Document:

Execution
      Copy

    

    

    
      

      

    

    
 

    AMENDED
      AND RESTATED

    LOAN
      AND GUARANTY AGREEMENT

    
 

    by
      and among

    

    

    COLLECTIVE
      BRANDS FINANCE, INC.

     

    as
      Borrower,

     

    THE
      GUARANTORS SIGNATORY
      HERETO, 

     

    as
      Credit Parties,

     

    THE
      LENDERS THAT ARE SIGNATORIES HERETO

     

    as
      the Lenders,

     

    and

     

    WELLS
      FARGO RETAIL FINANCE, LLC

     

    as
      Joint Lead Arranger, Joint Bookrunner and Administrative
      Agent

    

    and

    

    CITIGROUP
      GLOBAL MARKETS INC.

    

    as
      Joint Lead Arranger and Joint Bookrunner

    

    

    Dated
      as of August 17, 2007

    

    

    
      

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    AMENDED
      AND RESTATED LOAN AND GUARANTY AGREEMENT

    

    

    THIS
      AMENDED AND RESTATED LOAN AND GUARANTY AGREEMENT
      (this
“Agreement”),
      is
      entered into as of August 17, 2007, by and among, on the one hand, the lenders
      identified on the signature pages hereof (such lenders, together with their
      respective successors and permitted assigns, are referred to hereinafter each
      individually as a “Lender”
and
      collectively as the “Lenders”)
      and
WELLS
      FARGO RETAIL FINANCE, LLC, a
      Delaware limited liability company, as joint lead arranger, joint bookrunner
      and
      administrative agent for the Lenders (“Agent”)
      and
CITIGROUP
      GLOBAL MARKETS INC.,
      as
      joint lead arranger and joint bookrunner and, on the other hand, COLLECTIVE
      BRANDS FINANCE, INC., a
      Nevada
      corporation (formerly known as Payless ShoeSource Finance, Inc.) (“Borrower”)
      and
      the Guarantors identified on the signature pages hereof (together with Borrower,
      the “Credit
      Parties”
and
      each individually as a “Credit
      Party”).

     

    WHEREAS,
      Borrower (then known as “Payless
      ShoeSource Finance, Inc.”),
      Agent
      and certain financial institutions (such financial institutions, the
“Existing
      Lenders”)
      are
      party to a Loan, Guaranty and Security Agreement dated as of January 15, 2004
      (as amended through the date hereof, the “Prior
      Loan Agreement”);
      and

     

    WHEREAS,
      Borrower, Agent and the Existing Lenders have agreed to amend and restate the
      Prior Loan Agreement, subject to the terms and conditions set forth herein,
      to,
      among other things, (i) cause the Guarantors to continue to guarantee the
      Obligations, (ii) finance in part the acquisition on the Closing Date of
      substantially all of the assets of The Stride Rite Corporation (“Target”)
      (the
“Merger”),
      and
      (iii) provide working capital for Borrower and to provide funds for other
      general corporate purposes of Borrower;

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual agreements herein contained, and
      for other good and valuable consideration, the receipt and sufficiency of which
      are hereby acknowledged, the parties hereto agree that the Prior Credit
      Agreement is amended and restated in its entirety as follows:

     

    
      	
              1.

            	
              DEFINITIONS
                AND CONSTRUCTION.

            

    

     

    1.1 Definitions.
      As used
      in this Agreement, the following terms shall have the following
      definitions:

     

    “Account”
means
      an account (as that term is defined in the Code), and any and all supporting
      obligations in respect thereof.

     

    “Account
      Debtor”
means
      any Person obligated on an Account and any Credit Card Processor.

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    “Acquisition
      Subsidiary”
means
      San Jose Acquisition Corp., a Massachusetts corporation and a Wholly-Owned
      Subsidiary of the Parent.

     

    “Additional
      Documents”
has
      the
      meaning set forth in Section
      4.3(b).

     

    “Advance
      Rates”
means
      the percentage rates set forth in the definition of “Borrowing Base”, as such
      percentage rates may be modified pursuant to Section
      2.1(b).

     

    “Advances”
has
      the
      meaning set forth in Section
      2.1(a).

     

    “Affiliate”
      ” means,
      with respect to any Person, any other Person directly or indirectly controlling
      or that is controlled by or is under common control with such Person, each
      officer, director, general partner or joint-venturer of such Person, and each
      Person that is the beneficial owner of 15% or more of any class of Voting Stock
      of such Person; provided,
      however,
      “Affiliate” shall not include any holder of a minority interest in any
      Subsidiary of the Parent. For the purposes of this definition, “control” means
      the
      possession of the power to direct or cause the direction of the management
      and
      policies of such Person, whether through the ownership of voting securities,
      by
      contract or otherwise.

     

    “Agent”
means
      WFRF, in its capacity as arranger and administrative agent hereunder, and any
      successor thereto.

     

    “Agent
      Advances”
has
      the
      meaning set forth in Section
      2.3(e)(i).

     

    “Agent-Related
      Persons”
means
      Agent, together with its Affiliates, officers, directors, employees, attorneys,
      and agents.

     

    “Agent’s
      Account”
means
      the Deposit Account of Agent identified on Schedule
      A-1.

     

    “Agent’s
      Liens”
means
      the Liens granted by the Credit Parties to Agent under this Agreement or the
      other Loan Documents.

     

    “Aggregate
      Payments”
has
      the
      meaning set forth in Section
      17.2.

     

    “Agreement”
has
      the
      meaning set forth in the preamble to this Agreement.

     

    “Applicable
      Amount”
      shall mean, at any time (the “Reference
      Time”),
      an
      amount
      equal to (a) the sum, without duplication, of:

     

    (i) an
      amount
      equal to the greater of (x) zero and (y) 50% of cumulative Consolidated Net
      Income for the period from the Closing Date until the last day of the then
      most
      recent fiscal quarter for which financial statements have been delivered to
      the
      Agent pursuant to Section 6.3;
      provided that,
      the amount in this clause (i) shall
      only be available if the Parent would be in compliance with the Consolidated
      Coverage Test for the most recently ended Test Period, determined on a Pro
      Forma
      Basis after giving effect to any Investment or Restricted Payment actually
      made
      pursuant to Sections 7.10(j)(ii) and 7.8(c)(ii) hereof; and

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    (ii) the
      amount of any capital contributions (other than any such contribution consisting
      of Disqualified Stock) made in cash to the Parent (and contributed as common
      equity to the Borrower) from and including the Closing Date through and
      including the Reference Time,

     

    minus
      (b) the
      sum, without duplication, of:

     

    (i) the
      aggregate amount of Investments made pursuant to Sections
      7.10(j)(ii) following
      the Closing Date and prior to the Reference Time; and

     

    (ii) the
      aggregate amount of Restricted Payments pursuant to Section 7.8(c)(ii)
      following
      the Closing Date and prior to the Reference Time.

     

    “Applicable
      Margin”
means
      initially, the rates for Base Rate Loans and LIBOR Rate Loans set forth in
      Level
      I below and thereafter means the rates for Base Rate Loans and LIBOR Rate Loans
      set forth in the grid below based upon Average Utilization:

    

      
        	
                Level

              	
                Average
                  

                Utilization

              	
                Base
                  Rate 

                Loans

              	
                LIBOR
                  Rate 

                Loans

              	
                Documentary
                  

                Letters
                  of 

                Credit

              	
                Standby
                  

                Letters
                  of 

                Credit

              
	
                I

              	
                Up
                  to and including $65,000,000

              	
                (0.25)%

              	
                0.875%

              	
                0.375%

              	
                0.875%

              
	
                II

              	
                Greater
                  than $65,000,000 but less than or equal to $150,000,000

              	
                (0.25)%

              	
                1.0%

              	
                0.50%

              	
                1.0%

              
	
                III

              	
                Greater
                  than $150,000,000 but less than or equal to $250,000,000

              	
                0.0%

              	
                1.25%

              	
                0.75%

              	
                1.25%

              
	
                IV

              	
                Greater
                  than $250,000,000

              	
                0.0%

              	
                1.50%

              	
                1.0%

              	
                1.50%

              

      

    

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    The
      Applicable Margin shall be adjusted quarterly as of the first day of each
      calendar quarter, based upon the Average Utilization for the immediately
      preceding calendar quarter. 

     

    “Anti-Terrorism
      Laws”
has
      the
      meaning set forth in Section
      5.23.

     

    “Arrangers”
means,
      collectively, WFRF and Citigroup Global Markets Inc., each in its capacity
      as
      joint lead arranger and joint bookrunner.

     

    “Asset
      Sale”
      means a sale,
      conveyance, transfer, lease or other disposition of any of its respective assets
      or any interest therein by the Borrower or any of its Restricted Subsidiaries
      (including the sale or factoring at maturity or collection of any accounts)
      to
      any Person, or a permitting or sufferance of any other Person to acquire any
      interest in any of the respective assets of the Borrower or any of its
      Restricted Subsidiaries or, except in the case of the Borrower, the issuance
      or
      sale of any shares of Stock or any Stock Equivalent,
      other than (i) the
      sale
      or disposition of Cash Equivalents, Inventory or other assets, in each case
      in
      the ordinary course of business,
      (ii) the
      sale
      or disposition of equipment that has become obsolete, damaged, surplus or
      otherwise no longer used or useful in the ordinary course of business or is
      replaced in the ordinary course of business,
      (iii) any
      Recovery Event (without giving effect to the limitations in the definition
      thereof),
      (iv) sales
      or
      other dispositions without recourse and in the ordinary course of business
      of
      overdue accounts receivable in connection with the compromise or collection
      thereof,
      (v) the
      licensing, sublicensing or other similar ordinary course transfers (but not
      sales) of intellectual property rights (on an exclusive or non-exclusive basis)
      to the extent that the foregoing occurs on an arms-length basis, (vi) the
      settlement, release or surrender of tort or other litigation claims, (vii)
      asset
      contributions for no cash consideration (or its equivalent) to the extent
      constituting an Investment permitted under clause (d) of the definition of
      “Permitted
      Investments,”
      (viii) Assets
      Sales among Credit Parties, (xi) a true lease or sublease of Real Property
      not
      constituting Indebtedness and not constituting a Sale-Leaseback,
      (x) dispositions
      of property pursuant to a Permitted Sale-Leaseback, (xi) as long as no Default
      or Event of Default is continuing or would result therefrom, any other Asset
      Sale for fair market value, 75% of which shall be payable in cash upon such
      sale, provided,
      however,
      that
      with respect to any such Asset Sale pursuant to this clause (xi), the total
      Dollar amount of the aggregate consideration received during any fiscal year
      for
      all such Asset Sales shall not exceed 2.0% of the Consolidated Net Tangible
      Assets of Borrower and the Restricted Subsidiaries taken as a whole at any
      time
      outstanding, (xii) any other sale or transfer or series of related sales or
      transfers that result in cash consideration of less than $1,000,000, (xiii)
      transfers to insurers as part of insurance settlements for losses to
      governmental authority for condemned property, (xiv) Store Closings within
      the
      Store Closing Basket and (xv) dispositions listed on Schedule
      7.3.
      

     

    “Assignee”
has
      the
      meaning set forth in Section
      14.1(a).
      

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    “Assignment
      and Acceptance”
means
      an Assignment and Acceptance Agreement substantially in the form of Exhibit
      A-1.

     

    “Authorized
      Person”
means
      those individuals identified on Schedule
      A-2,
      as such
      schedule may be modified by written notice from Borrower to Agent from time
      to
      time.

     

    “Availability”
means,
      as of any date of determination, the amount that Borrower is entitled to borrow
      as Advances hereunder (after giving effect to all then outstanding Obligations
      and all sublimits and Reserves then applicable hereunder).

     

    “Average
      Utilization”
means
      for any calendar quarter an amount equal to the sum of the Daily Balance of
      Revolver Usage for each day of such calendar quarter divided by the actual
      number of days in such calendar quarter, as determined by Agent, which
      determination shall be conclusive absent manifest error.

     

    "Banking
      Services"
      means
      each and any of the following bank services provided to any Credit Party by
      any
      Lender: (a) commercial credit cards, (b) stored value cards and (c) treasury
      management services (including, without limitation, controlled disbursement,
      automated clearinghouse transactions, returned items, overdrafts and interstate
      depository network services).

     

    "Banking
      Services Obligations"
      means
      any and all obligations of the Credit Parties, whether absolute or contingent
      and howsoever and whensoever created, arising, evidenced or acquired (including
      all renewals, extensions and modifications thereof and substitutions therefore),
      in connection with Banking Services.

     

    “Bankruptcy
      Code”
means
      title 11 of the United States Code, as in effect from time to time.

     

    “Base
      LIBOR Rate”
means
      the rate per annum, determined by Agent in accordance with its customary
      procedures, and utilizing such electronic or other quotation sources as it
      considers appropriate (rounded upwards, if necessary, to the next 1/100%),
      to be
      the rate at which Dollar deposits (for delivery on the first day of the
      requested Interest Period) are offered to major banks in the London interbank
      market at approximately 11 a.m. (London time) 2 Business Days prior to the
      commencement of the requested Interest Period, for a term and in an amount
      comparable to the Interest Period and the amount of the LIBOR Rate Loan
      requested (whether as an initial LIBOR Rate Loan or as a continuation of an
      extant LIBOR Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate
      Loan) by Borrower in accordance with this Agreement, which determination shall
      be conclusive in the absence of manifest error.

     

    “Base
      Rate”
means,
      the rate of interest announced, from time to time, within Wells Fargo at its
      principal office in San Francisco as its “prime rate”, with the understanding
      that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the
      lowest of such rates) and serves as the basis upon which effective rates of
      interest are calculated for those loans making reference thereto and is
      evidenced by the recording thereof after its announcement in such internal
      publications as Wells Fargo may designate.

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    “Base
      Rate Loan”
means
      the portion of the Advances that bears interest at a rate determined by
      reference to the Base Rate.

     

    “Benefit
      Plan”
means
      a
“defined benefit plan” (as defined in Section 3(35)
      of
      ERISA) subject to Title IV of ERISA for which any Credit Party or ERISA
      Affiliate of any Credit Party has been an “employer” (as defined in
      Section 3(5) of ERISA) within the past six years.

     

    “Board
      of Directors”
means
      the board of directors (or comparable managers) of Parent or any committee
      thereof duly authorized to act on behalf of the board of directors (or
      comparable managers).

     

    “Books”
means
      each Credit Party’s now owned or hereafter acquired books and records (including
      all of its Records indicating, summarizing, or evidencing its assets (including
      the Collateral) or liabilities, all of the Records of each Credit Party relating
      to its business operations or financial condition, and all of its goods related
      to such information).

     

    “Borrower”
has
      the
      meaning set forth in the preamble to this Agreement.

     

    “Borrowing”
means
      a
      borrowing hereunder consisting of Advances made on the same day by the Lenders
      (or Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan,
      or
      by Agent in the case of an Agent Advance.

     

    “Borrowing
      Base”
means,
      as of any date of determination, the result of:

     

    (a) 85%
      of
      Eligible Accounts, plus

     

    (b) 90%
      of
      Eligible Credit Card Accounts, plus

     

    (c) 90%
      times
      the then
      extant Net Liquidation Percentage times
      Eligible
      Inventory, minus

     

    (d) the
      aggregate amount of Permitted Reserves, if any, established by the
      Agent.

     

    “Borrowing
      Base Certificate”
has
      the
      meaning set forth in Schedule
      6.2.

     

    “Business
      Day”
means
      any day that is not a Saturday, Sunday, or other day on which banks are
      authorized or required to close in the states of California, Kansas,
      Massachusetts or New York, except that, if a determination of a Business Day
      shall relate to a LIBOR Rate Loan, the term “Business Day” also shall exclude
      any day on which banks are closed for dealings in Dollar deposits in the London
      interbank market.

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    “Capital
      Lease”
means
      a
      lease that is required to be capitalized for financial reporting purposes in
      accordance with GAAP.

     

    “Capitalized
      Lease Obligation”
means
      that portion of the obligations under a Capital Lease that is required to be
      capitalized in accordance with GAAP.

     

    “Cash
      Equivalents”
means,
      as of any date of determination, (i) marketable securities (a) issued or
      directly and unconditionally guaranteed as to interest and principal by the
      United States Government or (b) issued by any agency of the United States in
      each case maturing within thirteen months after such date; (ii) marketable
      direct obligations issued by any state of the United States of America or any
      political subdivision of any such state or any public instrumentality thereof,
      in each case maturing within thirteen months after such date and having, at
      the
      time of the acquisition thereof, a rating of at least A-1 from Standard
&Poor’s Rating Group (“S&P”) or at least P-1 from Moody’s Investors
      Service Inc. (“Moody’s”); (iii) (a) commercial paper maturing no more than
      thirteen months from the date of creation thereof and having, at the time of
      the
      acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
      Moody’s and (b) other corporate obligations maturing no more than thirteen
      months from the acquisition thereof and having, at the time of the acquisition
      thereof, a rating of at least AA from S&P or at least Aa2 from Moody’s; (iv)
      variable rate demand notes and auction rate securities maturing no more than
      thirteen months from the date of creation thereof; (v) certificates of deposit
      or bankers’ acceptances maturing within thirteen months after such date and
      issued or accepted by any Lender or by any commercial bank organized under
      the
      laws of the United States of America or any state thereof or the District of
      Columbia that (a) is at least “adequately capitalized” (as defined in the
      regulations of its primary Federal banking regulator) and (b) has Tier 1 capital
      (as defined in such regulations) of not less than $100,000,000; and (vi) shares
      of any money market mutual fund that (a) has substantially all of its assets
      invested continuously in the types of investments referred to in clauses (i)
      and
      (ii) above, (b) has net assets of not less than $500,000,000 and (c) has the
      highest rating obtainable from either S&P or Moody’s.

