation by Borrower of the
granting and continuance of Agent's Liens, on behalf of itself and Lenders, pursuant to the Collateral Documents.

3.   
REPRESENTATIONS AND WARRANTIES

To induce Lenders to make the Loans and to incur Letter of Credit Obligations, the Credit Parties executing this
Agreement, jointly and severally, make the following representations and warranties to Agent and each Lender with respect to all Credit
Parties, each and all of which shall survive the execution and delivery of this Agreement. 

3.1   
Corporate Existence; Compliance with Law.  Each Credit Party
(a) is a corporation, limited liability company or limited partnership duly organized, validly existing and in good standing under the laws of
its respective jurisdiction of incorporation or organization set forth in Disclosure Schedule (3.1); (b) is duly qualified to
conduct business and is in good standing in each other jurisdiction where its ownership or lease of property or the conduct of its business
requires such qualification, except where the failure to be so qualified would not result in exposure to losses, damages or liabilities in excess of
$250,000; (c) has the requisite power and authority and the legal right to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease and to conduct its business as now, heretofore and proposed to be conducted;
(d) subject to specific representations regarding

                                                     24

Environmental Laws, has all material licenses, permits, consents or approvals from or
by, and has made all material filings with, and has given all material notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (e) is in compliance with its charter and bylaws or partnership or operating
agreement, as applicable; and (f) subject to specific representations set forth herein regarding ERISA, Environmental Laws, tax and
other laws, is in compliance with all applicable provisions of law, except where the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

3.2   
Executive Offices, Collateral Locations, FEIN.  As of the Closing
Date, each Credit Party's name as it appears in official filings in its state of incorporation or organization, state of incorporation or organization,
organization type, organization number, if any, issued by its state of incorporation or organization and the current location of each Credit
Party's chief executive office and the warehouses and premises at which any Collateral is located are set forth in Disclosure
Schedule (3.2), and none of such locations has changed within the four (4) months preceding the Closing Date.  In addition,
Disclosure Schedule (3.2) lists the federal employer identification number of each Credit Party.

3.3   
Corporate Power, Authorization, Enforceable Obligations.  The
execution, delivery and performance by each Credit Party of the Loan Documents to which it is a party and the creation of all Liens provided
for therein:  (a) are within such Person's power; (b) have been duly authorized by all necessary corporate, limited liability company
or limited partnership action, as applicable; (c) do not contravene any provision of such Person's charter, bylaws or partnership or
operating agreement as applicable; (d) do not violate any law or regulation, or any order or decree of any court or Governmental
Authority; (e) do not conflict with or result in the breach or termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which such
Person is a party or by which such Person or any of its property is bound; (f) do not result in the creation or imposition of any Lien upon
any of the property of such Person other than those in favor of Agent, on behalf of itself and Lenders, pursuant to the Loan Documents; and
(g) do not require the consent or approval of any Governmental Authority or any other Person, except those referred to in
Section 2.1(c), all of which will have been duly obtained, made or complied with prior to the Closing Date.  Each of the Loan
Documents shall be duly executed and delivered by each Credit Party that is a party thereto and each such Loan Document shall constitute a
legal, valid and binding obligation of such Credit Party enforceable against it in accordance with its terms.

3.4   
Financial Statements and Projections.  Except for the Projections,
all Financial Statements concerning Borrower and its respective Subsidiaries that are referred to below have been prepared in accordance with
GAAP consistently applied throughout the periods covered (except as disclosed therein and except, with respect to unaudited Financial
Statements, for the absence of footnotes and normal year-end audit adjustments) and present fairly in all material respects the financial
position of the Persons covered thereby as at the dates thereof and the results of their operations and cash flows for the periods then
ended.

	Financial Statements.  The following Financial Statements attached hereto as Disclosure
Schedule (3.4(a)) have been delivered on the Closing Date:

                                                     25

	The audited consolidated and consolidating balance sheets at February 3, 2007 and the related statements of
income and cash flows of Borrower and its Subsidiaries for the Fiscal Years then ended, certified by the Chief Financial Officer.

	The unaudited balance sheet(s) at August 4, 2007 and the related statement(s) of income and cash flows of
Borrower and its Subsidiaries for the twenty-eight weeks then ended.

	[Intentionally Omitted.]

	Projections.  The Projections delivered on the Closing Date and attached hereto as Disclosure
Schedule (3.4(c)) have been prepared by Borrower in light of the past operations of its businesses, and reflect projections for the
one (1) year period beginning on February 3, 2008, on a month-by-month basis and for each year thereafter through its fiscal year 2010, on a
yearly basis.  The Projections are based upon the same accounting principles as those used in the preparation of the financial statements
described above and the estimates and assumptions stated therein, all of which Borrower believes to be reasonable in light of current
conditions and current facts known to Borrower and, as of the Closing Date, reflect Borrower's good faith and reasonable estimates of the
future financial performance of Borrower for the period set forth therein.  

3.5   
Material Adverse Effect.  Between February 3, 2007 and the
Closing Date except as otherwise disclosed by Borrower in writing to Agent:  (a) none of the Credit Parties has incurred any obligations,
contingent or noncontingent liabilities, liabilities for Charges, long-term leases or unusual forward or long-term commitments that, alone or in
the aggregate, could reasonably be expected to have a Material Adverse Effect, (b) no contract, lease or other agreement or instrument
has been entered into by any Credit Party or has become binding upon any Credit Party's assets and no law or regulation applicable to any
Credit Party has been adopted that has had or could reasonably be expected to have a Material Adverse Effect, and (c) none of the
Credit Parties is in default and to the best of Borrower's knowledge no third party is in default under any material contract, lease or other
agreement or instrument to which any Credit Party is a party, that alone or in the aggregate could reasonably be expected to have a Material
Adverse Effect.  Since February 3, 2007, no event has occurred that alone or together with other events could reasonably be expected to have
a Material Adverse Effect.

3.6   
Ownership of Property; Liens.  As of the Closing Date, the real
estate ("Real Estate") listed in Disclosure Schedule (3.6) constitutes all of the real property owned,
licensed, leased, subleased, or used by any Credit Party.  Each Credit Party owns good fee simple title to all of its owned Real Estate, and
valid leasehold interests in all of its leased Real Estate, all as described on Disclosure Schedule (3.6), and copies of all such
leases or a summary of terms thereof reasonably satisfactory to Agent have been delivered to Agent.  Disclosure
Schedule (3.6) further describes any Real Estate with respect to which any Credit Party is a lessor, sublessor or assignor as of the
Closing Date.  Each Credit Party also has good title to, or valid leasehold interests in, all of its personal property and assets.  As of the Closing
Date, none of the properties and assets of any Credit Party are subject to any Liens other than Permitted Encumbrances, and there are no
facts, circumstances or conditions known to any Credit Party that may result in any Liens (including Liens arising under Environmental Laws) other than

                                                     26

Permitted Encumbrances.  Each Credit Party has received all deeds, assignments, waivers, consents, nondisturbance and
attornment or similar agreements, bills of sale and other documents, and has duly effected all recordings, filings and other actions necessary to
establish, protect and perfect such Credit Party's right, title and interest in and to all such Real Estate and other properties and assets.
Disclosure Schedule (3.6) also describes any purchase options, rights of first refusal or other similar contractual rights
pertaining to any Real Estate.  As of the Closing Date, no portion of any Credit Party's Real Estate has suffered any material damage by fire or
other casualty loss that has not heretofore been repaired and restored in all material respects to its original condition or otherwise remedied.
As of the Closing Date, all material permits required to have been issued or appropriate to enable the Real Estate to be lawfully occupied and
used for all of the purposes for which it is currently occupied and used have been lawfully issued and are in full force and effect.

3.7   
Labor Matters.  As of the Closing Date (a) no strikes or
other material labor disputes against any Credit Party are pending or, to any Credit Party's knowledge, threatened; (b) hours worked by
and payment made to employees of each Credit Party comply with the Fair Labor Standards Act and each other federal, state, local or foreign
law applicable to such matters; (c) all payments due from any Credit Party for employee health and welfare insurance have been paid or
accrued as a liability on the books of such Credit Party; (d) except as set forth in Disclosure Schedule (3.7), no Credit
Party is a party to or bound by any collective bargaining agreement, management agreement, consulting agreement, employment agreement,
bonus, restricted stock, stock option, or stock appreciation plan or agreement or any similar plan, agreement or arrangement (and true and
complete copies of any agreements described on Disclosure Schedule (3.7) have been delivered to Agent); (e) there is
no organizing activity involving any Credit Party pending or, to any Credit Party's knowledge, threatened by any labor union or group of
employees; (f) there are no representation proceedings pending or, to any Credit Party's knowledge, threatened with the National Labor
Relations Board, and no labor organization or group of employees of any Credit Party has made a pending demand for recognition; and
(g) except as set forth in Disclosure Schedule (3.7), there are no material complaints or charges against any Credit Party
pending or, to the knowledge of any Credit Party, threatened to be filed with any Governmental Authority or arbitrator based on, arising out of,
in connection with, or otherwise relating to the employment or termination of employment by any Credit Party of any individual.

3.8   
Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness.  Except as set forth in Disclosure Schedule (3.8), as of the Closing Date, no Credit Party has any
Subsidiaries, is engaged in any joint venture or partnership with any other Person, or is an Affiliate of any other Person; provided, however,
that Disclosure Schedule (3.8) need not list individuals who are Affiliates solely by virtue of clause (d) of the definition of
"Affiliate."  All of the issued and outstanding Stock of each Subsidiary of each Credit Party is owned by each of the Stockholders
and in the amounts set forth in Disclosure Schedule (3.8).  Except as set forth in Disclosure Schedule (3.8) and
except for common stock and options issued pursuant to stock option plans of Borrower described on Disclosure
Schedule (3.8), there are no outstanding rights to purchase, options, warrants or similar rights or agreements pursuant to which any
Credit Party may be required to issue, sell, repurchase or redeem any of its Stock or other equity securities or any Stock or other equity
securities of its Subsidiaries.  All outstanding

                                                     27

Indebtedness and Guaranteed Indebtedness of each Credit Party as of the Closing Date (except
for the Obligations) is listed in Section 6.3 (including Disclosure Schedule (6.3)).

3.9   
Government Regulation.  No Credit Party is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940.  No Credit Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, or any other federal or state statute that restricts or limits its ability to incur
Indebtedness or to perform its obligations hereunder. The making of the Loans by Lenders to Borrower, the incurrence of the Letter of Credit
Obligations, the application of the proceeds thereof and repayment thereof and the consummation of the Related Transactions will not violate
any provision of any such statute or any rule, regulation or order issued by the Securities and Exchange Commission.

3.10   
Margin Regulations.  No Credit Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" as such terms are defined in Regulation U of the Federal Reserve Board as now and from
time to time hereafter in effect (such securities being referred to herein as "Margin Stock").  No Credit Party owns any Margin
Stock, and none of the proceeds of the Loans or other extensions of credit under this Agreement will be used, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock, for the purpose of reducing or retiring any Indebtedness that was originally incurred to
purchase or carry any Margin Stock or for any other purpose that might cause any of the Loans or other extensions of credit under this
Agreement to be considered a "purpose credit" within the meaning of Regulations T, U or X of the Federal Reserve Board.  No
Credit Party will take or permit to be taken any action that might cause any Loan Document to violate any regulation of the Federal Reserve
Board.

3.11   
Taxes.  All tax returns, reports and statements, including
information returns, required by any Governmental Authority to be filed by any Credit Party have been filed with the appropriate Governmental
Authority and all Charges have been paid prior to the date on which any fine, penalty, interest or late charge may be added thereto for
nonpayment thereof (or any such fine, penalty, interest, late charge or loss has been paid), excluding Charges or other amounts being
contested in accordance with Section 5.2(b).  Proper and accurate amounts have been withheld by each Credit Party from its
respective employees for all periods in full and complete compliance with all applicable federal, state, local and foreign laws and such
withholdings have been timely paid to the respective Governmental Authorities.  Disclosure Schedule (3.11) sets forth as of the
Closing Date those taxable years for which any Credit Party's tax returns are currently being audited by the IRS or any other applicable
Governmental Authority, and any assessments or threatened assessments in connection with such audit, or otherwise currently outstanding.
Except as described in Disclosure Schedule (3.11), no Credit Party has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the effect of extending, the period for assessment or collection
of any Charges.  None of the Credit Parties and their respective predecessors are liable for any Charges:  (a) under any agreement
(including any tax sharing agreements) or (b) to each Credit Party's knowledge, as a transferee.  As of the Closing Date, no Credit Party has agreed or

                                                     28

been requested to make any adjustment under IRC Section 481(a), by reason of a change in accounting method or
otherwise, which would have a Material Adverse Effect.

3.12   
ERISA.

	Disclosure Schedule (3.12) lists (i) all ERISA Affiliates and (ii) all Plans and
separately identifies all Pension Plans, including Title IV Plans, Multiemployer Plans, ESOPs and Welfare Plans, including all Retiree Welfare
Plans.  Copies of all such listed Plans, together with a copy of the latest IRS/DOL 5500-series form for each such Plan, have been delivered to
Agent.  Except with respect to Multiemployer Plans, each Qualified Plan has been determined by the IRS to qualify under Section 401 of
the IRC, the trusts created thereunder have been determined to be exempt from tax under the provisions of Section 501 of the IRC, and
nothing has occurred that would cause the loss of such qualification or tax-exempt status.  Each Plan is in material compliance with the
applicable provisions of ERISA and the IRC, including the timely filing of all reports required under the IRC or ERISA, including the statement
required by 29 CFR Section 2520.104-23.  Neither any Credit Party nor ERISA Affiliate has failed to make any contribution or pay any
amount due as required by either Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan.  Neither any
Credit Party nor ERISA Affiliate has engaged in a "prohibited transaction," as defined in Section 406 of ERISA and
Section 4975 of the IRC, in connection with any Plan, that would subject any Credit Party to a material tax on prohibited transactions
imposed by Section 502(i) of ERISA or Section 4975 of the IRC.

	Except as set forth in Disclosure Schedule (3.12):  (i) no Title IV Plan has any Unfunded Pension Liability;
(ii) no ERISA Event or event described in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is reasonably expected to
occur; (iii) there are no pending, or to the knowledge of any Credit Party, threatened claims (other than claims for benefits in the normal
course), sanctions, actions or lawsuits, asserted or instituted against any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no Credit
Party or ERISA Affiliate has incurred or reasonably expects to incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan of any Credit Party or ERISA Affiliate has been terminated, whether or not in a
"standard termination" as that term is used in Section 4041(b)(1) of ERISA, nor has any Title IV Plan of any Credit Party or any
ERISA Affiliate (determined at any time within the last five years) with Unfunded Pension Liabilities been transferred outside of the
"controlled group" (within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate (determined at such
time); (vi) all Plans satisfy all legal requirements with respect to the amount of Stock of all Credit Parties and their ERISA Affiliates held by
each such Plan including, but not limited to, Section 407 of ERISA and Section 401(a)(22) of the IRC; and (vii) no liability under any Title IV
Plan has been satisfied with the purchase of a contract from an insurance company that is not rated AAA by the Standard & Poor's
Corporation or an equivalent rating by another nationally recognized rating agency.

3.13   
No Litigation.  No action, claim, lawsuit, demand, investigation or
proceeding is now pending or, to the knowledge of any Credit Party, threatened against any Credit Party , before any Governmental Authority
or before any arbitrator or panel of arbitrators (collectively, "Litigation"), (a) that challenges any Credit Party's right or power to enter into or

                                                     29

perform any of its obligations under the Loan Documents to which it is a party, or the validity or enforceability of any Loan
Document or any action taken thereunder, or (b) that has a reasonable risk of being determined adversely to any Credit Party and that, if
so determined, could be reasonably be expected to have a Material Adverse Effect.  Except as set forth on Disclosure
Schedule (3.13), as of the Closing Date there is no Litigation pending or, to any Credit Party's  knowledge, threatened, that seeks
damages in excess of $100,000 or injunctive relief against, or alleges criminal misconduct of, any Credit Party. 

3.14   
Brokers.  No broker or finder brought about the obtaining, making
or closing of the Loans or the Related Transactions, and no Credit Party or Affiliate thereof has any obligation to any Person in respect of any
finder's or brokerage fees in connection therewith.

3.15   
Intellectual Property.  As of the Closing Date, each Credit Party
owns or has rights to use all Intellectual Property necessary to continue to conduct its business as now or heretofore conducted by it or
proposed to be conducted by it, and each Patent, Trademark, Copyright and License is listed, together with application or registration
numbers, as applicable, in Disclosure Schedule (3.15).  Each Credit Party conducts its business and affairs without
infringement of or interference with any Intellectual Property of any other Person in any material respect.  Except as set forth in Disclosure
Schedule (3.15), no Credit Party is aware of any infringement claim by any other Person with respect to any Intellectual
Property.

3.16   
Full Disclosure.  No information contained in this Agreement, any
of the other Loan Documents, Financial Statements or Collateral Reports or other written reports from time to time delivered hereunder or any
written statement furnished by or on behalf of any Credit Party to Agent or any Lender pursuant to the terms of this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained herein
or therein not misleading in light of the circumstances under which they were made.  The Liens granted to Agent, on behalf of itself and
Lenders, pursuant to the Collateral Documents will at all times be fully perfected first priority Liens in and to the Collateral described therein,
subject, as to priority, only to Permitted Encumbrances.

3.17   
Environmental Matters.

	Except as set forth in Disclosure Schedule (3.17), as of the Closing Date:  (i) the Real
Estate is free of contamination from any Hazardous Material except for such contamination that would not adversely impact the value or
marketability of such Real Estate and that would not result in Environmental Liabilities that could reasonably be expected to exceed $500,000;
(ii) no Credit Party has caused or suffered to occur any Release of Hazardous Materials on, at, in, under, above, to, from or about any of
its Real Estate; (iii) the Credit Parties are and have been in compliance with all Environmental Laws, except for such noncompliance that
would not result in Environmental Liabilities which could reasonably be expected to exceed $250,000; (iv) the Credit Parties have
obtained, and are in compliance with, all Environmental Permits required by Environmental Laws for the operations of their respective
businesses as presently conducted or as proposed to be conducted, except where the failure to so obtain or comply with such Environmental
Permits would not result in Environmental Liabilities that could reasonably be expected to exceed $250,000, and all such Environmental
Permits are valid, uncontested and in good standing; (v) no Credit Party is involved in operations or knows of any

                                                     30

facts, circumstances or conditions, including any Releases of Hazardous Materials, that are likely to result in any Environmental Liabilities of such Credit Party
which could reasonably be expected to exceed $500,000, and no Credit Party has permitted any current or former tenant or occupant of the
Real Estate to engage in any such operations; (vi) there is no Litigation arising under or related to any Environmental Laws,
Environmental Permits or Hazardous Material that seeks damages, penalties, fines, costs or expenses in excess of $250,000 or injunctive
relief against, or that alleges criminal misconduct by, any Credit Party; (vii) no notice has been received by any Credit Party identifying it
as a "potentially responsible party" or requesting information under CERCLA or analogous state statutes, and to the knowledge of
the Credit Parties, there are no facts, circumstances or conditions that may result in any Credit Party being identified as a "potentially
responsible party" under CERCLA or analogous state statutes; and (viii) the Credit Parties have provided to Agent copies of all
existing environmental reports, reviews and audits and all written information pertaining to actual or potential Environmental Liabilities, in each
case relating to any Credit Party. 

	Each Credit Party hereby acknowledges and agrees that Agent (i) is not now, and has not ever been, in
control of any of the Real Estate or any Credit Party's affairs, and (ii) does not have the capacity through the provisions of the Loan
Documents or otherwise to influence any Credit Party's conduct with respect to the ownership, operation or management of any of its Real
Estate or compliance with Environmental Laws or Environmental Permits. 

3.18   
Insurance.  Disclosure Schedule (3.18) lists all
insurance policies of any nature maintained, as of the Closing Date, for current occurrences by each Credit Party, and Borrower has delivered
certificates of all insurance policies showing Agent as an additional insured party, together with loss payable endorsements, to
Agent.

3.19   
Deposit and Disbursement Accounts.  Disclosure
Schedule (3.19) lists all banks and other financial institutions at which any Credit Party maintains deposit or other accounts as of
the Closing Date, including any Disbursement Accounts, and such Schedule correctly identifies the name, address and telephone
number of each depository, the name in which the account is held, a description of the purpose of the account, and the complete account
number therefor.

3.20   
Government Contracts.  As of the Closing Date, no Credit Party is
a party to any contract or agreement with any Governmental Authority and no Credit Party's Accounts are subject to the Federal Assignment of
Claims Act (31 U.S.C. Section 3727) or any similar state or local law.

3.21   
Customer and Trade Relations.  Except as set forth in
Schedule 3.21, as of the Closing Date, there exists no actual or, to the knowledge of any Credit Party, threatened termination or
cancellation of, or any material adverse modification or change in the business relationship of any Credit Party with any supplier or customer
material to its operations.

3.22   
Agreements and Other Documents.  As of the Closing Date, each
Credit Party has provided to Agent or its counsel, on behalf of Lenders, accurate and complete copies (or summaries) of all of the following
agreements or documents to which it is subject and each of

                                                     31

which is listed in Disclosure Schedule (3.22):  supply agreements
and purchase agreements not terminable by such Credit Party within 60 days following written notice issued by such Credit Party and involving
transactions in excess of $1,000,000 per annum (provided, however, that purchase orders entered into by Borrower in the ordinary course of
business which are cancelable without penalty at any time prior to shipment need not be listed on Disclosure Schedule (3.22));
leases of Equipment having a remaining term of one year or longer and requiring aggregate rental and other payments in excess of $500,000
per annum; licenses and permits held by the Credit Parties, the absence of which could be reasonably likely to have a Material Adverse Effect;
all instruments and documents evidencing any Indebtedness or Guaranteed Indebtedness of such Credit Party and any Lien granted by such
Credit Party with respect thereto; instruments and agreements evidencing the issuance of any equity securities (other than common stock
certificates), warrants, rights or options to purchase equity securities of such Credit Party; agreements or arrangements with armored vehicle
or other funds transportation service providers; and agreements or arrangements with respect to Credit Card Issuers and Credit Card
Processors.  

3.23   
Solvency.  Both before and after giving effect to (a) the
Loans and Letter of Credit Obligations to be made or incurred on the Closing Date or such other date as Loans and Letter of Credit Obligations
requested hereunder are made or incurred, (b) the disbursement of the proceeds of such Loans pursuant to the instructions of Borrower;
(c) the consummation of the Related Transactions; and (d) the payment and accrual of all transaction costs in connection with the
foregoing, each Credit Party is and will be Solvent.

3.24   
[Intentionally Omitted.]

3.25   
[Intentionally Omitted.]

3.26   
Subordinated Debt and Capital Leases.  As of the Closing
Date, Borrower has delivered to Agent a complete and correct copy of the New Subordinated Note (including all schedules, exhibits,
amendments, supplements, modifications, assignments and all other documents delivered pursuant thereto or in connection therewith) and of
all Capital Leases to which Borrower is a party.  Borrower has the corporate power and authority to incur the Indebtedness evidenced by the
New Subordinated Note.  The subordination provisions of the New Subordinated Note are enforceable against the holders of the New
Subordinated Note by Agent and Lenders, and all Obligations, including the Letter of Credit Obligations, constitute senior Indebtedness entitled
to the benefits of the subordination provisions contained in the New Subordinated Note.  Borrower acknowledges that Agent and each Lender
are entering into this Agreement and are extending the Commitments in reliance upon the subordination provisions of the New Subordinated
Note and this Section 3.26.

4.   
FINANCIAL STATEMENTS AND INFORMATION

4.1   
Reports and Notices.

	Each Credit Party executing this Agreement hereby agrees that from and after the Closing Date and until the
Termination Date, it shall deliver to Agent or to

                                                     32

Agent and Lenders, as required, the Financial Statements, notices, Projections and other
information at the times, to the Persons and in the manner set forth in Annex E.

	Each Credit Party executing this Agreement hereby agrees that, from and after the Closing Date and until the
Termination Date, it shall deliver to Agent or to Agent and Lenders, as required, the various Collateral Reports (including Borrowing Base
Certificates in the form of Exhibit 4.1(b)) at the times, to the Persons and in the manner set forth in
Annex F.

4.2   
Communication with Accountants.  Each Credit Party executing
this Agreement authorizes (a) Agent and (b) so long as an Event of Default has occurred and is continuing, each Lender, to
communicate directly with its independent certified public accountants, including Deloitte & Touche LLP, and authorizes and, at
Agent's request, shall instruct those accountants and advisors to disclose and make available to Agent and each Lender any and all Financial
Statements and other supporting financial documents, schedules and information relating to any Credit Party (including copies of any issued
management letters) with respect to the business, financial condition and other affairs of any Credit Party.