     

    “Cash
      Management Account”
has
      the
      meaning set forth in Section
      2.7(a).
      

     

    “Cash
      Management Agreements”
means
      those certain cash management agreements, in form and substance satisfactory
      to
      Agent, each of which is among the applicable Credit Party, Agent, and one of
      the
      Cash Management Banks.

     

    “Cash
      Management Bank”
has
      the
      meaning set forth in Section
      2.7(a).

     

    “Change
      of Control”
means
      any
      event or circumstance after which (a) any person or group of persons (within
      the
      meaning of the Securities Exchange Act of 1934, as amended) shall have acquired
      beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
      Exchange Commission under the Securities Act of 1934, as amended) of more than
      50% of the voting stock of the Parent, (b) a majority of the board of directors
      of the Parent shall not be Continuing Directors or (c)
      Borrower shall cease to be a direct Wholly Owned Domestic Subsidiary of the
      Parent.

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    “Closing
      Date”
means
      the date of the making of the initial Advance (or other extension of credit)
      hereunder or the date on which Agent sends Borrower a written notice that each
      of the conditions precedent set forth in Section 3.1 either have been satisfied
      or have been waived. 

     

    “Closing
      Date Business Plan”
means
      the set of Projections of Parent and its Subsidiaries and the Target and its
      subsidiaries (on a combined basis) through the 2014 fiscal year, prepared on
      a
      quarterly basis through the end of 2007 (and annually thereafter).

     

    “Code”
means
      the New York Uniform Commercial Code, as in effect from time to
      time.

     

    “Collateral”
means
      all property and interests in property and proceeds thereof now owned or
      hereafter acquired by any Credit Party in or upon which a Lien is granted under
      any Collateral Document.

     

    “Collateral
      Documents”
means
      the Pledge and Security Agreement, other pledge or security agreements
      (including those in respect of Intellectual Property), the Mortgages, the
      Deposit Account Control Agreements, the Securities Account Control Agreements
      and any other document executed and delivered by a Credit Party granting a
      Lien
      on any of its property to secure payment of the Secured
      Obligations.

     

    “Collateral
      Access Agreement”
means
      a
      landlord waiver, bailee letter, or acknowledgement agreement of any lessor,
      warehouseman, processor, consignee, or other Person in possession of, having
      a
      Lien upon, or having rights or interests in any Credit Party’s Inventory or
      Books relating to the Collateral, in each case, in form and substance
      satisfactory to Agent.

     

    “Collections”
means
      all
      cash,
      checks, notes, instruments, and other items of payment relating to the
      Collateral. 

     

    “Commitment”
means,
      with respect to each Lender, its Revolver Commitment and, with respect to all
      Lenders, their Revolver Commitments, as such Dollar amounts are set forth beside
      such Lender’s name under the applicable heading on Schedule
      C-1
      or in
      the Assignment and Acceptance pursuant to which such Lender became a Lender
      hereunder in accordance with the provisions of Section
      14.1
      or
      pursuant to Section
      2.2.

     

    “Compliance
      Certificate”
means
      a
      certificate substantially in the form of Exhibit
      C-1
      delivered by the chief financial officer of Borrower to Agent.

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    “Concentration
      Accounts”
has
      the
      meaning set forth in Section
      2.7(a).
      

     

    “Consignee/Bailee
      Location”
means
      real property owned or leased by a Person constituting a “bailee” or “consignee”
for purposes of the Code with respect to Inventory of the Credit Parties, other
      than in-transit Inventory, in excess of $2,500,000 in the aggregate for all
      such
      Consignee/Bailee Locations and $1,000,000 in respect of any particular Person
      constituting a “bailee” or “consignee”; provided that no Pool Location shall be
      considered a Consignee/Bailee Location for purposes of this
      Agreement.

     

    “Consolidated”
means,
      when used to modify a financial term, test, statement, or report of a Person,
      the application or preparation of such term, test, statement or report (as
      applicable) based upon the consolidation, in accordance with GAAP, of the
      financial condition or operating results of such Person and its
      Subsidiaries.

     

    "Consolidated
      Coverage Test"
      means
      the maintenance by Borrower, on the last day of each fiscal quarter set forth
      below, of a Total Leverage Ratio of not more than the maximum ratio set forth
      below opposite such fiscal quarter:

     

    
      	
              FISCAL
                QUARTER ENDING ON OR ABOUT

            	
              MAXIMUM
                LEVERAGE RATIO

            
	
              October
                31, 2007, January 31, 2008, April 30, 2008, July 31, 2008, October
                31,
                2008 and January 31, 2009

            	
              4.7
                to 1

            
	
              April
                30, 2009, July 31, 2009, October 31, 2009 and January 31,
                2010

            	
              4.2
                to 1

            
	
              April
                30, 2010 and each fiscal quarter thereafter

            	
              4.0
                to 1

            

    

    

     

    “Consolidated
      EBITDA”
means
      Consolidated EBITDAR minus
      the
      amount, if any, of rental expense added to Consolidated Net Income in
      calculating Consolidated EBITDAR.

     

    “Consolidated
      EBITDAR”
means,
      with respect to any Person for any period, Consolidated Net Income for such
      Person and its Subsidiaries for such period, plus (a) the sum of the following,
      without duplication and, in each case, to the extent deducted in determining
      such Consolidated Net Income: (i) any provision for income taxes, (ii) all
      interest expense (net of interest income), (iii) depreciation, amortization
      and
      rental expense, (iv) extraordinary, unusual or non-recurring charges, expenses
      or losses (including, whether or not otherwise includable as a separate item
      in
      the statement of such Consolidated Net Income for such period, losses on the
      sales of assets outside of the ordinary course of business), (v) losses or
      charges resulting from hedging activities, including but not limited to any
      decrease in the fair value of interest rate swap agreements and any losses
      on
      foreign currency contracts not entered into for speculative purposes, (vi)
      the
      amount of all non-cash charges for such period (including any impairment or
      writeoff of goodwill or other intangible assets but excluding any such non-cash
      charge, expense or loss to the extent that it represents an accrual of or
      reserve for cash expenses in any future period or an amortization of a prepaid
      cash expense that was paid in a prior period), (vii) the amortization of any
      financing costs or fees or original issue discount incurred in connection with
      any Indebtedness, (viii) any non-cash expenses due to purchase accounting
      associated with the Transactions and any future Permitted Acquisitions, (ix)
      any
      non-cash compensation charge or expense arising from any grant of stock, stock
      options or other equity based awards and (x) to the extent non-recurring and
      not
      capitalized, costs, fees, charges and expenses (including legal and consulting
      fees) incurred in connection with or written off as a result of (1) the Loans,
      the Merger or the other Transactions, (2) Permitted Acquisitions and other
      investments permitted under the Loan Documents, (3) issuances of Stock or Stock
      Equivalents, and (4) disposition, incurrence or refinancing of any Indebtedness,
      including in each case, all deferred financing costs written off and premiums
      paid or other expenses incurred directly in connection with any early
      extinguishment of Indebtedness and any net loss from any write-off or
      forgiveness of Indebtedness; less
      (b) the
      sum of the following to the extent included in determining Consolidated Net
      Income (i) income tax benefits for such period, (ii) any extraordinary, unusual
      or non-recurring income or gains for such period (including, whether or not
      otherwise includable as a separate item in the statement of such Consolidated
      Net Income for such period, gains on the sales of assets outside of the ordinary
      course of business and any net gain from any write-off or forgiveness of
      Indebtedness), (iii) other non-cash income or gains (other than the accrual
      of
      revenue in the ordinary course), and (iv) gains resulting from hedging
      activities, including but not limited to any increase in the fair value of
      interest rate swap agreements and any gains on foreign currency contracts not
      entered into for speculative purpose. 

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    “Consolidated
      Fixed Charge Coverage Ratio”
means,
      at any date of determination, the ratio of (a) (i) Consolidated EBITDA for
      such
      period minus
      (ii)
      Capital Expenditures to (b) the sum of (i) Debt Service Charges plus
      (ii) the
      aggregate amount of all Restricted Payments, plus
      (iii)
      the aggregate amount of Federal, state, local and foreign income taxes paid
      in
      cash, in each case, of or by the Parent and its Restricted Subsidiaries for
      the
      most recently completed period, all as determined on a Consolidated basis in
      accordance with GAAP.

     

    “Consolidated
      Funded Indebtedness”
means,
      as of any date of determination, the sum (without duplication) of (a) the
      aggregate principal amount of Indebtedness of the Parent and the Restricted
      Subsidiaries outstanding as of such date, in the amount that would be reflected
      on a balance sheet prepared as of such date on a Consolidated basis in
      accordance with GAAP, and (b) the aggregate principal amount of Indebtedness
      outstanding as of such date of Persons other than the Parent or a Restricted
      Subsidiary, in the amount that would be reflected on a balance sheet of any
      such
      Person prepared as of such date on a Consolidated basis in accordance with
      GAAP,
      to the extent such Indebtedness is guaranteed by the Parent or a Restricted
      Subsidiary. For
      purposes of determining the Senior Secured Leverage Ratio and the Total Leverage
      Ratio for any Test Period, Consolidated Funded Indebtedness in respect of
      Indebtedness outstanding under this Agreement shall be the average outstanding
      amount of such Indebtedness during such Test Period.

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    “Consolidated
      Interest Charges”
means,
      for any period, the sum of (a) all interest, premium payments, debt discount,
      fees, charges and related expenses in connection with borrowed money (including
      capitalized interest) or in connection with the deferred purchase price of
      assets, in each case to the extent treated as interest in accordance with GAAP,
      including, without limitation, all commissions, discounts and other fees and
      charges owed with respect to letters of credit and bankers’ acceptance financing
      and net costs under Swap Contracts, but excluding (i) any non-cash or deferred
      interest financing costs and (ii) interest expenses treated as such pursuant
      solely to Fin 48, (b) all interest paid or payable with respect to discontinued
      operations and (c) the portion of rent expense with respect to such period
      under
      Capital Lease Obligations that is treated as interest in accordance with GAAP,
      in each case of or by the Parent and its Restricted Subsidiaries for the most
      recently completed period, all as determined on a Consolidated basis in
      accordance with GAAP.

     

    “Consolidated
      Net Income”
means,
      with respect to any Person and its Subsidiaries, for any period, the net income
      (or loss) of such Person and its Subsidiaries for such period, determined on
      a
      Consolidated basis in accordance with GAAP; provided
      that
      there shall be excluded from the calculation of Consolidated Net Income (a)
      except as otherwise provided in the credit documentation with respect to
      calculations to be made on a pro forma basis, the net income (or loss) 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, (b) the
      net income (or loss) of any Person that is an Unrestricted Subsidiary or in
      which such Person has a minority ownership interest, except to the extent any
      such income has actually been received by such Person in the form of cash
      dividends or distributions, and (c) the cumulative effect of a change in
      accounting principles.

     

    “Consolidated
      Net Tangible Assets”
means,
      at any date of determination, (i) the consolidated net book value of all assets
      of Parent and its Subsidiaries, minus (ii) the consolidated total net book
      value
      of all assets of Parent and its Subsidiaries which would be treated as
      intangibles under GAAP, including goodwill and trademarks, all as determined
      on
      a consolidated basis in accordance with GAAP.

     

    “Consolidated
      Store Deposit Accounts”
has
      the
      meaning set forth in Section
      2.7(a).

     

    “Continuing
      Director”
means
      the directors of the Parent on the Closing Date and each other director of
      the
      Parent, if, in each case, such other director’s nomination for election to the
      board of directors of the Parent is recommended by at least 51% of the then
      Continuing Directors.

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    “Contractual
      Obligation”
of
      any
      Person means any obligation, agreement, undertaking or similar provision of
      any
      security issued by such Person or of any agreement, undertaking, contract,
      lease, indenture, mortgage, deed of trust or other instrument (excluding a
      Loan
      Document) to which such Person is a party or by which it or any of its property
      is bound or to which any of its property is subject.

     

    “Contributing
      Guarantors”
has
      the
      meaning set forth in Section
      17.2.

     

    “Control
      Exercise Notice”
has
      the
      meaning set forth in Section
      2.7(f).

     

    “Credit
      Card Agreements”
means
      those certain credit card receipts agreements, each in form and substance
      reasonably satisfactory to Agent, and each of which is among Agent, the
      applicable Credit Party, and one of such Credit Party’s Credit Card Processors,
      whereby, among other things, such Credit Card Processor is irrevocably directed
      and agrees to transfer all proceeds of credit card charges for sales by such
      Credit Party received by it (or other amounts payable by such Credit Card
      Processor) into a designated Concentration Account on a daily basis or such
      other periodic basis as Agent may otherwise direct.

     

    “Credit
      Card Processor”
means
      any Person (including an issuer of a credit card) that acts as a credit card
      clearinghouse or remits payments due to any Credit Party with respect to credit
      card charges accepted by such Credit Party.

     

    “Credit
      Card Receivables”
means,
      on any date of determination thereof, Accounts consisting of rights of any
      Credit Party to payment by any Credit Card Processor in connection with consumer
      retail sales for which such Credit Party has accepted payment by means of
      charges to debit cards or major credit cards (MasterCard, VISA), American
      Express, Discover, Japan Credit Bureau, Ahorro
      A Toda Hora Banco
      Popular (“ATH”) Card, EBT Cards (so long as Eligible Accounts relating to EBT
      Cards do not exceed, in the aggregate, $250,000) and such other bank or non-bank
      credit or debit cards as may be approved by Agent in its Permitted
      Discretion).

     

    “Credit
      Party”
means
      the Borrower and each Guarantor.

     

    “Customs
      Broker”
means
      Expeditors International, or such other Persons as may be selected by Borrower
      after the date hereof who are reasonably acceptable to Agent in its Permitted
      Discretion to perform port of entry services to accept and process Inventory
      imported by any Credit Party and who have executed and delivered a Customs
      Broker Agreement.

     

    “Customs
      Broker Agreement”
means
      a
      customs broker agreement in form and substance satisfactory to Agent in its
      Permitted Discretion, duly executed and delivered to Agent by a Customs Broker
      and the applicable Credit Party.

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    “Daily
      Balance”
means,
      as of any date of determination and with respect to any Obligation, the amount
      of such Obligation owed at the end of such day.

     

    “Debt
      Service Charges”
means
      for any period, the sum of (a) Consolidated Interest Charges paid or required
      to
      be paid for such period,
      plus
      (b)
      principal payments required to be made and actually made on account of
      Indebtedness (excluding the Obligations and the Term Loan Obligations but
      including, without limitation, Capital Lease Obligations), in each case of
      or by
      the Parent and its Restricted Subsidiaries for the most recently completed
      period, all as determined on a Consolidated basis in accordance with
      GAAP.

     

    “Default”
means
      an event, condition, or default that, with the giving of notice, the passage
      of
      time, or both, would be an Event of Default.

     

    “Defaulting
      Lender”
means
      any Lender that fails to make any Advance (or other extension of credit) that
      it
      is required to make hereunder on the date that it is required to do so
      hereunder.

     

    “Defaulting
      Lender Rate”
means
      (a) for the first 3 days from and after the date the relevant payment is due,
      the Base Rate, and (b) thereafter, the interest rate then applicable to Advances
      that are Base Rate Loans (inclusive of the Applicable Margin applicable
      thereto).

     

    “Deposit
      Account”
means
      any deposit account (as that term is defined in the Code).

     

    “Deposit
      Account Control Agreement”
has
      the
      meaning specified in the Pledge and Security Agreement.

     

    “Designated
      Account”
means
      the Deposit Account of each Credit Party identified on Schedule
      D-1.

     

    “Designated
      Account Bank”
has
      the
      meaning ascribed thereto on Schedule
      D-1.

     

    “Disbursement
      Letter”
means
      an instructional letter executed and delivered by Borrower to Agent regarding
      the extensions of credit to be made on the Closing Date, the form and substance
      of which is satisfactory to Agent.