5.   
AFFIRMATIVE COVENANTS

Each Credit Party executing this Agreement jointly and severally agrees as to all Credit Parties that from and after
the Closing Date and until the Termination Date:

5.1   
Maintenance of Existence and Conduct of Business.  Each Credit
Party shall:  do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and its rights and
franchises;  continue to conduct its business substantially as now conducted or as otherwise permitted hereunder;  at all times maintain,
preserve and protect all of its assets and properties used or useful in the conduct of its business, and keep the same in good repair, working
order and condition in all material respects (taking into consideration ordinary wear and tear) and from time to time make, or cause to be made,
all necessary or appropriate repairs, replacements and improvements thereto consistent with industry practices; and  transact business only in
such corporate and trade names as are set forth in Disclosure Schedule (5.1).

5.2   
Payment of Charges.

	Subject to Section 5.2(b), each Credit Party shall pay and discharge or cause to be paid and
discharged promptly all Charges payable by it, including (i) Charges imposed upon it, its income and profits, or any of its property (real,
personal or mixed) and all Charges with respect to tax, social security and unemployment withholding with respect to its employees,
(ii) lawful claims for labor, materials, supplies and services or otherwise, and (iii) all storage or rental charges payable to
warehousemen or bailees, in each case, before any thereof shall become past due.

	Each Credit Party may in good faith contest, by appropriate proceedings, the validity or amount of any Charges,
Taxes or claims described in Section 5.2(a); provided, that (i) adequate reserves with respect to such contest
are maintained on the books of such Credit Party, in accordance with GAAP; (ii) no Lien shall be imposed to secure payment of

                                                     33

such Charges (other than payments to warehousemen and/or bailees) that is superior to any of the Liens securing the Obligations and such contest
is maintained and prosecuted continuously and with diligence and operates to suspend collection or enforcement of such Charges;
(iii) none of the Collateral becomes subject to forfeiture or loss as a result of such contest; (iv) such Credit Party shall promptly
pay or discharge such contested Charges, Taxes or claims and all additional charges, interest, penalties and expenses, if any, and shall
deliver to Agent evidence reasonably acceptable to Agent of such compliance, payment or discharge, if such contest is terminated or
discontinued adversely to such Credit Party or the conditions set forth in this Section 5.2(b) are no longer met; and
(v) Agent has not advised Borrower in writing that Agent reasonably believes that nonpayment or nondischarge thereof could have or
result in a Material Adverse Effect.

5.3   
Books and Records.  Each Credit Party shall keep adequate
books and records with respect to its business activities in which proper entries, reflecting all financial transactions, are made in accordance
with GAAP and on a basis consistent with the Financial Statements attached as Disclosure Schedule (3.4(a)).

5.4   
Insurance; Damage to or Destruction of Collateral.

	The Credit Parties shall, at their sole cost and expense, maintain the policies of insurance described on
Disclosure Schedule (3.18) as in effect on the Closing Date or otherwise in form and amounts and with insurers reasonably
acceptable to Agent.  Such policies of insurance (or the loss payable and additional insured endorsements delivered to Agent) shall contain
provisions pursuant to which the insurer agrees to provide 30 days prior written notice to Agent in the event of any non-renewal, cancellation or
amendment of any such insurance policy.  If any Credit Party at any time or times hereafter shall fail to obtain or maintain any of the policies of
insurance required above, or to pay all premiums relating thereto, Agent may at any time or times thereafter obtain and maintain such policies
of insurance and pay such premiums and take any other action with respect thereto that Agent deems advisable.  Agent shall have no
obligation to obtain insurance for any Credit Party or pay any premiums therefor.  By doing so, Agent shall not be deemed to have waived any
Default or Event of Default arising from any Credit Party's failure to maintain such insurance or pay any premiums therefor.  All sums so
disbursed, including reasonable attorneys' fees, court costs and other charges related thereto, shall be payable on demand by Borrower to
Agent and shall be additional Obligations hereunder secured by the Collateral.

	Agent reserves the right at any time upon any change in any Credit Party's risk profile (including any change in the
product mix maintained by any Credit Party or any laws affecting the potential liability of such Credit Party) to require additional forms and
limits of insurance to, in Agent's opinion, adequately protect both Agent's and Lenders' interests in all or any portion of the Collateral and to
ensure that each Credit Party is protected by insurance in amounts and with commercially reasonable and customary coverage for its industry.
If reasonably requested by Agent, each Credit Party shall deliver to Agent from time to time a report of a reputable insurance broker,
reasonably satisfactory to Agent, with respect to its insurance policies.

	Borrower shall deliver to Agent, in form and substance reasonably satisfactory to Agent, endorsements to
(i) all casualty, property, "All Risk" and business

                                                     34

interruption insurance naming Agent, on behalf of itself and Lenders, as loss
payee, and (ii) all general liability and other liability policies naming Agent, on behalf of itself and Lenders, as additional insured.
Borrower shall promptly notify Agent of any loss, damage, or destruction to the Collateral in the amount of $250,000 or more, whether or not
covered by insurance.  Borrower shall deposit any and all insurance proceeds in the Concentration Account for application to the Obligations.

	Borrower irrevocably makes, constitutes and appoints Agent (and all officers, employees or agents designated by
Agent), so long as any Default or Event of Default has occurred and is continuing or the anticipated insurance proceeds exceed $1,500,000, as
Borrower's true and lawful agent and attorney-in-fact for the purpose of making, settling and adjusting claims under such casualty, property
and "All Risk" policies of insurance, endorsing the name of Borrower on any check or other item of payment for the proceeds of
such "All Risk" policies of insurance and for making all determinations and decisions with respect to such "All Risk"
policies of insurance.  Agent shall have no duty to exercise any rights or powers granted to it pursuant to the foregoing power-of-attorney.
After deducting from such proceeds the expenses, if any, incurred by Agent in the collection or handling thereof, Agent may, at its option, apply
such proceeds to the reduction of the Obligations in accordance with Section 1.3(d), or permit or require Borrower to use such
money, or any part thereof, to replace, repair, restore or rebuild the Collateral in a diligent and expeditious manner with materials and
workmanship of substantially the same quality as existed before the loss, damage or destruction. Notwithstanding the foregoing, if the casualty
giving rise to such insurance proceeds could not reasonably be expected to have a Material Adverse Effect and such insurance proceeds do
not exceed $1,500,000 in the aggregate, Agent shall permit Borrower to replace, restore, repair or rebuild the property; provided that if
Borrower has not completed or entered into binding agreements to complete such replacement, restoration, repair or rebuilding within 180
days of such casualty, Agent may apply such insurance proceeds to the Obligations in accordance with Section 1.3(d).  All insurance
proceeds that are to be made available to Borrower to replace, repair, restore or rebuild the Collateral shall be applied by Agent to reduce the
outstanding principal balance of the Revolving Loan (which application shall not result in a permanent reduction of the Revolving Loan
Commitment) and upon such application, Agent shall establish a Reserve against the Borrowing Base in an amount equal to the amount of
such proceeds so applied.  All insurance proceeds made available to any Credit Party that is not a Borrower to replace, repair, restore or
rebuild Collateral shall be deposited in a cash collateral account.  Thereafter, such funds shall be made available to Borrower to provide funds
to replace, repair, restore or rebuild the Collateral as follows: (i) Borrower shall request a Revolving Credit Advance be made to Borrower in the
amount requested to be released; (ii) so long as the conditions set forth in Section 2.2 have been met, Revolving Lenders shall make
such Revolving Credit Advance or Agent shall release funds from the cash collateral account; and (iii) in the case of insurance proceeds
applied against the Revolving Loan, the Reserve established with respect to such insurance proceeds shall be reduced by the amount of such
Revolving Credit Advance.  To the extent not used to replace, repair, restore or rebuild the Collateral, such insurance proceeds shall be
applied in accordance with Section 1.3(d).

5.5   
Compliance with Laws.  Each Credit Party shall comply with all
federal, state, local and foreign laws and regulations applicable to it, including those relating to OSHA, ERISA and labor matters and
Environmental Laws and Environmental Permits, except to the

                                                     35

extent that the failure to comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  

5.6   
Supplemental Disclosure.  From time to time as may be
reasonably requested by Agent (which request will not be made more frequently than once each year absent the occurrence and continuance
of a Default or an Event of Default), the Credit Parties shall supplement any Disclosure Schedule hereto, or any representation herein or
in any other Loan Document, with respect to any matter hereafter arising that, if existing or occurring at the date of this Agreement, would have
been required to be set forth or described in such Disclosure Schedule or as an exception to such representation or that is necessary to
correct any information in such Disclosure Schedule or representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be appropriately marked to show the changes made
therein); provided that (a) no such supplement to any such Disclosure Schedule or representation shall amend, supplement or
otherwise modify any Disclosure Schedule or representation, or be or be deemed a waiver of any Default or Event of Default resulting
from the matters disclosed therein, except as consented to by Agent and Requisite Lenders in writing, and (b) no supplement shall be
required or permitted as to representations and warranties that relate solely to the Closing Date.

5.7   
Intellectual Property.  Each Credit Party will conduct its business
and affairs without infringement of or interference with any Intellectual Property of any other Person in any material respect.

5.8   
Environmental Matters.  Each Credit Party shall and shall cause
each Person within its control to:  (a) conduct its operations and keep and maintain its Real Estate in compliance with all Environmental
Laws and Environmental Permits other than noncompliance that could not reasonably be expected to have a Material Adverse Effect;
(b) implement any and all investigation, remediation, removal and response actions that are appropriate or necessary to maintain the
value and marketability of the Real Estate or to otherwise comply with Environmental Laws and Environmental Permits pertaining to the
presence, generation, treatment, storage, use, disposal, transportation or Release of any Hazardous Material on, at, in, under, above, to, from
or about any of its Real Estate; (c) notify Agent promptly after such Credit Party becomes aware of any violation of Environmental Laws
or Environmental Permits or any Release on, at, in, under, above, to, from or about any Real Estate that is reasonably likely to result in
Environmental Liabilities in excess of $250,000; and (d) promptly forward to Agent a copy of any order, notice, request for information or
any communication or report received by such Credit Party in connection with any such violation or Release or any other matter relating to any
Environmental Laws or Environmental Permits that could reasonably be expected to result in Environmental Liabilities in excess of $500,000,
in each case whether or not the Environmental Protection Agency or any Governmental Authority has taken or threatened any action in
connection with any such violation, Release or other matter.  If Agent at any time has a reasonable basis to believe that there may be a
violation of any Environmental Laws or Environmental Permits by any Credit Party or any Environmental Liability arising thereunder, or a
Release of Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate, that, in each case, could reasonably be
expected to have a Material Adverse Effect, then  each Credit Party shall, upon Agent's written request (i) cause the performance of

                                                     36

such environmental audits including subsurface sampling of soil and groundwater, and preparation of such environmental reports, at
Borrower's expense, as Agent may from time to time reasonably request, which shall be conducted by reputable environmental consulting
firms reasonably acceptable to Agent and shall be in form and substance reasonably acceptable to Agent, and (ii) permit Agent or its
representatives to have access to all Real Estate for the purpose of conducting such environmental audits and testing as Agent deems
appropriate, including subsurface sampling of soil and groundwater.  Borrower shall reimburse Agent for the costs of such audits and tests and
the same will constitute a part of  the Obligations secured hereunder.

5.9   
Landlords' Agreements, Mortgagee Agreements, Bailee Letters and Real
Estate Purchases.  

	Each Credit Party shall use its commercially reasonable efforts to obtain, with respect to each warehouse,
processor, converter or other such storage or staging facility leased or acquired by such Credit Party (each a "Specified
Location") after the date hereof, a landlord's agreement, mortgagee agreement or bailee letter, containing a waiver or subordination
of all Liens or claims that such Person may assert against the Collateral at such Specified Location, and shall otherwise be reasonably
satisfactory in form and substance to Agent (each a "Collateral Access Agreement").  With respect to each leased or
owned location listed on Disclosure Schedule 3.2, if Agent has not received a Collateral Access Agreement with respect to
such location, Borrower's Eligible Inventory at such locations shall, in Agent's discretion, be excluded from the Borrowing Base absent
compliance with the provisions of Section 1.7(b) and/or be subject to Reserves as may be established by Agent based upon statutory
lien requirements, until such time, as to any such location, as Agent has received a Collateral Access Agreement.  With respect to locations of
Collateral leased or owned after the date hereof, other than with respect to Permitted Temporary Leases, if Agent has not received a Collateral
Access Agreement as of the date such location is acquired or leased, Borrower's Eligible Inventory at that location shall, in Agent's discretion,
be excluded from the Borrowing Base absent compliance with Section 1.7(b) and/or be subject to Reserves as may be established by
Agent based upon statutory lien requirements, until such time, as to any such location, as Agent has received a Collateral Access Agreement.
Each Credit Party shall timely and fully pay and perform its obligations under all leases and other agreements with respect to each Specified
Location where any Collateral is or may be located.

	To the extent otherwise permitted hereunder, if any Credit Party proposes to acquire a fee ownership interest in
Real Estate after the Closing Date for which the Borrower proposes to have such Real Estate be deemed Eligible Mortgaged Property, it shall
first provide to Agent a mortgage or deed of trust granting Agent a Lien on such Real Estate, together with environmental audits, mortgage title
insurance commitment, real property survey, local counsel opinion(s), and, if required by Agent, supplemental casualty insurance and flood
insurance, and such other documents, instruments or agreements reasonably requested by Agent, in each case, in form and substance
reasonably satisfactory to Agent.

5.10   
[Intentionally Omitted].  

5.11   
Further Assurances.  Each Credit Party executing this Agreement
agrees that it shall and shall cause each other Credit Party to, at such Credit Party's expense and upon request of Agent, duly execute and
deliver, or cause to be duly executed and delivered, to Agent

                                                     37

such further instruments and do and cause to be done such further acts as may
be necessary or proper in the reasonable opinion of Agent to carry out more effectively the provisions and purposes of this Agreement or any
other Loan Document.

5.12   
Leases.

	Store Leases.  With respect to each Store Lease, the Credit Parties shall:

	promptly perform and/or observe in all material respects all of the covenants and agreements required to be
performed and/or observed by the lessee under each Store Lease and do all things necessary to preserve and to keep unimpaired its rights
thereunder;

	promptly notify Agent of any alleged default by any Person under each Store Lease;

	promptly deliver to Agent a copy of each notice of default and other material notice to be provided or received in
respect of any Store Lease; and

	use commercially reasonable efforts to enforce the performance and observance of all of the covenants and
agreements required to be performed and/or observed by the lessor under each Store Lease unless, in each case, failure to do so would not
result in a Material Adverse Effect.

	Space Leases.  With respect to Space Leases encumbering a Mortgaged Property, the Credit Parties
shall:

	promptly perform and/or observe in all material respects all of the covenants and agreements required to be
performed and/or observed by the lessor under each Space Lease and do all things necessary to preserve and to keep unimpaired its rights
thereunder;

	promptly notify Agent of an alleged default by any Person under each Space Lease;

	promptly deliver to Agent a copy of each notice of default and other material notice to be provided or received in
respect of any Space Lease; and

	use commercially reasonable efforts to enforce the performance and observance of all of the covenants and
agreements required to be performed and/or observed by the lessee under each Space Lease.  All Space Leases entered into by any Credit
Party after the Closing Date shall be on commercially reasonable terms, and, other than renewals, on the form of such Credit
Party.

	Right to Take Action.  If any Credit Party shall fail to perform or observe (after the applicable notice and
grace period) any of the covenants and/or agreements required to be performed and/or observed by it under any Store Lease or any Space Lease subject

                                                     38

to a Mortgage, including, without limitation, payment of all rent and other charges due thereunder, Agent may, 5 Business Days
after Credit Party's receipt of written notice (except in emergencies and/or in situations where a failure sooner to perform or observe the same
may result in a forfeiture under the Lease (in either of the foregoing cases, Agent shall give only such prior notice as is reasonable under the
existing circumstances)), take such action as is appropriate to cause such covenants and/or agreements promptly to be performed and/or
observed on behalf of the Credit Parties but no such action by Agent shall release any Credit Party from any of its obligations under the Loan
Documents.  Upon receipt by Agent from the counterparty under any Lease of any notice of default by the Credit Parties thereunder, Agent
may rely thereon and take any action as aforesaid to cure such default even though the existence of such default or the nature thereof may be
questioned or denied by the Credit Parties or by any party on behalf of the Credit Parties.

	Renewal Options.  The Credit Parties shall provide at least 30 days prior written notice to Agent of the
Credit Parties' intent not to renew any such Store Lease, together with a summary of the Credit Parties' intended plan for the sale, transfer or
other disposition of all Collateral located in the premises subject of such Store Lease.  From and after the occurrence of an Event of Default, if
the Credit Parties shall fail to so exercise any option to renew or extend the term of any Store Lease, Agent shall have, and is hereby granted,
the irrevocable right to exercise such option, either in its own name and behalf, or in the name and behalf of the Credit Parties, all as Agent
shall determine.

	Written Statement.  The Credit Parties shall, within 20 days after demand by Agent, deliver to Agent a
written statement certifying as to any factual matter and providing representations as to any other matter in connection with any Store Lease
which is reasonably requested by Agent.

	Arbitration or Appraisal Proceedings.  The Credit Parties shall give Agent prompt notice of the
commencement of any arbitration or appraisal proceeding in connection with or relating to any Real Estate.  Agent shall have the right to
intervene and participate in any such proceeding and the Credit Parties shall confer with Agent and its attorneys and experts and cooperate
with them to the extent Agent deems reasonably necessary for the protection of Agent and Lenders.

	Additional Store Lease Covenants.

	In the event any Store Lease shall be terminated by reason of a default thereunder by the applicable Credit Party
and Agent shall acquire from the fee owner a new ground lease, the applicable Credit Party hereby waives any right, title and interest in and to
such new ground lease or the leasehold estate created thereby, waiving all rights of redemption now or hereafter operable under any
law.

	In the event of the bankruptcy of the lessor or sublessor under any Store Lease, during the occurrence and the
continuance of an Event of Default, neither Borrower nor any other Credit Party shall agree to treat any Store Lease as terminated, canceled or
surrendered pursuant to the applicable provisions of the Bankruptcy Code or otherwise (including, but not limited to,
Section 365(h)(1) thereof) without Agent's prior written consent.

                                                     39

In addition, during the occurrence and continuance of an
Event of Default, the applicable Credit Party shall, in the event of the bankruptcy of the  lessor or sublessor under any Store Lease, reaffirm
and ratify the legality, validity, binding effect and enforceability of the Store Lease and shall elect to remain in possession of the land and the
leasehold estate, notwithstanding any rejection of such Store Lease, unless Agent otherwise directs.  In the event of the bankruptcy of the
lessor or sublessor under any Store Lease, if no Event of Default has occurred and is continuing, Borrower and any Credit Party may treat any
Store Lease as terminated, canceled or surrendered pursuant to the applicable provisions of the Bankruptcy Code or otherwise (including, but
not limited to Section 365(h)(1) thereof), provided, however, that the applicable Credit Party shall provide Agent with thirty (30) days
written notice prior to rejecting any Store Lease and vacating the premises, together with a summary of such Credit Party's intended plan for
the sale, transfer, or other disposition of Collateral located in the premises subject of such Store Lease.

	During the continuance of an Event of Default under this Agreement, Agent shall have the right, but not the
obligation, (i) to perform and comply with all obligations of the applicable Credit Party under the affected Store Lease without relying on
any grace period provided therein, (ii) to do and take, without any obligation to do so, such action as Agent deems necessary or
desirable to prevent or cure any default by the applicable Credit Party under the Store Lease, including, without limitation, any act, deed,
matter or thing whatsoever that the applicable Credit Party may do in order to cure a default under the Store Lease and (iii) to enter in
and upon the land or any part thereof to such extent and as often as Agent deems necessary or desirable in order to prevent or cure any
default of the applicable Credit Party under the Store Lease.  The applicable Credit Party shall, within five (5) days after written
request is made therefor by Agent, execute and deliver to Agent or to any party designated by Agent, such further instruments, agreements,
powers, assignments, conveyances or the like as may be reasonably necessary to complete or perfect the interest, rights or powers of Agent
pursuant to this Section or as may otherwise be required by Agent.

5.13   
Condition of the Real Estate.  The Credit Parties shall
(a) not permit the Real Estate or any of the Mortgaged Properties (or any portion thereof) to be removed, demolished or materially
altered, (b) subject to the provisions of Section 5.4(d) and Section 1.3(d), repair, replace and restore the
Real Estate and other Mortgaged Properties (and any Collateral located thereat) now or hereafter damaged or destroyed by any casualty or
other event (whether or not insured against and insurable) or affected by any Taking so that, when repaired, replaced and restored, the same
shall be (i) at least equal in quality, usefulness and value as the Real Estate, or other Mortgaged Properties and/or Collateral which
existed immediately prior to such casualty, event or Taking, as the case may be and (ii) of the same type and character as the type and
character of the Collateral existing on the Closing Date and (c) perform any and all construction, equipping, alteration, repair,
replacement and/or restoration in a good and workmanlike manner, free and clear of all Liens (except, in the case of improvements to any Real
Estate or other Mortgaged Properties, for the Permitted Encumbrances).

5.14   
Payments from Credit Card Issuers and Credit Card Processors.
Borrower shall cause all amounts payable to Borrower from any Credit Card Issuer and Credit Card Processor to be deposited in a
Concentration Account or the Collection Account.

                                                     40

5.15   
LI>Post-Closing Deliveries.  Within thirty (30) days (or such longer period as the Agent may consent
to, in writing) after the date hereof, the Borrower shall deliver to the Agent: (a) a Credit Card Notice with respect to Borrower's credit card
processing arrangement with HSBC, duly executed by both Borrower and HSBC; and (b) a duly executed termination and release, in form and
substance satisfactory to the Agent, of all Liens of Kimco Capital Corporation on file with the United States Patent & Trademark Office
respect to Borrower's intellectual property.

6.   
NEGATIVE COVENANTS

Each Credit Party executing this Agreement jointly and severally agrees as to all Credit Parties that from and after
the Closing Date until the Termination Date:

6.1   
Mergers, Subsidiaries, Etc.  No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) form or acquire any Subsidiary, or (b) merge with, consolidate with, acquire all or
substantially all of the assets or Stock of, or otherwise combine with or acquire, any Person.

6.2   
Investments; Loans and Advances.  Except as otherwise
expressly permitted by this Section 6 (including, without limitation, Sections 6.3 and 6.4), no Credit Party shall
make or permit to exist any investment in, or make, accrue or permit to exist loans or advances of money to, any Person, through the direct or
indirect lending of money, holding of securities or otherwise, except that:  (a) Borrower may hold investments comprised of notes
payable, or Stock or other securities pursuant to negotiated agreements with respect to the settlement of an Account Debtor's Accounts in the
ordinary course of business, Indebtedness or other claims due or owing to Borrower or any of its Subsidiaries; so long as the aggregate
amount of such Accounts so settled by Borrower does not exceed $250,000; and (b) Borrower and its Subsidiaries may receive and hold
Stock, promissory notes and other non-cash consideration received in connection with any sale of an asset permitted by
Section 6.8(c);  and (c) Borrower may maintain its existing investments in its Subsidiaries as of the Closing
Date.

6.3   
Indebtedness.

	No Credit Party shall create, incur, assume or permit to exist any Indebtedness, except (without duplication)
(i) Indebtedness secured by purchase money security interests and Capital Leases permitted in Section 6.7(c),
(ii) the Loans and the other Obligations, (iii) unfunded pension fund and other employee benefit plan obligations and liabilities to
the extent they are permitted to remain unfunded under applicable law, (iv) existing Indebtedness described in Disclosure
Schedule (6.3) and refinancings thereof or amendments or modifications thereto that do not have the effect of increasing the
principal amount thereof or changing the amortization thereof (other than to extend the same) and that are otherwise on terms and conditions
no less favorable to any Credit Party, Agent or any Lender, as determined by Agent, than the terms of the Indebtedness being refinanced,
amended or modified, (v) Indebtedness permitted by Section 6.17, and (vi) reimbursement obligations in respect of the surety
bonds described in Schedule 6.3, copies of which have been or will be promptly provided to Agent as soon as available; upon
commercially reasonable terms and conditions and renewals and extensions thereof upon commercially reasonable terms and
conditions.

                                                     41

	No Credit Party shall, directly or indirectly, voluntarily purchase, redeem, defease or prepay any principal of,
premium, if any, interest or other amount payable in respect of any Indebtedness, other than (i) the Obligations, (ii) the prepayment of an
aggregate amount of up to $18,179,598 of the principal amount of the New Subordinated Note, plus accrued interest thereon, so long as (A)
immediately after giving effect to such payment, and on a pro forma basis for the twelve (12) consecutive fiscal months following such
payment, average Borrowing Availability exceeds $35,000,000 and (B) no Default or Event of Default exists both immediately prior to and after
giving effect thereto and (iii) as a result of the making of scheduled payments of principal and interest on Indebtedness permitted under
Section 6.3(a).

6.4   
Employee Loans and Affiliate Transactions.

	Except as otherwise expressly permitted in this Section 6 with respect to Affiliates, no Credit
Party shall enter into or be a party to any transaction with any other Credit Party or any Affiliate thereof except in the ordinary course of and
pursuant to the reasonable requirements of such Credit Party's business and upon fair and reasonable terms that are no less favorable to such
Credit Party than would be obtained in a comparable arm's length transaction with a Person not an Affiliate of such Credit Party.  In addition,
the terms of these transactions must be disclosed in advance to Agent and Lenders.  All such transactions existing as of the Closing Date are
described in Disclosure Schedule (6.4(a)). 

	No Credit Party shall enter into any lending or borrowing transaction with any employees of any Credit Party,
except loans to its respective employees in the ordinary course of business consistent with past practices for travel and entertainment
expenses, relocation costs and similar purposes and stock option financing.

	From the occurrence and during the continuance of an Event of Default, no Credit Party shall increase the direct or
indirect aggregate compensation (excluding stock options) of the ten most highly compensated employees of the Credit Parties, taken as a
whole, by more than 10% per annum in excess of the then current compensation level for those employees, expressed as an aggregate dollar
amount.

6.5   
Capital Structure and Business.  No Credit Party shall
(a) make any changes in any of its business objectives, purposes or operations that could in any way adversely affect the repayment of
the Loans or any of the other Obligations or could reasonably be expected to have or result in a Material Adverse Effect, (b) make any
change in its capital structure as described in Disclosure Schedule (3.8), other than the issuance or sale of any shares of
common Stock, warrants, options or other securities convertible into common Stock so long as the net cash proceeds of any such issuance
are paid to Agent for application to the Loans and Agent and Lenders obtain a first priority security interest (subject to Permitted
Encumbrances) to any non-cash proceeds thereof or (c) amend its charter or bylaws in a manner that would adversely affect Agent or
Lenders or such Credit Party's duty or ability to repay the Obligations.  No Credit Party shall engage in any business other than the businesses
currently engaged in by it or businesses reasonably related thereto.

6.6   
Guaranteed Indebtedness.  No Credit Party shall create, incur,
assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement of instruments or items

                                                     42

of payment for deposit to
the general account of any Credit Party, and (b) for Guaranteed Indebtedness incurred for the benefit of any other Credit Party if the
primary obligation is expressly permitted by this Agreement.

6.7   
Liens.  No Credit Party shall create, incur, assume or permit to
exist any Lien on or with respect to its Accounts or any of its other properties or assets (whether now owned or hereafter acquired) except for
(a) Permitted Encumbrances; (b) Liens in existence on the Closing Date and summarized on Disclosure
Schedule (6.7) securing the Indebtedness described on Disclosure Schedule (6.3) and permitted refinancings,
extensions and renewals thereof, including extensions or renewals of any such Liens; provided that the principal amount of the Indebtedness
so secured is not increased and the Lien does not attach to any other property; and (c) Liens created after the Closing Date by
conditional sale or other title retention agreements (including Capital Leases) or in connection with purchase money Indebtedness with respect
to Equipment and Fixtures acquired by any Credit Party in the ordinary course of business, involving the incurrence of an aggregate amount of
purchase money Indebtedness and Capital Lease Obligations which, when combined with all permitted transactions under Section
6.12(2), do not exceed $2,000,000 on a trailing twelve month basis (provided that no Default or Event of Default has occurred or is
continuing, that such Liens attach only to the assets subject to such purchase money debt and such Indebtedness is incurred within 20 days
following such purchase, that such Indebtedness does not exceed 100% of the purchase price of the subject assets and that all net proceeds
of such purchase money debt are paid to Agent for application to the Loans). In addition, no Credit Party shall become a party to any
agreement, note, indenture or instrument, or take any other action, that would prohibit the creation of a Lien on any of its properties or other
assets in favor of Agent, on behalf of itself and Lenders, as additional collateral for the Obligations, except operating leases, Capital Leases,
Licenses or purchase agreements for sales otherwise permitted hereunder which prohibit Liens upon the assets that are subject
thereto.

6.8   
Sale of Stock and Assets.  No Credit Party shall sell, transfer,
convey, assign or otherwise dispose of any of its properties or other assets, including the Stock of any of its Subsidiaries (whether in a public
or a private offering or otherwise) or any of its Accounts, other than (a) the sale of Inventory in the ordinary course of business, (b) the
sale, as a result of arm's length negotiations, of any Eligible Mortgaged Property so long as (1) no Default or Event of Default shall have
occurred or be continuing or would result therefrom, (2) the net proceeds of such sale equal or exceed the amount of Revolving Credit
Advances then outstanding with respect to such Eligible Mortgaged Property and (3) the net proceeds of such sale are paid to Agent or
reinvested in the Borrower's business in accordance with Section 1.3(b)(ii) and (c) the sale, transfer, conveyance or other
disposition by a Credit Party of other assets having a sales price not exceeding $20,000,000 in the aggregate since the date hereof so long as
no (1) Default or Event of Default has occurred or is continuing or would result therefrom, (2) such sale or disposition is to a non-
Affiliate as a result of arm's length negotiations and (3) the net proceeds of such sale are paid to Agent or reinvested in the Borrower's
business in accordance with Section 1.3(b)(ii).  With respect to any disposition of assets or other properties permitted pursuant to
clauses (b), or (c) above, subject to Section 1.3(b), Agent will on reasonable prior written notice release its
Lien on such assets or other properties in order to permit the applicable Credit Party to effect such disposition and shall execute and deliver to Borrower, at Borrower's

                                                     43

expense, appropriate UCC-3 termination statements, reconveyances and other releases as reasonably requested by
Borrower.

6.9   
ERISA.  No Credit Party shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur an event that could result in the imposition of a Lien under Section 412 of the IRC or
Section 302 or 4068 of ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event could reasonably be
expected to have a Material Adverse Effect.

6.10   
Financial Covenants.  Borrower shall not breach or fail to comply
with any of the Financial Covenants.

6.11   
Hazardous Materials.  No Credit Party shall cause or permit a
Release of any Hazardous Material on, at, in, under, above, to, from or about any of the Real Estate where such Release would
(a) violate in any respect, or form the basis for any Environmental Liabilities under, any Environmental Laws or Environmental Permits or
(b) otherwise adversely impact the value or marketability of any of the Real Estate or any of the Collateral, other than such violations or
Environmental Liabilities that could not reasonably be expected to have a Material Adverse Effect.

6.12   
Sale-Leasebacks.  No Credit Party shall engage in any sale-
leaseback, synthetic lease or similar transaction involving any of its assets except for: (a) any other such transactions which when
combined with all permitted transactions under Section 6.7(c), do not exceed $2,000,000 on a trailing twelve month basis so long as
no Default or Event of Default shall have occurred or be continuing, and (b) all other such transactions with Agent's prior written consent,
provided that in any case, the transaction meets each of the following criteria:  (i) the transaction is a financing limited to specific
equipment or Real Estate; (ii) the proceeds of any such transaction exceed 90% of the original cost of the equipment or Real Estate in
question; (iii) the transaction is with a third party who is not an Affiliate and is the result of arms' length negotiations; and (iv) 100%
of the net cash proceeds of any such transaction are paid to Agent for application to the Revolving Loans in the manner set forth in
Section 1.3(c), and Agent obtains a perfected first priority security interest in any non-cash proceeds (subject to Permitted
Encumbrances, other than Permitted Encumbrances as defined under clause (i) of the definition of "Permitted
Encumbrances").  

6.13   
Cancellation of Indebtedness.  No Credit Party shall cancel any
claim or debt owing to it, except for reasonable consideration negotiated on an arm's length basis and in the ordinary course of its business
consistent with past practices.

6.14   
Restricted Payments.  No Credit Party shall make any Restricted
Payment, except (a) dividends and distributions by Subsidiaries of Borrower paid to Borrower, (b) employee loans permitted under Section
6.4(b), (c) scheduled payments of interest with respect to the New Subordinated Note so long as no Default or Event of Default has
occurred and is continuing or would result after giving effect thereto, (d) scheduled payments of principal under the New Subordinated Note so
long as (i) no Default or Event of Default has occurred and is continuing or would result after giving effect thereto and (ii) prior to making such
payment and immediately after giving effect thereto, Borrowing Availability is at least $15,000,000, (e)

                                                     44

open market purchases of Borrower's
common Stock on a public exchange by Borrower in accordance with applicable laws; provided that: (i) no Default or Event of Default has
occurred and is continuing or would result therefrom, and (ii) immediately after giving effect to such purchase, and on a pro forma basis for the
twelve (12) consecutive fiscal months following such purchase, average Borrowing Availability exceeds $35,000,000, or (f) full or partial
pre-payment of the New Subordinated Note, prior to the Commitment Termination Date in an aggregate principal amount totaling not more than
$18,172,598, plus accrued interest thereon; provided that: (i) immediately after giving effect to such payment, and on a pro
forma basis for the twelve (12) consecutive fiscal months following such payment, average Borrowing Availability exceeds $35,000,000 and (ii)
no Default or Event of Default exists both immediately prior to and after giving effect thereto.

6.15   
Change of Corporate Name or Location; Change of Fiscal Year.
No Credit Party shall (a) change its name as it appears in official filings in the state of its incorporation or other organization
(b) change its chief executive office, principal place of business, corporate offices or warehouses or locations at which Collateral is held
or stored, or the location of its records concerning the Collateral, (c) change the type of entity that it is, (d) change its organization
identification number, if any, issued by its state of incorporation or other organization, or (e) change its state of incorporation or
organization, in each case without at least 30 days prior written notice to Agent and after Agent's written acknowledgment that any reasonable
action requested by Agent in connection therewith, including to continue the perfection of any Liens in favor of Agent, on behalf of Lenders, in
any Collateral, has been completed or taken, and provided that any such new location shall be in the United States.  No Credit Party shall
change its Fiscal Year.

6.16   
[Intentionally Omitted].

6.17   
No Speculative Transactions.  No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies receivable or payable by it and interest swaps, caps or collars
without Agent's prior written consent.

6.18   
Leases; Real Estate Purchases.  Except for leases permitted
under Sections 6.7(e) and 6.12, no Credit Party shall enter into any operating lease for Equipment or lease for Real
Estate, without the prior written consent of Agent, if the payments payable in any year would exceed $500,000 for any lease or if the aggregate
of all payments for all such leases in any year would exceed $2,000,000.

6.19   
Changes Relating to Subordinated Debt; Material
Contracts.

	No Credit Party shall change or amend the terms of any Subordinated Debt, or any indenture, mortgage or
agreement in connection with any such Indebtedness if the effect of such amendment is to:  (i) increase the interest rate on such
Indebtedness; (ii) change the dates upon which payments of principal or interest are due on such Indebtedness other than to extend
such dates; (iii) change any default or event of default other than to delete or make less restrictive any default provision therein, or add
any covenant with

                                                     45

respect to such Indebtedness; (iv) change the redemption or prepayment provisions of such Indebtedness other than
to extend the dates therefor or to reduce the premiums payable in connection therewith; (v) grant any security or collateral to secure
payment of such Indebtedness or (vi) change or amend any other term if such change or amendment would materially increase the
obligations of the Credit Party thereunder or confer additional material rights on the holder of such Indebtedness in a manner adverse to any
Credit Party, Agent or any Lender.

	Unless consented to by Agent and Requisite Lenders in writing, no Credit Party shall change or amend, in any
manner which is materially adverse to the interests of the Agents and/or the Lenders, the terms of (i) any Credit Card Agreement or (ii) any
agreement with United Security Bank.

	Unless consented to by Agent and Requisite Lenders in writing, no Credit Party shall change or amend the terms
of the New Subordinated Note; provided, that, the New Subordinated Note may be amended solely to remove any restriction
on making any full or partial prepayment of such note, prior to the Commitment Termination Date, to the extent such payment is otherwise
permitted under the terms of this Agreement.

6.20   
Credit Card Notices.  Borrower shall not deliver to the Credit Card
Issuers or the Credit Card Processors any instructions which modify or amend the Credit Card Notices or in any manner attempt to change the
delivery of Credit Card Receivables to Agent.

7.   
TERM
 

7.1   
Termination.  The financing arrangements contemplated hereby shall
be in effect until the Commitment Termination Date, and the Loans and all other Obligations shall be automatically due and payable in full on
such date.

7.2   
Survival of Obligations Upon Termination of Financing Arrangements.
 Except as otherwise expressly provided for in the Loan Documents, no termination or cancellation (regardless of cause or procedure) of
any financing arrangement under this Agreement shall in any way affect or impair the obligations, duties and liabilities of the Credit Parties or
the rights of Agent and Lenders relating to any unpaid portion of the Loans or any other Obligations, due or not due, liquidated, contingent or
unliquidated, or any transaction or event occurring prior to such termination, or any transaction or event, the performance of which is required
after the Commitment Termination Date.  Except as otherwise expressly provided herein or in any other Loan Document, all undertakings,
agreements, covenants, warranties and representations of or binding upon the Credit Parties, and all rights of Agent and each Lender, all as
contained in the Loan Documents, shall not terminate or expire, but rather shall survive any such termination or cancellation and shall continue
in full force and effect until the Termination Date; provided, that the provisions of Section 11, the payment obligations under
Sections 1.15 and 1.16, and the indemnities contained in the Loan Documents shall survive the Termination
Date.

8.   
EVENTS OF DEFAULT; RIGHTS AND REMEDIES

8.1   
Events of Default.  The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an "Event of Default" hereunder:

                                                     46

	Borrower (i) fails to make any payment of principal of, or interest on, or Fees owing in respect of, the Loans
or any of the other Obligations when due and payable, (ii) fails to pay or reimburse Agent or Lenders for any expense reimbursable
hereunder or under any other Loan Document within 10 days following Agent's demand for such reimbursement or payment of expenses,
provided, however, that Borrower shall have 2 Business Days to cure any failure under this Section 8.1(a)(i) that
arises solely from Agent's failure to charge such payment under Section 1.11(b) at a time when all conditions to a Revolving Credit
Advance, including those specified in Sections 1.1 and 2.2, are satisfied.

	Any Credit Party  fails or neglects to perform, keep or observe any of the provisions of Sections 1.3, 1.4,
1.8, 1.14, 5.1 (with respect to its corporate existence and conduct of business), 5.4, 5.5, 5.14, 5.15 or 6, or any of the provisions set forth
in Annexes C or G,  or  any of the provisions set forth in clause (b) of Annex F, respectively.

	Borrower  fails or neglects to perform, keep or observe any of the provisions of Section 4 or any
provisions set forth in Annexes E or F, (other than the provisions set forth in  clause (b) of Annex F)
respectively, and the same shall remain unremedied for 3 Business Days or more.

	Any Credit Party fails or neglects to perform, keep or observe any other provision of this Agreement or of any of
the other Loan Documents (other than any provision embodied in or covered by any other clause of this Section 8.1) and the
same shall remain unremedied for 30 days or more.

	A default or breach occurs under any other agreement, document or instrument to which any Credit Party is a
party that is not cured within any applicable grace period therefor, and such default or breach (i) involves the failure to make any
payment when due in respect of any Indebtedness or Guaranteed Indebtedness (other than the Obligations) of any Credit Party in excess of
$250,000 in the aggregate (including (x) undrawn committed or available amounts and (y) amounts owing to all creditors under
any combined or syndicated credit arrangements), or (ii) causes, or permits any holder of such Indebtedness or Guaranteed
Indebtedness or a trustee to cause, Indebtedness or Guaranteed Indebtedness or a portion thereof in excess of $250,000 in the aggregate to
become due prior to its stated maturity or prior to its regularly scheduled dates of payment, or cash collateral in respect thereof to be
demanded, in each case, unless such default is waived within 30 days.

	Any information contained in any Borrowing Base Certificate is untrue or incorrect in any respect that is material in
the sole discretion of Agent, or any representation or warranty herein or in any Loan Document or in any written statement, report, financial
statement or certificate (other than a Borrowing Base Certificate) made or delivered to Agent or any Lender by any Credit Party is untrue or
incorrect in any material respect as of the date when made or deemed made.

	Assets of any Credit Party with a fair market value of $250,000 or more are attached, seized, levied upon or
subjected to a writ or distress warrant, or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors
of any Credit Party and such condition continues for 60 days or more.

                                                     47

	A case or proceeding is commenced against any Credit Party seeking a decree or order in respect of such Credit
Party,  (i) under the Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for such Credit Party or for any
substantial part of any such Credit Party's assets, or (iii) ordering the winding-up or liquidation of the affairs of such Credit Party, and
such case or proceeding shall remain undismissed or unstayed for 60 days or more or a decree or order granting the relief sought in such case
or proceeding shall be entered by a court of competent jurisdiction.

	Any Credit Party (i) files a petition seeking relief under the Bankruptcy Code, or any other applicable federal,
state or foreign bankruptcy or other similar law, (ii) consents to or fails to contest in a timely and appropriate manner the institution of
proceedings thereunder or the filing of any such petition or the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) for such Credit Party or for any substantial part of any such Credit Party's  assets,
(iii) makes an assignment for the benefit of creditors, (iv) takes any action in furtherance of any of the foregoing, or
(v) admits in writing its inability to, or is generally unable to, pay its debts as such debts become due.

	A final judgment or judgments for the payment of money in excess of $250,000 in any one case or in excess of
$500,000 in the aggregate at any time are outstanding against one or more of the Credit Parties and the same are not, within 30 days after the
entry thereof, discharged or execution thereof stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration
of any such stay.

	Any material provision of any Loan Document for any reason ceases to be valid, binding and enforceable in
accordance with its terms (or any Credit Party shall challenge the enforceability of any Loan Document or shall assert in writing, or engage in
any action or inaction based on any such assertion, that any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms), or any Lien created under any Loan Document ceases to be a valid and perfected
first priority Lien (except as otherwise permitted herein or therein) in any of the Collateral purported to be covered thereby.

	Any Change of Control occurs.

	Except to the extent permitted pursuant to Section 6.14, the payment of all or any portion of the principal
amount of any Subordinated Debt whether at maturity, upon acceleration or otherwise, so long as the Obligations under this Agreement have
not been paid in full and the Commitments have not been terminated.

8.2   
Remedies.

	If any Default or Event of Default has occurred and is continuing, Agent may (and at the written request of the
Requisite Revolving Lenders shall), without notice, suspend the Revolving Loan facility with respect to additional Advances and/or the
incurrence of additional Letter of Credit Obligations, whereupon any additional Advances and additional

                                                     48

Letter of Credit Obligations shall be
made or incurred in Agent's sole discretion (or in the sole discretion of the Requisite Revolving Lenders, if such suspension occurred at their
direction) so long as such Default or Event of Default is continuing.  If any Default or Event of Default has occurred and is continuing, Agent
may (and at the written request of Requisite Lenders shall), without notice except as otherwise expressly provided herein, increase the rate of
interest applicable to the Loans and the Letter of Credit Fees to the Default Rate.

	If any Event of Default has occurred and is continuing, Agent may (and at the written request of the Requisite
Lenders shall), without notice:  (i) terminate the Revolving Loan facility with respect to further Advances or the incurrence of further
Letter of Credit Obligations; (ii) reduce the Revolving Loan Commitment from time to time; (iii) declare all or any portion of the
Obligations, including all or any portion of any Loan to be forthwith due and payable, and require that the Letter of Credit Obligations be cash
collateralized as provided in Annex B, all without presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrower and each other Credit Party; or (iv) exercise any rights and remedies provided to Agent under the Loan
Documents or at law or equity, including all remedies provided under the Code; provided, that upon the occurrence of an Event of
Default specified in Sections 8.1(h) or (i), the Commitments shall be immediately terminated and all of the Obligations,
including the aggregate Revolving Loan, shall become immediately due and payable without declaration, notice or demand by any
Person.

8.3   
Waivers by Credit Parties.  Except as otherwise provided for in
this Agreement or by applicable law, each Credit Party waives (including for purposes of Section 12):  (a) presentment,
demand and protest and notice of presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by Agent on which any Credit Party may in any way be liable, and hereby ratifies
and confirms whatever Agent may do in this regard, (b) all rights to notice and a hearing prior to Agent's taking possession or control of,
or to Agent's replevy, attachment or levy upon, the Collateral or any bond or security that might be required by any court prior to allowing Agent
to exercise any of its remedies, and (c) the benefit of all valuation, appraisal, marshaling and exemption laws.

9.   
ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF
AGENT

9.1   
Assignment and Participations.

	Subject to the terms of this Section 9.1, any Lender may make an assignment to a Qualified
Assignee of, or sell participations in, at any time or times, the Loan Documents, Loans, Letter of Credit Obligations and any Commitment or
any portion thereof or interest therein, including any Lender's rights, title, interests, remedies, powers or duties thereunder.  Any assignment by
a Lender shall:  (i) require the consent of Agent (which consent shall not be unreasonably withheld or delayed with respect to a Qualified
Assignee) and the execution of an assignment agreement (an "Assignment Agreement") substantially in the form attached
hereto as Exhibit 9.1(a) and otherwise in form and substance reasonably satisfactory to, and acknowledged by, Agent;
(ii) be conditioned on such assignee Lender representing to the assigning Lender and Agent that it is purchasing the applicable Loans to
be assigned to it for its

                                                     49

own account, for investment purposes and not with a view to the distribution thereof; (iii) after giving effect to any
such partial assignment, the assignee Lender shall have Commitments in an amount at least equal to $5,000,000 and the assigning Lender
shall have retained Commitments in an amount at least equal to $5,000,000; (iv) include a payment to Agent of an assignment fee of
$3,500; and (v) so long as no Event of Default has occurred and is continuing, require the consent of Borrower, which shall not be
unreasonably withheld or delayed; provided that no such consent shall be required for an assignment to a Qualified Assignee.
In the case of an assignment by a Lender under this Section 9.1, the assignee shall have, to the extent of such assignment, the
same rights, benefits and obligations as all other Lenders hereunder.  The assigning Lender shall be relieved of its obligations hereunder with
respect to its Commitments or assigned portion thereof from and after the date of such assignment.  Borrower hereby acknowledges and
agrees that any assignment shall give rise to a direct obligation of Borrower to the assignee and that the assignee shall be considered to be a
"Lender."  In all instances, each Lender's liability to make Loans hereunder shall be several and not joint and shall be limited to
such Lender's Pro Rata Share of the applicable Commitment.  In the event Agent or any Lender assigns or otherwise transfers all or any part
of the Obligations, Agent or any such Lender shall so notify Borrower and Borrower shall, upon the request of Agent or such Lender, execute
new Notes in exchange for the Notes, if any, being assigned.  Notwithstanding the foregoing provisions of this Section 9.1(a),
any Lender may at any time pledge the Obligations held by it and such Lender's rights under this Agreement and the other Loan Documents to
a Federal Reserve Bank, and any Lender that is an investment fund may assign the Obligations held by it and such Lender's rights under this
Agreement and the other Loan Documents to another investment fund managed by the same investment advisor; provided, that no
such pledge to a Federal Reserve Bank shall release such Lender from such Lender's obligations hereunder or under any other Loan
Document.

	Any participation by a Lender of all or any part of its Commitments shall be made with the understanding that all
amounts payable by Borrower hereunder shall be determined as if that Lender had not sold such participation, and that the holder of any such
participation shall not be entitled to require such Lender to take or omit to take any action hereunder except actions directly affecting
(i) any reduction in the principal amount of, or interest rate or Fees payable with respect to, any Loan in which such holder participates,
(ii) any extension of the scheduled amortization of the principal amount of any Loan in which such holder participates or the final maturity
date thereof, and (iii) any release of all or substantially all of the Collateral (other than in accordance with the terms of this Agreement,
the Collateral Documents or the other Loan Documents).  Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8, Borrower
acknowledges and agrees that a participation shall give rise to a direct obligation of Borrower to the participant effective upon delivery of
written notice to Borrower of such participation and the participant shall be considered to be a "Lender."  Except as set forth in the
preceding sentence neither Borrower nor any other Credit Party shall have any obligation or duty to any participant.  Neither Agent nor any
Lender (other than the Lender selling a participation) shall have any duty to any participant and may continue to deal solely with the Lender
selling a participation as if no such sale had occurred.

	Except as expressly provided in this Section 9.1, no Lender shall, as between Borrower and that
Lender, or Agent and that Lender, be relieved of any of its

                                                     50

obligations hereunder as a result of any sale, assignment, transfer or negotiation of,
or granting of participation in, all or any part of the Loans, the Notes or other Obligations owed to such Lender.

	Each Credit Party executing this Agreement shall assist any Lender permitted to sell assignments or participations
under this Section 9.1 as reasonably required to enable the assigning or selling Lender to effect any such assignment or
participation, including the execution and delivery of any and all agreements, notes and other documents and instruments as shall be
requested and, if requested by Agent, the preparation of informational materials for, and the participation of management in meetings with,
potential assignees or participants.  Each Credit Party executing this Agreement shall certify the correctness, completeness and accuracy of all
descriptions of the Credit Parties and their respective affairs contained in any selling materials provided by it and all other information provided
by them and included in such materials, except that any Projections delivered by Borrower shall only be certified by Borrower as having been
prepared by Borrower in compliance with the representations contained in Section 3.4(c).