     

    “Disqualified
      Stock”
shall
      mean any Stock or Stock Equivalent which, by its terms (or by the terms of
      any
      Security into which it is convertible or for which it is exchangeable), or
      upon
      the happening of any event, (a) matures (excluding any maturity as the result
      of
      an optional redemption by the issuer thereof) or is mandatorily redeemable,
      pursuant to a sinking fund obligation or otherwise, or is redeemable at the
      option of the holder thereof, in whole or in part, on or prior to the first
      anniversary of the Maturity Date, (b) is convertible into or exchangeable
      (unless at the sole option of the issuer thereof) for (i) debt securities or
      (ii) any Stock or Stock Equivalent referred to in clause (a) above, in each
      case
      at any time on or prior to the first anniversary of the Maturity Date, or (c)
      contains any repurchase obligation which may come into effect prior to payment
      in full of all Obligations; provided, however, that any Stock or Stock
      Equivalents that would not constitute Disqualified Stock but for provisions
      thereof giving holders thereof (or the holders of any security into or for
      which
      such Stock or Stock Equivalents is convertible, exchangeable or exercisable)
      the
      right to require the issuer thereof to redeem such Stock or Stock Equivalents
      upon the occurrence of a change in control or an asset sale occurring prior
      to
      the first anniversary of the Maturity Date shall not constitute Disqualified
      Stock if such Stock or Stock Equivalents provide that the issuer thereof will
      not redeem any such Stock or Stock Equivalents pursuant to such provisions
      prior
      to the repayment in full of the Obligations; provided further, however, that
      any
      Stock or Stock Equivalents owned by a Group Member in a Joint Venture shall
      not
      constitute Disqualified Stock solely due to repurchase obligations triggered
      upon such Group Member’s failure to make a required capital
      contribution.

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    “Dollars”
or
      “$”
means
      United States dollars.

     

    “EBT
      Cards”
means
      those cards subject to an electronic benefit transfer system that allows the
      user to authorize the transfer of the user’s government benefits from a Federal
      account to a retailer account in order to pay for products
      received.

     

    “Eligible
      Accounts”
means
      those Accounts (other than Eligible Credit Card Accounts) that are created
      by
      any Credit Party in the ordinary course of its business, that arise out of
      such
      Credit Party’s sale of goods or rendition of services, that comply with each of
      the representations and warranties respecting Eligible Accounts made in the
      Loan
      Documents, and that are not excluded as ineligible by virtue of one or more
      of
      the excluding criteria set forth below; provided,
      however, that such criteria may be revised from time to time by Agent in its
      Permitted Discretion to address the results of any audit performed by Agent
      from
      time to time after the Closing Date. In determining the amount to be included,
      Eligible Accounts shall be calculated at face value. Eligible Accounts shall
      not
      include the following: 

     

    (a) Accounts
      that the Account Debtor has failed to pay within 90 days of original invoice
      date (or such longer period not to exceed 120 days in the Agent's discretion)
      or
      Accounts with selling terms of more than 60 days, 

     

    (b) Accounts
      owed by an Account Debtor (or its Affiliates) where 50% or more of all Accounts
      owed by that Account Debtor (or its Affiliates) are deemed ineligible under
      clause (a) above,

     

    (c) Accounts
      with respect to which the Account Debtor is an Affiliate of Borrower or an
      employee or agent of Borrower or any Affiliate of Borrower,

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    (d) Accounts
      arising in a transaction wherein goods are placed on consignment or are sold
      pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill
      and
      hold, or any other terms by reason of which the payment by the Account Debtor
      may be conditional,

     

    (e) Accounts
      that are not payable in Dollars,

     

    (f) Accounts
      with respect to which the Account Debtor either (i) does not maintain its chief
      executive office in the United States, or (ii) is not organized under the laws
      of the United States or any state thereof, or (iii) is the government of any
      foreign country or sovereign state, or of any state, province, municipality,
      or
      other political subdivision thereof, or of any department, agency, public
      corporation, or other instrumentality thereof, unless (y) the Account is
      supported by an irrevocable letter of credit satisfactory to Agent in its
      Permitted Discretion (as to form, substance, and issuer or domestic confirming
      bank) that has been delivered to Agent and is directly drawable by Agent, or
      (z)
      the Account is covered by credit insurance in form, substance, and amount,
      and
      by an insurer, satisfactory to Agent in its Permitted Discretion,

     

    (g) Accounts
      with respect to which the Account Debtor is either (i) the United States or
      any
      department, agency, or instrumentality of the United States (exclusive, however,
      of Accounts with respect to which Borrower has complied, to the reasonable
      satisfaction of Agent, with the Assignment of Claims Act, 31 USC §3727), or (ii)
      any state of the United States,

     

    (h) Accounts
      with respect to which the Account Debtor is subject to an Insolvency Proceeding,
      is not Solvent, or as to which any Credit Party has received notice of an
      imminent Insolvency Proceeding or a material impairment of the financial
      condition of such Account Debtor,

     

    (i) Accounts,
      the collection of which, Agent, in its Permitted Discretion, believes to be
      doubtful by reason of the Account Debtor’s financial condition, 

     

    (j) Accounts
      that are not subject to a valid and perfected first priority Agent’s Lien,
      or

     

    (k)
      Accounts with respect to which (i) the goods giving rise to such Account have
      not been shipped and billed to the Account Debtor, or (ii) the services giving
      rise to such Account have not been performed and billed to the Account
      Debtor.

     

    “Eligible
      Credit Card Accounts”
means
      those Eligible Accounts consisting of Credit Card Receivables in each case
      (for
      all such Accounts) that are created by any Credit Party in the ordinary course
      of its business, that arise out of such Credit Party’s sale of goods or
      rendition of services, that comply with each of the representations and
      warranties respecting Eligible Accounts made in the Loan Documents, and that
      are
      not excluded as ineligible by virtue of one or more of the excluding criteria
      set forth below; provided,
      however, that such criteria may be revised from time to time by Agent in its
      Permitted Discretion to address the results of any audit performed by Agent
      from
      time to time after the Closing Date. In determining the amount to be included,
      Eligible Accounts shall be calculated at face value. Eligible Accounts shall
      not
      include the following: 

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

    (a) Credit
      Card Receivables that the applicable Credit Card Processor has failed to pay
      within 5 Business Days after the applicable sale date;

     

    (b) Accounts
      owed by an Account Debtor (or its Affiliates) where 50% or more of all Accounts
      owed by that Account Debtor (or its Affiliates) are deemed ineligible under
      clause (a) above,

     

    (c) Accounts
      that are not payable in Dollars,

     

    (d) Accounts
      with respect to which the Account Debtor either (i) does not maintain its chief
      executive office in the United States, or (ii) is not organized under the laws
      of the United States or any state thereof, or (iii) is the government of any
      foreign country or sovereign state, or of any state, province, municipality,
      or
      other political subdivision thereof, or of any department, agency, public
      corporation, or other instrumentality thereof, unless (y) the Account is
      supported by an irrevocable letter of credit satisfactory to Agent in its
      Permitted Discretion (as to form, substance, and issuer or domestic confirming
      bank) that has been delivered to Agent and is directly drawable by Agent, or
      (z)
      the Account is covered by credit insurance in form, substance, and amount,
      and
      by an insurer, satisfactory to Agent in its Permitted Discretion,

     

    (e) Accounts
      with respect to which the Account Debtor is subject to an Insolvency Proceeding,
      is not Solvent, or as to which any Credit Party has received notice of an
      imminent Insolvency Proceeding or a material impairment of the financial
      condition of such Account Debtor,

     

    (f) Accounts,
      the collection of which, Agent, in its Permitted Discretion, believes to be
      doubtful by reason of the Account Debtor’s financial condition, or 

     

    (g) Accounts
      that are not subject to a valid and perfected first priority Agent’s Lien, and,
      at any time after the 90th
      day
      following the Closing Date are not subject to a Credit Card
      Agreement.

     

    “Eligible
      In-Transit Inventory”
means,
      as of the date of determination thereof, without duplication of other Eligible
      Inventory, Inventory (a) which has been shipped from a location outside the
      United States for receipt by a Credit Party to a location listed on Schedule
      E-1
      within 45 days of the date of determination, but which has not yet been
      delivered to a Credit Party, (b) for which payment has been made by a Credit
      Party and title has passed to a Credit Party, (c) for which the document of
      title reflects a Credit Party as consignee (along with delivery to a Credit
      Party of the documents of title with respect thereto), (d) (x) is being
      transported pursuant to a nonnegotiable document of title within the meaning
      of
      the Code and (y) as to which, at any time after the 90th day following the
      Closing Date, Agent has control over the documents of title which evidence
      ownership of the subject Inventory by the delivery of a Customs Broker
      Agreement, (e) such Inventory is insured against types of loss, damage, hazards,
      and risks, and in amounts satisfactory to Agent in its Permitted Discretion,
      and
      (f) which otherwise would constitute Eligible Landed Inventory.

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

    “Eligible
      Inventory”
means
      Eligible Landed Inventory, Eligible L/C Inventory, Eligible In-Transit Inventory
      or Eligible U.S. Territory Inventory, less any Reserves imposed by the
      Agent.

     

    “Eligible
      Landed Inventory”
means
      Inventory consisting of finished goods held for sale in the ordinary course
      of
      each Credit Party’s business that complies with each of the representations and
      warranties respecting Eligible Inventory made in the Loan Documents, and that
      is
      not excluded as ineligible by virtue of the one or more of the excluding
      criteria set forth below; provided,
      however, that such criteria may be revised from time to time by Agent in its
      Permitted Discretion to address the results of any audit or appraisal performed
      by Agent from time to time after the Closing Date. In determining the amount
      to
      be so included, Inventory shall be valued at the lower of cost (determined
      on a
      perpetual basis) or market on a basis consistent with such Credit Party’s
      historical accounting practices, but excluding, for purposes of any such
      determination, the value of any capitalized costs unrelated to the acquisition
      of Inventory. An item of Inventory shall not be included in Eligible Landed
      Inventory if:

     

    (a) a
      Credit
      Party does not have good, valid, and marketable title thereto,

     

    (b) it
      is not
      located at one of the locations in the United States set forth on Schedule E-1
      or a
      Pool Location (or in transit from one such location to another such location)
      as
      such locations are updated by the Borrower from time to time by written notice
      to Agent,

     

    (c) it
      is
      located on real property leased by any Credit Party or in a contract warehouse,
      Pool Location, or Consignee/Bailee Location, unless (i) it is segregated or
      otherwise separately identifiable from goods of others, if any, stored on the
      premises, (ii) with respect to any Credit Party’s chief executive office,
      Non-Owned Storage Facilities and any Consignee/Bailee Location, after 90 days
      from closing, is subject to a Collateral Access Agreement and (iii), in the
      case
      of Inventory held by a bailee or consignee at a Consignee/Bailee Location,
      notice of Agent’s security interest in the Collateral has been sent to each
      secured creditor having a security interest in inventory of such bailee or
      consignee provided
      that,
      notwithstanding clause (ii) and (iii) above, Inventory located on real property
      leased by any Credit Party or in a contract warehouse, Pool Location, or
      Consignee/Bailee Location shall not be ineligible solely due to the inability
      or
      failure to obtain a landlord or bailee waiver or other third party consent
      or
      document, including a Collateral Access Agreement (provided
      that the
      Agent shall be entitled to establish a Reserve against Availability under the
      Borrowing Base equal to the lesser of the value of such Inventory or up to
      three
      (3) months’ rent for such location if such waiver is not received),

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

    (d) it
      is not
      subject to a valid and perfected first priority Agent’s Lien, 

     

    (e) it
      consists of goods returned or rejected by any Credit Party’s customers unless
      such goods are repackaged and ready for sale in the ordinary course of such
      Credit Party’s business, or

     

    (f) it
      consists of goods that are obsolete or slow moving (i.e. more than three (3)
      seasons old (it being understood that the Borrower has only two seasons in
      each
      calendar year)), restrictive or custom items, work-in-process, mismatches,
      goods
      on display, return to vendor goods, raw materials, or goods that constitute
      spare parts, packaging and shipping materials, supplies used or consumed in
      any
      Credit Party’s business, bill and hold goods, defective goods, “seconds” or
      Inventory acquired on consignment.

     

    “Eligible
      L/C Inventory”
means,
      as of the date of determination thereof, without duplication of other Eligible
      Inventory, Inventory (a) not yet delivered to a Credit Party, (b) the purchase
      of which is supported by a Qualified Import Letter of Credit, (c) for which
      the
      document of title reflects a Credit Party as consignee (along with delivery
      to a
      Credit Party or the Issuing Bank, as applicable, of the documents of title
      with
      respect thereto), (d) with respect to which the Underlying Letter of Credit
      has
      been drawn upon in full and the Underlying Issuer has honored such drawing
      and
      Agent has honored its obligations to the Underlying Issuer under the applicable
      Qualified Import Letter of Credit, (e) (x) is being transported pursuant to
      a
      nonnegotiable document of title within the meaning of the Code and (y) as to
      which, at any time after the 90th day following the Closing Date, Agent has
      control over the documents of title which evidence ownership of the subject
      Inventory by the delivery of a Customs Broker Agreement, (f) such Inventory
      is
      insured against types of loss, damage, hazards and risks, and in amounts,
      satisfactory to Agent in its Permitted Discretion, and (g) which upon completion
      of manufacture otherwise would constitute Eligible Landed
      Inventory.

     

    “Eligible
      Transferee”
means
      (a) a commercial bank organized under the laws of the United States, or any
      state thereof, and having total assets in excess of $250,000,000, (b) a
      commercial bank organized under the laws of any other country which is a member
      of the Organization for Economic Cooperation and Development or a political
      subdivision of any such country and which has total assets in excess of
      $250,000,000, provided
      that
      such bank is acting through a branch or agency located in the United States,
      (c) a finance company, insurance company, or other financial institution or
      fund that is engaged in making, purchasing, or otherwise investing in commercial
      loans in the ordinary course of its business and having (together with its
      Affiliates) total assets in excess of $250,000,000, (d) any Affiliate
      (other than individuals) of a Lender, (e) any other Person approved by Agent
      and, so long as no Event of Default has occurred and is continuing, Borrower
      (which approval of Borrower shall not be unreasonably withheld, delayed, or
      conditioned).

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

     

    “Eligible
      U.S. Territory Inventory”
means,
      as of the date of determination thereof, without duplication of other Eligible
      Inventory, Inventory consisting of finished goods for which a Credit Party
      or
      Subsidiary of a Credit Party has good, valid and marketable title, held for
      sale
      in the ordinary course of a Credit Party’s or its Subsidiary’s business and that
      complies with each of the representations and warranties respecting Eligible
      Inventory made in the Loan Documents and that is either (a) shipped from a
      location outside of the U.S. Territories for receipt by a Credit Party or
      Subsidiary of a Credit Party in a U.S. Territory and for which (i) payment
      has
      been made by a Credit Party or Subsidiary of a Credit Party for such Inventory
      and (ii) such Inventory is insured against types of loss, damage, hazards,
      and
      risks, and in amounts satisfactory to Agent in its Permitted Discretion; or
      (b)
      located on real property in a U.S. Territory leased or owned by a Credit Party
      or Subsidiary of a Credit Party. 

     

    “Environmental
      Actions”
means
      any complaint, summons, citation, notice, directive, order, claim, litigation,
      investigation, judicial or administrative proceeding, judgment, letter, or
      other
      communication, each, by or from any Governmental Authority, or any third party
      involving (x) violations of Environmental Laws or (y) releases of Hazardous
      Materials (a) from any assets, properties, or businesses of any Credit Party,
      or
      any of their predecessors in interest, (b) from adjoining properties or
      businesses, or (c) from or onto any facilities which received Hazardous
      Materials generated by any Credit Party, or any of their predecessors in
      interest.

     

    “Environmental
      Law”
means
      any applicable federal, state, provincial, foreign or local statute, law, rule,
      regulation, ordinance, code, binding and enforceable guideline, binding and
      enforceable written policy, or rule of common law now or hereafter in effect
      and
      in each case as amended, or any judicial or administrative interpretation
      thereof, including any judicial or administrative order, consent decree or
      judgment, in each case, to the extent binding on any Credit Party, relating
      to
      the environment, employee health and safety, or Hazardous Materials, including
      CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC § 1251
et seq;
      the
      Toxic Substances Control Act, 15 USC § 2601 et seq;
      the
      Clean Air Act, 42 USC § 7401 et seq.;
      the
      Safe Drinking Water Act, 42 USC § 3803 et seq.;
      the Oil
      Pollution Act of 1990, 33 USC § 2701 et seq.;
      the
      Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC
§ 11001 et seq.;
      the
      Hazardous Material Transportation Act, 49 USC § 1801 et seq.;
      and the
      Occupational Safety and Health Act, 29 USC §651 et seq.
      (to the
      extent it regulates occupational exposure to Hazardous Materials); any state
      and
      local or foreign counterparts or equivalents, in each case as amended from
      time
      to time.

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

    “Environmental
      Liabilities and Costs”
means
      all liabilities, monetary obligations, Remedial Actions, losses, damages,
      punitive damages, consequential damages, treble damages, costs and expenses
      (including all reasonable fees, disbursements and expenses of counsel, experts,
      or consultants, and costs of investigation and feasibility studies), fines,
      penalties, sanctions, and interest incurred as a result of any claim or demand
      by any Governmental Authority or any third party, and which relate to any
      Environmental Action.

     

    “Environmental
      Lien”
means
      any Lien in favor of any Governmental Authority for Environmental Liabilities
      and Costs.

     

    “Equipment”
means
      equipment (as that term is defined in the Code) and includes machinery, machine
      tools, motors, furniture, furnishings, fixtures, vehicles (including motor
      vehicles), computer hardware, tools, parts, and goods (other than consumer
      goods, farm products, or Inventory), wherever located, including all
      attachments, accessories, accessions, replacements, substitutions, additions,
      and improvements to any of the foregoing.