	Any Lender may furnish any information concerning Credit Parties in the possession of such Lender from time to
time to assignees and participants (including prospective assignees and participants); provided that such Lender shall obtain from
assignees or participants confidentiality covenants substantially equivalent to those contained in Section 11.8.

	So long as no Event of Default has occurred and is continuing, no Lender shall assign or sell participations in any
portion of its Loans or Commitments to a potential Lender or participant, if, as of the date of the proposed assignment or sale, the assignee
Lender or participant would be subject to capital adequacy or similar requirements under Section 1.16(a), increased costs
under Section 1.16(b), an inability to fund LIBOR Loans under Section 1.16(c), withholding taxes in accordance
with Section 1.15(a), or has not provided a Certificate of Exemption.

	Nothing contained in this Section 9 shall require the consent of any party for Agent or any Lender to
assign any of its rights in respect of any Swap Related Reimbursement Obligation.

9.2   
Appointment of Agent.  GE Capital is hereby appointed to
act on behalf of all Lenders as Agent under this Agreement and the other Loan Documents.  The provisions of this Section 9.2
are solely for the benefit of Agent and Lenders and no Credit Party nor any other Person shall have any rights as a third party beneficiary of
any of the provisions hereof.  In performing its functions and duties under this Agreement and the other Loan Documents, Agent shall act
solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency
or trust with or for any Credit Party or any other Person.  Agent shall have no duties or responsibilities except for those expressly set forth in
this Agreement and the other Loan Documents.  The duties of Agent shall be mechanical and administrative in nature and Agent shall not
have, or be deemed to have, by reason of this Agreement, any other Loan Document or otherwise a fiduciary relationship in respect of any
Lender.  Except as expressly set forth in this Agreement and the other Loan Documents, Agent shall not have any duty to disclose, and shall
not be liable for failure to disclose, any information relating to any Credit Party or any of their respective Subsidiaries or any Account Debtor that is

                                                     51

communicated to or obtained by GE Capital or any of its Affiliates in any capacity.  Neither Agent nor any of its Affiliates nor any
of their respective officers, directors, employees, agents or representatives shall be liable to any Lender for any action taken or omitted to be
taken by it hereunder or under any other Loan Document, or in connection herewith or therewith, except for damages caused by its or their
own gross negligence or willful misconduct.

If Agent shall request instructions from Requisite Lenders, Requisite Revolving Lenders, or all affected Lenders with
respect to any act or action (including failure to act) in connection with this Agreement or any other Loan Document, then Agent shall be
entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from Requisite Lenders, Requisite
Revolving Lenders, or all affected Lenders, as the case may be, and Agent shall not incur liability to any Person by reason of so refraining.
Agent shall be fully justified in failing or refusing to take any action hereunder or under any other Loan Document (a) if such action
would, in the opinion of Agent, be contrary to law or the terms of this Agreement or any other Loan Document, (b) if such action would,
in the opinion of Agent, expose Agent to Environmental Liabilities or (c) if Agent shall not first be indemnified to its satisfaction against
any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.  Without limiting the
foregoing, no Lender shall have any right of action whatsoever against Agent as a result of Agent acting or refraining from acting hereunder or
under any other Loan Document in accordance with the instructions of Requisite Lenders, Requisite Revolving Lenders, or all affected
Lenders, as applicable.

9.3   
Agent's Reliance, Etc.  Neither Agent nor any of its Affiliates nor
any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or
in connection with this Agreement or the other Loan Documents, except for damages caused by its or their own gross negligence or willful
misconduct.  Without limiting the generality of the foregoing, Agent:  (a)  may treat the payee of any Note as the holder thereof until
Agent receives written notice of the assignment or transfer thereof signed by such payee and in form reasonably satisfactory to Agent;
(b) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action
taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts; (c) makes no
warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations made in
or in connection with this Agreement or the other Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of any
Credit Party or to inspect the Collateral (including the books and records) of any Credit Party; (e) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto; and (f) shall incur no liability under or in respect of this Agreement or
the other Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper party or parties.

9.4   
GE Capital and Affiliates.  With respect to its Commitments
hereunder, GE Capital shall have the same rights and powers under this Agreement and the other Loan Documents as any other Lender
and may exercise the same as though it were not Agent; and the

                                                     52

term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include GE Capital in its individual capacity.  GE Capital and its Affiliates may lend money to, invest in, and
generally engage in any kind of business with, any Credit Party, any of their Affiliates and any Person who may do business with or own
securities of any Credit Party or any such Affiliate, all as if GE Capital were not Agent and without any duty to account therefor to
Lenders.  GE Capital and its Affiliates may accept fees and other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. Each Lender acknowledges the potential conflict of interest
between GE Capital as a Lender holding disproportionate interests in the Loans and GE Capital as Agent.

9.5   
Lender Credit Decision.  Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on the Financial Statements referred to in
Section 3.4(a) and such other documents and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and
without reliance upon Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under this Agreement.  Each Lender acknowledges the potential conflict
of interest of each other Lender as a result of Lenders holding disproportionate interests in the Loans, and expressly consents to, and waives
any claim based upon, such conflict of interest.

9.6   
Indemnification.  Lenders agree to indemnify Agent (to the extent
not reimbursed by Credit Parties and without limiting the obligations of Borrower hereunder), ratably according to their respective Pro Rata
Shares, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against Agent in any way relating to or
arising out of this Agreement or any other Loan Document or any action taken or omitted to be taken by Agent in connection therewith;
provided, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or willful misconduct. Without limiting the foregoing, each Lender
agrees to reimburse Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including reasonable counsel fees)
incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and each
other Loan Document, to the extent that Agent is not reimbursed for such expenses by Credit Parties.  

9.7   
Successor Agent.  Agent may resign at any time by giving not
less than 30 days' prior written notice thereof to Lenders and Borrower.  Upon any such resignation, the Requisite Lenders shall have the right
to appoint a successor Agent.  If no successor Agent shall have been so appointed by the Requisite Lenders and shall have accepted such
appointment within 30 days after the resigning Agent's giving notice of resignation, then the resigning Agent may, on behalf of Lenders,
appoint a successor Agent, which shall be a Lender, if a Lender is willing to accept such appointment, or otherwise shall be a commercial bank
or financial institution or a subsidiary of a commercial bank or financial institution if such commercial bank

                                                     53

or financial institution is organized
under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least $300,000,000.  If no
successor Agent has been appointed pursuant to the foregoing, within 30 days after the date such notice of resignation was given by the
resigning Agent, such resignation shall become effective and the Requisite Lenders shall thereafter perform all the duties of Agent hereunder
until such time, if any, as the Requisite Lenders appoint a successor Agent as provided above.  Any successor Agent appointed by Requisite
Lenders hereunder shall be subject to the approval of Borrower, such approval not to be unreasonably withheld or delayed; provided that such
approval shall not be required if a Default or an Event of Default has occurred and is continuing.  Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall succeed to and become vested with all the rights, powers, privileges and
duties of the resigning Agent.  Upon the earlier of the acceptance of any appointment as Agent hereunder by a successor Agent or the
effective date of the resigning Agent's resignation, the resigning Agent shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents, except that any indemnity rights or other rights in favor of such resigning Agent shall continue.
After any resigning Agent's resignation hereunder, the provisions of this Section 9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was acting as Agent under this Agreement and the other Loan Documents. 

9.8   
Setoff and Sharing of Payments.  In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any
Event of Default and subject to Section 9.9(f), each Lender, each participant and each holder is hereby authorized at any time
or from time to time, without notice to any Credit Party or to any other Person, any such notice being hereby expressly waived, to offset and to
appropriate and to apply any and all balances held by it at any of its offices for the account of Borrower or Guarantor (regardless of whether
such balances are then due to Borrower or Guarantor) and any other properties or assets at any time held or owing by that Lender, holder or
participant to or for the credit or for the account of Borrower or Guarantor against and on account of any of the Obligations that are not paid
when due.  Any Lender exercising a right of setoff or otherwise receiving any payment on account of the Obligations in excess of its Pro Rata
Share thereof shall purchase for cash (and the other Lenders or holders shall sell) such participations in each such other Lender's or holder's
Pro Rata Share of the Obligations as would be necessary to cause such Lender to share the amount so offset or otherwise received with each
other Lender or holder in accordance with their respective Pro Rata Shares (other than offset rights exercised by any Lender with respect to
Sections 1.13, 1.15 or 1.16).  Each Lender's obligation under this Section 9.8 shall be in addition to and not in
limitation of its obligations to purchase a participation in an amount equal to its Pro Rata Share of the Swing Line Loans under
Section 1.1.  Borrower or Guarantor agrees, to the fullest extent permitted by law, that (a) any Lender may exercise its
right to offset with respect to amounts in excess of its Pro Rata Share of the Obligations and may sell participations in such amounts so offset
to other Lenders, participants and holders and (b) any Lender, participant or holder so purchasing a participation in the Loans made or
other Obligations held by other Lenders, participants or holders may exercise all rights of offset, bankers' lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender, participant or holder were a direct holder of the Loans and the other Obligations in
the amount of such participation.  Notwithstanding the foregoing, if all or any portion of the offset amount or payment otherwise received is
thereafter recovered from the Lender that has exercised the right of offset, the

                                                     54

purchase of participations by that Lender shall be rescinded and
the purchase price restored without interest.

9.9   
Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert.

	Advances; Payments.

	Revolving Lenders shall refund or participate in the Swing Line Loan in accordance with clauses
(iii) and (iv) of Section 1.1(c).  If the Swing Line Lender declines to make a Swing Line Loan or if
Swing Line Availability is zero, Agent shall notify Revolving Lenders, promptly after receipt of a Notice of Revolving Credit Advance and in any
event prior to 12:00 p.m. (Los Angeles time) on the date such Notice of Revolving Credit Advance is received, by telecopy, telephone or
other similar form of transmission.  Each Revolving Lender shall make the amount of such Lender's Pro Rata Share of such Revolving Credit
Advance available to Agent in same day funds by wire transfer to Agent's account as set forth in Annex H not later than
2:00 p.m. (Los Angeles time) on the requested funding date.  After receipt of such wire transfers (or, in Agent's sole discretion, before
receipt of such wire transfers), subject to the terms hereof, Agent shall make the requested Revolving Credit Advance to Borrower.  All
payments by each Revolving Lender shall be made without setoff, counterclaim or deduction of any kind.

	On the 2nd Business Day of each calendar week or more frequently at Agent's election (each, a
"Settlement Date"), Agent shall advise each Lender by telephone, or telecopy of the amount of such Lender's Pro Rata
Share of principal, interest and Fees paid for the benefit of Lenders with respect to each applicable Loan.  Provided that each Lender has
funded all payments or Advances required to be made by it and has purchased all participations required to be purchased by it under this
Agreement and the other Loan Documents as of such Settlement Date, Agent shall pay to each Lender such Lender's Pro Rata Share of
principal, interest and Fees paid by Borrower since the previous Settlement Date for the benefit of such Lender on the Loans held by it.  To the
extent that any Lender (a "Non-Funding Lender") has failed to fund all such payments and Advances or failed to fund the
purchase of all such participations, Agent shall be entitled to set off the funding short-fall against that Non-Funding Lender's Pro Rata
Share of all payments received from Borrower.  Such payments shall be made by wire transfer to such Lender's account (as specified by such
Lender in Annex H or the applicable Assignment Agreement) not later than 1:00 p.m. (Los Angeles time) on the next
Business Day following each Settlement Date.  

	Availability of Lender's Pro Rata Share.  Agent may assume that each Revolving Lender will make its Pro
Rata Share of each Revolving Credit Advance available to Agent on each funding date.  If such Pro Rata Share is not, in fact, paid to Agent by
such Revolving Lender when due, Agent will be entitled to recover such amount on demand from such Revolving Lender without setoff,
counterclaim or deduction of any kind.  If any Revolving Lender fails to pay the amount of its Pro Rata Share forthwith upon Agent's demand,
Agent shall promptly notify Borrower and Borrower shall immediately repay such amount to Agent.  Nothing in this
Section 9.9(b) or elsewhere in this Agreement or the other Loan Documents shall be deemed to require Agent to advance
funds on behalf of any Revolving Lender or to relieve

                                                     55

any Revolving Lender from its obligation to fulfill its Commitments hereunder or to
prejudice any rights that Borrower may have against any Revolving Lender as a result of any default by such Revolving Lender hereunder.  To
the extent that Agent advances funds to Borrower on behalf of any Revolving Lender and is not reimbursed therefor on the same Business
Day as such Advance is made, Agent shall be entitled to retain for its account all interest accrued on such Advance until reimbursed by the
applicable Revolving Lender.

	Return of Payments.

	If Agent pays an amount to a Lender under this Agreement in the belief or expectation that a related payment has
been or will be received by Agent from Borrower and such related payment is not received by Agent, then Agent will be entitled to recover such
amount from such Lender on demand without setoff, counterclaim or deduction of any kind.

	If Agent determines at any time that any amount received by Agent under this Agreement must be returned to
Borrower or paid to any other Person pursuant to any insolvency law or otherwise, then, notwithstanding any other term or condition of this
Agreement or any other Loan Document, Agent will not be required to distribute any portion thereof to any Lender.  In addition, each Lender
will repay to Agent on demand any portion of such amount that Agent has distributed to such Lender, together with interest at such rate, if any,
as Agent is required to pay to Borrower or such other Person, without setoff, counterclaim or deduction of any kind.

	Non-Funding Lenders.  The failure of any Non-Funding Lender to make any Revolving Credit Advance or
any payment required by it hereunder or to purchase any participation in any Swing Line Loan to be made or purchased by it on the date
specified therefor shall not relieve any other Lender (each such other Revolving Lender, an "Other Lender") of its
obligations to make such Advance or purchase such participation on such date, but neither any Other Lender nor Agent shall be responsible
for the failure of any Non-Funding Lender to make an Advance, purchase a participation or make any other payment required hereunder.
Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender shall not have any voting or consent rights under or with
respect to any Loan Document or constitute a "Lender" or a "Revolving Lender" (or be included in the calculation of
"Requisite Lenders," or "Requisite Revolving Lenders" hereunder) for any voting or consent rights under or with respect
to any Loan Document.  At Borrower's request, Agent or a Person reasonably acceptable to Agent shall have the right with Agent's consent
and in Agent's sole discretion (but shall have no obligation) to purchase from any Non-Funding Lender, and each Non-Funding Lender agrees
that it shall, at Agent's request, sell and assign to Agent or such Person, all of the Commitments of that Non-Funding Lender for an amount
equal to the principal balance of all Loans held by such Non-Funding Lender and all accrued interest and fees with respect thereto through the
date of sale, such purchase and sale to be consummated pursuant to an executed Assignment Agreement.

	Dissemination of Information.  Agent shall use reasonable efforts to provide Lenders with any notice of
Default or Event of Default received by Agent from, or delivered by Agent to, any Credit Party, with notice of any Event of Default of which Agent has

                                                     56

actually become aware and with notice of any action taken by Agent following any Event of Default; provided, that Agent
shall not be liable to any Lender for any failure to do so, except to the extent that such failure is attributable to Agent's gross negligence or
willful misconduct.  Lenders acknowledge that Borrower is required to provide Financial Statements and Collateral Reports to Lenders in
accordance with Annexes E and F hereto and agree that Agent shall have no duty to provide the same to Lenders.

	Actions in Concert.  Anything in this Agreement to the contrary notwithstanding, each Lender hereby
agrees with each other Lender that no Lender shall take any action to protect or enforce its rights arising out of this Agreement or the Notes
(including exercising any rights of setoff) without first obtaining the prior written consent of Agent and Requisite Lenders, it being the intent of
Lenders that any such action to protect or enforce rights under this Agreement and the Notes shall be taken in concert and at the direction or
with the consent of Agent or Requisite Lenders.

9.10   
Syndication Agent.  It is expressly acknowledged and agreed by
Agent and each Lender, for the benefit of the Syndication Agent that, other than any rights or obligations explicitly reserved to or imposed upon
the Syndication Agent hereunder, the Syndication Agent, in such capacity, has no rights or obligations hereunder nor shall the Syndication
Agent, in such capacity, be responsible or accountable to any other party hereto for any action or failure to act hereunder other than in
connection with such explicitly reserved rights or obligations and then only for damages caused by its own gross negligence or willful
misconduct.

10.   
SUCCESSORS AND ASSIGNS

10.1   
Successors and Assigns.  This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit Party, Agent, Lenders and their respective successors and assigns
(including, in the case of any Credit Party, a debtor-in-possession on behalf of such Credit Party), except as otherwise provided herein or
therein.  No Credit Party may assign, transfer, hypothecate or otherwise convey its rights, benefits, obligations or duties hereunder or under
any of the other Loan Documents without the prior express written consent of Agent and Lenders.  Any such purported assignment, transfer,
hypothecation or other conveyance by any Credit Party without the prior express written consent of Agent and Lenders shall be void.  The
terms and provisions of this Agreement are for the purpose of defining the relative rights and obligations of each Credit Party, Agent and
Lenders with respect to the transactions contemplated hereby and no Person shall be a third party beneficiary of any of the terms and
provisions of this Agreement or any of the other Loan Documents.

11.   
MISCELLANEOUS

11.1   
Complete Agreement; Modification of Agreement.  The Loan
Documents constitute the complete agreement between the parties with respect to the subject matter thereof and may not be modified, altered
or amended except as set forth in Section 11.2.  Any letter of interest, commitment letter, or fee letter (other than the
GE Capital Fee Letter) or confidentiality agreement, if any, between any Credit Party and Agent or any Lender or any of

                                                     57

their respective Affiliates, predating this Agreement and relating to a financing of substantially similar form, purpose or effect shall be superseded by this
Agreement. Notwithstanding the foregoing, the GE Capital Fee Letter and any market flex provisions contained in the final commitment letter
between Agent and Borrower shall survive the execution and delivery of this Agreement and shall continue to be binding obligations of the
parties.

11.2   
Amendments and Waivers.

	Except for actions expressly permitted to be taken by Agent, no amendment, modification, termination or
waiver of any provision of this Agreement or any other Loan Document, or any consent to any departure by any Credit Party therefrom, shall in
any event be effective unless the same shall be in writing and signed by Agent and Borrower, and by Requisite Lenders, Requisite Revolving
Lenders, or all affected Lenders, as applicable.  Except as set forth in clauses (b) and (c) below, all such amendments,
modifications, terminations or waivers requiring the consent of any Lenders shall require the written consent of Requisite Lenders.

	No amendment, modification, termination or waiver of or consent with respect to any provision of this Agreement
that waives compliance with the conditions precedent set forth in Section 2.2 to the making of any Loan or the incurrence of
any Letter of Credit Obligations shall be effective unless the same shall be in writing and signed by Agent, Requisite Revolving Lenders and
Borrower.  Notwithstanding anything contained in this Agreement to the contrary, no waiver or consent with respect to any Default or any Event
of Default shall be effective for purposes of the conditions precedent to the making of Loans or the incurrence of Letter of Credit Obligations
set forth in Section 2.2 unless the same shall be in writing and signed by Agent, Requisite Revolving Lenders, and
Borrower.

	No amendment, modification, termination or waiver shall, unless in writing and signed by Agent and each Lender
directly affected thereby:  (i) increase the principal amount of any Lender's Commitment (which action shall be deemed only to affect
those Lenders whose Commitments are increased and may be approved by Requisite Lenders, including those Lenders whose Commitments
are increased); (ii) reduce the principal of, rate of interest on or Fees payable with respect to any Loan or Letter of Credit Obligations of
any affected Lender; (iii) extend any scheduled payment date (other than payment dates of mandatory prepayments under
Section 1.3(b)(ii)-(iii)) or final maturity date of the principal amount of any Loan of any affected Lender; (iv) waive, forgive,
defer, extend or postpone any payment of interest or Fees as to any affected Lender; (v) increase Borrowing Availability, or otherwise increase
the percentage advance rates set forth in the definition of the Borrowing Base, or make less restrictive the nondiscretionary criteria for
exclusion from Eligible Inventory or Eligible Credit Card Receivables set forth in Sections 1.6 and 1.7; (vi) reduce the
frequency or content of reports required to be delivered to Agent or Lenders by or with respect to any Credit Party; (vii) except as
expressly permitted or required in the Loan Documents, release or dispose of any material portion of the Collateral, (viii) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the Loans that shall be required for Lenders or any of them to
take any action hereunder; (ix) amend or waive this Section 11.2 or the definitions of the terms "Requisite
Lenders," or "Requisite Revolving Lenders," insofar as such definitions affect the substance of this
Section 11.2, (x) amend Section 1.11(a) or (xi) amend the definition of

                                                     58

"Minimum Excess Availability."
Furthermore, no amendment, modification, termination or waiver affecting the rights or duties of Agent or L/C Issuer under this Agreement or
any other Loan Document shall be effective unless in writing and signed by Agent or L/C Issuer, as the case may be, in addition to Lenders
required hereinabove to take such action.  Furthermore, no amendment, modification, termination or waiver affecting the rights or duties of
Agent or L/C Issuer, or of any Lender in respect to any Swap Related Reimbursement Obligations, under this Agreement or any other Loan
Document, including any release of any Guaranty or Collateral requiring a writing signed by all Lenders, shall be effective unless in writing and
signed by Agent or L/C Issuer or the applicable Lenders, as the case may be, in addition to the other Lenders required hereinabove to take
such action.  No amendment, modification, termination or waiver shall be required for Agent to take additional Collateral pursuant to any Loan
Document.  No amendment, modification, termination or waiver of any provision of any Note shall be effective without the written concurrence
of the holder of that Note.  No notice to or demand on any Credit Party in any case shall entitle such Credit Party or any other Credit Party to
any other or further notice or demand in similar or other circumstances.  Any amendment, modification, termination, waiver or consent effected
in accordance with this Section 11.2 shall be binding upon each holder of the Notes at the time outstanding and each future
holder of the Notes. 

	If, in connection with any proposed amendment, modification, waiver or termination (a "Proposed
Change") requiring the consent of all affected Lenders, the consent of Agent, but the consent of other Lenders whose consent is
required is not obtained (any such Lender whose consent is not obtained being referred to as a "Non-Consenting Lender")
then, at Borrower's request, Agent or a Person reasonably acceptable to Agent shall have the right, with Agent's consent and in Agent's sole
discretion (but Agent shall have no obligation), to purchase from all, but not less than all, such Non-Consenting Lenders, and such Non-
Consenting Lenders agree that they shall, upon Agent's request, sell and assign to Agent or such Person, all of the Commitments of such Non-
Consenting Lenders for an amount equal to the principal balance of all Loans held by the Non-Consenting Lenders and all accrued interest
and Fees with respect thereto, in each case outstanding as of the date of sale (the "Purchase Price").  Such purchase and
sale shall be consummated pursuant to an executed Assignment Agreement, which Assignment Agreement may be executed by the Agent on
behalf of each such Non-Consenting Lender so long as the applicable Purchase Price is paid to such Non-Consenting Lender.

	Upon payment in full in cash and performance of all of the Obligations (other than indemnification Obligations),
termination of the Commitments and a release of all claims against Agent and Lenders, and so long as no suits, actions, proceedings or claims
are pending or threatened against any Indemnified Person asserting any damages, losses or liabilities that are Indemnified Liabilities, Agent
shall deliver to Borrower termination statements, mortgage releases and other documents necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations.