     

    “ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended, and any
      successor statute thereto. 

     

    “ERISA
      Affiliate”
means
      (a) any Person subject to ERISA whose employees are treated as employed by
      the
      same employer as the employees of any Credit Party under IRC Section 414(b),
      (b)
      any trade or business subject to ERISA whose employees are treated as employed
      by the same employer as the employees of any Credit Party under IRC Section
      414(c), (c) solely for purposes of Section 302 of ERISA and Section 412 of
      the
      IRC, any organization subject to ERISA that is a member of an affiliated service
      group of which any Credit Party is a member under IRC Section 414(m), or (d)
      solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
      Person subject to ERISA that is a party to an arrangement with any Credit Party
      and whose employees are aggregated with the employees of any Credit Party under
      IRC Section 414(o).

     

    “Event
      of Default”
has
      the
      meaning set forth in Section
      8.

     

    “Excess
      Availability”
means,
      as of any date of determination, the amount equal to Availability minus
      the
      aggregate amount, if any, of all trade payables of the Credit Parties aged
      in
      excess of historical levels with respect thereto and all book overdrafts of
      the
      Credit Parties in excess of historical practices with respect thereto, in each
      case as determined by Agent in its Permitted Discretion.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as in effect from time to
      time.

     

    “Excluded
      Assets”
means
      (a) any lease, license, contract, property right or agreement to which any
      Credit Party is a party or any of its rights or interests thereunder if and
      to
      the extent that a security interest is prohibited by or in violation of (i)
      any
      law, rule or regulation applicable to such Credit Party, or (ii) a term,
      provision or condition of or under, any such lease, license, contract, property
      right or agreement (unless in either clause (i) or (ii) above such law, rule
      or
      regulation or such term, provision or condition would be rendered unenforceable
      against the Loans pursuant to Sections 9-406, 9-407, or 9-408 of the applicable
      Uniform Commercial Code); (b) any Stock or Stock Equivalents representing more
      than 66% of the outstanding voting stock issued by any entity organized under
      the laws of a jurisdiction other than the United States or a state thereof;
      (c)
      any assets of an Unrestricted Subsidiary or any assets of or Stock or Stock
      Equivalents in any of an Unrestricted Subsidiary’s direct or indirect
      subsidiaries; or (d) any assets of any Immaterial Subsidiary that is not a
      Credit Party.

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

     

    “Excluded
      Subsidiary”
means
      any Subsidiary that is organized under the laws of a jurisdiction other than
      the
      United States of America or any state thereof or the District of
      Columbia.

     

    “Executive
      Order”
has
      the
      meaning set forth in Section
      5.23.

     

    “Existing
      Lenders”
has
      the
      meaning set forth in the Recitals hereto.

     

    “Fair
      Share”
has
      the
      meaning set forth in Section
      17.2.

     

    “Fair
      Share Contribution Amount”
has
      the
      meaning set forth in Section
      17.2.

     

    “Fair
      Share Shortfall”
has
      the
      meaning set forth in Section
      17.2.

     

    “Fee
      Letter”
means
      that certain fee letter, dated as of even date herewith, between Borrower and
      Agent, in form and substance satisfactory to Agent.

     

    “FEIN”
means
      Federal Employer Identification Number.

     

    “Fin
      48”
means
      the Financial Accounting Standards Board Interpretation No. 48.

     

    “Funding
      Date”
means
      the date on which a Borrowing occurs.

     

    “Funding
      Guarantor”
has
      the
      meaning set forth in Section
      17.2.

     

    “Funding
      Losses”
has
      the
      meaning set forth in Section
      2.13(b)(ii).

     

    “GAAP”
means
      generally accepted accounting principles as in effect from time to time in
      the
      United States, consistently applied.

     

    “General
      Intangibles”
means
      the following general intangibles of any Credit Party: payment intangibles,
      contract rights, rights to payment, rights arising under common law, statutes,
      or regulations, choses or things in action, goodwill, patents, trade names,
      trade secrets, trademarks, servicemarks, copyrights, blueprints, drawings,
      purchase orders, customer lists, route lists, computer programs, information
      contained on computer disks or tapes, software, literature, reports and
      catalogs, and any and all supporting obligations of any Credit Party in respect
      thereof.

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

     

    “Governing
      Documents”
means,
      with respect to any Person, the certificate or articles of incorporation,
      by-laws, or other organizational documents of such Person.

     

    “Governmental
      Authority”
means
      any federal, state, local, or other governmental or administrative body,
      instrumentality, department, or agency or any court, tribunal, administrative
      hearing body, arbitration panel, commission, or other similar dispute-resolving
      panel or body.

     

    “Gross
      Collateral Availability”
means,
      as of any date of determination, the Borrowing Base, less
      the
      Letter of Credit Usage, less
      the then
      extant amount of outstanding Advances. 

     

    “Group
      Concentration Account”
means
      the Deposit Account over which Agent has control pursuant to a deposit account
      control agreement that acts as the repository for the disbursement and funding
      of a subsidiary or group of subsidiaries and described on Schedule
      D-2.

     

    “Group
      Members”
has
      the
      meaning set forth in Section
      5.24.

     

    “Guaranteed
      Obligations”
has
      the
      meaning set forth in Section
      17.1.

     

    “Guarantor”
means
      Parent and any Wholly Owned Domestic Subsidiary of Borrower that is a Restricted
      Subsidiary or any Restricted Subsidiary of the Parent that guarantees or
      otherwise provides direct credit support for any Indebtedness of the Parent
      of
      the type listed in clause (a) or (b) of the definition of Indebtedness, each
      party to the Guaranty.

     

    “Guaranty”
means
      the guaranty of each Guarantor set forth in Section
      17.

     

    “Hazardous
      Materials”
means
      (a) substances that are defined or listed in, or otherwise classified
      pursuant to, any applicable laws or regulations as “hazardous substances,”
“hazardous materials,” “hazardous wastes,” “toxic substances,” or any other
      formulation intended to define, list, or classify substances by reason of
      deleterious properties such as ignitability, corrosivity, reactivity,
      carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or
      petroleum derived substances, natural gas, natural gas liquids, synthetic gas,
      drilling fluids, produced waters, and other wastes associated with the
      exploration, development, or production of crude oil, natural gas, or geothermal
      resources, (c) any flammable substances or explosives or any radioactive
      materials, and (d) asbestos in any form or electrical equipment that contains
      any oil or dielectric fluid containing levels of polychlorinated biphenyls
      in
      excess of 50 parts per million.

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

     

    “Hedge
      Agreement”
means
      any and all agreements or documents now existing or hereafter entered into
      by
      any Credit Party that provide for an interest rate, credit, commodity or equity
      swap, cap, floor, collar, forward foreign exchange transaction, currency swap,
      cross currency rate swap, currency option, or any combination of, or option
      with
      respect to, these or similar transactions, for the purpose of hedging such
      Credit Party’s exposure to fluctuations in interest or exchange rates, loan,
      credit exchange, security, or currency valuations or commodity
      prices.

     

    “Holdout
      Lender”
has
      the
      meaning set forth in Section
      15.2(a).

     

    “Home
      Office Account”
has
      the
      meaning set forth in Section
      2.7(a).

     

    “Immaterial
      Subsidiary”
means
      any Subsidiary of the Parent designated in writing by Borrower to the Agent
      whose total assets or revenues (in each case on a Consolidated basis with its
      Subsidiaries) are less than 3% of the total assets or revenues of Parent and
      the
      Restricted Subsidiaries, taken as a whole; provided,
      however,
      that
      the aggregate total assets or revenues of all such subsidiaries designated
      as
“Immaterial Subsidiaries” (on a Consolidated basis with their Subsidiaries),
      shall not exceed 5% of the total assets or revenue of the Parent and the
      Restricted Subsidiaries, taken as a whole.

     

    “Indebtedness”
means,
      without duplication, (a) all obligations for borrowed money, (b) all obligations
      evidenced by bonds, debentures, notes, or other similar instruments and all
      reimbursement or other obligations in respect of letters of credit, bankers
      acceptances, interest rate swaps, or other financial products, (c) all
      obligations as a lessee under Capital Leases, (d) all obligations or liabilities
      of others secured by a Lien on any asset of a Person or its Subsidiaries,
      irrespective of whether such obligation or liability is assumed, (e) all
      obligations to pay the deferred purchase price of assets (other than trade
      payables incurred in the ordinary course of business), (f) all obligations
      owing
      under Hedge Agreements, and (g) any obligation guaranteeing or intended to
      guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
      discounted, or sold with recourse) any obligation of any other Person that
      constitutes Indebtedness under any of clauses (a) through (f)
      above.

     

    “Indemnified
      Liabilities”
has
      the
      meaning set forth in Section
      11.3.

     

    “Indemnified
      Person”
has
      the
      meaning set forth in Section
      11.3.

     

    “Indenture”
means
      that certain Indenture dated as of July 28, 2003 by and among Borrower, the
      guarantors named therein and Wells Fargo Bank Minnesota, National Association,
      as trustee, as amended, restated, supplemented or otherwise modified from time
      to time as permitted hereby.

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

     

    “Individual
      Store Accounts”
has
      the
      meaning set forth in Section
      2.7(a).

     

    “Initial
      Syndication Date”
means
      the date on which the Agent has notified the Borrower that the syndication
      of
      the Revolver Commitments has been completed and the Agent has reached its “hold
      level” as contemplated by the Fee Letter.

     

    “Insolvency
      Proceeding”
means
      any proceeding commenced by or against any Person under any provision of the
      Bankruptcy Code or under any other state or federal bankruptcy or insolvency
      law, assignments for the benefit of creditors, formal or informal moratoria,
      compositions, extensions generally with creditors, or proceedings seeking
      reorganization, arrangement, or other similar relief.

     

    “Intangible
      Assets”
means,
      with respect to any Person, that portion of the book value of all of such
      Person’s assets that would be treated as intangibles under GAAP.

     

    “Intellectual
      Property”
has
      the
      meaning given such term in the Pledge and Security Agreement.

     

    “Intercreditor
      Agreement”
means
      that certain Intercreditor Agreement, dated as of the date hereof, among Agent,
      Citicorp North America, Inc. as administrative agent for the lenders under
      the
      Term Loan Agreement, Borrower and the Credit Parties.

     

    “Interest
      Period”
means,
      with respect to each LIBOR Rate Loan, a period commencing on the date of the
      making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or
      the
      conversion of a Base Rate Loan to a LIBOR Rate Loan) and ending 1, 2, 3, or
      6
      months thereafter, as elected by the Borrower pursuant to Section
      2.13
      and
      subject to Section
      2.13(d)(ii)(y);
      provided,
      however,
      that
      (a) if any Interest Period would end on a day that is not a Business Day, such
      Interest Period shall be extended (subject to clauses (c)-(e) below) to the
      next
      succeeding Business Day, (b) interest shall accrue at the applicable rate based
      upon the LIBOR Rate from and including the first day of each Interest Period
      to,
      but excluding, the day on which any Interest Period expires, (c) any Interest
      Period that would end on a day that is not a Business Day shall be extended
      to
      the next succeeding Business Day unless such Business Day falls in another
      calendar month, in which case such Interest Period shall end on the next
      preceding Business Day, (d) with respect to an Interest Period that begins
      on
      the last Business Day of a calendar month (or on a day for which there is no
      numerically corresponding day in the calendar month at the end of such Interest
      Period), the Interest Period shall end on the last Business Day of the calendar
      month that is 1, 2, 3, or 6 months after the date on which the Interest Period
      began, as applicable, and (e) Borrower may not elect an Interest Period which
      will end after the Maturity Date.

     

    “Inventory”
means
      inventory (as that term is defined in the Code).

     

    “Investment”
means,
      with respect to any Person, any investment by such Person in any other Person
      (including Affiliates) in the form of loans, guarantees, advances, or capital
      contributions (excluding (a) commission, travel, and similar advances to
      officers and employees of such Person made in the ordinary course of business,
      and (b) bona
      fide
      Accounts
      arising in the ordinary course of business consistent with past practice),
      purchases or other acquisitions of Indebtedness, Stock, or all or substantially
      all of the assets of such other Person (or of any division or business line
      of
      such other Person), and any other items that are or would be classified as
      investments on a balance sheet prepared in accordance with GAAP.

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

     

    “Investment
      Property”
means
      investment property (as that term is defined in the Code), and any and all
      supporting obligations in respect thereof.

     

    “IRB”
means
      an industrial revenue bond issued by the city of Topeka, Kansas to a Credit
      Party pursuant to the City of Topeka resolution No. 7102 adopted and approved
      on
      November 14, 2000 or any similar resolution authorizing an industrial revenue
      bond.

     

    “IRC”
means
      the Internal Revenue Code of 1986, as in effect from time to time.

     

    “Issuing
      Lender”
means
      WFRF or any Affiliate thereof or any other Lender that, at the request of
      Borrower and with the consent of Agent, agrees, in such Lender’s sole
      discretion, to become an Issuing Lender for the purpose of issuing L/Cs or
      L/C
      Undertakings pursuant to Section
      2.12.

     

    “Joint
      Venture”
means
      a
      corporation, limited liability company, joint venture or similar limited
      liability legal entity formed in order to conduct a common venture or enterprise
      between two or more Persons.

     

    “L/C”
has
      the
      meaning set forth in Section
      2.12(a).

     

    “L/C
      Disbursement”
means
      a
      payment made by the Issuing Lender pursuant to a Letter of Credit.

     

    “L/C
      Undertaking”
has
      the
      meaning set forth in Section
      2.12(a).

     

    “Leased
      Store Location”
means
      any store for which any Credit Party has a leasehold interest.

     

    “Lender”
and
      “Lenders”
have
      the respective meanings set forth in the preamble to this Agreement, and shall
      include any other Person made a party to this Agreement in accordance with
      the
      provisions of Section
      14.1.

     

    “Lender
      Group”
means,
      individually and collectively, each of the Lenders (including the Issuing
      Lender) and Agent.

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

     

    “Lender
      Group Expenses”
means
      all (a) costs or expenses (including taxes, and insurance premiums) required
      to
      be paid by any Credit Party under any of the Loan Documents that are paid,
      advanced, or incurred by the Lender Group, (b) reasonable fees or charges paid
      or incurred by Agent in connection with the Lender Group’s transactions with any
      Credit Party, including, fees or charges for photocopying, notarization,
      couriers and messengers, telecommunication, public record searches (including
      tax lien, litigation, and UCC searches), filing, recording, publication,
      appraisal (including periodic collateral appraisals or business valuations
      to
      the extent of the fees and charges (and up to the amount of any limitation)
      set
      forth in the Loan Documents), (c) reasonable costs and expenses incurred by
      Agent in the disbursement of funds to any Credit Party or other members of
      the
      Lender Group (by wire transfer or otherwise), (d) reasonable charges paid or
      incurred by Agent resulting from the dishonor of checks, (e) reasonable costs
      and expenses paid or incurred by the Lender Group to correct any default or
      enforce any provision of the Loan Documents, or in gaining possession of,
      maintaining, handling, preserving, storing, shipping, selling, preparing for
      sale, or advertising to sell the Collateral, or any portion thereof,
      irrespective of whether a sale is consummated, (f) audit fees and expenses
      of
      Agent related to audit examinations of the Books (provided
      that, so
      long as no Default or Event of Default or Triggering Period has occurred and
      is
      continuing and so long as the aggregate amount of Advances outstanding does
      not
      exceed $100,000,000, Agent shall be limited to reimbursement for a maximum
      of
      two (2) such audit examinations per annum) to the extent of the fees and charges
      (and up to the amount of any limitation) set forth in the Loan Documents, (g)
      reasonable costs and expenses of third party claims or any other suit paid
      or
      incurred by the Lender Group in enforcing or defending the Loan Documents or
      in
      connection with the transactions contemplated by the Loan Documents or the
      Lender Group’s relationship with any Credit Party, (h) Agent’s reasonable costs
      and expenses (including attorneys fees) incurred in advising, structuring,
      drafting, reviewing, administering, syndicating, or amending the Loan Documents,
      and (i) Agent’s and each Lender’s reasonable costs and expenses (including
      attorneys, accountants, consultants, and other advisors fees and expenses)
      incurred in terminating, enforcing (including attorneys, accountants,
      consultants, and other advisors fees and expenses incurred in connection with
      a
“workout,” a “restructuring,” or an Insolvency Proceeding concerning any Credit
      Party or in exercising rights or remedies under the Loan Documents), or
      defending the Loan Documents, irrespective of whether suit is brought, or in
      taking any Remedial Action concerning the Collateral.

     

    “Lender-Related
      Person”
means,
      with respect to any Lender, such Lender, together with such Lender’s Affiliates,
      officers, directors, employees, attorneys, and agents.

     

    “Letter
      of Credit”
means
      an L/C or an L/C Undertaking, as the context requires.

     

    “Letter
      of Credit Usage”
means,
      as of any date of determination, the aggregate undrawn amount of all outstanding
      Letters of Credit.

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

     

    “LIBOR
      Deadline”
has
      the
      meaning set forth in Section
      2.13(b)(i).