11.3   
Fees and Expenses.  Borrower shall reimburse (i) Agent for
all fees, costs and expenses (including the reasonable fees and expenses of all of its counsel, advisors, consultants and auditors) and
(ii) Agent (and, with respect to clauses (c) and (d) below, all Lenders) for all fees, costs and expenses, including the
reasonable fees, costs and expenses of counsel or other advisors (including environmental and management consultants and appraisers),

                                                     59

incurred in connection with the negotiation and preparation of the Loan Documents and incurred in connection with:

	the forwarding to Borrower or any other Person on behalf of Borrower by Agent of the proceeds of any Loan
(including a wire transfer fee of $25 per wire transfer);

	any amendment, modification or waiver of, consent with respect to, or termination of, any of the Loan Documents
or Related Transactions Documents or advice in connection with the syndication and administration of the Loans made pursuant hereto or its
rights hereunder or thereunder;

	any litigation, contest, dispute, suit, proceeding or action (whether instituted by Agent, any Lender, Borrower or
any other Person and whether as a party, witness or otherwise) in any way relating to the Collateral, any of the Loan Documents or any other
agreement to be executed or delivered in connection herewith or therewith, including any litigation, contest, dispute, suit, case, proceeding or
action, and any appeal or review thereof, in connection with a case commenced by or against Borrower or any other Person that may be
obligated to Agent by virtue of the Loan Documents; including any such litigation, contest, dispute, suit, proceeding or action arising in
connection with any work-out or restructuring of the Loans during the pendency of one or more Events of Default; provided that in the
case of reimbursement of counsel for Lenders other than Agent, such reimbursement shall be limited to one counsel for all such Lenders;
provided, further, that no Person shall be entitled to reimbursement under this clause (c) in respect of any litigation, contest,
dispute, suit, proceeding or action to the extent any of the foregoing results from such Person's gross negligence or willful
misconduct;

	any attempt to enforce any remedies of Agent against any or all of the Credit Parties or any other Person that may
be obligated to Agent or any Lender by virtue of any of the Loan Documents, including any such attempt to enforce any such remedies in the
course of any work-out or restructuring of the Loans during the pendency of one or more Events of Default; provided, that in the case
of reimbursement of counsel for Lenders other than Agent, such reimbursement shall be limited to one counsel for all such Lenders;

	any workout or restructuring of the Loans during the pendency of one or more Events of Default; and

	efforts to (i) monitor the Loans or any of the other Obligations, (ii) evaluate, observe or assess any of
the Credit Parties or their respective affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell, liquidate or otherwise
dispose of any of the Collateral;

including, as to each of clauses (a) through (f) above, all reasonable attorneys' and other
professional and service providers' fees arising from such services and other advice, assistance or other representation, including those in
connection with any appellate proceedings, and all expenses, costs, charges and other fees incurred by such counsel and others in connection
with or relating to any of the events or actions described in this Section 11.3, all of which shall be

                                                     60

payable, on demand, by
Borrower to Agent.  Without limiting the generality of the foregoing, such expenses, costs, charges and fees may include:  fees, costs and
expenses of accountants, environmental advisors, appraisers, investment bankers, management and other consultants and paralegals; court
costs and expenses; photocopying and duplication expenses; court reporter fees, costs and expenses; long distance telephone charges; air
express charges; telegram or telecopy charges; secretarial overtime charges; and expenses for travel, lodging and food paid or incurred in
connection with the performance of such legal or other advisory services.

11.4   
No Waiver.  Agent's or any Lender's failure, at any time or times,
to require strict performance by the Credit Parties of any provision of this Agreement or any other Loan Document shall not waive, affect or
diminish any right of Agent or such Lender thereafter to demand strict compliance and performance herewith or therewith.  Any suspension or
waiver of an Event of Default shall not suspend, waive or affect any other Event of Default whether the same is prior or subsequent thereto and
whether the same or of a different type.  Subject to the provisions of Section 11.2, none of the undertakings, agreements,
warranties, covenants and representations of any Credit Party contained in this Agreement or any of the other Loan Documents and no Default
or Event of Default by any Credit Party shall be deemed to have been suspended or waived by Agent or any Lender, unless such waiver or
suspension is by an instrument in writing signed by an officer of or other authorized employee of Agent and the applicable required Lenders,
and directed to Borrower specifying such suspension or waiver.

11.5   
Remedies.  Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies that Agent or any Lender may have under any other
agreement, including the other Loan Documents, by operation of law or otherwise.  Recourse to the Collateral shall not be
required.

11.6   
Severability.  Wherever possible, each provision of this
Agreement and the other Loan Documents shall be interpreted in such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement or any other Loan Document shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of
this Agreement or such other Loan Document.

11.7   
Conflict of Terms.  Except as otherwise provided in this
Agreement or any of the other Loan Documents by specific reference to the applicable provisions of this Agreement, if any provision contained
in this Agreement conflicts with any provision in any of the other Loan Documents, the provision contained in this Agreement shall govern and
control.

11.8   
Confidentiality.  Agent and each Lender agree to use
commercially reasonable efforts (equivalent to the efforts Agent or such Lender applies to maintaining confidentiality of its own confidential
information) to maintain as confidential all confidential information provided to them by the Credit Parties for a period of 2 years following
receipt thereof, except that Agent and any Lender may disclose such information (a) to Persons employed or engaged by Agent or such
Lender; (b) to any bona fide assignee or participant or potential assignee or participant that has agreed to comply with the covenant
contained in this Section 11.8 (and any such bona fide assignee or participant or potential assignee or participant may disclose
such information to Persons employed or engaged by them as described in clause

                                                     61

(a) above); (c) as required or requested by any
Governmental Authority or reasonably believed by Agent or such Lender to be compelled by any court decree, subpoena or legal or
administrative order or process; (d) as, on the advice of Agent's or such Lender's counsel, is required by law; (e) in connection
with the exercise of any right or remedy under the Loan Documents or in connection with any Litigation to which Agent or such Lender is a
party; or (f) that ceases to be confidential through no fault of Agent or any Lender.  None of the foregoing obligations and restrictions
shall apply to any information that (i) was or is generally available to the public other than as a result of a disclosure by Agent or any
Lender, or (ii) was or is available to Agent or any Lender on a non-confidential basis prior to its disclosure by the Credit
Parties.

11.9   
GOVERNING LAW.  EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.  EACH CREDIT PARTY
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE SOUTHERN DISTRICT OF NEW
YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT
PARTIES, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY
MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT
AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED FURTHER,  THAT NOTHING IN
THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR
TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT.  EACH CREDIT PARTY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
CREDIT PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL
OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.  EACH CREDIT PARTY HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE
SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF  

                                                     62

OR 3 DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.

11.10   
Notices.  Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served
upon any of the parties by any other parties, or whenever any of the parties desires to give or serve upon any other parties any communication
with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing
and shall be deemed to have been validly served, given or delivered:  (a) upon the earlier of actual receipt and 3 Business Days after
deposit in the United States Mail, registered or certified mail, return receipt requested, with proper postage prepaid; (b) upon
transmission, when sent by telecopy or other similar facsimile transmission (with such telecopy or facsimile promptly confirmed by delivery of a
copy by personal delivery or United States Mail as otherwise provided in this Section 11.10); (c) 1 Business Day
after deposit with a reputable overnight courier with all charges prepaid or (d) when delivered, if hand-delivered by messenger, all of
which shall be addressed to the party to be notified and sent to the address or facsimile number indicated in Annex I or to such other
address (or facsimile number) as may be substituted by notice given as herein provided.  The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice.  Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to any Person (other than Borrower or Agent) designated in Annex I to receive copies shall
in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other
communication.

11.11   
Section Titles.  The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.

11.12   
Counterparts.  This Agreement may be executed in any number
of separate counterparts, each of which shall collectively and separately constitute one agreement.

11.13   
WAIVER OF JURY TRIAL.  BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER
THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY
CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
RELATED THERETO.

                                                     63

11.14   
Press Releases and Related Matters.  Each Credit Party executing
this Agreement agrees that neither it nor its Affiliates will in the future issue any press releases or other public disclosure using the name of
GE Capital, or its affiliates or referring to this Agreement, the other Loan Documents or the Related Transactions Documents without at
least 2 Business Days' prior notice to GE Capital, and without the prior written consent of GE Capital, unless (and only to the
extent that) such Credit Party or Affiliate is required to do so under law and then, in any event, such Credit Party or Affiliate will consult with
GE Capital, before issuing such press release or other public disclosure or unless such public disclosure is made in connection with
compliance by such Credit Party or Affiliate with its obligations under the federal securities laws.  Each Credit Party consents to the publication
by Agent or any Lender of a tombstone or similar advertising material relating to the financing transactions contemplated by this Agreement
using Borrower's name, product photographs, logo or trademark.  Agent or such Lender shall provide a draft of any such tombstone or similar
advertising material to each Credit Party for review and comment prior to the publication thereof. Agent reserves the right to provide to industry
trade organizations information necessary and customary for inclusion in league table measurements.

11.15   
Reinstatement.  This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against any Credit Party for liquidation or reorganization, should any Credit
Party become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or
any significant part of any Credit Party's assets, and shall continue to be effective or to be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Obligations, whether as a "voidable preference," "fraudulent
conveyance," or otherwise, all as though such payment or performance had not been made.  In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not
so rescinded, reduced, restored or returned.

11.16   
Advice of Counsel.  Each of the parties represents to each other
party hereto that it has discussed this Agreement and, specifically, the provisions of Sections 11.9 and 11.13, with its
counsel.

11.17   
No Strict Construction.  The parties hereto have participated
jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any provisions of this Agreement.

[Remainder of Page Intentionally Left Blank]

                                                     64

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.

 

 

GOTTSCHALKS INC.

By:  ________________________________

                           Name:J. Gregory Ambro

                 Senior Vice President and 

        Chief Administrative Officer

                                                     65

 

GENERAL ELECTRIC CAPITAL

                   CORPORATION,

                   as Agent and as a Lender

By:  ________________________________

                           Name:  

                       Title:    Its Duly Authorized Signatory

                                                     66

THE CIT GROUP/BUSINESS CREDIT, INC.,

                   as a Lender

By:  ________________________________

                           Name:  

                       Title: 

                                                     67

WELLS FARGO FOOTHILL, LLC,

as a Lender

By:  ________________________________

                           Name:  

                       Title: 

                                                     68

LASALLE RETAIL FINANCE, a division of
LASALLE BUSINESS CREDIT, LLC, as agent
for STANDARD FEDERAL BANK
NATIONAL
ASSOCIATION N.A.,

as a Lender

By:  ________________________________

                           Name:  

                       Title: 

                                                     69

ANNEX A (Recitals)

                  to

                  CREDIT AGREEMENT

DEFINITIONS

Capitalized terms used in the Loan Documents shall have (unless otherwise provided elsewhere in the Loan
Documents) the following respective meanings, and all references to Sections, Exhibits, Schedules or Annexes in the following definitions shall
refer to Sections, Exhibits, Schedules or Annexes of or to the Agreement:

"Account Debtor" means any Person who may become obligated to any Credit Party under, with
respect to, or on account of, an Account, Chattel Paper or General Intangibles (including a payment intangible).

"Accounting Changes" has the meaning ascribed thereto in Annex G.

"Accounts" means all "accounts," as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, including (a) all accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper, or Instruments), (including any such obligations that may be
characterized as an account or contract right under the Code), (b) all of each Credit Party's rights in, to and under all purchase orders or
receipts for goods or services, (c) all of each Credit Party's rights to any goods represented by any of the foregoing (including unpaid
sellers' rights of rescission, replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), (d) all
rights to payment due to any Credit Party for property sold, leased, licensed, assigned or otherwise disposed of, for a policy of insurance
issued or to be issued, for a secondary obligation incurred or to be incurred, for energy provided or to be provided, for the use or hire of a
vessel under a charter or other contract, arising out of the use of a credit card or charge card, or for services rendered or to be rendered by
such Credit Party or in connection with any other transaction (whether or not yet earned by performance on the part of such Credit Party) and,
(e) all collateral security of any kind, given by any Account Debtor or any other Person with respect to any of the foregoing.  

"Activation Notice" has the meaning ascribed to it in Annex C.

"Advance" means any Revolving Credit Advance or Swing Line Advance, as the context may
require.

"Affected Lender" has the meaning ascribed to it in Section 1.16.

"Affiliate" means, with respect to any Person, (a) each Person that, directly or indirectly,
owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, 5% or more of the Stock having ordinary voting power in the
election of directors of such Person, (b) each Person that controls, is controlled by or is under common control with such Person,

                                                     A-1

(c) each of such Person's officers, directors, joint venturers and partners and (d) in the case of Borrower, the immediate family
members, spouses and lineal descendants of individuals who are Affiliates of Borrower.  For the purposes of this definition,
"control" of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by contract or otherwise; provided, however,
that the term "Affiliate" shall specifically exclude Agent and each Lender.

"Agent" means GE Capital in its capacity as Agent for Lenders or its successor appointed
pursuant to Section 9.7.

"Agreement" means the Second Amended and Restated Credit Agreement by and among
Borrower, the other Credit Parties party thereto, GE Capital, as Agent and Lender and the other Lenders from time to time party thereto,
dated as of September 26, 2007, as the same may be amended, supplemented, restated or otherwise modified from time to time.

"Appendices" has the meaning ascribed to it in the recitals to the Agreement.

"Applicable L/C Margin" means the per annum fee, from time to time in effect, payable with
respect to outstanding Letter of Credit Obligations as determined by reference to Section 1.5(a).

"Applicable Margins" means collectively the Applicable L/C Margin, the Applicable Unused Line
Fee Margin, the Applicable Revolver Index Margin, and the Applicable Revolver LIBOR Margin.

"Applicable Revolver Index Margin" means the per annum interest rate margin from time to time in
effect and payable in addition to the Index Rate applicable to the Revolving Credit Advances, as determined by reference to
Section 1.5(a).

"Applicable Revolver LIBOR Margin" means the per annum interest rate from time to time in effect
and payable in addition to the LIBOR Rate applicable to the Revolving Credit Advances, as determined by reference to
Section 1.5(a).

"Applicable Unused Line Fee Margin" means the per annum fee, from time to time in effect,
payable in respect of Borrower's non-use of committed funds pursuant to Section 1.9(b), which fee is determined by reference
to Section 1.5(a).

"Assignment Agreement" has the meaning ascribed to it in Section 9.1(a).

"Availability" means as of any date of determination, (a) the lesser of (i) the Maximum
Amount less any Reserves and (ii) the Borrowing Base, less (b) the sum of the aggregate Revolving Loan and Swing
Line Loan then outstanding, provided that an Overadvance in accordance with Section 1.1(a)(iii) may cause the
Revolving Loan and the Swing Line Loan to exceed the Borrowing Base by the amount of such permitted Overadvance.

"Bankruptcy Code" means the provisions of Title 11 of the United States Code, 11 U.S.C. §§101
et seq. 

                                                     A-2

"Blocked Accounts" has the meaning ascribed to it in Annex C.

"Borrower" has the meaning ascribed thereto in the preamble to the Agreement.

"Borrowing Availability" means as of any date of determination, (a) the lesser of (i) the
Maximum Amount less any Reserves and (ii) the Borrowing Base, less (b) the sum of the aggregate Revolving Loan
and Swing Line Loan then outstanding, and less (c) the Minimum Excess Availability provided that an Overadvance in
accordance with Section 1.1(a)(iii) may cause the Revolving Loan and the Swing Line Loan to exceed the Borrowing Base by
the amount of such permitted Overadvance.

"Borrowing Base" means, as of any date of determination by Agent, from time to time, an amount
equal to the sum of:
(a)95% of the net recovery value of Eligible Inventory as determined by a third party appraiser acceptable to Agent
in its sole discretion; 

(b)90% of the Eligible Credit Card Receivables; and

(c)the lesser of (i) 65% of the Fair Market Value of the Eligible Mortgaged Properties or (ii)
$43,200,000;

in each case, less any Reserves established by Agent at such time, including, without limitation (i) in the case of
Eligible L/C Inventory and/or Eligible In Transit Inventory, Reserves for duties, custom brokers, freight, taxes, insurance and other charges and
expenses pertaining to such Inventory and (ii) in the case of Eligible Mortgaged Properties, Reserves for real property and other applicable
taxes, insurance, capital improvements, repairs, operations and maintenance, equipment repair and replacement, remediation, and other
charges and expenses pertaining to such Eligible Mortgaged Properties.

"Borrowing Base Certificate" means a certificate to be executed and delivered from time to time by
the chief financial officer, vice president of finance or assistant controller of  Borrower or any other officer of Borrower previously approved by
Agent in writing, in the form attached to the Agreement as Exhibit 4.1(b).

"Business Day" means any day that is not a Saturday, a Sunday or a day on which banks are
required or permitted to be closed in the States of California and/or New York and in reference to LIBOR Loans shall mean any such day that
is also a LIBOR Business Day. 

"Capital Expenditures" means, with respect to any Person, all expenditures (by the expenditure of
cash or the incurrence of Indebtedness) by such Person during any measuring period for any fixed assets or improvements or for
replacements, substitutions or additions thereto that have a useful life of more than one year and that are required to be capitalized under
GAAP.

"Capital Lease" means, with respect to any Person, any lease of any property (whether real,
personal or mixed) by such Person as lessee that, in accordance with GAAP,

                                                     A-3

would be required to be classified and accounted for as a capital
lease on a balance sheet of such Person.

"Capital Lease Obligation" means, with respect to any Capital Lease of any Person, the amount of
the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of such
Capital Lease.

"Cash Collateral Account" has the meaning ascribed to it Annex B.

"Cash Equivalents" has the meaning ascribed to it in Annex B.

"Cash Management Systems" has the meaning ascribed to it in Section 1.8.

"Certificate of Exemption" has the meaning ascribed to it in Section 1.15(c).

"Change of Control" means any of the following:  (a) any person or group of persons (within
the meaning of the Securities Exchange Act of 1934) other than a Permitted Holder, shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 20% or more
of the issued and outstanding shares of capital Stock of Borrower having the right to vote for the election of directors of Borrower under
ordinary circumstances; (b) any Permitted Holder (or all of the Permitted Holders as a group within the meaning of the Securities
Exchange Act of 1934) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934) of 50% or more of the issued and outstanding shares of capital Stock of
Borrower having the right to vote for the election of directors of Borrower under ordinary circumstances; (c) during any period of twelve
consecutive calendar months, individuals who at the beginning of such period constituted the board of directors of Borrower (together with any
new directors whose election by the board of directors of Borrower or whose nomination for election by the Stockholders of Borrower was
approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any reason other than death or disability to constitute a majority of
the directors then in office; or (d) Borrower ceases to own and control all of the economic and voting rights associated with all of the
outstanding capital Stock of any of its Subsidiaries.

"Charges" means all federal, state, county, city, municipal, local, foreign or other governmental
taxes (including taxes owed to the PBGC at the time due and payable), levies, assessments, charges, liens, claims or encumbrances
(a) upon or relating to the Collateral, (b) upon or relating to the Obligations, (c) measured by the employees, payroll, income
or gross receipts of any Credit Party owed by or assessable against any Credit Party, (d) upon or relating to any Credit Party's
ownership or use of any properties or other assets, or (e) upon or relating to any other aspect of any Credit Party's business.

"Chattel Paper" means any "chattel paper," as such term is defined in the Code,
including electronic chattel paper, now owned or hereafter acquired by any Credit Party.

                                                     A-4

"Closing Date" means September 26, 2007.

"Closing Checklist" means the schedule, including all appendices, exhibits or schedules thereto,
listing certain documents and information to be delivered in connection with the Agreement, the other Loan Documents and the transactions
contemplated thereunder, substantially in the form attached hereto as Annex D.

"Code" means the Uniform Commercial Code as the same may, from time to time, be enacted and
in effect in the State of New York; provided, that to the extent that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or
Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of, or remedies with respect to, Agent's or any Lender's Lien on any Collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term "Code" shall mean
the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.

"Collateral" means the property covered by the Security Agreement, the Mortgages and the other
Collateral Documents and any other property, real or personal, tangible or intangible, now existing or hereafter acquired, that may at any time
be or become subject to a security interest or Lien in favor of Agent, on behalf of itself and Lenders, to secure the Obligations.

"Collateral Access Agreement" has the meaning ascribed to it in Section 5.9(a).

"Collateral Documents" means the Security Agreement, the Pledge Agreements, the Guaranties,
the Mortgages, the Trademark Security Agreement, the Reaffirmation Agreement and all similar agreements entered into guaranteeing
payment of, or granting a Lien upon property as security for payment of, the Obligations.

"Collateral Reports" means the reports with respect to the Collateral referred to in
Annex F.

"Collection Account" means that certain account of Agent, account number 502-328-54 in the
name of Agent at DeutscheBank Trust Company Americas in New York, New York ABA No. 021 001 033, or such other account as may
be specified in writing by Agent as the "Collection Account."

"Commitment Termination Date" means the earliest of (a) September 26, 2012, (b) the date of
termination of Lenders' obligations to make Advances and to incur Letter of Credit Obligations or permit existing Loans to remain outstanding
pursuant to Section 8.2(b), and (c) the date of indefeasible prepayment in full by Borrower of the Loans and the cancellation and
return (or stand-by guarantee) of all Letters of Credit or the cash collateralization of all Letter of Credit Obligations pursuant to Annex
B, and the permanent reduction of all Commitments to zero dollars ($0).

                                                     A-5

"Commitments" means (a) as to any Lender, such Lender's Revolving Loan
Commitment (including without duplication the Swing Line Lender's Swing Line Accommodation as a subset of its Revolving Loan
Commitment) as set forth on Annex J to the Agreement or in the most recent Assignment Agreement executed by such Lender
and (b) as to all Lenders, the aggregate of all Lenders' Revolving Loan Commitments (including without duplication the Swing Line
Lender's Swing Line Accommodation as a subset of its Revolving Loan Commitment), which aggregate commitment shall be Two Hundred
Million Dollars ($200,000,000) on the Closing Date, as to each of clauses (a) and (b), as such Commitments may be reduced, amortized
or adjusted from time to time in accordance with the Agreement.

"Compliance Certificate" has the meaning ascribed to it in Annex E.

"Concentration Account Bank" has the meaning ascribed to it in Annex C.

"Concentration Accounts" has the meaning ascribed to it in Annex C.

"Contracts" means all "contracts," as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, in any event, including all contracts, leases, undertakings, or agreements (other than rights evidenced
by Chattel Paper, Documents or Instruments) in or under which any Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of any Account.

"Control Letter" means a letter agreement between Agent and (i) the issuer of uncertificated
securities with respect to uncertificated securities in the name of any Credit Party, (ii) a securities intermediary with respect to securities,
whether certificated or uncertificated, securities entitlements and other financial assets held in a securities account in the name of any Credit
Party, (iii) a futures commission merchant or clearing house, as applicable, with respect to commodity accounts and commodity
contracts held by any Credit Party, whereby, among other things, the issuer, securities intermediary or futures commission merchant disclaims
any security interest in the applicable financial assets, acknowledges the Lien of Agent, on behalf of itself and Lenders, on such financial
assets, and agrees to follow the instructions or entitlement orders of Agent without further consent by the affected Credit Party.

"Copyright License" means any and all rights now owned or hereafter acquired by any Credit Party
under any written agreement granting any right to use any Copyright or Copyright registration.

"Copyrights" means all of the following now owned or hereafter adopted or acquired by any Credit
Party:  (a) all copyrights and General Intangibles of like nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including all registrations, recordings and applications in the United States Copyright
Office or in any similar office or agency of the United States, any state or territory thereof, or any other country or any political subdivision
thereof, and (b) all reissues, extensions or renewals thereof.

                                                     A-6

"Credit Card Agreements" means all agreements now or hereafter entered into by Borrower with
any Credit Card Issuer or Credit Card Processor, as the same may now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.

"Credit Card Issuer" means any Person who issues or whose members issue credit cards used by
customers of Borrower to purchase goods, including, without limitation, Household, Carte Blanche, Diners, Discover, MasterCard or VISA bank
credit or debit cards and American Express.

"Credit Card Notices" means those certain notices issued by Borrower in favor of Agent to the
Credit Card Issuers and Credit Card Processors pursuant to which such parties acknowledge Agent's first priority security interest in the
monies due to Borrower under any Credit Card Agreement and agree to transfer all credit card receipts to the Concentration Account.

"Credit Card Processor" means any servicing or processing agent or any factor or financial
intermediary who facilitates, services, processes or manages the credit authorization, billing transfer and/or payment with respect to Credit
Card Receivables from a Credit Card Issuer and other procedures with respect to any sales transactions of  Borrower involving credit card or
debit card purchases by customers using credit cards or debit cards issued by any Credit Card Issuer.

"Credit Card Receivables" means all Accounts consisting of the present and future rights of
Borrower to payment by Credit Card Issuers or Credit Card Processors for merchandise sold and delivered to customers of Borrower who have
purchased such goods using a credit card or a debit card issued by a Credit Card Issuer.

"Credit Parties" means Borrower, and each of its respective Subsidiaries.

"Default" means any event that, with the passage of time or notice or both, would, unless cured or
waived, become an Event of Default.

"Default Rate" has the meaning ascribed to it in Section 1.5(d).

"Deposit Accounts" means all "deposit accounts" as such term is defined in the Code,
now or hereafter held in the name of any Credit Party.

"Disbursement Accounts" has the meaning ascribed to it in Annex C.

"Disclosure Schedules" means the Schedules prepared by Borrower and denominated as
Disclosure Schedules (3.1) through (6.7) in the Index to the Agreement.

"Documents" means all "documents," as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party, wherever located.

"Dollars" or "$" means lawful currency of the United States of America.