     

    “LIBOR
      Notice”
means
      a
      written notice in the form of Exhibit
      L-1.

     

    “LIBOR
      Option”
has
      the
      meaning set forth in Section
      2.13.

     

    “LIBOR
      Rate”
means,
      for each Interest Period for each LIBOR Rate Loan, the rate per annum determined
      by Agent (rounded upwards, if necessary, to the next 1/100%) by dividing
      (a) the
      Base LIBOR Rate for such Interest Period, by
      (b) 100%
minus
      the
      Reserve Percentage. The
      LIBOR
      Rate shall be adjusted on and as of the effective day of any change in the
      Reserve Percentage.

     

    “LIBOR
      Rate Loan”
means
      each portion of an Advance that bears interest at a rate determined by reference
      to the LIBOR Rate.

     

    “Lien”
means
      any interest in an asset securing an obligation owed to, or a claim by, any
      Person other than the owner of the asset, irrespective of whether (a) such
      interest is based on the common law, statute, or contract, (b) such interest
      is
      recorded or perfected, and (c) such interest is contingent upon the occurrence
      of some future event or events or the existence of some future circumstance
      or
      circumstances. Without limiting the generality of the foregoing, the term “Lien”
includes the lien or security interest arising from a mortgage, deed of trust,
      encumbrance, pledge, hypothecation, assignment, deposit arrangement, security
      agreement, conditional sale or trust receipt, or from a lease, consignment,
      or
      bailment for security purposes and also includes reservations, exceptions,
      encroachments, easements, rights-of-way, covenants, conditions, restrictions,
      leases, and other title exceptions and encumbrances affecting Real
      Property.

     

    “Loans”
means
      Base Rate Loans and LIBOR Rate Loans.

     

    “Loan
      Account”
has
      the
      meaning set forth in Section
      2.10.
      

     

    “Loan
      Documents”
means
      this Agreement, the Intercreditor Agreement, the Collateral Documents, the
      Cash
      Management Agreements, the Credit Card Agreements, the Customs Broker
      Agreements, the Disbursement Letter, the Fee Letter, the Letters of Credit,
      any
      note or notes executed by Borrower in connection with this Agreement and payable
      to a member of the Lender Group, and any other agreement entered into, now
      or in
      the future, by any Credit Party and the Lender Group in connection with this
      Agreement or otherwise relating to the Obligations.

     

    “Material
      Adverse Change”
means
      (a) a material adverse change in the business, operations, results of
      operations, assets, liabilities or condition (financial or otherwise) of
      the Borrower,
      the Parent and the Restricted Subsidiaries taken as a whole, (b) a material
      impairment of the Credit Parties’ ability to perform their obligations under the
      Loan Documents to which they are parties or of the Lender Group’s ability to
      enforce the Obligations or realize upon the Collateral, or (c) a material
      impairment of the enforceability or priority of the Agent’s Liens with respect
      to the Collateral as a result of an action or failure to act on the part of
      any
      Credit Party.

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

    

     

    “Material
      Adverse Effect”
means
      an effect that results in or causes, or would reasonably be expected to result
      in or cause, a Material Adverse Change.

     

    “Material
      Credit Party”
means
      each of Borrower, Parent, Payless Missouri and any other Credit Party other
      than
      Immaterial Subsidiaries.

     

    “Maturity
      Date”
has
      the
      meaning set forth in Section
      3.4.
      

     

    “Maximum
      Revolver Amount”
means
      $350,000,000 plus the amount, if any, of any increase permitted by Section
      2.2
      (after
      which increase, the Maximum Revolver Amount shall not exceed
      $400,000,000).

     

    “Merger”
means
      that certain merger of the Acquisition Subsidiary with and into the Target
      pursuant to the terms of the Merger Agreement.

     

    “Merger
      Agreement”
means
      that certain Agreement and Plan of Merger, dated as of May 22, 2007, by and
      between the Target, the Borrower and the Acquisition Subsidiary.

     

    “Merger
      Funding Date”
means
      the date that the Merger is consummated.

     

    “Mortgages”
means
      the mortgages, deeds of trust or other real estate security documents made
      or
      required herein to be made by the Borrower or any other Credit Party, each
      in
      form and substance reasonably satisfactory to the Agent.

     

    “Mortgage
      Supporting Documents”
means,
      with respect to any Mortgage for a parcel of owned Real Property, each document
      (including title policies or marked-up unconditional insurance binders (in
      each
      case, together with copies of all documents referred to therein), maps, ALTA
      or
      TLTA, if applicable, as-built surveys, in form and as to date that is
      sufficiently acceptable to the title insurer issuing title insurance to the
      Agent for such title insurer to deliver endorsements to such title insurance
      as
      reasonably requested by the Agent, environmental assessments and reports and
      evidence regarding recording and payment of fees, insurance premium and taxes)
      that the Agent may reasonably request, to create, register, perfect, maintain,
      evidence the existence, substance, form or validity of or enforce a valid and
      enforceable first priority Lien on such parcel of owned Real Property in favor
      of the Agent for the benefit of the Secured Parties (as defined in the Pledge
      and Security Agreement), subject only to such Liens as the Agent may
      approve.

     

    “Net
      Liquidation Percentage”
means
      the percentage of the perpetual value of each Credit Party’s Eligible Inventory
      that is estimated to be recoverable in an orderly liquidation of such Inventory,
      such percentage to be calculated as an average of the then current month’s
      average Net Liquidation Percentage and the average Net Liquidation Percentage
      for the preceding month as determined from time to time by a qualified appraisal
      company selected by Agent with Borrower’s consent, which consent shall not be
      unreasonably withheld.

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

    

     

    “Non-Owned
      Storage Facility”
means
      any distribution center or warehouse facility leased by any Credit Party,
      together with any other location where Inventory of any Credit Party is stored
      or held pursuant to a lease, bailment, warehousing or similar arrangement,
      which
      location (a) is not owned by a Credit Party, and (b) is not a Leased
      Store Location or a Pool Location.

     

    “Obligations”
means
      all loans, Advances, debts, principal, interest (including any interest that,
      but for the commencement of an Insolvency Proceeding, would have accrued),
      contingent reimbursement obligations with respect to outstanding Letters of
      Credit, premiums, liabilities (including all amounts charged to Borrower’s Loan
      Account pursuant hereto), obligations (including indemnification obligations),
      fees (including the fees provided for in the Fee Letter), charges, costs, Lender
      Group Expenses (including any fees or expenses that, but for the commencement
      of
      an Insolvency Proceeding, would have accrued), Banking Services Obligations,
      lease payments, guaranties, covenants, and duties of any kind and description
      owing by any Credit Party to the Lender Group pursuant to or evidenced by the
      Loan Documents and irrespective of whether for the payment of money, whether
      direct or indirect, absolute or contingent, due or to become due, now existing
      or hereafter arising, and including all interest not paid when due and all
      Lender Group Expenses that the Credit Parties are required to pay or reimburse
      by the Loan Documents, by law, or otherwise. Any reference in this Agreement
      or
      in the Loan Documents to the Obligations shall include all extensions,
      modifications, renewals, or alterations thereof, both prior and subsequent
      to
      any Insolvency Proceeding.

     

    “Obligee
      Guarantor”
has
      the
      meaning set forth in Section
      17.7.

     

    “Originating
      Lender”
has
      the
      meaning set forth in Section
      14.1(e).

     

    “Overadvance”
has
      the
      meaning set forth in Section
      2.5.
      

     

    “Parent”
means
      Payless ShoeSource, Inc., a Delaware corporation.

     

    “Participant”
has
      the
      meaning set forth in Section
      14.1(e).

     

    "Patriot
      Act"
      means
      the USA Patriot Act of 2001 (31 U.S.C. 5318 et
      seq.).

     

    “Payless
      Missouri”
means
      Payless ShoeSource, Inc., a Missouri corporation.

    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

    

     

    “Permitted
      Acquisition”
means
      any Proposed Acquisition subject to the satisfaction of each of the following
      conditions at or prior to the consummation of the Proposed Acquisition: (a)
      the
      Agent shall receive prior written notice of such Proposed Acquisition, which
      notice shall include, without limitation, a reasonably detailed description
      of
      such Proposed Acquisition; (b) the Investment in such Permitted Acquisition
      is
      permitted under clause (i) or (j) of Section 7.10; (c) the Borrower (or the
      Parent or the Subsidiary making such Proposed Acquisition) and the Proposed
      Acquisition Target shall have executed such documents and taken such actions
      as
      may be required under Section 5.14; (d) the Agent shall have received copies
      of
      the agreements, related contracts, instruments and all opinions, certificates,
      lien search results and other documents, in each case to the extent actually
      received by any Credit Party (and subject to agreement to such additional
      confidentiality requirements as may be required to permit such Credit Party
      to
      deliver such copies), in each case reasonably requested by the Agent; (e)
      Availability after giving effect to such Proposed Acquisition is at least
      $50,000,000 both before and as projected by the Borrower on a pro forma basis
      for the three month period following such Proposed Acquisition or (f) at the
      time of such Proposed Acquisition and after giving effect thereto, (i) no
      Default or Event of Default shall have occurred and be continuing and (ii)
      all
      representations and warranties contained in Article V and in the other Loan
      Documents shall be true and correct in all material respects and (iii)
the
      Parent would be in compliance with the Consolidated Coverage Test for the most
      recently ended Test Period, determined on a pro forma basis after giving effect
      to such Proposed Acquisition (and the transactions contemplated thereby,
      including the incurrence or assumption of any Indebtedness in connection
      therewith).

     

    “Permitted
      Discretion”
means
      a
      determination made in good faith and in the exercise of reasonable (from the
      perspective of a secured, asset-based lender) business judgment based upon
      a
      change in circumstances or new information after the Closing Date.

     

    “Permitted
      Dispositions”
means
      (a) sales or other dispositions of Equipment that is substantially worn,
      damaged, or obsolete in the ordinary course of business, (b) sales of Inventory
      to buyers in the ordinary course of business, (c) the use or transfer of money
      or Cash Equivalents in a manner that is not prohibited by the terms of this
      Agreement or the other Loan Documents, (d) the
      licensing, sublicensing or other similar ordinary course transfers (but not
      sales) of intellectual property rights (on an exclusive or non-exclusive basis)
      to the extent that the foregoing occurs on an arms-length basis
      and (e)
      Store Closings in any fiscal year of the Borrower not in excess of the Store
      Closing Basket.

     

    “Permitted
      Investments”
means
      (a) Investments in cash and Cash Equivalents, (b) Investments in negotiable
      instruments for collection, (c) advances made in connection with purchases
      of
      goods or services in the ordinary course of business, (d) Investments made
      by
      one Credit Party in another Credit Party, (e) Investments received in settlement
      of amounts due to any Credit Party effected in the ordinary course of business
      or owing to any Credit Party as a result of Insolvency Proceedings involving
      an
      Account Debtor or upon the foreclosure or enforcement of any Lien in favor
      of
      such Credit Party, (f) Subordinated Indebtedness or guaranties of Subsidiaries,
      in each case to the extent permitted by Section
      7.1,
      and (g)
      Investments in bonds issued by a Governmental Authority in connection with
      the
      lease of property or equipment by any Credit Party from such Governmental
      Authority, provided that such bonds are secured by the lease payments required
      to be made by such Credit Party with respect to such leased property and are
      issued in transactions which are in form and substance substantially similar
      to
      those in which the Investments described on Schedule
      7.10
      were
      made.

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

    

     

    “Permitted
      Liens”
      means (a) Liens held by Agent, (b) Liens for unpaid taxes, assessments or
      governmental charges or levies that either (i) are not yet delinquent, or
      (ii) do not constitute an Event of Default hereunder and are the subject of
      Permitted Protests, (c) Liens existing on the date of this Agreement and set
      forth on Schedule
      P-1,
      (d) the interests of lessors under operating leases, (e) purchase money Liens
      or
      the interests of lessors under Capital Leases to the extent that such Liens
      or
      interests secure Permitted Purchase Money Indebtedness and so long as such
      Lien
      attaches only to the asset purchased or acquired and the proceeds thereof,
      (f)
      Liens arising by operation of law in favor of warehousemen, landlords, carriers,
      mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course
      of business and not in connection with the borrowing of money, and which Liens
      either (i) are for sums not yet delinquent, or (ii) are the subject of
      Permitted Protests, (g) Liens arising from deposits or pledges made or letters
      of credit issues in connection with obtaining worker’s compensation or other
      unemployment insurance or to comply with any applicable law, rule or regulation
      regarding social security, unemployment or other employee benefits, (h) Liens,
      pledges or deposits to secure performance of bids, tenders, leases, licenses,
      trade contracts, statutory obligations, customs, surety, stay, performance
      and
      appeal bonds, and other obligations incurred in the ordinary course of business
      and not in connection with the borrowing of money; provided that the Credit
      Parties may elect to post cash and obtain cash secured letters of credit in
      lieu
      of posting cash directly under this clause, (i) Liens resulting from any
      judgment or award that is not an Event of Default hereunder, (j) with respect
      to
      any Real Property, easements, rights of way, and zoning restrictions that do
      not
      materially interfere with or impair the use or operation thereof, (k)
encumbrances
      arising under leases or subleases of Real Property that do not, in the
      aggregate, materially detract from the value of such Real Property or interfere
      with the ordinary conduct of the business conducted and proposed to be conducted
      at such Real Property,
      (l) Liens in favor of customs and revenue authorities arising as a matter of
      law
      to secure payment of customs duties in connection with the importation of goods,
      (m) Liens resulting from the filing of precautionary UCC financing statements
      relating to operating leases of any Credit Party which are entered into in
      the
      ordinary course of business and which are limited solely to the assets subject
      thereto, (n) Liens incurred in connection with the licensing of patents,
      trademarks, copyrights, and other intellectual property rights of the Credit
      Parties and their Subsidiaries in the ordinary course of business to Persons
      outside the United States or any U.S. Territory for use solely outside of the
      United States or any U.S. Territory, (o) Liens on assets not consisting of
      the
      Collateral that secure Indebtedness under any IRB to which any Credit Party
      and
      any Governmental Authority is party and (p) Liens on Collateral held by the
      Term
      Loan Agent to secure the Term Loan Obligations to the extent permitted by the
      Intercreditor Agreement. 

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

     

    “Permitted
      Protest”
means
      the right of any Credit Party to protest any Lien (other than any Lien that
      secures the Obligations), taxes (other than payroll taxes or taxes that are
      the
      subject of a United States federal tax lien), or rental payment, provided that
      (a) a reserve with respect to such obligation is established on the Books
      in such amount as is required under GAAP, (b) any such protest is
      instituted promptly and prosecuted diligently by such Credit Party, as
      applicable, in good faith, and (c) Agent is satisfied that, while any such
      protest is pending, there will be no impairment of the enforceability, validity,
      or priority of any of the Agent’s Liens.

     

    “Permitted
      Purchase Money Indebtedness”
means,
      as of any date of determination, Purchase Money Indebtedness incurred after
      the
      Closing Date in an aggregate principal amount outstanding at any one time not
      in
      excess of $75,000,000.

     

    “Permitted
      Reserves”
means
      reserves on Availability imposed from time to time by the Agent in its Permitted
      Discretion based upon the results of appraisals and audits on Collateral.

     

    “Permitted
      Sale-Leasebacks”
has
      the
      meaning assigned to that term in Section
      7.16.

     

    “Person”
means
      natural persons, corporations, limited liability companies, limited
      partnerships, general partnerships, limited liability partnerships, joint
      ventures, trusts, land trusts, business trusts, or other organizations,
      irrespective of whether they are legal entities, and governments and agencies
      and political subdivisions thereof.

     

    “Pledge
      and Security Agreement”
means
      an agreement, in substantially the form of
      Exhibit G
      hereto, executed
      by the Borrower and each Guarantor.

     

    “Pledged
      Stock”
has
      the
      meaning specified in the Pledge and Security Agreement.

     

    “Pool
      Location”
means
      any of the locations in the United States listed on Schedule
      E-2,
      as such
      schedule is updated pursuant to Section
      6.13.
      

     

    “Post-Closing
      Agreement”
means
      that certain post-closing agreement, dated as of even date herewith, between
      Borrower and Agent.

     

    “Prior
      Loan Agreement”
has
      the
      meaning set forth in the Recitals hereto.

     

    “Projections”
means
      Parent’s and its Subsidiaries’ forecasted (a) balance sheets, (b) profit and
      loss statements, and (c) cash flow statements, all prepared on a basis
      consistent with Parent’s historical financial statements, together with
      appropriate supporting details and a statement of underlying
      assumptions.

    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

     

    “Proposed
      Acquisition”
means
      the proposed acquisition by the Borrower, the Parent or any of the Restricted
      Subsidiaries of all or substantially all of the assets or Stock of any Proposed
      Acquisition Target, or the merger of any Proposed Acquisition Target with or
      into the Borrower, the Parent or any Subsidiary of the Parent (and, in the
      case
      of a merger with the Borrower, with the Borrower being the surviving
      corporation).

     

    “Proposed
      Acquisition Target”
means
      any Person or group of Persons engaged in a particular line of business or
      any
      operating division thereof subject to a Proposed Acquisition.