                                                     A-7

"EBITDA" means, with respect to any Person for any fiscal period, without duplication, an amount
equal to (a) consolidated net income of such Person for such period determined in accordance with GAAP, minus (b) the
sum of (i) income tax credits, (ii) interest income, (iii) gain from extraordinary and other non-cash, non-recurring items for
such period, and (iv) any material aggregate net gain reflected in the Financial Statements during such period arising from the sale,
exchange or other disposition of capital assets by such Person (including any fixed assets, whether tangible or intangible, all inventory sold in
conjunction with the disposition of fixed assets and all securities), in each case to the extent included in the calculation of consolidated net
income of such Person for such period in accordance with GAAP, but without duplication, plus (c) the sum of (i) any
provision for income taxes, (ii) Interest Expense, (iii) loss from extraordinary and other non cash, non-recurring items for such
period, (iv) the amount of depreciation and amortization for such period, (v) amortized debt discount for such period, and
(vi) the amount of any deduction to consolidated net income as the result of any grant to any members of the management of such
Person of any Stock, in each case to the extent included in the calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication.  For purposes of this definition, the following items shall be excluded in determining
consolidated net income of a Person:  (1) the income (or deficit) of any other Person accrued prior to the date it became a Subsidiary of,
or was merged or consolidated into, such Person or any of such Person's Subsidiaries; (2) the income (or deficit) of any other Person
(other than a Subsidiary and other than Park 41) in which such Person has an ownership interest, except to the extent any such income
has actually been received by such Person in the form of cash dividends or distributions; (3) the undistributed earnings of any Subsidiary
of such Person 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 or requirement of law applicable to such Subsidiary; (4) any restoration to income of any
contingency reserve, except to the extent that provision for such reserve was made out of income accrued during such period; (5) any
write-up of any asset; (6) any net gain from the collection of the proceeds of life insurance policies; (7) any net gain arising from
the acquisition of any securities, or the extinguishment, under GAAP, of any Indebtedness, of such Person, (8) in the case of a
successor to such Person by consolidation or merger or as a transferee of its assets, any earnings of such successor prior to such
consolidation, merger or transfer of assets, and (9) any deferred credit representing the excess of equity in any Subsidiary of such
Person at the date of acquisition of such Subsidiary over the cost to such Person of the investment in such Subsidiary. 

"Eligible Credit Card Receivables" has the meaning ascribed to it in
Section 1.6.

"Eligible Inventory" has the meaning ascribed to it in Section 1.7.

"Eligible In-Transit Inventory" means all finished goods inventory owned by Borrower and not
covered by Letters of Credit, and which finished goods Inventory is in transit to any of Borrower's locations (other than items in-transit directly
from one of Borrower's locations listed on Disclosure Schedule 3.8 to another listed location) and which finished goods
Inventory (a) has been paid for and is owned by Borrower, (b) is fully insured other than any applicable deductibles or self-insured
retention limits under insurance policies or programs maintained in accordance with Section 5.4(a), (c) is subject to a first
priority security interest in

                                                     A-8

and lien upon such goods in favor of Agent (except for any possessor lien upon such goods in the possession of a
freight carrier or shipping company securing only the freight charges for the transportation of such goods to Borrower), (d) is evidenced
or deliverable pursuant to documents, notices, instruments, statements and bills of lading that have been delivered to Agent or an agent acting
on its behalf, and (e) is otherwise deemed to be "Eligible Inventory" hereunder.  It is understood and agreed that any
Inventory located at a warehouse or consolidator which has executed and delivered to Agent a bailee letter in form and substance satisfactory
to Agent and which Inventory otherwise satisfies the criteria for Eligible Inventory set forth in Section 1.7 shall not be considered
in-transit Inventory; provided, however, that Agent retains its discretion to change such criteria, establish reserves or otherwise
modify such terms as specified in Section 1.7 or elsewhere in this Agreement.

"Eligible L/C Inventory" means all finished goods Inventory owned by Borrower and covered by
documentary Letters of Credit, which finished goods Inventory is in transit to one or more of Borrower's locations and which finished goods
Inventory (a) is owned by  Borrower, (b) is fully insured other than any applicable deductibles or self-insured retention limits under
insurance policies or programs maintained in accordance with Section 5.4(a), (c) is subject to a first priority security interest in
and lien upon such goods in favor of Agent (except for any possessor lien upon such goods in the possession of a freight carrier or shipping
company securing only the freight charges for the transportation of such goods to Borrower), (d) is evidenced or deliverable pursuant to
documents, notices, instruments, statements and bills of lading that have been delivered to Agent or an agent acting on its behalf, and
(e) is otherwise deemed to be "Eligible Inventory" hereunder.

"Eligible Mortgaged Property" means each Mortgaged Property set forth on Disclosure
Schedule 3.6, as of the date hereof, as one of the "Owned Properties" (other than that property located at 2900 Airport Drive, Madera, CA  93637) which is (a) owned by Borrower, free and
clear of all Liens other than Liens set forth in clauses (d) and (g) of the definition of Permitted Encumbrances, (b) is fully insured in accordance
with the requirements of Section 5.4 and is in compliance with all other applicable representations, warranties and covenants in the
Loan Documents, (c) is subject to a duly filed Mortgage providing a first priority security interest in and lien upon such Mortgaged Property in
favor of Agent, on behalf of itself and for the benefit of the Lenders, (d) is the subject of an appraisal having been delivered to Agent which was
(at the time of receipt thereof by Agent) and continues to be in form and substance satisfactory to Agent, and (e) is not otherwise unacceptable
to Agent in its reasonable credit judgment; provided, however, additional "Owned Properties" of the Borrower set
forth on Disclosure Schedule 3.6 (as updated after the date hereof) may be included as Eligible Mortgaged Property so long as (x)
each of the conditions set forth in clauses (a) through (e) above are satisfied, (y) such owned property is satisfactory to the Agent and (z) after
giving effect to the inclusion of such owned property as an Eligible Mortgaged Property, the amount, as of such date, of the Borrowing Base
calculated in accordance with clause (c) of the definition thereof does not exceed the amount, as of the date hereof, of the Borrowing Base
calculated in accordance with clause (c) of the definition thereof.

"Environmental Laws" means all applicable federal, state, local and foreign laws, statutes,
ordinances, codes, rules, standards and regulations, now or hereafter in effect, and any

                                                     A-9

applicable judicial or administrative interpretation
thereof, including any applicable judicial or administrative order, consent decree, order or judgment, imposing liability or standards of conduct
for or relating to the regulation and protection of human health, safety, the environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation).  Environmental Laws include the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C.    9601 et seq.)
("CERCLA"); the Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C.    5101 et
seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.    136 et seq.); the Solid Waste Disposal Act (42
U.S.C.    6901 et seq.); the Toxic Substance Control Act (15 U.S.C.    2601 et seq.); the Clean Air Act (42
U.S.C.    7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C.    1251 et seq.); the Occupational
Safety and Health Act (29 U.S.C.    651 et seq.); and the Safe Drinking Water Act (42 U.S.C.    300(f) et
seq.), and any and all regulations promulgated thereunder, and all analogous state, local and foreign counterparts or equivalents and any
transfer of ownership notification or approval statutes.

"Environmental Liabilities" means, with respect to any Person, all liabilities, obligations,
responsibilities, response, remedial and removal costs, investigation and feasibility study costs, capital costs, operation and maintenance
costs, losses, damages, punitive damages, property damages, natural resource damages, consequential damages, treble damages, costs and
expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants), fines, penalties, sanctions and
interest incurred as a result of or related to any claim, suit, action, investigation, proceeding or demand by any Person, whether based in
contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law, including any arising under or related to any
Environmental Laws, Environmental Permits, or in connection with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or personal property.

"Environmental Permits" means all permits, licenses, authorizations, certificates, approvals or
registrations required by any Governmental Authority under any Environmental Laws.

"Equipment" means all "equipment," as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party, wherever located and, in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and computer equipment, including embedded software and
peripheral equipment and all engineering, processing and manufacturing equipment, office machinery, furniture, materials handling equipment,
tools, attachments, accessories, automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other
equipment of every kind and nature, trade fixtures and fixtures not forming a part of real property, together with all additions and accessions
thereto, replacements therefor, all parts therefor, all substitutes for any of the foregoing, fuel therefor, and all manuals, drawings, instructions,
warranties and rights with respect thereto, and all products and proceeds thereof and condemnation awards and insurance proceeds with
respect thereto.

                                                     A-10

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to
time, and any regulations promulgated thereunder.

"ERISA Affiliate" means, with respect to any Credit Party, any trade or business (whether or not
incorporated) that, together with such Credit Party, are treated as a single employer within the meaning of Sections 414(b), (c), (m) or
(o) of the IRC.

"ERISA Event" means, with respect to any Credit Party or any ERISA Affiliate, (a) any event
described in Section 4043(c) of ERISA with respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate
from a Title IV Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of any Credit Party or any ERISA Affiliate from any
Multiemployer Plan; (d) the filing of a notice of intent to terminate a Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC;
(f) the failure by any Credit Party or ERISA Affiliate to make when due required contributions to a Multiemployer Plan or Title IV Plan
unless such failure is cured within 30 days; (g) any other event or condition that might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or Multiemployer
Plan or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a Multiemployer Plan under
Section 4041A of ERISA or the reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA; or
(i) the loss of a Qualified Plan's qualification or tax exempt status; or (j) the termination of a Plan described in Section 4064
of ERISA.

"ESOP" means a Plan that is intended to satisfy the requirements of Section 4975(e)(7) of
the IRC.

"Event of Default" has the meaning ascribed to it in Section 8.1.

"Extension Request" has the meaning ascribed to it in Section 7.1.

"Fair Labor Standards Act" means the Fair Labor Standards Act, 29 U.S.C.  201 et
seq. 

"Fair Market Value" means, as of any date of determination with respect to any Mortgaged
Property, the fair market value thereof as determined by Agent based on the most recent satisfactory (to Agent) appraisal having been
delivered to, or conducted by, Agent pursuant to this Agreement, it being understood that Agent shall have the right to adjust such fair market
value downward in its reasonable credit judgment, including as a result of changes to real estate market conditions, or events or circumstances
affecting such Mortgaged Property or general real estate values in the geographical area in which such Mortgaged Property is located.

"Federal Funds Rate" means, for any day, a floating rate equal to the weighted average of the
rates on overnight Federal funds transactions among members of the Federal Reserve System, as determined by Agent in its sole discretion,
which determination shall be final, binding and conclusive (absent manifest error).

                                                     A-11

"Federal Reserve Board" means the Board of Governors of the Federal Reserve System.

"Fees" means any and all fees payable to Agent or any Lender pursuant to the Agreement or any
of the other Loan Documents.

"Financial Covenants" means the financial covenants set forth in Annex G.

"Financial Statements" means the consolidated and consolidating income statements, statements
of cash flows and balance sheets of Borrower delivered in accordance with Section 3.4 and Annex E.

"Fiscal Month" means any of the monthly accounting periods of Borrower.

"Fiscal Quarter" means any of the quarterly accounting periods of Borrower, ending on or about
April 30, July 31, October 30 and January 31 of each year.

"Fiscal Year" means any of the annual accounting periods of Borrower beginning in any calendar
year and ending on the Saturday nearest January 31 of the following year.  For further clarification, references to "Fiscal Year
2003" refer to the Fiscal Year ending on the Saturday nearest January 31, 2004.

"Fixed Charges" means, with respect to any Person for any fiscal period, (a) the aggregate of all
Interest Expense paid or accrued during such period, plus (b) any payments of principal with respect to Indebtedness during
such period. 

"Fixed Charge Coverage Ratio" means, with respect to any Person for any fiscal period, the ratio
of (a) the sum of EBITDA during such period, less cash taxes paid during such period, less cash Capital Expenditures made
during such period to (b) Fixed Charges.  With respect to any fiscal period that includes the payment in full of principal and interest to United
Security Bank, such payments shall be excluded from Fixed Charges for such fiscal period so long as Borrowing Availability is at least
$15,000,000 for the ninety (90) day period prior to such payment and immediately thereafter.  With respect to any fiscal period that
includes payments in connection with the prepayment of the New Subordinated Note pursuant to Section 6.14(f), such payments shall
be excluded from Fixed Charges for such fiscal period.

"Foreign Person" has the meaning ascribed to it in Section 1.15.

"Fixtures" means all "fixtures" as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party.

"Funded Debt" means, with respect to any Person, without duplication, all Indebtedness for
borrowed money evidenced by notes, bonds, debentures, or similar evidences of Indebtedness that by its terms matures more than one year
from, or is directly or indirectly renewable or extendible at such Person's option under a revolving credit or similar agreement obligating the
lender or lenders to extend credit over a period of more than one year from the date of creation thereof, including current maturities of long
term debt, revolving credit and

                                                     A-12

short-term debt extendible beyond one year at the option of the debtor, and also including, in the case of
Borrower, the Obligations and, without duplication, Guaranteed Indebtedness consisting of guaranties of Funded Debt of other Persons, but
excluding in all instances Subordinated Debt and Capital Lease Obligations.

"GAAP" means generally accepted accounting principles in the United States of America
consistently applied, as such term is further defined in Annex G to the Agreement.

"GE Capital" means General Electric Capital Corporation, a Delaware corporation.

"GE Capital Fee Letter" has the meaning ascribed to it in Section 1.9(a).

"General Intangibles" means all "general intangibles," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, including all right, title and interest that such Credit Party may now or hereafter
have in or under any Contract, all payment intangibles, customer lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property, interests in partnerships, joint ventures and other business
associations, licenses, permits, copyrights, trade secrets, proprietary or confidential information, inventions (whether or not patented or
patentable), technical information, procedures, designs, knowledge, know-how, software, data bases, data, skill, expertise, experience,
processes, models, drawings, materials and records, goodwill (including the goodwill associated with any Trademark or Trademark License),
all rights and claims in or under insurance policies (including insurance for fire, damage, loss and casualty, whether covering personal
property, real property, tangible rights or intangible rights, all liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and other bank accounts, rights to receive tax refunds and other
payments, rights to receive dividends, distributions, cash, Instruments and other property in respect of or in exchange for pledged Stock and
Investment Property, rights of indemnification, all books and records, correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in the possession or under the control of such Credit Party or any
computer bureau or service company from time to time acting for such Credit Party.

"Goods" means all "goods" as defined in the Code, now owned or hereafter acquired
by any Credit Party, wherever located, including embedded software to the extent included  in "goods" as defined in the Code,
manufactured homes, standing timber that is cut and removed for sale and unborn young of animals.

"Governmental Authority" means any nation or government, any state or other political subdivision
thereof, and any agency, department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

"Guaranteed Indebtedness" means as to any Person, any obligation of such Person guaranteeing,
providing comfort or otherwise supporting any Indebtedness, lease, dividend, or other obligation ("primary obligation") of
any other Person (the "primary obligor") in any

                                                     A-13

manner, including any obligation or arrangement of such Person to
(a) purchase or repurchase any such primary obligation, (b) advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor, (c) purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation,
(d) protect the beneficiary of such arrangement from loss (other than product warranties given in the ordinary course of business) or
(e) indemnify the owner of such primary obligation against loss in respect thereof.  The amount of any Guaranteed Indebtedness at any
time shall be deemed to be an amount equal to the lesser at such time of (x) the stated or determinable amount of the primary obligation
in respect of which such Guaranteed Indebtedness is incurred and (y) the maximum amount for which such Person may be liable
pursuant to the terms of the instrument embodying such Guaranteed Indebtedness, or, if not stated or determinable, the maximum reasonably
anticipated liability (assuming full performance) in respect thereof.

"Guaranties" means, collectively, each Subsidiary Guaranty and any other guaranty executed by
any Guarantor in favor of Agent and Lenders in respect of the Obligations.

"Guarantors" means each Subsidiary of Borrower and each other Person, if any, that executes a
guaranty or other similar agreement in favor of Agent, for itself and the ratable benefit of Lenders, in connection with the transactions
contemplated by the Agreement and the other Loan Documents.

"Harris" means The Harris Company, a California corporation.

"Hazardous Material" means any substance, material or waste that is regulated by, or forms the
basis of liability now or hereafter under, any Environmental Laws, including any material or substance that is (a) defined as a "solid
waste," "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous
waste,"  "restricted hazardous waste," "pollutant," "contaminant," "hazardous constituent,"
"special waste," "toxic substance" or other similar term or phrase under any Environmental Laws, or
(b) petroleum or any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or any radioactive substance.

"Household" means Household Bank (SB), N.A.

"Indebtedness" means, with respect to any Person, without duplication, (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property payment for which is deferred 6 months or more, but
excluding obligations to trade creditors incurred in the ordinary course of business that are unsecured and not overdue by more than 6 months
unless being contested in good faith, (b) all reimbursement and other obligations with respect to letters of credit, bankers' acceptances
and surety bonds, whether or not matured, (c) all obligations evidenced by notes, bonds, debentures or 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),

                                                     A-14

(e) all Capital Lease Obligations and the present value (discounted at the Index Rate as in effect on the Closing Date) of
future rental payments under all synthetic leases, (f) all obligations of such Person under commodity purchase or option agreements or
other commodity price hedging arrangements, in each case whether contingent or matured, (g) all obligations of such Person under any
foreign exchange contract, currency swap agreement, interest rate swap, cap or collar agreement or other similar agreement or arrangement
designed to alter the risks of that Person arising from fluctuations in currency values or interest rates, in each case whether contingent or
matured, (h) all indebtedness secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property or other assets (including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such indebtedness, and (i) the Obligations.

"Indemnified Liabilities" has the meaning ascribed to it in Section 1.13.

"Indemnified Person" has the meaning ascribed to in Section 1.13.

"Index Rate" means, for any day, a floating rate equal to the higher of (i) the rate publicly
quoted from time to time by The Wall Street Journal as the "prime rate" (or, if
The Wall Street Journal ceases quoting a prime rate, the highest per annum rate of interest published by the Federal
Reserve Board in Federal Reserve statistical release H.15 (519) entitled "Selected Interest Rates" as the Bank prime loan
rate or its equivalent), and (ii) the Federal Funds Rate plus 50 basis points per annum.  Each change in any interest rate provided for in
the Agreement based upon the Index Rate shall take effect at the time of such change in the Index Rate.

"Index Rate Loan" means a Loan or portion thereof bearing interest by reference to the Index
Rate.

"Instruments" means all "instruments," as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party, wherever located, and, in any event, including all certificated securities, all certificates of deposit,
and all promissory notes and other evidences of indebtedness, other than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.

"Intellectual Property" means any and all Licenses, Patents, Copyrights, Trademarks, and the
goodwill associated with such Trademarks.

"Interest Expense" means, with respect to any Person for any fiscal period, interest expense
(whether cash or non-cash) of such Person determined in accordance with GAAP for the relevant period ended on such date, including,
interest expense with respect to any Funded Debt of such Person other than interest expense for the relevant period that has been capitalized
on the balance sheet of such Person and that is not material to the financial presentation of such Person.

"Interest Payment Date" means (a) as to any Index Rate Loan, the first Business Day of
each month to occur while such Loan is outstanding, and (b) as to any LIBOR Loan, the last day of the applicable LIBOR Period;
provided, that in the case of any LIBOR Period greater

                                                     A-15

than three months in duration, interest shall be payable at three-month
intervals and on the last day of such LIBOR Period; and provided further that, in addition to the foregoing, each of
(x) the date upon which all of the Commitments have been terminated and the Loans have been paid in full and (y) the
Commitment Termination Date shall be deemed to be an "Interest Payment Date" with respect to any interest that has then
accrued under the Agreement.

"Inventory" means all "inventory," as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located, and in any event including inventory, merchandise, goods and other personal
property that are held by or on behalf of any Credit Party for sale or lease or are furnished or are to be furnished under a contract of service, or
that constitute raw materials, work in process, finished goods, returned goods, or materials or supplies of any kind, nature or description used
or consumed or to be used or consumed in such Credit Party's business or in the processing, production, packaging, promotion, delivery or
shipping of the same, including all supplies and embedded software.

"Investment Property" means all "investment property" as such term is defined in the
Code now owned or hereafter acquired by any Credit Party, wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party, including the rights of any Credit Party to any securities account
and the financial assets held by a securities intermediary in such securities account and any free credit balance or other money owing by any
securities intermediary with respect to that account; (iii) all securities accounts of any Credit Party; (iv) all commodity contracts of
any Credit Party; and (v) all commodity accounts held by any Credit Party.

"IRC" means the Internal Revenue Code of 1986 and all regulations promulgated thereunder.

"IRS" means the Internal Revenue Service.

"L/C Issuer" has the meaning ascribed to it in Annex B.

"L/C Sublimit" has the meaning ascribed to it in Annex B.

"Lenders" means GE Capital, the other Lenders named on the signature pages of the
Agreement, and, if any such Lender shall decide to assign all or any portion of the Obligations, such term shall include any assignee of such
Lender.

"Letter of Credit Fee" has the meaning ascribed to it in Annex B.

"Letter of Credit Obligations" means all outstanding obligations incurred by Agent and Revolving
Lenders at the request of Borrower, whether direct or indirect, contingent or otherwise, due or not due, in connection with the issuance of
Letters of Credit by Agent or another L/C Issuer or the purchase of a participation as set forth in Annex B with respect to any
Letter of Credit.  The amount of such Letter of Credit Obligations shall equal the maximum

                                                     A-16

amount that may be payable at such time or at any
time thereafter by Agent or Revolving Lenders thereupon or pursuant thereto.

"Letters of Credit" means documentary or standby letters of credit issued for the account of
Borrower by any L/C Issuer, and bankers' acceptances issued by Borrower, for which Agent and Revolving Lenders have incurred Letter of
Credit Obligations.  The term does not include a Swap Related L/C.

"Letter-of-Credit Rights" means "letter-of-credit rights" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, including rights to payment or performance under a letter of credit, whether or not
such Credit Party, as beneficiary, has demanded or is entitled to demand payment or performance.

"LIBOR Business Day" means a Business Day on which banks in the City of London are generally
open for interbank or foreign exchange transactions.

"LIBOR Loan" means a Loan or any portion thereof bearing interest by reference to the LIBOR
Rate.

"LIBOR Period" means, with respect to any LIBOR Loan, each period commencing on a LIBOR
Business Day selected by Borrower pursuant to the Agreement and ending one, two, three or six months thereafter, as selected by Borrower's
irrevocable notice to Agent as set forth in Section 1.5(e); provided, that the foregoing provision relating to LIBOR
Periods is subject to the following:

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

(b)any LIBOR Period that would otherwise extend beyond the Commitment Termination Date shall end 2 LIBOR
Business Days prior to such date;

(c)any LIBOR Period that begins on the last LIBOR 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 LIBOR Period) shall end on the last LIBOR Business Day of a
calendar month;

(d)Borrower shall select LIBOR Periods so as not to require a payment or prepayment of any LIBOR Loan during a
LIBOR Period for such Loan; and

(e)Borrower shall select LIBOR Periods so that there shall be no more than 5 separate LIBOR Loans in existence
at any one time.

"LIBOR Rate" means for each LIBOR Period, a rate of interest determined by Agent equal to:

                                                     A-17

(a)the offered rate for deposits in United States Dollars for the applicable LIBOR Period that appears on Telerate
Page 3750 as of 11:00 a.m. (London time), on the second full LIBOR Business Day next preceding the first day of such LIBOR Period
(unless such date is not a Business Day, in which event the next succeeding Business Day will be used); divided by

(b)a number equal to 1.0 minus the aggregate (but without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements in effect on the day that is 2 LIBOR Business Days prior to the beginning of such LIBOR Period
(including basic, supplemental, marginal and emergency reserves under any regulations of the Federal Reserve Board or other Governmental
Authority having jurisdiction with respect thereto, as now and from time to time in effect) for Eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Federal Reserve Board that are required to be maintained by a member bank of
the Federal Reserve System.  

If such interest rates shall cease to be available from Telerate News Service, the LIBOR Rate shall be determined from
such financial reporting service or other information as shall be mutually acceptable to Agent and Borrower.

"License" means any Copyright License, Patent License, Trademark License or other license of
rights or interests now held or hereafter acquired by any Credit Party.

"Lien" means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a
security interest under the Code or comparable law of any jurisdiction).

"Litigation" has the meaning ascribed to it in Section 3.13.

"Loan Account" has the meaning ascribed to it in Section 1.12.

"Loan Documents" means the Agreement, the Notes, the Collateral Documents, the Master
Standby Agreement, the Master Documentary Agreement, the Collateral Access Agreements, and all other agreements, instruments,
documents and certificates identified in the Closing Checklist executed and delivered to, or in favor of, Agent or any Lenders and including all
other pledges, powers of attorney, consents, assignments, contracts, notices, letter of credit agreements and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Credit Party or any employee of any Credit Party, and delivered to Agent or any
Lender in connection with the Agreement or the transactions contemplated thereby.  Any reference in the Agreement or any other Loan
Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or
other modifications thereto, and shall refer to the Agreement or such Loan Document as the same may be in effect at any and all times such
reference becomes operative.

"Loans" means the Revolving Loan and the Swing Line Loan.

                                                     A-18

"Margin Stock" has the meaning ascribed to in Section 3.10.

"Master Documentary Agreement" means the Master Agreement for Documentary Letters of
Credit dated as of January 31, 2002 among Borrower, as Applicant(s), and GE Capital.

"Master Standby Agreement" means the Master Agreement for Standby Letters of Credit dated as
of January 31, 2002 among Borrower, as Applicant(s), and GE Capital, as issuer.