     

    “Pro
      Forma Basis”
      means, as to any Person, for any events as described in clauses (i) and
      (ii) below
      that occur subsequent to the commencement of a period for which the financial
      effect of such events is being calculated, and giving effect to the events
      for
      which such calculation is being made, such calculation as will give pro
      forma
      effect to such events as if such events occurred on the first day of the
      applicable Test Period: 

     

    (i)
      in making any determination of Consolidated EBITDA or Consolidated EBITDAR,
      pro
      forma
      effect shall be given to any Asset Sale and to any Permitted Acquisition (or
      to
      any similar transaction or transactions that require a waiver or consent of
      the
      Required Lenders pursuant to Section 7.3 or Section 7.10), in each case that
      occurred during the Test Period (or, in the case of determinations made pursuant
      to the definition of “Permitted Acquisition” occurring during the Test Period or
      thereafter and through and including the date upon which the respective
      Permitted Acquisition is consummated); and 

     

    (ii)
      in making any determination on a Pro Forma Basis, (x) all Indebtedness
      (including Indebtedness incurred or assumed and for which the financial effect
      is being calculated, whether incurred under this Agreement or otherwise incurred
      or permanently repaid during the Test Period (or, in the case of determinations
      made pursuant to the definition of “Permitted
      Acquisition”,
      occurring during the Test Period and through and including the date upon which
      the respective Permitted Acquisition is consummated) shall be deemed to have
      been incurred or repaid at the beginning of such period (if such Indebtedness
      was incurred under this Agreement, such Indebtedness shall be deemed to be
      outstanding for the entire Test Period for purposes of determining the Senior
      Secured Leverage Ratio and the Total Leverage Ratio) and (y) interest expense
      of
      such Person attributable to interest on any Indebtedness, for which pro
      forma
      effect is being given as provided in preceding clause
      (x),
      bearing floating interest rates shall be computed on a pro
      forma
      basis as if the rates that would have been in effect during the period for
      which
pro
      forma
      effect is being given had been actually in effect during such
      periods.

    
      
        
        

      

      
        -33-

        
          

        

      

      
        
        

      

    

     

    Pro
      forma
      calculations made pursuant to the definition of “Pro
      Forma Basis”
      shall be determined in good faith by a Responsible Officer of the Borrower
      and,
      for any fiscal period ending on or prior to the first anniversary of a Permitted
      Acquisition or Asset Sale (or any similar transaction or transactions that
      require a waiver or consent of the Required Lenders pursuant to Section 7.3
      or
      Section 7.10), may include adjustments to reflect operating expense reductions
      and other operating improvements or synergies implemented or planned to be
      implemented and reasonably expected to result from such Permitted Acquisition,
      Asset Sale or other similar transaction, to the extent that the Borrower
      delivers to the Agent (i) a certificate of the Borrower signed by a Responsible
      Officer setting forth such operating expense reductions and other operating
      improvements or synergies and (ii) information and calculations supporting
      in
      reasonable detail such estimated operating expense reductions and other
      operating improvements or synergies.

     

    “Pro
      Rata Share”
means,
      as of any date of determination: (i) prior to the Revolver Commitments being
      terminated or reduced to zero, the percentage obtained by dividing (y) such
      Lender’s Revolver Commitment, by (z) the aggregate Revolver Commitments of all
      Lenders, and (ii) from and after the time that the Revolver Commitments have
      been terminated or reduced to zero, the percentage obtained by dividing (y)
      the
      aggregate outstanding principal amount of such Lender’s Advances plus such
      Lender’s ratable portion of the Risk Participation Liability with respect to
      outstanding Letters of Credit by (z) the aggregate outstanding principal amount
      of all Advances plus the aggregate amount of the Risk Participation Liability
      with respect to outstanding Letters of Credit.

     

    “Purchase
      Money Indebtedness”
means
      Indebtedness (other than the Obligations, but including Capitalized Lease
      Obligations), incurred at the time of, or within 20 days after, the acquisition
      of any fixed assets for the purpose of financing all or any part of the
      acquisition cost thereof, together with any refinancings under Section
      7.1(f).

     

    “Qualified
      Import Letter of Credit”
means
      a
      Letter of Credit that (a) is issued to facilitate the purchase by any
      Credit Party of Eligible Inventory, (b) has an expiry date of less than 90
      days and is otherwise in form and substance acceptable to Agent, and (c) is
      issued to support an Underlying Letter of Credit that only is drawable by the
      beneficiary thereof by the presentation of, among other documents, such
      applicable documents satisfactory to Agent as evidencing such Credit Party’s
      title to the subject Inventory.

     

    “Qualified
      Capital Stock”
of
      any
      Person shall mean any Stock or Stock Equivalents of such Person that is not
      Disqualified Stock.

     

    “Qualified
      Refinancing Indebtedness”
means
      Indebtedness incurred to refinance, in part, the Term Loan Obligations, on
      terms
      and conditions satisfactory to the Administrative Agent and in an aggregate
      principal amount not to exceed $450,000,000.

     

    "Qualified
      Restricted Subsidiary”
means
      any Restricted Subsidiary that is not a Credit Party and (a) is set forth on
      Schedule
      1.1(b)
      and (b)
      that satisfies each of the following requirements: (i) there are no
      restrictions, directly or indirectly, on the ability of such Restricted
      Subsidiary to pay dividends or make distributions to the holders of its Stock
      and Stock Equivalents; and (ii) the Stock and Stock Equivalents of such
      Restricted Subsidiary consist of Stock and Stock Equivalents majority owned
      by
      the Parent and its Qualified Restricted Subsidiaries.

    
      
        
        

      

      
        -34-

        
          

        

      

      
        
        

      

    

     

    “Real
      Property”
means
      any estates or interests in real property now owned or hereafter acquired by
      any
      Credit Party and the improvements thereto.

     

    “Record”
means
      information that is inscribed on a tangible medium or which is stored in an
      electronic or other medium and is retrievable in perceivable form.

     

    “Recovery
      Event”
means
      any settlement of or payment in respect of any property or casualty insurance
      claim or any taking under power of eminent domain or by condemnation or similar
      proceeding of or relating to any property or asset of the Parent or any of
      its
      Restricted Subsidiaries other than any settlement, payment, taking or proceeding
      that results in cash consideration of less than $1,000,000,
      individually.

     

    “Related
      Documents”
means
      the Merger Agreement, the Subordinated Notes Indenture, the Term Loan Agreement
      and each other document and instrument executed with respect to any of the
      foregoing.

     

    “Remedial
      Action”
means
      all actions taken to (a) clean up, remove, remediate, contain, treat, monitor,
      assess, evaluate, or in any way address Hazardous Materials in the indoor or
      outdoor environment, (b) prevent or minimize a release or threatened release
      of
      Hazardous Materials so they do not migrate or endanger or threaten to endanger
      public health or welfare or the indoor or outdoor environment, (c) perform
      any
      pre-remedial studies, investigations, or post-remedial operation and maintenance
      activities, or (d) conduct any other actions authorized by 42 USC §
9601.

     

    “Replacement
      Lender”
has
      the
      meaning set forth in Section
      15.2(a).

     

    “Report”
has
      the
      meaning set forth in Section
      16.17.

     

    “Required
      Closing Availability”
means
      that Excess Availability is equal to or exceeds $100,000,000.

     

    “Required
      Lenders”
means,
      at any time, Lenders whose aggregate Pro Rata Shares equal or exceed
      50.1%.

     

    “Requirement
      of Law”
means,
      with respect to any Person, the common law and all federal, state, local and
      foreign laws, treaties, rules and regulations, orders, judgments, decrees and
      other determinations of, concessions, grants, franchises, licenses and other
      contractual obligations with, any Governmental Authority or arbitrator,
      applicable to or binding upon such Person or any of its property or to which
      such Person or any of its property is subject.

    
      
        
        

      

      
        -35-

        
          

        

      

      
        
        

      

    

     

    “Reserve
      Percentage”
means,
      on any day, for any Lender, the maximum percentage prescribed by the Board
      of
      Governors of the Federal Reserve System (or any successor Governmental
      Authority) for determining the reserve requirements (including any basic,
      supplemental, marginal, or emergency reserves) that are in effect on such date
      with respect to eurocurrency funding (currently referred to as “eurocurrency
      liabilities”) of that Lender, but so long as such Lender is not required or
      directed under applicable regulations to maintain such reserves, the Reserve
      Percentage shall be zero.

     

    “Reserves”
has
      the
      meaning set forth in Section
      2.1(b).

     

    “Responsible
      Officer”
means,
      with respect to any Person, any of the principal executive officers, managing
      members or general partners of such Person but, in any event, with respect
      to
      financial matters, the chief financial officer, treasurer or controller of
      such
      Person.

     

    “Restricted
      Payment”
means
      (a) any dividend or other distribution, direct or indirect, on account of any
      shares of any Stock of any Credit Party now or hereafter outstanding, except
      a
      dividend payable solely in shares of that class of Stock to the holders of
      that
      class; (b) any redemption, retirement, sinking fund or similar payment, purchase
      or other acquisition for value, direct or indirect, of any shares of any class
      of Stock of a Credit Party now or hereafter outstanding; (c) any payment made
      to
      retire, or to obtain the surrender of, any outstanding warrants, options or
      other rights to acquire any Stock of any Credit Party now or hereafter
      outstanding; and (d) any payment or prepayment of principal of, premium, if
      any,
      or redemption, purchase, retirement, defeasance (including in-substance or
      legal
      defeasance), sinking fund or similar payment with respect to, any Subordinated
      Indebtedness.

     

    “Restricted
      Subsidiary”
means
      any Subsidiary of the Borrower that is not an Unrestricted
      Subsidiary.

     

    “Revolver
      Commitment”
means,
      with respect to each Lender, its Revolver Commitment, and, with respect to
      all
      Lenders, their Revolver Commitments, in each case as such Dollar amounts are
      set
      forth beside such Lender’s name under the applicable heading on Schedule
      C-1
      or in
      the Assignment and Acceptance pursuant to which such Lender became a Lender
      hereunder in accordance with the provisions of Section
      14.1
      and as
      such amounts may be increased pursuant to Section
      2.2.

     

    “Revolver
      Increase”
has
      the
      meaning assigned to that term in Section
      2.2.

     

    “Revolver
      Increase Notice”
has
      the
      meaning assigned to that term in Section
      2.2.

    
      
        
        

      

      
        -36-

        
          

        

      

      
        
        

      

    

     

    “Revolver
      Usage”
means,
      as of any date of determination, the sum of (a) the then extant amount of
      outstanding Advances, plus
      (b) the
      then extant amount of the Letter of Credit Usage.

     

    “Risk
      Participation Liability”
means,
      as to each Letter of Credit, all reimbursement obligations of Borrower to the
      Issuing Lender with respect to an L/C Undertaking, consisting of (a) the amount
      available to be drawn or which may become available to be drawn, (b) all amounts
      that have been paid by the Issuing Lender to the Underlying Issuer to the extent
      not reimbursed by Borrower, whether by the making of an Advance or otherwise,
      and (c) all accrued and unpaid interest, fees, and expenses payable with respect
      thereto. 

     

    “Sale-Leasebacks”
has
      the
      meaning assigned to that term in Section
      7.16.
      

     

    “SEC”
means
      the United States Securities and Exchange Commission and any successor
      thereto.

     

    “Secured
      Obligations”
has
      the
      meaning specified in the Pledge and Security Agreement.

     

    “Securities
      Account Control Agreement”
has
      the
      meaning specified in the Pledge and Security Agreement.

     

    “Senior
      Secured Leverage Ratio”
means,
      as of any date of determination, the ratio of (a) Consolidated Funded
      Indebtedness of the Parent and the Restricted Subsidiaries that is secured
      by
      Liens outstanding as of such date (minus the cash and Cash Equivalents of the
      Credit Parties that are not subject to any Lien securing Indebtedness other
      than
      the Obligations or Term Loan Obligations) to (b) the aggregate amount of
      Consolidated EBITDA of the Parent and the Restricted Subsidiaries for the most
      recently ended Test Period.

     

    “Senior
      Subordinated Notes”
means
      (i) those certain 8.25% Series A Senior Subordinated Notes due 2013 and (ii)
      those certain 8.25% Series B Senior Subordinated Notes due 2013, each issued
      by
      Borrower pursuant to the Indenture, in each case as amended, restated,
      supplemented or otherwise modified from time to time as permitted
      hereby.

     

    “Settlement”
has
      the
      meaning set forth in Section
      2.3(f)(i).

     

    “Settlement
      Date”
has
      the
      meaning set forth in Section
      2.3(f)(i).

     

    “Solvent”
means,
      with respect to any Person on a particular date, that, at fair valuations,
      the
      sum of such Person’s assets is greater than all of such Person’s debts.

    
      
        
        

      

      
        -37-

        
          

        

      

      
        
        

      

    

     

    “Stock”
means
      all shares, options, warrants, interests, participations, or other equivalents
      (regardless of how designated) of or in a Person, whether voting or 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 SEC under the Exchange Act). 

     

    “Stock
      Equivalents”
means
      all securities convertible into or exchangeable for Stock and all warrants,
      options or other rights to purchase or subscribe for any Stock, whether or
      not
      presently convertible, exchangeable or exercisable.

     

    “Store
      Closing Basket”
means,
      with respect to any fiscal year of the Borrower, Store Closings, net of Store
      Openings, in an amount up to 500 Store Closings in such fiscal year, provided
      that in the event that the Credit Parties are closing more than 100 stores
      at
      any one time, the Borrower shall, at Agent’s request, hire a qualified inventory
      liquidation company reasonably satisfactory to the Agent to conduct such Store
      Closings on terms satisfactory to Agent in its Permitted Discretion; provided,
      that at no time will the total number of stores owned or franchised by the
      Group
      Members be lower than 3,500.

     

    “Store
      Closings”
means
      the closing, sale, sublease or franchise or other disposition of stores operated
      by Borrower or any Restricted Subsidiary in a manner consistent with the past
      business practices of the Borrower and the Restricted Subsidiaries or the
      Closing Date Business Plan (involving store closing sales and liquidations
      of
      store inventory on site).

     

    “Store
      Openings”
means
      the opening of stores, including the purchase of a franchise, operated by
      Borrower or any Restricted Subsidiary in a manner consistent with the past
      business practices of the Borrower and the Restricted Subsidiaries or the
      Closing Date Business Plan (involving store openings).

     

    “Subordinated
      Indebtedness”
means
      (a) all Indebtedness under the Indenture and (b) (i) any other public
      Indebtedness of the Credit Parties subordinated in right of payment to the
      Obligations pursuant to documentation containing material terms, including
      subordination provisions substantially similar to those set forth in the
      Indenture and (ii) all private Indebtedness of the Credit Parties subordinated
      in right of payment to the Obligations pursuant to documentation containing
      market terms and conditions consistent with private subordinated indebtedness
      of
      such type, in each case pursuant to this clause
      (b),
      satisfactory to Agent in its Permitted Discretion.

     

    “Subordinated
      Notes Indenture”
means
      the Indenture, dated as of July 28, 2003, between Borrower and Wells Fargo
      Bank
      Minnesota, National Association, as trustee.

     

    “Subsidiary”
of
      a
      Person means a corporation, partnership, limited liability company, or other
      entity in which that Person directly or indirectly owns or controls the shares
      of Stock having ordinary voting power to elect a majority of the board of
      directors (or appoint other comparable managers) of such corporation,
      partnership, limited liability company, or other entity.

    
      
        
        

      

      
        -38-

        
          

        

      

      
        
        

      

    

     

    “Swing
      Lender”
means
      WFRF or any other Lender that, at the request of Borrower and with the consent
      of Agent agrees, in such Lender’s sole discretion, to become the Swing Lender
      under Section
      2.3(d).

     

    “Swing
      Loan”
has
      the
      meaning set forth in Section
      2.3(d)(i).
      

     

    “Target”
means
      The Stride Rite Corporation.

     

    “Target
      Shares”
means
      100% of the shares of Target’s publicly traded common stock.

     

    “Taxes”
has
      the
      meaning set forth in Section
      16.11.

     

    “Term
      Agent”
means
      Citicorp North America, Inc., in its capacity as administrative agent under
      the
      Term Loan Agreement. 

     

    “Term
      Loan Agreement”
means
      that certain Term Loan Agreement, dated as of the date hereof, among the
      Borrower, the Credit Parties, the Term Agent as administrative agent and lender
      thereunder and the other lenders party thereto.

     

    “Term
      Loan Documents”
means,
      collectively, the Term Loan Agreement, all guaranties, pledges, security
      agreements and similar agreements entered into in connection therewith to
      guaranty or secure any Term Loan Obligations and each other certificate,
      agreement and other document entered into in connection therewith (other than
      the Intercreditor Agreement)

     

    “Term
      Loan Obligations”
has
      the
      meaning set forth in Section
      7.1(b).

     

    “Term
      Loans”
means
      those loans outstanding under the Term Loan Agreement, as amended, modified
      or
      supplemented from time to time to the extent permitted pursuant to Section
      7.14
      hereof and pursuant to the Intercreditor Agreement, and any refinancing
      permitted pursuant to Section 7.1(f) hereof.

     

    “Term
      Priority Collateral”
has
      the
      meaning set forth in the Intercreditor Agreement.

     

    “Test
      Period”
shall
      mean, for any determination under this Agreement, the period of the most
      recently ended four consecutive fiscal quarters of the Parent for which
      financial statements have been delivered to the Agent pursuant to Section
      6.3.

    
      
        
        

      

      
        -39-

        
          

        

      

      
        
        

      

    

     

    "Total
      Assets”
      means
      the total amount of all assets of the Borrower, the Parent and the Restricted
      Subsidiaries, determined on a Consolidated basis as shown on the most recent
      balance sheet of the Parent.

     

    “Total
      Leverage Ratio”
means,
      as of any date of determination, the ratio of (a) Consolidated Funded
      Indebtedness of the Parent and the Restricted Subsidiaries outstanding as of
      such date (minus the cash and Cash Equivalents of the Loan Parties that are
      not
      subject to any Lien securing Indebtedness other than the Obligations or Term
      Loan Obligations) to (b) the aggregate amount of Consolidated EBITDA of the
      Parent and the Restricted Subsidiaries for the most recently ended Test
      Period.

     

    “Transactions”
means,
      collectively, the Tender Offer, the Merger, entry into the Term Loan Agreement
      and the transactions contemplated thereby and the transactions contemplated
      hereby.

     

    “Triggering
      Period”
means
      a
      period (a) commencing on the earliest to occur of (i) the occurrence and
      continuation of an Event of Default, or (ii) the date on which Availability
      shall be less than $35,000,000 and (b) continuing until such time as, for a
      period of fifteen (15) consecutive days, both (x) Availability shall be
      equal to or in excess of $40,000,000 and (y) there shall not have occurred
      and be continuing any Event of Default.

     

    “United
      States”
and
      “U.S.”
mean
      the United States of America.

     

    “Underlying
      Issuer”
means
      a
      third Person which is the beneficiary of an L/C Undertaking or Qualified Import
      Letter of Credit and which has issued a letter of credit at the request of
      the
      Issuing Lender for the benefit of any Credit Party.

     

    “Underlying
      Letter of Credit”
means
      a
      letter of credit that has been issued by an Underlying Issuer.

     

    “Unrestricted
      Subsidiary”
shall
      mean any Subsidiary of the Parent that is acquired or created after the Closing
      Date and designated by the board of directors of the Parent as an “Unrestricted
      Subsidiary” hereunder by written notice to the Agent and listed on Schedule
      6.15
      hereto,
      any Subsidiary of such Unrestricted Subsidiary and any Subsidiary designated
      as
      an "Unrestricted Subsidiary" under the Term Loan Agreement.

     

    “U.S.
      Territory”
means
      each of the U.S. Virgin Islands, Guam and Saipan.

     

    “Voidable
      Transfer”
has
      the
      meaning set forth in Section
      18.7.

     

    “Wells
      Fargo”
means
      Wells Fargo Bank, National Association, a national banking
      association.

     

    “WFRF”
means
      Wells Fargo Retail Finance, LLC, a Delaware limited liability
      company.

    
      
        
        

      

      
        -40-

        
          

        

      

      
        
        

      

    

     

    “Wholly
      Owned Domestic Subsidiary”
means
      each Subsidiary of the Borrower or any Guarantor, all of the Stock of which
      (other than director’s qualifying shares, as may be required by law) is owned by
      such Person, either directly or indirectly through one or more Subsidiaries
      of
      such Person, that is organized under the laws of the United States of America
      or
      any State or political subdivision thereof.

     

    “Winston”
has
      the
      meaning set forth in Section
      16.19.

     

    1.2 Accounting
      Terms(a) All
      accounting terms not specifically defined herein shall be construed in
      accordance with GAAP. When used herein, the term “financial statements” shall
      include the notes and schedules thereto. Whenever the term “Borrower” is used in
      respect of a financial covenant or a related definition, it shall be understood
      to mean Borrower and its Subsidiaries on a consolidated basis unless the context
      clearly requires otherwise.

     

    (b) If
      any change in the accounting principles used in the preparation of the most
      recent financial statements referred to in Section
      6.3
      is hereafter required or permitted by the rules, regulations, pronouncements
      and
      opinions of the Financial Accounting Standards Board or the American Institute
      of Certified Public Accountants (or any successors thereto) and such change
      is
      adopted by the Borrower with the agreement of the Borrower’s accountants and
      results in a change in any of the calculations required by Article VII that
      would not have resulted had such accounting change not occurred, the parties
      hereto agree to enter into negotiations in order to amend such provisions so
      as
      to equitably reflect such change such that the criteria for evaluating
      compliance with such covenants by the Borrower shall be the same after such
      change as if such change had not been made; provided, however, that no change
      in
      GAAP that would affect a calculation that measures compliance with any covenant
      contained in Article VII shall be given effect until such provisions are amended
      to reflect such changes in GAAP.

     

    1.3 Code.
      Any
      terms used in this Agreement that are defined in the Code shall be construed
      and
      defined as set forth in the Code unless otherwise defined herein.

     

    1.4 Construction.
      Unless
      the context of this Agreement or any other Loan Document clearly requires
      otherwise, references to the plural include the singular, references to the
      singular include the plural, the term “including” is not limiting, and the term
“or” has, except where otherwise indicated, the inclusive meaning represented by
      the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and
      similar terms in this Agreement or any other Loan Document refer to this
      Agreement or such other Loan Document, as the case may be, as a whole and not
      to
      any particular provision of this Agreement or such other Loan Document, as
      the
      case may be. Section, subsection, clause, schedule, and exhibit references
      herein are to this Agreement unless otherwise specified. Any reference in this
      Agreement or in the other Loan Documents to any agreement, instrument, or
      document shall include all alterations, amendments, changes, extensions,
      modifications, renewals, replacements, substitutions, joinders, and supplements,
      thereto and thereof, as applicable (subject to any restrictions on such
      alterations, amendments, changes, extensions, modifications, renewals,
      replacements, substitutions, joinders, and supplements set forth herein). Any
      reference herein to the repayment in full or satisfaction in full of the
      Obligations shall mean the repayment in full in cash (or cash collateralized
      in
      accordance with the terms hereof) of all Obligations other than contingent
      indemnification Obligations that, at such time, are allowed by the applicable
      member of the Lender Group to remain outstanding and are not required to be
      repaid or cash collateralized pursuant to the provisions of this Agreement.
      Any
      reference herein to any Person shall be construed to include such Person’s
      successors and assigns. Any requirement of a writing contained herein or in
      the
      other Loan Documents shall be satisfied by the transmission of a Record and
      any
      Record transmitted shall constitute a representation and warranty as to the
      accuracy and completeness of the information contained therein.

    
      
        
        

      

      
        -41-

        
          

        

      

      
        
        

      

    

     

    1.5 Schedules
      and Exhibits.
      All of
      the schedules and exhibits attached to this Agreement shall be deemed
      incorporated herein by reference.

     

    
      	
              2.

            	
              LOAN
                AND TERMS OF PAYMENT.

            

    

     

    2.1 Revolver
      Advances.

     

    (a) Subject
      to the terms and conditions of this Agreement, and during the term of this
      Agreement, each Lender agrees (severally, not jointly or jointly and severally)
      to make advances (“Advances”)
      to
      Borrower in an amount at any one time outstanding not to exceed such Lender’s
      Pro Rata Share of an amount equal to the
      lesser of
      (i) the
      Maximum Revolver Amount less
      the
      Letter of Credit Usage, or (ii) the Borrowing Base less
      the
      Letter of Credit Usage.

     

    (b) Anything
      to the contrary in this Section
      2.1
      notwithstanding, Agent shall have the right to establish and modify Permitted
      Reserves against Availability in such amounts, and with respect to such matters,
      as Agent in its Permitted Discretion shall deem necessary or appropriate,
      including with respect to (i) shrinkage (so as to bring perpetual records in
      line with historical levels), (ii) potential liabilities to customers, including
      without limitation, in connection with merchandise deposits, returns,
      merchandise credits, gift certificates, and frequent shopper programs, (iii)
      bad
      debt write-downs, discounts, advertising allowances, credits, or increases
      in
      other dilutive items with respect to Accounts, (iv) unpaid freight charges,
      warehousing or storage charges, taxes, duties, and other similar unpaid costs
      associated with the acquisition of Inventory, (v) sums that any Credit Party
      is
      required to pay (such as taxes, assessments, insurance premiums, or, in the
      case
      of leased assets, rents or other amounts payable under such leases) and has
      failed to pay under any Section of this Agreement or any other Loan Document,
      (vi) damaged goods, refurbished goods, goods returned for resale and similar
      goods, (vii) Eligible U.S. Territory Inventory, and (viii) amounts owing by
      any
      Credit Party to any Person to the extent secured by a Lien on, or trust over,
      any of the Collateral (other than any existing Permitted Lien set forth on
      Schedule
      P-1
      which is
      specifically identified thereon as entitled to have priority over the Agent’s
      Liens), which Lien or trust, in the Permitted Discretion of Agent likely would
      have a priority superior to the Agent’s Liens (such as Liens or trusts in favor
      of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
      suppliers, or Liens or trusts for ad
      valorem,
      excise,
      sales, or other taxes where given priority under applicable law) in and to
      such
      item of the Collateral. In addition to the foregoing, Agent shall have the
      right
      at any time Revolver Usage is in excess of $100,000,000, subject to the any
      other limitations contained herein or in the Loan Documents, to have the
      Collateral reappraised by a qualified company selected by Agent from time to
      time after the Closing Date for the purpose of re-determining the value of
      Eligible Accounts or Eligible Inventory and modifying Advance Rates and, as
      a
      result, re-determining the Borrowing Base; provided
      that
unless
      an Event of Default is continuing or a Triggering Period has occurred and is
      continuing, the Borrower shall only be responsible for the expenses incurred
      for
      two such appraisals or audits in any 12 month period.

    
      
        
        

      

      
        -42-

        
          

        

      

      
        
        

      

    

     

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

     

    (d) Amounts
      borrowed pursuant to this Section
      2.1
      may be
      repaid and, subject to the terms and conditions of this Agreement, reborrowed
      at
      any time during the term of this Agreement.

     

    2.2 Revolver
      Increase.
      On and
      after the Initial Syndication Date and until (but not including) the Maturity
      Date, Borrower may, at its option at any time on a single occasion, seek to
      increase (the “Revolver
      Increase”)
      the
      Maximum Revolver Amount by up to $50,000,000 (after giving effect to which
      the
      Maximum Revolver Amount shall not exceed $400,000,000 less the aggregate amount
      of reductions to the Revolver Commitments effected on or prior to the date
      of
      the Revolver Increase) upon at least 30 days (but not more than 45 days) written
      notice (“Revolver
      Increase Notice”)
      to the
      Agent (which notice Agent shall promptly deliver to the Lenders). The Revolver
      Increase Notice shall (a) specify the date upon which the Revolver Increase
      is
      requested to occur, (b) be delivered at a time when no Default or Event of
      Default has occurred and is continuing (and the effectiveness of the Revolver
      Increase shall be subject to no Default or Event of Default existing of the
      time
      of the Revolver Increase) and (c) certify that the Revolver Increase will not
      violate or conflict with the terms of any Indebtedness or any other contract,
      agreement, instrument or obligation of any Credit Party (and which notice will
      be accompanied by an opinion of counsel to Credit Parties on terms satisfactory
      to Agent in its Permitted Discretion to the effect that, among other matters,
      the Revolver Increase constitutes a “Senior Claim” under and as defined in the
      Intercreditor Agreement and that there is no conflict with the Credit Parties’
other Indebtedness or any such contract, agreement, instrument or obligation).
      Borrower shall, after giving a Revolver Increase Notice, offer the Revolver
      Increase (i) first on a pro-rata basis to the Lenders, which each Lender may
      in
      its sole and absolute discretion accept or decline (it being understood that
      any
      Lender not affirmatively committing in writing to its pro-rata portion shall
      be
      deemed to have declined), (ii) second, if any Lender has declined its pro rata
      share or any part thereof, such remaining amounts on a non pro-rata basis to
      the
      Lenders accepting their pro rata share of the Revolver Increase and (iii) third,
      to other Eligible Transferees. Agent agrees to use its reasonable efforts to
      syndicate any remaining portion of the Revolver Increase to other Eligible
      Transferees; provided,
      however,
      that
      the minimum final allocated Revolver Commitment of each Eligible Transferee
      that
      is not a Lender shall be equal to or in excess of $5,000,000. No increase in
      the
      Maximum Revolver Amount shall become effective until all existing and new
      Lenders committing to the Revolver Increase have delivered to the Agent a
      writing in form reasonably satisfactory to the Agent pursuant to which such
      existing Lenders state the amount of their Revolver Increase and any such new
      Lenders state the amount of their Revolver Commitment and agree to assume and
      accept the obligations and rights of a Lender hereunder and any such new and
      increasing Lenders agree to make an Advance such that the outstanding Advances
      of such new Lender or increasing Lender constitute a proportional amount of
      the
      aggregate outstanding Advances based on the Revolver Commitment of such new
      Lender. Any Advance as a result of an increase to the Revolver Commitment
      pursuant to this Section
      2.2
      shall be
      subject to the terms and conditions contained in this Agreement. Upon the
      increase of the Revolver Commitment pursuant to this Section
      2.2,
      Schedule
      C-1
      shall be
      deemed amended and replaced with a new Schedule
      C-1
      reflecting the new Revolver Commitments hereunder.

    
      
        
        

      

      
        -43-

        
          

        

      

      
        
        

      

    

     

    2.3 Borrowing
      Procedures and Settlements.

     

    (a) Procedure
      for Borrowing.
      Each
      Borrowing shall be made by an irrevocable written request by an Authorized
      Person delivered to Agent (which notice must be received by Agent no later
      than
      1:00 p.m. (New York time) on the Business Day prior to the date that is the
      requested Funding Date (subject to Section
      2.13(b)(i)
      in the
      case of any LIBOR Rate Loan) specifying (i) the amount of such Borrowing, and
      (ii) the requested Funding Date, which shall be a Business Day; provided,
      however,
      that in
      the case of a request for Swing Loan in an amount of $35,000,000, or less,
      such
      notice will be timely received if it is received by Agent no later than 1:00
      p.m. (New York time) on the Business Day that is the requested Funding Date)
      specifying (i) the amount of such Borrowing, and (ii) the requested Funding
      Date, which shall be a Business Day. At Agent’s election, in
      lieu
      of delivering the above-described written request, any Authorized Person may
      give Agent electronic notice of such request by the required time. In such
      circumstances, Borrower agrees that any such electronic notice will be confirmed
      in writing within 24 hours of the giving of such notice and the failure to
      provide such written confirmation shall not affect the validity of the
      request.

     

    (b) Agent’s
      Election.
      Promptly after receipt of a request for a Borrowing pursuant to Section
      2.3(a),
      Agent
      shall elect, in its discretion, (i) to have the terms of Section
      2.3(c)
      apply to
      such requested Borrowing, or (ii) if the Borrowing is for an Advance, to request
      Swing Lender to make a Swing Loan pursuant to the terms of Section
      2.3(d)
      in the
      amount of the requested Borrowing; provided,
      however,
      that
      (i) if Swing Lender declines in its sole discretion to make a Swing Loan
      pursuant to Section
      2.3(d),
      Agent
      shall elect to have the terms of Section
      2.3(c)
      apply to
      such requested Borrowing; and (ii) if a notice requesting a LIBOR Rate Loan
      has
      been timely delivered per Section
      2.13(b)(i),
      Agent
      shall not have the option to request Swing Lender to make such Borrowing as
      a
      Swing Loan.

    
      
        
        

      

      
        -44-

        
          

        

      

      
        
        

      

    

     

    (c) Making
      of Loans.

     

    (i) In
      the
      event that Agent shall elect to have the terms of this Section
      2.3(c)
      apply to
      a requested Borrowing as described in Section
      2.3(b),
      then
      promptly after receipt of a request for a Borrowing pursuant to Section
      2.3(a),
      Agent
      shall notify the Lenders, not later than 4:00 p.m. (New York time) on the
      Business Day immediately preceding the Funding Date applicable thereto, by
      telecopy, telephone, or other similar form of transmission, of the requested
      Borrowing. Each Lender shall make the amount of such Lender’s Pro Rata Share of
      the requested Borrowing available to Agent in immediately available funds,
      to
      Agent’s Account, not later than 1:00 p.m. (New York time) on the Funding Date
      applicable thereto. After Agent’s receipt of the proceeds of such Advances,
      Agent shall make the proceeds thereof available to Borrower on the applicable
      Funding Date by transferring immediately available funds equal to such proceeds
      received by Agent to Borrower’s Designated Account; provided,
      however,
      that,
      subject to the provisions of Section
      2.3(i),
      Agent
      shall not request any Lender to make, and no Lender shall have the obligation
      to
      make, any Advance if Agent shall have actual knowledge that (1) one or more
      of
      the applicable conditions precedent set forth in Section
      3
      will not
      be satisfied on the requested Funding Date for the applicable Borrowing unless
      such condition has been waived, or (2) the requested Borrowing would exceed
      the
      Availability on such Funding Date.