"Material Adverse Effect" means a material adverse effect on (a) the business, assets,
operations, prospects or financial or other condition of Borrower or all Credit Parties taken as a whole, (b) Borrower's ability to pay any
of the Loans or any of the other Obligations in accordance with the terms of the Agreement, (c) the Collateral or Agent's Liens, on behalf
of itself and Lenders, on the Collateral or the priority of such Liens, or (d) Agent's or any Lender's rights and remedies under the
Agreement and the other Loan Documents.  

"Maximum Amount" means, as of any date of determination, an amount equal to the Revolving
Loan Commitment of all Lenders as of that date.

"Minimum Excess Availability" means Fifteen Million Dollars ($15,000,000).

"Mortgaged Properties" means each of the following properties: (a) 313 Madonna Rd. San Luis
Obispo, CA  93405, (b) 1673 W. Lacey Blvd., Hanford, CA  93230, (c) 2300 Watt Avenue, Sacramento, CA 95825, (d) 82225 Highway 111,
Indio, CA 92201, (e) 1255 Airport Way & Cowles, Fairbanks, AK 99701, (f) 755 E. Shaw Avenue, Fresno, CA 93710, (g) 3300 S.
Broadway, Eureka, CA  95501, (h) 2520 Somersville Rd., Antioch, CA  94509, (i) 905 Colusa Avenue, Yuba City, CA  95991, (j) 1123 W.
Avenue "P" Palmdale, CA  93551, (k) E. 802 29th Avenue, Spokane, WA  99203, and (l) and any other Real Estate of any Credit Party
which may from time to time become subject to a Mortgage in the favor of Agent securing the Obligations and is otherwise satisfactory to the
Agent.

"Mortgages" means each of the mortgages, deeds of trust, leasehold mortgages, leasehold deeds
of trust, collateral assignments of leases or other real estate security documents, as amended from time to time, delivered by any Credit Party
to Agent on behalf of itself and Lenders with respect to the Real Estate, all in form and substance reasonably satisfactory to Agent.

"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is making, is obligated to make or has made or been
obligated to make, contributions on behalf of participants who are or were employed by any of them.

"New Subordinated Note" means the Non-Negotiable Subordinated Unsecured Note Due May 30,
2009 dated December 7, 2004 issued by Borrower in favor of The Harris Company in an aggregate original principal amount of
$22,179,598.00.

"Non-Funding Lender" has the meaning ascribed to it in Section 9.9(a)(ii).

                                                     A-19

"Notes" means, collectively, the Revolving Notes and the Swing Line Notes.

"Notice of Conversion/Continuation" has the meaning ascribed to it in
Section 1.5(e).

"Notice of Revolving Credit Advance" has the meaning ascribed to it in
Section 1.1(a).

"Obligations" means all loans, advances, debts, liabilities and obligations for the performance of
covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or such
amounts are liquidated or determinable) owing by any Credit Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement, letter of credit agreement, or other
instrument, arising under the Agreement or any of the other Loan Documents.  This term includes all principal, interest (including all interest
that accrues after the commencement of any case or proceeding by or against any Credit Party in bankruptcy, whether or not allowed in such
case or proceeding), Fees, Swap Related Reimbursement Obligations, expenses, attorneys' fees and any other sum chargeable to any Credit
Party under the Agreement or any of the other Loan Documents.

"Original Credit Agreement" has the meaning ascribed to it in the recitals to this Agreement.

"OSHA" means Occupational Safety and Hazard Act.

"Overadvance" has the meaning ascribed to it in Section 1.1(a)(iii).

"Park 41" means Park 41, a California limited partnership.

"Patent License" means rights under any written agreement now owned or hereafter acquired by
any Credit Party granting any right with respect to any invention on which a Patent is in existence.

"Patents" means all of the following in which any Credit Party now holds or hereafter acquires any
interest:  (a) all letters patent of the United States or of any other country, all registrations and recordings thereof, and all applications for
letters patent of the United States or of any other country, including registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any State, or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.

"PBGC" means the Pension Benefit Guaranty Corporation.

"Pension Plan" means a Plan described in Section 3(2) of ERISA.

"Permitted Encumbrances" means the following encumbrances:  (a) Liens for taxes or
assessments or other governmental Charges not yet due and payable or which are being contested in accordance with
Section 5.2(b); (b) pledges or deposits of money securing statutory

                                                     A-20

obligations under workmen's compensation,
unemployment insurance, social security or public liability laws or similar legislation (excluding Liens under ERISA); (c) pledges or
deposits of money securing bids, tenders, contracts (other than contracts for the payment of money) or leases to which any Credit Party is a
party as lessee made in the ordinary course of business; (d) inchoate and unperfected workers', mechanics' or similar liens arising in the
ordinary course of business, so long as such Liens attach only to Equipment, Fixtures and/or Real Estate; (e) deposits securing, or in
lieu of, surety, appeal or customs bonds in proceedings to which any Credit Party is a party; (f) any attachment or judgment lien not
constituting an Event of Default under Section 8.1(j); (g) zoning restrictions, easements, licenses, or other restrictions on
the use of any Real Estate or other minor irregularities in title (including leasehold title) thereto, so long as the same do not materially impair
the use, value, or marketability of such Real Estate; (h) presently existing or hereafter created Liens in favor of Agent, on behalf of
Lenders;  (i) Liens expressly permitted under clauses (b) and (c) of Section 6.7 of the Agreement; (j) inchoate
Liens arising by operation of law in favor of landlords subject to Reserves established in Agent's reasonable credit judgment; (k) inchoate Liens
arising under Division 2 of the Code or similar provisions of applicable law in the ordinary course of Borrower's business, covering only the
goods sold and securing only the unpaid purchase price for such goods and related expenses, so long as all Inventory covered by such liens is
not Eligible Inventory or that Reserves for such Inventory have been established in Agent's reasonable credit judgment; (l) customary
rights of set off and charge back under deposit agreements or under the Code of depository institutions for accounts maintained by Borrower in
compliance with the terms of this Agreement; (m) inchoate Liens in favor of banks which arise under Article 4 of the Code or similar provisions
of applicable law on items in collection; and (n) Liens not evidenced by a financing statement arising by operation of law in favor of
common carriers, covering only the goods carried, securing only charges not yet payable to such carrier so long as all Inventory covered by
such Liens is not Eligible Inventory or that Reserves for such charges have been established in Agent's reasonable credit judgment.

"Permitted Holder" means each of (i) Harris, together with all of those Persons who are or
become Permitted Transferees of Harris or (ii) Joseph Levy, together with all of those Persons who are or become Permitted
Transferees of Joseph Levy.

"Permitted Temporary Lease" means lease of temporary space in malls or shopping centers in
which one of Borrower's stores is located and in each case which lease is (i) four months or less in duration; (ii) involves floor
space of 5,000 square feet or less; and (iii) the rental amount for such individual location is no more than $5,000 per month and the
rental amount for all such locations is not more than $100,000 per month in the aggregate.

"Permitted Transferees" means, with respect to any Person, (i) any Subsidiary of such
Person, (ii) the heirs, executors, administrators, testamentary trustees, legatees or beneficiaries of any such Person, or (iii) a trust,
the beneficiaries of which, or a corporation or partnership, the stockholders of general or limited partners of which, include only such Person or
his or her spouse or lineal descendants, in each case to whom such Person has transferred the beneficial ownership of any securities of
Borrower.

                                                     A-21

"Person" means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, institution, public benefit corporation, other entity or government (whether
federal, state, county, city, municipal, local, foreign, or otherwise, including any instrumentality, division, agency, body or department
thereof).

"Plan" means, at any time, an "employee benefit plan," as defined in
Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate maintains, contributes to or has an obligation to contribute to or has
maintained, contributed to or had an obligation to contribute to at any time within the past 7 years on behalf of participants who are or were
employed by any Credit Party or ERISA Affiliate.

"Pledge Agreement" means the Pledge Agreements, as amended by the Reaffirmation Agreement
made in favor of Agent, on behalf of Lenders, by each Credit Party.

"Proceeds" means "proceeds," as such term is defined in the Code, including
(a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to any Credit Party from time to time with respect to
any of the Collateral, (b) any and all payments (in any form whatsoever) made or due and payable to any Credit Party from time to time
in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any Governmental
Authority (or any Person acting under color of governmental authority), (c) any claim of any Credit Party against third parties (i) for
past, present or future infringement of any Patent or Patent License, or (ii) for past, present or future infringement or dilution of any
Copyright, Copyright License, Trademark or Trademark License, or for injury to the goodwill associated with any Trademark or Trademark
License, (d) any recoveries by any Credit Party against third parties with respect to any litigation or dispute concerning any of the
Collateral including claims arising out of the loss or nonconformity of, interference with the use of, defects in, or infringement of rights in, or
damage to, Collateral, (e) all amounts collected on, or distributed on account of, other Collateral, including dividends, interest,
distributions and Instruments with respect to Investment Property and pledged Stock, and (f) any and all other amounts, rights to
payment or other property acquired upon the sale, lease, license, exchange or other disposition of Collateral and all rights arising out of
Collateral.

"Projections" means Borrower's forecasted consolidated:  (a) balance sheets;
(b) profit and loss statements; and (c) cash flow statements, all prepared on a Subsidiary by Subsidiary basis, if applicable, and
otherwise consistent with the historical Financial Statements of Borrower, together with appropriate supporting details and a statement of
underlying assumptions.

"Pro Rata Share" means with respect to all matters relating to any Lender (a) with respect to
the  Revolving Credit Loan, the percentage obtained by dividing (i) the  Revolving Loan Commitment of that Lender by (ii) the
aggregate Revolving Loan Commitments of all Lenders, (b) with respect to all Loans, the percentage obtained by dividing (i) the
aggregate Commitments of that Lender by (ii) the aggregate Commitments of all Lenders, and (c) with respect to all Loans on and
after the Commitment Termination Date, the percentage obtained by dividing (i) the aggregate outstanding principal balance of the
Loans held by that Lender, by

                                                     A-22

(ii) the outstanding principal balance of the Loans held by all Lenders, as any such percentages may be
adjusted by assignments permitted pursuant to Section 9.1.

"Qualified Plan" means a Pension Plan that is intended to be tax-qualified under
Section 401(a) of the IRC.

"Qualified Assignee" means (a) any Lender, any Affiliate of any Lender and, with respect to
any Lender that is an investment fund that invests in commercial loans, any other investment fund that invests in commercial loans and that is
managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor, and (b) any
commercial bank, savings and loan association or savings bank or any other entity which is an "accredited investor" (as defined in
Regulation D under the Securities Act of 1933) which extends credit or buys loans as one of its businesses, including insurance companies,
mutual funds, lease financing companies and commercial finance companies, in each case, which has a rating of BBB or higher from
S&P and a rating of Baa2 or higher from Moody's at the date that it becomes a Lender and which, through its applicable lending office, is
capable of lending to Borrower without the imposition of any withholding or similar taxes; provided that no Person determined by
Agent to be acting in the capacity of a vulture fund or distressed debt purchaser shall be a Qualified Assignee, and no Person or Affiliate of
such Person (other than a Person that is already a Lender) holding Subordinated Debt or Stock issued by any Credit Party shall be a Qualified
Assignee.

"Reaffirmation Agreement" means the Reaffirmation and Amendment Agreement dated as of the
Closing Date entered into by and among Agent, on behalf of itself and Lenders, and each Credit Party signatory thereto.

"Real Estate" has the meaning ascribed to it in Section 3.6.

"Refunded Swing Line Loan" has the meaning ascribed to it in
Section 1.1(c)(iii).

"Related Transactions" means the initial borrowing under the Revolving Loan on the Closing Date,
the payment of all fees, costs and expenses associated with all of the foregoing and the execution and delivery of all of the Related
Transactions Documents. 

"Related Transactions Documents" means the Loan Documents, and all other agreements or
instruments executed in connection with the Related Transactions.

"Relationship Bank" has the meaning ascribed to it in Annex C.

"Release" means any release, threatened release, spill, emission, leaking, pumping, pouring,
emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Material in the
indoor or outdoor environment, including the movement of Hazardous Material through or in the air, soil, surface water, ground water or
property.

"Replacement Lender" has the meaning ascribed to it in Section 1.16.

                                                     A-23

"Requisite Lenders" means Lenders having (a) more than 66 2/3% of the Commitments of
all Lenders, or (b) if the Commitments have been terminated, more than 66 2/3% of the aggregate outstanding amount of the Loans.

"Requisite Revolving Lenders" means Lenders having (a) more than 66 2/3% of the
Revolving Loan Commitments of all Lenders, or (b) if the Revolving Loan Commitments have been terminated, more than 66 2/3% of
the aggregate outstanding amount of the Revolving Credit Advances and Letter of Credit Obligations.

"Reserves" means (a) reserves established by Agent from time to time against Eligible
Inventory pursuant to Section 5.9, (b) reserves established pursuant to Section 5.4, (c) such other
reserves against Eligible Inventory or Borrowing Availability of Borrower that Agent may, in its reasonable credit judgment, establish from time
to time and (d) the Swap Related Reserve.  Without limiting the generality of the foregoing, Reserves established to ensure the payment of
accrued Interest Expenses or Indebtedness shall be deemed to be a reasonable exercise of Agent's credit judgment.

"Restricted Payment" means, with respect to any Credit Party (a) the declaration or
payment of any dividend or the incurrence of any liability to make any other payment or distribution of cash or other property or assets in
respect of Stock; (b) any payment on account of the purchase, redemption, defeasance, sinking fund or other retirement of such Credit
Party's Stock or any other payment or distribution made in respect thereof, either directly or indirectly; (c) any payment or prepayment of
principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to, any Subordinated Debt; (d) any payment made to redeem,
purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire Stock of such Credit
Party now or hereafter outstanding; (e) any payment of a claim for the rescission of the purchase or sale of, or for material damages
arising from the purchase or sale of, any shares of such Credit Party's Stock or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or rescission; (f) any payment, loan, contribution, or other transfer of funds or
other property to any Affiliate of such Credit Party other than payment of compensation in the ordinary course of business to Affiliates who are
employees or directors of such Person; (g) any payment of management fees (or other fees of a similar nature) by such Credit Party to
any Stockholder of such Credit Party or its Affiliates.

"Retiree Welfare Plan" means, at any time, a Welfare Plan that provides for continuing coverage
or benefits for any participant or any beneficiary of a participant after such participant's termination of employment, other than continuation
coverage provided pursuant to Section 4980B of the IRC and at the sole expense of the participant or the beneficiary of the
participant.

"Revolving Credit Advance" has the meaning ascribed to it in Section 1.1(a)(i).

"Revolving Lenders" means, as of any date determination Lenders having a Revolving Loan
Commitment.

                                                     A-24

"Revolving Loan" means, at any time, the sum of (i) the aggregate amount of Revolving
Credit Advances outstanding to Borrower plus (ii) the aggregate Letter of Credit Obligations incurred on behalf of Borrower.
Unless the context otherwise requires, references to the outstanding principal balance of the Revolving Loan shall include the outstanding
balance of Letter of Credit Obligations.

"Revolving Loan Commitments" means, (a) as to any Revolving Lender, the aggregate
commitment of such Revolving Lender to make Revolving Credit Advances or incur Letter of Credit Obligations as set forth on Annex
J to the Agreement or in the most recent Assignment Agreement executed by such Revolving Lender and (b) as to all Revolving Lenders,
the aggregate commitment of all Revolving Lenders to make Revolving Credit Advances or incur Letter of Credit Obligations, which aggregate
commitment shall be Two Hundred Million Dollars ($200,000,000) on the Closing Date, as such amount may be adjusted, if at all, from
time to time in accordance with this Agreement.

"Revolving Note" has the meaning ascribed to it in Section 1.1(a)(ii).

"Security Agreement" means the Security Agreement dated as of January 31, 2002 as amended
by the Reaffirmation Agreement, entered into by and among Agent, on behalf of itself and Lenders, and each Credit Party that is a signatory
thereto.

"Software" means all "software" as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, other than software embedded in any category of Goods, including all computer programs and all
supporting information provided in connection with a transaction related to any program.

"Solvent"  means, with respect to any Person on a particular date, that on such date (a) the
fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person;
(b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured; (c) such Person does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (d) such Person is not
engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person's property would
constitute an unreasonably small capital.  The amount of contingent liabilities (such as litigation, guaranties and pension plan liabilities) at any
time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that can be
reasonably be expected to become an actual or matured liability.

"Space Lease" means any lease that generates annual rent revenue in excess of $500,000 under
which a Credit Party is the lessor or sublessor.

"Specified Location" has the meaning ascribed to it in Section 5.9(a).

"Stock" means all shares, options, warrants, general or limited partnership interests, membership
interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or

                                                     A-25

nonvoting, including common stock, preferred stock or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of
1934).

"Stockholder" means, with respect to any Person, each holder of Stock of such Person.

"Store Lease" means each lease identified by its address under the subheading "Store
Leases" on Disclosure Schedule 3.6 (as any such lease may be hereinafter amended, modified, restated, extended,
supplemented, renewed or consolidated in accordance with the terms hereof), and all other leases which may now or hereinafter be entered
into by a Credit Party as lessee, as any such lease may be hereinafter amended, modified, restated, extended, supplemented, renewed or
consolidated in accordance with the terms hereof. 

"Subordinated Debt" means the Indebtedness of Borrower to Harris evidenced by the New
Subordinated Note, and any other Indebtedness of any Credit Party subordinated to the Obligations in a manner and form satisfactory to Agent
and Lenders in their sole discretion, as to right and time of payment and as to any other rights and remedies thereunder.

"Subsidiary" means, with respect to any Person, (a) any corporation of which an aggregate
of more than 50% of the outstanding Stock having ordinary voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person or one or more
Subsidiaries of such Person, or with respect to which any such Person has the right to vote or designate the vote of 50% or more of such
Stock whether by proxy, agreement, operation of law or otherwise, and (b) any partnership or limited liability company in which such
Person and/or one or more Subsidiaries of such Person shall have an interest (whether in the form of voting or participation in profits or capital
contribution) of more than 50% or of which any such Person is a general partner or may exercise the powers of a general partner.  Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference to a Subsidiary of a Borrower.

"Subsidiary Guaranty" means the Subsidiary Guaranty executed by each Subsidiary of Borrower
in favor of Agent, on behalf of itself and Lenders after the Closing Date.

"Supporting Obligations" means all "supporting obligations" as such term is defined in
the Code, including letters of credit and guaranties issued in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments, or Investment Property.

"Swap Related L/C" means a letter of credit or other credit enhancement provided by any Lender
to the extent supporting the payment obligations by Borrower under an interest rate protection or hedging agreement or transaction (including,
but not limited to, interest rate swaps, caps, collars, floors and similar transactions) designed to protect or manage exposure to the fluctuations
in the interest rates applicable to any of the Loans, and which agreement or transaction Borrower entered into as the result of a specific referral
pursuant to which GE

                                                     A-26

Capital, GE Corporate Financial Services, Inc. or any other Affiliate of GE Capital had arranged for Borrower to enter
into such agreement or transaction.  The term includes a Swap Related L/C as it may be increased from time to time fully to support
Borrower's payment obligations under any and all such interest rate protection or hedging agreements or transactions.

"Swap Related Reimbursement Obligation" has the meaning ascribed to it in Section
1.2A.

"Swap Related Reserve" has the meaning ascribed to it in Section 1.2A(g).

"Swing Line Accommodation" means, as to the Swing Line Lender, the accommodation by the
Swing Line Lender to make Swing Line Advances as specified in Section 1.1(c) and as set forth on Annex J to the
Agreement, which accommodation constitutes a subfacility of the Revolving Loan Commitment of the Swing Line Lender.

"Swing Line Advance" has the meaning ascribed to it in Section 1.1(c)(i).

"Swing Line Availability" has the meaning ascribed to it in Section 1.1(c)(i).

"Swing Line Lender" means GE Capital.

"Swing Line Loan" means, as the context may require, at any time, the aggregate amount of
Swing Line Advances outstanding to Borrower.

"Swing Line Note" has the meaning ascribed to it in Section 1.1(c)(ii).

"Syndication Agent" has the meaning ascribed to it in the preamble to this Agreement.

"Taking" means any awards made with respect to Real Estate as the result of the exercise of the
power of eminent domain, including, without limitation, any awards of the changes of the grade of streets and/or as the result of any other
damage to any Real Estate for which compensation shall be given by any Governmental Authority.

"Taxes" means taxes, levies, imposts, deductions, Charges or withholdings, and all liabilities with
respect thereto, excluding (i) taxes (and all liabilities imposed with respect thereto) imposed on or measured by the net income of Agent
or a Lender and franchise taxes imposed in lieu thereof (including, without limitation, branch profits taxes, minimum taxes and taxes computed
under alternate methods, at least one of which is based on net income) by the jurisdictions under the laws of which Agent or such Lender is
organized or conducts or has conducted business or any political subdivision thereof; and (ii) any Taxes (and all liabilities imposed with
respect thereto) that would not have been imposed but for (A) the unexcused failure or unreasonable delay by Agent or any Lender,
upon or following Borrower's reasonable written request, to complete, provide, file, update or renew properly completed and duly executed
Certificates of Exemption (unless such failure or delay results from a change in applicable law after the date of the applicable Assignment
Agreement or sale of a participation, which precludes such Agent or Lender from continuing to qualify for a complete exemption from

                                                     A-27

United States withholding tax), (B) the gross negligence or willful misconduct of Agent or any Lender, or (C) Agent or any Lender being
treated as a "conduit entity" within the meaning of Treasury Regulation Section 1.881-3 or any successor provisions
thereto.

"Termination Date" means the date on which (a) the Loans have been indefeasibly repaid in
full, (b) all other Obligations under the Agreement and the other Loan Documents have been completely discharged (c) all Letter
of Credit Obligations have been cash collateralized, canceled or backed by standby letters of credit in accordance with
Annex B, and (d) Borrower shall not have any further right to borrow any monies under the Agreement.

"Title IV Plan" means a Pension Plan (other than a Multiemployer Plan), that is covered by Title IV
of ERISA, and that any Credit Party or ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.

"Trademark Security Agreements" means the Trademark Security Agreements, as amended by
the Reaffirmation Agreement, made in favor of Agent, on behalf of Lenders, by each applicable Credit Party.

"Trademark License" means rights under any written agreement now owned or hereafter acquired
by any Credit Party granting any right to use any Trademark.

"Trademarks" means all of the following now owned or hereafter existing or adopted or acquired
by any Credit Party:  (a) all trademarks, trade names, corporate names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), all registrations and recordings thereof, and all applications in connection therewith, including
registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United
States, any state or territory thereof, or any other country or any political subdivision thereof; (b) all reissues, extensions or renewals
thereof; and (c) all goodwill associated with or symbolized by any of the foregoing.

"Trigger Date" has the meaning ascribed to it in Annex G.

"Unfunded Pension Liability" means, at any time, the aggregate amount, if any, of the sum of
(a) the amount by which the present value of all accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title IV of ERISA, all determined as of the most recent valuation date
for each such Title IV Plan using the actuarial assumptions for funding purposes in effect under such Title IV Plan, and (b) for a
period of 5 years following a transaction which might reasonably be expected to be covered by Section 4069 of ERISA, the liabilities
(whether or not accrued) that could be avoided by any Credit Party or any ERISA Affiliate as a result of such transaction.

"Welfare Plan" means a Plan described in Section 3(i) of ERISA.

                                                     A-28

Rules of construction with respect to accounting terms used in the Agreement or the other Loan Documents shall be as
set forth in Annex G.  All other undefined terms contained in any of the Loan Documents shall, unless the context indicates
otherwise, have the meanings provided for by the Code to the extent the same are used or defined therein; in the event that any term is
defined differently in different Articles or Divisions of the Code, the definition contained in Article or Division 9 shall control.  Unless otherwise
specified, references in the Agreement or any of the Appendices to a Section, subsection or clause refer to such Section, subsection or clause
as contained in the Agreement.  The words "herein," "hereof" and "hereunder" and other words of similar
import refer to the Agreement as a whole, including all Annexes, Exhibits and Schedules, as the same may from time to time be amended,
restated, modified or supplemented, and not to any particular section, subsection or clause contained in the Agreement or any such Annex,
Exhibit or Schedule.

Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the
singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, feminine and neuter
genders.  The words "including," "includes" and "include" shall be deemed to be followed by the words
"without limitation"; the word "or" is not exclusive; references to Persons include their respective successors and
assigns (to the extent and only to the extent permitted by the Loan Documents) or, in the case of governmental Persons, Persons succeeding
to the relevant functions of such Persons; and all references to statutes and related regulations shall include any amendments of the same and
any successor statutes and regulations.  Whenever any provision in any Loan Document refers to the knowledge (or an analogous phrase) of
any Credit Party, such words are intended to signify that such Credit Party has actual knowledge or awareness of a particular fact or
circumstance or that such Credit Party, if it had exercised reasonable diligence, would have known or been aware of such fact or
circumstance.

                                                     A-29

ANNEX G (Section 6.10)

                  to

                  CREDIT AGREEMENT

FINANCIAL COVENANTS

Borrower shall not breach or fail to comply with any of the following financial covenants, each of which shall
be calculated in accordance with GAAP consistently applied:

(a)Minimum Fixed Charge Coverage Ratio.  From and after the first date, if any, on which Availability is
less than $20,000,000 (in each case, the "Trigger Date") Borrower and its Subsidiaries shall have on a consolidated basis
on the Trigger Date and as of the last day of each month thereafter, a Fixed Charge Coverage Ratio for the 12-month period most recently
then ended of not less than 1.0:1.0.

(b)Minimum Borrowing Availability.  Borrower shall at all times maintain Borrowing Availability at least
equal to the Minimum Excess Availability. The Minimum Excess Availability shall for all purposes in the Agreement (including conditions to
lending and required prepayments), be considered a reserve against Borrowing Availability.  No Revolving Loans shall be available to
Borrower to the extent that the making of such Revolving Loan would reduce Borrowing Availability below the Minimum Excess Availability,
and Borrower shall make any prepayments relating thereto as forth in Section 1.3(b).  Notwithstanding the foregoing to the contrary,
Agent in its sole discretion may make advances for the account of Lenders to the extent permitted under Section 1.1(a)(iii).

 

Unless otherwise specifically provided herein, any accounting term used in the Agreement shall have the meaning
customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed in accordance with GAAP
consistently applied.  That certain items or computations are explicitly modified by the phrase "in accordance with GAAP" shall in
no way be construed to limit the foregoing.  If any "Accounting Changes" (as defined below) occur and such changes result in a
change in the calculation of the financial covenants, standards or terms used in the Agreement or any other Loan Document, then Borrower,
Agent and Lenders agree to enter into negotiations in order to amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating Borrower's and its Subsidiaries' financial condition shall be the same
after such Accounting Changes as if such Accounting Changes had not been made; provided, however, that the agreement
of Requisite Lenders to any required amendments of such provisions shall be sufficient to bind all Lenders.  "Accounting
Changes" means (i) 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 successor thereto or any
agency with similar functions), (ii) changes in accounting principles concurred in by Borrower's certified public accountants;
(iii) purchase accounting adjustments under A.P.B. 16 or 17 and EITF 88-16, and the application of the accounting principles set forth in
FASB 109, including the establishment of reserves pursuant

                                                     G-1

thereto and any subsequent reversal (in whole or in part) of such reserves; and
(iv) the reversal of any reserves established as a result of purchase accounting adjustments.  If Agent, Borrower and Requisite Lenders
agree upon the required amendments, then after appropriate amendments have been executed and the underlying Accounting Change with
respect thereto has been implemented, any reference to GAAP contained in the Agreement or in any other Loan Document shall, only to the
extent of such Accounting Change, refer to GAAP, consistently applied after giving effect to the implementation of such Accounting Change.  If
Agent, Borrower and Requisite Lenders cannot agree upon the required amendments within 30 days following the date of implementation of
any Accounting Change, then all Financial Statements delivered and all calculations of financial covenants and other standards and terms in
accordance with the Agreement and the other Loan Documents shall be prepared, delivered and made without regard to the underlying
Accounting Change.  For purposes of Section 8.1, a breach of a Financial Covenant contained in this Annex G
shall be deemed to have occurred as of any date of determination by Agent or as of the last day of any specified measurement period,
regardless of when the Financial Statements reflecting such breach are delivered to Agent.

                                                     G-2

ANNEX J (from Annex A - Commitments Definition)

                  to

                  CREDIT AGREEMENT

	
Commitments 
	
Lender(s)

	
Revolving Loan Commitment (including a Swing Line Accommodation of $15,000,000) of $111,500,000
	
General Electric Capital Corporation

	
Revolving Loan Commitment of $38,500,000
	
The CIT Group/Business Credit, Inc.

	
Revolving Loan Commitment of $20,000,000
	
LaSalle Retail Finance

	
Revolving Loan Commitment of $30,000,000
	
Wells Fargo Foothill, LLC

EXHIBIT 1.1(a)(i)

                  To

                  CREDIT AGREEMENT

 

FORM OF NOTICE OF REVOLVING CREDIT ADVANCE

Reference is made to that certain Second Amended and Restated Credit Agreement dated as of September 26, 2007 among Gottschalks
Inc., the other Persons named therein as Credit Parties, the Lenders from time to time signatory thereto ("Lenders") and
General Electric Capital Corporation, as agent for Lenders ("Agent") (including all annexes, exhibits and schedules
thereto, and as from time to time amended, restated, supplemented or otherwise modified, the "Credit Agreement").
Capitalized terms used herein without definition are so used as defined in the Credit Agreement.

Borrower hereby gives irrevocable notice, pursuant to Section 1.1(a)(i) of the Credit Agreement, of its request for a Revolving Credit
Advance to be made on [__Date__] in the aggregate amount of $[__________] as [an Index Rate Loan] [a LIBOR Loan having a
LIBOR Period of [_____] month(s)].

Borrower hereby (i) represents and warrants that all of the conditions contained in Section 2.2 of the Credit Agreement have been
satisfied on and as of the date hereof, and will continue to be satisfied on and as of the date of the Advance(s) requested hereby, before and
after giving effect thereto and to the application of the proceeds therefrom; (ii) represents and warrants that a true and correct copy of the
Borrower Base Certificate is attached hereto as Exhibit A; and (iii) reaffirms the granting and continuance of Agent's Liens, on behalf of itself
and Lenders, pursuant to the Collateral Documents.

IN WITNESS WHEREOF, Borrower has caused this Notice of Revolving Credit Advance to be executed and delivered by its duly
authorized officer as of the date first set forth above.

GOTTSCHALKS INC.

By:

Name:

Title:

EXHIBIT 1.1(a)(ii)

                  to

                  CREDIT AGREEMENT

 

REVOLVING NOTE

 

	

$___,___,___

	

_______ __, 20__

FOR VALUE RECEIVED, the undersigned, GOTTSCHALKS INC., a Delaware corporation ("Borrower"), HEREBY PROMISES
TO PAY to the order of ________________ ("Lender"), at the offices of GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation, as Agent for Lenders ("Agent"), at its address at 201 Merritt 7, Norwalk, CT 06856-5201, or at such other
place as Agent may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds,
the amount of ___________________ DOLLARS AND ________ CENTS ($___,____,___) or, if less, the aggregate unpaid amount of all
Revolving Credit Advances made to the undersigned under the "Credit Agreement" (as hereinafter defined).  All capitalized terms
used but not otherwise defined herein have the meanings given to them in the Credit Agreement or in Annex A thereto.

This Revolving Note is one of the Revolving Notes issued pursuant to that certain Second Amended and Restated Credit Agreement dated
as of September 26, 2007 by and among Borrower, the other Persons named therein as Credit Parties, Agent, Lender and the other Persons
signatory thereto from time to time as Lenders (including annexes, exhibits and schedules thereto, and as from time to time amended, restated,
supplemented or otherwise modified, the "Credit Agreement"), and is entitled to the benefit and security of the Credit Agreement, the
Security Agreement and all of the other Loan Documents referred to therein.  Reference is hereby made to the Credit Agreement for a
statement of all of the terms and conditions under which the Loans evidenced hereby are made and are to be repaid.  The date and amount of
each Revolving Credit Advance made by Lenders to Borrower, the rates of interest applicable thereto and each payment made on account of
the principal thereof, shall be recorded by Agent on its books; provided that the failure of Agent to make any such recordation shall not affect the
obligations of Borrower to make a payment when due of any amount owing under the Credit Agreement or this Note to in respect of the
Revolving Credit Advances made by Lender to Borrower.

The principal amount of the indebtedness evidenced hereby shall be payable in the amounts and on the dates specified in the Credit
Agreement, the terms of which are hereby incorporated herein by reference.  Interest thereon shall be paid until such principal amount is paid in
full at such interest rates and at such times, and pursuant to such calculations, as are specified in the Credit Agreement.

If any payment on this Revolving Note becomes due and payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day and, with respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.

Upon and after the occurrence of any Event of Default, this Revolving Note may, as provided in the Credit Agreement, and without demand,
notice or legal process of any kind, be declared, and immediately shall become, due and payable.

Time is of the essence of this Revolving Note.  Demand, presentment, protest and notice of nonpayment and protest are hereby waived by
Borrower.

Except as provided in the Credit Agreement, this Revolving Note may not be assigned by Lender to any Person.

THIS REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE.

GOTTSCHALKS INC.

By: _______________________________

Title: __________________________

EXHIBIT 1.1(c)(ii)

                  to

                  CREDIT AGREEMENT

SWING LINE NOTE

	

$15,000,000

	

September 26, 2007

FOR VALUE RECEIVED, the undersigned, GOTTSCHALKS INC., a Delaware corporation ("Borrower"), HEREBY
PROMISES TO PAY to the order of GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation ("Swing Line
Lender") at the offices of GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as Agent (in such capacity,
the "Agent") at the Agent's address at 201 Merritt 7, Norwalk, CT 06856-5201, or at such other place as Agent may
designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the amount of
FIFTEEN MILLION DOLLARS AND NO CENTS ($15,000,000) or, if less, the aggregate unpaid amount of all Swing Line Advances made to
the undersigned under the "Credit Agreement" (as hereinafter defined).  All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Credit Agreement or in Annex A thereto.

This Swing Line Note is issued pursuant to that certain Second Amended and Restated Credit Agreement dated as of September 26,
2007 by and among Borrower, the other Persons named therein as Credit Parties, Agent, Swing Line Lender and the other Persons signatory
thereto from time to time as Lenders (including all annexes, exhibits and schedules thereto and as from time to time amended, restated,
supplemented or otherwise modified, the "Credit Agreement"), and is entitled to the benefit and security of the Credit
Agreement, the Security Agreement and all of the other Loan Documents.  Reference is hereby made to the Credit Agreement for a
statement of all of the terms and conditions under which the Loans evidenced hereby are made and are to be repaid.  The date and amount
of each Swing Line Advance made by Swing Line Lender to Borrower, the rate of interest applicable thereto and each payment made on
account of the principal thereof, shall be recorded by Agent on its books; provided that the failure of Agent to make any such
recordation shall not affect the obligations of Borrower to make a payment when due of any amount owing under the Credit Agreement or this
Swing Line Note in respect of the Swing Line Advances made by Swing Line Lender to Borrower.

The principal amount of the indebtedness evidenced hereby shall be payable in the amounts and on the dates specified in the Credit
Agreement, the terms of which are hereby incorporated herein by reference.  Interest thereon shall be paid until such principal amount is paid
in full at such interest rates and at such times, and pursuant to such calculations, as are specified in the Credit Agreement.

If any payment of this Swing Line Note becomes due and payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day

and, with respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.

Upon and after the occurrence of any Event of Default, this Swing Line Note may, as provided in the Credit Agreement, and without
demand, notice or legal process of any kind, be declared, and immediately shall become, due and payable.

Time is of the essence of this Swing Line Note.  Demand, presentment, protest and notice of nonpayment and protest are hereby waived
by Borrower.

THIS SWING LINE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE.
 

GOTTSCHALKS INC.

By: _______________________________

Name: __________________________

Title: __________________________

EXHIBIT 1.5(e)

                  to

                  CREDIT AGREEMENT

NOTICE OF CONVERSION/CONTINUATION

Reference is made to that certain Second Amended and Restated Credit Agreement dated as of September 26, 2007 by and among the
undersigned ("Borrower"), the other Persons named therein as Credit Parties, General Electric Capital Corporation
("Agent") and the Lenders from time to time signatory thereto (including all annexes, exhibits or schedules thereto, and as
from time to time amended, restated, supplemented or otherwise modified, the "Credit Agreement").  Capitalized terms
used herein without definition are so used as defined in the Credit Agreement.

Borrower hereby gives irrevocable notice, pursuant to Section 1.5(e) of the Credit Agreement, of its request to:

(a)on [__date__] convert $[________] of the aggregate outstanding principal amount of the [_________] Loan, bearing
interest at the [__________] Rate, into a(n) [______] Loan [and, in the case of a LIBOR Loan, having a LIBOR Period of [______]
month(s)];

[(b)on [___date___] continue $[___________] of the aggregate outstanding principal amount of the [________] Loan, bearing
interest at the LIBOR Rate, as a LIBOR Loan having a LIBOR Period of [_________] month(s)].

Borrower hereby represents and warrants that all of the conditions contained in Section 2.2 of the Credit Agreement have been
satisfied on and as of the date hereof, and will continue to be satisfied on and as of the date of the conversion/continuation requested hereby,
before and after giving effect thereto.

IN WITNESS WHEREOF, Borrower has caused this Notice of Conversion/Continuation be executed and delivered by its duly authorized
officer as of the date first set forth above.

GOTTSCHALKS INC.

By: _______________________________

Title: __________________________

EXHIBIT 9.1(a)

ASSIGNMENT AGREEMENT 

This Assignment Agreement (this "Agreement") is made as of ________ __, 200__ by and between
______________________________________________ ("Assignor Lender") and ___________________________ ("Assignee
Lender") and acknowledged and consented to by GENERAL ELECTRIC CAPITAL CORPORATION, as agent ("Agent").  All
capitalized terms used in this Agreement and not otherwise defined herein will have the respective meanings set forth in the Credit Agreement as
hereinafter defined.

RECITALS:

WHEREAS, GOTTSCHALKS INC., a Delaware corporation, ("Borrower"), Agent, Assignor Lender and other
Persons signatory thereto as Lenders have entered into that certain Second Amended and Restated Credit Agreement dated as of September 26,
2007 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement") pursuant to
which Assignor Lender has agreed to make certain Loans to, and incur certain Letter of Credit Obligations for, Borrowers;

WHEREAS, Assignor Lender desires to assign to Assignee Lender [all/a portion] of its interest in the Loans (as described
below), the Letter of Credit Obligations and the Collateral and to delegate to Assignee Lender [all/a portion] of its Commitments and other duties
with respect to such Loans, Letter of Credit Obligations and Collateral;

WHEREAS, Assignee Lender desires to become a Lender under the Credit Agreement and to accept such assignment
and delegation from Assignor Lender; and

WHEREAS, Assignee Lender desires to appoint Agent to serve as agent for Assignee Lender under the Credit
Agreement.

NOW, THEREFORE, in consideration of the premises and the agreements, provisions, and covenants herein contained,
Assignor Lender and Assignee Lender agree as follows:

1.ASSIGNMENT, DELEGATION, AND ACCEPTANCE

1.1Assignment.  Assignor Lender hereby transfers and assigns to Assignee Lender, without recourse and
without representations or warranties of any kind (except as set forth in Section 3.2), [all/such percentage] of Assignor Lender's right, title,
and interest in [the Revolving Loan ], [Letter of Credit Obligations], Loan Documents and Collateral as will result in Assignee Lender having as of
the Effective Date (as hereinafter defined) a Pro Rata Share thereof, as follows:

	
Assignee Lender's Loans
	
Principal Amount
	
Pro Rata Share

	
Revolving Loan
	
$
	
___%

1.2Delegation.  Assignor Lender hereby irrevocably assigns and delegates to Assignee Lender [all/a portion]
of its Commitments and its other duties and obligations as a Lender under the Loan Documents equivalent to [100%/___%] of Assignor Lender's
Revolving Loan Commitment (such percentage representing a commitment of $ ____________).

1.3Acceptance by Assignee Lender.  By its execution of this Agreement, Assignee Lender irrevocably
purchases, assumes and accepts such assignment and delegation and agrees to be a Lender with respect to the delegated interest under the
Loan Documents and to be bound by the terms and conditions thereof By its execution of this Agreement, Assignor Lender agrees, to the extent
provided herein, to relinquish its rights and be released from its obligations and duties under the Credit Agreement.

1.4Effective Date.  Such assignment and delegation by Assignor Lender and acceptance by Assignee
Lender will be effective and Assignee Lender will become a Lender under the Loan Documents as of the date of this Agreement ("Effective
Date") and upon payment of the Assigned Amount and the Assignment Fee (as each term is defined below).  [Interest and Fees accrued
prior to the Effective Date are for the account of Assignor Lender, and Interest and Fees accrued from and after the Effective Date are for the
account of Assignee Lender.

2.INITIAL PAYMENT AND DELIVERY OF NOTES

2.1Payment of the Assigned Amount.  Assignee Lender will pay to Assignor Lender, in immediately available
funds, not later than 12:00 noon (New York time) on the Effective Date, an amount equal to its Pro Rata Share of the then outstanding principal
amount of the Loans as set forth above in Section 1.1 [together with accrued interest, fees and other amounts as set forth on Schedule
2.1] (the "Assigned Amount").

2.2Payment of Assignment Fee.  [Assignor Lender and/or Assignee Lender] will pay to Agent, for its own
account in immediately available funds, not later than 12:00 noon (New York time) on the Effective Date, the assignment fee in the amount of
$3,500 (the "Assignment Fee") as required pursuant to Section 9.1(a) of the Credit Agreement.

2.3Execution and Delivery of Notes.  Following payment of the Assigned Amount and the Assignment Fee,
Assignor Lender will deliver to Agent the Notes previously delivered to Assignor Lender for redelivery to Borrowers and Agent will obtain from
Borrowers for delivery to [Assignor Lender and] Assignee Lender, new executed Notes evidencing Assignee Lender's [and Assignor Lender's
respective] Pro Rata Share[s] in the Loans after giving effect to the assignment described in Section 1.  Each new Note will be issued in
the aggregate maximum principal amount of the [applicable] Commitment [of the Lender to whom such Note is issued] OR [the Assignee
Lender].

                                                     2

3.REPRESENTATIONS, WARRANTIES AND COVENANTS

3.1Assignee Lender's Representations, Warranties and Covenants.  Assignee Lender hereby represents,
warrants, and covenants the following to Assignor Lender and Agent:

(a)This Agreement is a legal, valid, and binding agreement of Assignee Lender, enforceable according to its
terms;

(b)The execution and performance by Assignee Lender of its duties and obligations under this Agreement and the
Loan Documents will not require any registration with, notice to, or consent or approval by any Governmental Authority;

(c)Assignee Lender is familiar with transactions of the kind and scope reflected in the Loan Documents and in this
Agreement;

(d)Assignee Lender has made its own independent investigation and appraisal of the financial condition and affairs of
each Credit Party, has conducted its own evaluation of the Loans and Letter of Credit Obligations, the Loan Documents and each Credit Party's
creditworthiness, has made its decision to become a Lender to Borrowers under the Credit Agreement independently and without reliance upon
Assignor Lender or Agent, and will continue to do so;

(e)Assignee Lender is entering into this Agreement in the ordinary course of its business, and is acquiring its interest
in the Loans and Letter of Credit Obligations for its own account and not with a view to or for sale in connection with any subsequent distribution;
provided, however, that at all times the distribution of Assignee Lender's property shall, subject to the terms of the Credit Agreement, be and
remain within its control;

(f)No future assignment or participation granted by Assignee Lender pursuant to Section 9.1 of the Credit Agreement
will require Assignor Lender, Agent, or Borrower to file any registration statement with the Securities and Exchange Commission or to apply to
qualify under the blue sky laws of any state;

(g)Assignee Lender has no loans to, written or oral agreements with, or equity or other ownership interest in any
Credit Party;

(h)Assignee Lender will not enter into any written or oral agreement with, or acquire any equity or other ownership
interest in, any Credit Party without the prior written consent of Agent; and

(i)As of the Effective Date, Assignee Lender (i) is entitled to receive payments of principal and interest in respect of the
Obligations without deduction for or on account of any taxes imposed by the United States of America or any political subdivision thereof [, (ii) is
not subject to capital adequacy or similar requirements under Section 1.16(a) of the Credit Agreement, (iii) does not require the payment of any
increased costs under Section 1.16(b) of the Credit Agreement, and (iv) is not unable to fund LIBOR Loans under Section 1.16(c) of the Credit
Agreement,  and Assignee Lender will indemnify Agent from and against all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, or expenses

                                                     3

that result from Assignee Lender's failure to fulfill its obligations under the terms of Section 1.15(c) of the Credit
Agreement or from any other inaccuracy in the foregoing.

3.2Assignor Lender's Representations, Warranties and Covenants.  Assignor Lender hereby represents,
warrants and covenants the following to Assignee Lender:

(a)Assignor Lender is the legal and beneficial owner of the Assigned Amount;

(b)This Agreement is a legal, valid and binding agreement of Assignor Lender, enforceable according to its terms;

(c)The execution and performance by Assignor Lender of its duties and obligations under this Agreement and the
Loan Documents will not require any registration with, notice to or consent or approval by any Governmental Authority;

(d)Assignor Lender has full power and authority, and has taken all action necessary to execute and deliver this
Agreement and to fulfill the obligations hereunder and to consummate the transactions contemplated hereby;

(e)Assignor Lender is the legal and beneficial owner of the interests being assigned hereby, free and clear of any
adverse claim, lien, encumbrance, security interest, restriction on transfer, purchase option, call or similar right of a third party; and

(f)This Assignment by Assignor Lender to Assignee Lender complies, in all material respects, with the terms of the
Loan Documents.

4.LIMITATIONS OF LIABILITY

Neither Assignor Lender (except as provided in Section 3.2) nor Agent makes any representations or warranties
of any kind, nor assumes any responsibility or liability whatsoever, with regard to (a) the Loan Documents or any other document or instrument
furnished pursuant thereto or the Loans, Letter of Credit Obligations or other Obligations, (b) the creation, validity, genuineness, enforceability,
sufficiency, value or collectibility of any of them, (c) the amount, value or existence of the Collateral, (d) the perfection or priority of any Lien upon
the Collateral, or (e) the financial condition of any Credit Party or other obligor or the performance or observance by any Credit Party of its
obligations under any of the Loan Documents.  Neither Assignor Lender nor Agent has or will have any duty, either initially or on a continuing
basis, to make any investigation, evaluation, appraisal of, or any responsibility or liability with respect to the accuracy or completeness of, any
information provided to Assignee Lender which has been provided to Assignor Lender or Agent by any Credit Party.  Nothing in this Agreement or
in the Loan Documents shall impose upon the Assignor Lender or Agent any fiduciary relationship in respect of the Assignee Lender.

5.FAILURE TO ENFORCE

No failure or delay on the part of Agent or Assignor Lender in the exercise of any power, right, or privilege hereunder or
under any Loan Document will impair such power, right,

                                                     4

or privilege or be construed to be a waiver of any default or acquiescence therein.  No
single or partial exercise of any such power, right, or privilege will preclude further exercise thereof or of any other right, power, or privilege.  All
rights and remedies existing under this Agreement are cumulative with, and not exclusive of, any rights or remedies otherwise available.

6.NOTICES

Unless otherwise specifically provided herein, any notice or other communication required or permitted to be given will be
in writing and addressed to the respective party as set forth below its signature hereunder, or to such other address as the party may designate in
writing to the other.

7.AMENDMENTS AND WAIVERS

No amendment, modification, termination, or waiver of any provision of this Agreement will be effective without the written
concurrence of Assignor Lender, Agent and Assignee Lender.

8.SEVERABILITY

Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under
applicable law.  In the event any provision of this Agreement is or is held to be invalid, illegal, or unenforceable under applicable law, such
provision will be ineffective only to the extent of such invalidity, illegality, or unenforceability, without invalidating the remainder of such provision or
the remaining provisions of the Agreement.  In addition, in the event any provision of or obligation under this Agreement is or is held to be invalid,
illegal, or unenforceable in any jurisdiction, the validity, legality, and enforceability of the remaining provisions or obligations in any other
jurisdictions will not in any way be affected or impaired thereby.

9.SECTION TITLES

Section and Subsection titles in this Agreement are included for convenience of reference only, do not constitute a part of
this Agreement for any other purpose, and have no substantive effect.

10.SUCCESSORS AND ASSIGNS

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns.

11.APPLICABLE LAW

THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE.

                                                     5

12.COUNTERPARTS

This Agreement and any amendments, waivers, consents, or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which, when so executed and delivered, will be deemed an original and all of
which shall together constitute one and the same instrument.

[signature page follows]

                                                     6

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.

	
ASSIGNEE LENDER:
	
ASSIGNOR LENDER:

	
By: ________________________________
	
By: ________________________________

	
Title: ___________________________________
	
Title: ___________________________________

	 	 
	
Notice Address:

 ____________________________________

____________________________________

____________________________________
	
Notice Address:

 ____________________________________

____________________________________

____________________________________

ACKNOWLEDGED AND CONSENTED TO:

GENERAL ELECTRIC CAPITAL

   CORPORATION

By: _______________________________

Title: _________________________________

[If required]

GOTTSCHALKS INC.

By: _______________________________

Title: _________________________________

                                                     7

SCHEDULE 2.1

Assignor Lender's Loans

Principal Amount

Revolving Loan$________________

Subtotal$________________

Accrued Interest$________________

Unused Line Fee$________________

Other + or -$$________________

Total$________________

All determined as of the Effective Date.

                                                     8

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