     

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

    
      
        
        

      

      
        -45-

        
          

        

      

      
        
        

      

    

     

    (iii) Agent
      shall not be obligated to transfer to a Defaulting Lender any payments made
      by
      any Credit Party to Agent for the Defaulting Lender’s benefit, and, in the
      absence of such transfer to the Defaulting Lender, Agent shall transfer any
      such
      payments to each other non-Defaulting Lender member of the Lender Group ratably
      in accordance with their Commitments (but only to the extent that such
      Defaulting Lender’s Advance was funded by the other members of the Lender Group)
      or, if so directed by Borrower and if no Default or Event of Default had
      occurred and is continuing (and to the extent such Defaulting Lender’s Advance
      was not funded by the Lender Group), retain same to be re-advanced to Borrower
      as if such Defaulting Lender had made Advances to Borrower. Subject to the
      foregoing, Agent may hold and, in its Permitted Discretion, re-lend to Borrower
      for the account of such Defaulting Lender the amount of all such payments
      received and retained by Agent for the account of such Defaulting Lender. Solely
      for the purposes of voting or consenting to matters with respect to the Loan
      Documents, such Defaulting Lender shall be deemed not to be a “Lender” and such
      Lender’s Commitment shall be deemed to be zero. This Section shall remain
      effective with respect to such Lender until (x) the Obligations under this
      Agreement shall have been declared or shall have become immediately due and
      payable, (y) the non-Defaulting Lenders, Agent, and the Credit Parties shall
      have waived such Defaulting Lender’s default in writing, or (z) the Defaulting
      Lender makes its Pro Rata Share of the applicable Advance and pays to Agent
      all
      amounts owing by Defaulting Lender in respect thereof. The operation of this
      Section shall not be construed to increase or otherwise affect the Commitment
      of
      any Lender, to relieve or excuse the performance by such Defaulting Lender
      or
      any other Lender of its duties and obligations hereunder, or to relieve or
      excuse the performance by any Credit Party of its duties and obligations
      hereunder to Agent or to the Lenders other than such Defaulting Lender. Any
      such
      failure to fund by any Defaulting Lender shall constitute a material breach
      by
      such Defaulting Lender of this Agreement and shall entitle Borrower at its
      option, upon written notice to Agent, to arrange for a substitute Lender to
      assume the Commitment of such Defaulting Lender, such substitute Lender to
      be
      acceptable to Agent. In connection with the arrangement of such a substitute
      Lender, the Defaulting Lender shall have no right to refuse to be replaced
      hereunder, and agrees to execute and deliver a completed form of Assignment
      and
      Acceptance in favor of the substitute Lender (and agrees that it shall be deemed
      to have executed and delivered such document if it fails to do so) subject
      only
      to being repaid its share of the outstanding Obligations (including an
      assumption of its Pro Rata Share of the Risk Participation Liability) without
      any premium or penalty of any kind whatsoever; provided,
      however,
      that
      any such assumption of the Commitment of such Defaulting Lender shall not be
      deemed to constitute a waiver of any of the Lender Groups’ or any Credit Party’s
      rights or remedies against any such Defaulting Lender arising out of or in
      relation to such failure to fund.

    
      
        
        

      

      
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    (d) Making
      of Swing Loans.

     

    (i) In
      the
      event Agent shall elect, with the consent of Swing Lender, as a Lender, to
      have
      the terms of this Section
      2.3(d)
      apply to
      a requested Borrowing as described in Section
      2.3(b),
      Swing
      Lender as a Lender shall make such Advance in the amount of such Borrowing
      (any
      such Advance made solely by Swing Lender as a Lender pursuant to this
Section
      2.3(d)
      being
      referred to as a “Swing
      Loan”
and
      such Advances being referred to collectively as “Swing
      Loans”)
      available to Borrower on the Funding Date applicable thereto by transferring
      immediately available funds to Borrower’s Designated Account; provided,
      however,
      the
      aggregate amount of the Swing Loans at any one time outstanding shall not exceed
      $35,000,000. Each Swing Loan shall be deemed to be an Advance hereunder and
      shall be subject to all the terms and conditions applicable to other Advances,
      except that no such Swing Loan shall be eligible to be a LIBOR Rate Loan and
      all
      payments on any Swing Loan shall be payable to Swing Lender as a Lender solely
      for its own account (and for the account of the holder of any participation
      interest with respect to such Swing Loan). Subject to the provisions of
Section
      2.3(i),
      Agent
      shall not request Swing Lender as a Lender to make, and Swing Lender as a Lender
      shall not make, any Swing Loan if Agent has actual knowledge that (i) one or
      more of the applicable conditions precedent set forth in Section
      3
      will not
      be satisfied on the requested Funding Date for the applicable Borrowing unless
      such condition has been waived, or (ii) the requested Borrowing would exceed
      the
      Availability on such Funding Date. Swing Lender as a Lender shall not otherwise
      be required to determine whether the applicable conditions precedent set forth
      in Section
      3
      have
      been satisfied on the Funding Date applicable thereto prior to making, in its
      sole discretion, any Swing Loan.

    
      
        
        

      

      
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    (ii) The
      Swing
      Loans shall be secured by the Agent’s Liens, constitute Obligations hereunder,
      and bear interest at the rate applicable from time to time to Advances that
      are
      Base Rate Loans.

     

    (e) Agent
      Advances.

     

    (i) Agent
      hereby is authorized by Borrower and the Lenders, from time to time in Agent’s
      sole discretion, (1) after the occurrence and during the continuance of a
      Default or an Event of Default, or (2) at any time that any of the other
      applicable conditions precedent set forth in Section
      3
      have not
      been satisfied, to make Advances to Borrower on behalf of the Lenders in an
      amount not exceeding the lesser of (x) 5% of Gross Collateral Availability
      and
      (y) $10,000,000 that Agent, in its Permitted Discretion deems necessary or
      desirable (A) to preserve or protect the Collateral, or any portion thereof,
      (B)
      to enhance the likelihood of repayment of the Obligations, or (C) to pay any
      other amount chargeable to any Credit Party pursuant to the terms of this
      Agreement, including Lender Group Expenses and the costs, fees, and expenses
      described in Section
      10
      (any of
      the Advances described in this Section
      2.3(e)
      shall be
      referred to as “Agent
      Advances”);
      provided,
      however,
      that
      (i) no Agent Advances shall be outstanding for a period exceeding thirty (30)
      consecutive days and (ii) there shall be no more than two separate Agent
      Advances during any twelve month period. Each Agent Advance shall be deemed
      to
      be an Advance hereunder, except that no such Agent Advance shall be eligible
      to
      be a LIBOR Rate Loan and all payments thereon shall be payable to Agent solely
      for its own account.

     

    (ii) The
      Agent
      Advances shall be repayable on demand, secured by the Agent’s Liens granted to
      Agent under the Loan Documents, constitute Obligations hereunder, and bear
      interest at the rate applicable from time to time to Advances that are Base
      Rate
      Loans.

     

    (f) Settlement.
      It is
      agreed that each Lender’s funded portion of the Advances is intended by the
      Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstanding
      Advances. Such agreement notwithstanding, Agent, Swing Lender, and the other
      Lenders agree (which agreement shall not be for the benefit of or enforceable
      by
      Borrower) that in order to facilitate the administration of this Agreement
      and
      the other Loan Documents, settlement among them as to the Advances, the Swing
      Loans, and the Agent Advances shall take place on a periodic basis in accordance
      with the following provisions:

    
      
        
        

      

      
        -48-

        
          

        

      

      
        
        

      

    

     

    (i) Agent
      shall request settlement (“Settlement”)
      with
      the Lenders on a weekly basis, or on a more frequent basis if so determined
      by
      Agent, (1) on behalf of Swing Lender, with respect to each outstanding Swing
      Loan, (2) for itself, with respect to each Agent Advance, and (3) with respect
      to any Credit Party’s Collections received by Agent, as to each by notifying the
      Lenders by telecopy, telephone, or other similar form of transmission, of such
      requested Settlement, no later than 2:00 p.m. (New York time) on the Business
      Day immediately prior to the date of such requested Settlement (the date of
      such
      requested Settlement being the “Settlement
      Date”).
      Such
      notice of a Settlement Date shall include a summary statement of the amount
      of
      outstanding Advances, Swing Loans, and Agent Advances for the period since
      the
      prior Settlement Date. Subject to the terms and conditions contained herein
      (including Section
      2.3(c)(iii)):
      (y) if
      a Lender’s balance of the Advances (including Swing Loans and Agent Advances)
      exceeds such Lender’s Pro Rata Share of the Advances (including Swing Loans and
      Agent Advances) as of a Settlement Date, then Agent shall, by no later than
      3:00
      p.m. (New York time) on the Settlement Date, transfer in immediately available
      funds to a Deposit Account of such Lender (as such Lender may designate), an
      amount such that each such Lender shall, upon receipt of such amount, have
      as of
      the Settlement Date, its Pro Rata Share of the Advances (including Swing Loans
      and Agent Advances), and (z) if a Lender’s balance of the Advances (including
      Swing Loans and Agent Advances) is less than such Lender’s Pro Rata Share of the
      Advances (including Swing Loans and Agent Advances) as of a Settlement Date,
      such Lender shall no later than 2:00 p.m. (New York time) on the Settlement
      Date
      transfer in immediately available funds to the Agent’s Account, an amount such
      that each such Lender shall, upon transfer of such amount, have as of the
      Settlement Date, its Pro Rata Share of the Advances (including Swing Loans
      and
      Agent Advances). Such amounts made available to Agent under clause (z) of the
      immediately preceding sentence shall be applied against the amounts of the
      applicable Swing Loans or Agent Advances and, together with the portion of
      such
      Swing Loans or Agent Advances representing Swing Lender’s Pro Rata Share
      thereof, shall constitute Advances of such Lenders. If any such amount is not
      made available to Agent by any Lender on the Settlement Date applicable thereto
      to the extent required by the terms hereof, Agent shall be entitled to recover
      for its account such amount on demand from such Lender together with interest
      thereon at the Defaulting Lender Rate.

     

    (ii) In
      determining whether a Lender’s balance of the Advances, Swing Loans, and Agent
      Advances is less than, equal to, or greater than such Lender’s Pro Rata Share of
      the Advances, Swing Loans, and Agent Advances as of a Settlement Date, Agent
      shall, as part of the relevant Settlement, apply to such balance the portion
      of
      payments actually received in good funds by Agent with respect to principal,
      interest, fees payable any Credit Party and allocable to the Lenders hereunder,
      and proceeds of the Collateral. To the extent that a net amount is owed to
      any
      such Lender after such application, such net amount shall be distributed by
      Agent to that Lender as part of such next Settlement.

    
      
        
        

      

      
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    (iii) Between
      Settlement Dates, Agent, to the extent no Agent Advances or Swing Loans are
      outstanding, may pay over to Swing Lender any payments received by Agent, that
      in accordance with the terms of this Agreement would be applied to the reduction
      of the Advances, for application to Swing Lender’s Pro Rata Share of the
      Advances. If, as of any Settlement Date, Collections of any Credit Party
      received since the then immediately preceding Settlement Date have been applied
      to Swing Lender’s Pro Rata Share of the Advances other than to Swing Loans, as
      provided for in the previous sentence, Swing Lender shall pay to Agent for
      the
      accounts of the Lenders, and Agent shall pay to the Lenders, to be applied
      to
      the outstanding Advances of such Lenders, an amount such that each Lender shall,
      upon receipt of such amount, have, as of such Settlement Date, its Pro Rata
      Share of the Advances. During the period between Settlement Dates, Swing Lender
      with respect to Swing Loans, Agent with respect to Agent Advances, and each
      Lender (subject to the effect of letter agreements between Agent and individual
      Lenders) with respect to the Advances other than Swing Loans and Agent Advances,
      shall be entitled to interest at the applicable rate or rates payable under
      this
      Agreement on the daily amount of funds employed by Swing Lender, Agent, or
      the
      Lenders, as applicable.

     

    (g) Notation.
      Agent
      shall record on its books the principal amount of the Advances owing to each
      Lender, including the Swing Loans owing to Swing Lender, and Agent Advances
      owing to Agent, and the interests therein of each Lender, from time to time
      and
      such records shall, absent manifest error, conclusively be presumed to be
      correct and accurate. In addition, each Lender is authorized, at such Lender’s
      option, to note the date and amount of each payment or prepayment of principal
      of such Lender’s Advances in its books and records, including computer
      records.

     

    (h) Lenders’
      Failure to Perform.
      All
      Advances (other than Swing Loans and Agent Advances) shall be made by the
      Lenders contemporaneously and in accordance with their Pro Rata Shares. It
      is
      understood that (i) no Lender shall be responsible for any failure by any other
      Lender to perform its obligation to make any Advance (or other extension of
      credit) hereunder, nor shall any Commitment of any Lender be increased or
      decreased as a result of any failure by any other Lender to perform its
      obligations hereunder, and (ii) no failure by any Lender to perform its
      obligations hereunder shall excuse any other Lender from its obligations
      hereunder.

    
      
        
        

      

      
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    2.4 Payments.

     

    (a) Payments
      by Borrower.

     

    (i) Except
      as
      otherwise expressly provided herein, all payments by Borrower shall be made
      to
      Agent’s Account for the account of the Lender Group and shall be made in
      immediately available funds, no later than 2:00 p.m. (New York time) on the
      date
      specified herein. Any payment received by Agent later than 2:00 p.m. (New York
      time) shall be deemed to have been received on the following Business Day and
      any applicable interest or fee shall continue to accrue until such following
      Business Day.

     

    (ii) Unless
      Agent receives notice from Borrower prior to the date on which any payment
      is
      due to the Lenders that Borrower will not make such payment in full as and
      when
      required, Agent may assume that Borrower has made (or will make) such payment
      in
      full to Agent on such date in immediately available funds and Agent may (but
      shall not be so required), in reliance upon such assumption, distribute to
      each
      Lender on such due date an amount equal to the amount then due such Lender.
      If
      and to the extent Borrower does not make such payment in full to Agent on the
      date when due, each Lender severally shall repay to Agent on demand such amount
      distributed to such Lender, together with interest thereon at the Defaulting
      Lender Rate for each day from the date such amount is distributed to such Lender
      until the date repaid.

     

    (b) Apportionment
      and Application of Payments.

     

    (i) Except
      as
      otherwise provided with respect to Defaulting Lenders and except as otherwise
      provided in the Loan Documents (including letter agreements between Agent,
      individual Lenders and Borrower), aggregate principal and interest payments
      shall be apportioned ratably among the Lenders (according to the unpaid
      principal balance of the Obligations to which such payments relate held by
      each
      Lender) and payments of fees and expenses (other than fees or expenses that
      are
      for Agent’s separate account, after giving effect to any letter agreements
      between Agent and individual Lenders) shall be apportioned ratably among the
      Lenders having a Pro Rata Share of the type of Commitment or Obligation to
      which
      a particular fee relates. All payments shall be remitted to Agent and all such
      payments, and all proceeds of the Collateral received by Agent, shall be applied
      as follows:

    
      
        
        

      

      
        -51-

        
          

        

      

      
        
        

      

    

     

    (A) first,
      to pay
      any Lender Group Expenses then due to Agent under the Loan Documents, until
      paid
      in full,

     

    (B) second,
      to pay
      any Lender Group Expenses then due to the Lenders under the Loan Documents,
      on a
      ratable basis, until paid in full,

     

    (C) third,
      to pay
      any fees then due to Agent (for its separate account, after giving effect to
      any
      letter agreements between Agent and individual Lenders) under the Loan Documents
      until paid in full,

     

    (D) fourth,
      to pay
      any fees then due to any or all of the Lenders (after giving effect to any
      letter agreements between Agent and individual Lenders) under the Loan
      Documents, on a ratable basis, until paid in full, 

     

    (E) fifth,
      to pay
      interest due in respect of all Agent Advances until paid in full, 

     

    (F) sixth,
      ratably
      to pay interest due in respect of the Advances (other than Agent Advances)
      and
      the Swing Loans, until paid in full,

     

    (G) seventh,
      to pay
      the principal of all Agent Advances until paid in full, 

     

    (H) eighth,
      to pay
      the principal of all Swing Loans until paid in full,

     

    (I) ninth,
      so long
      as no Event of Default has occurred and is continuing, to pay the principal
      of
      all Advances until paid in full,

     

    (J) tenth,
      if an
      Event of Default has occurred and is continuing, ratably (i) to pay the
      principal of all Advances until paid in full and (ii)to Agent, to be held by
      Agent, for the ratable benefit of Issuing Lender and those Lenders having a
      Revolver Commitment, as cash collateral an amount up to 105% of the then extant
      Letter of Credit Usage until paid in full, 

     

    (K) eleventh,
      if an
      Event of Default has occurred and is continuing, to pay any other Obligations
      (including, without limitation, Banking Services Obligations), and 

     

    (L) twelfth,
      to
      Borrower (to be wired to the Designated Account) or such other Person entitled
      thereto under applicable law.

    
      
        
        

      

      
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    (ii) Agent
      promptly shall distribute to each Lender, pursuant to the applicable wire
      instructions received from each Lender in writing, such funds as it may be
      entitled to receive, subject to a Settlement delay as provided in Section
      2.3(f).

     

    (iii) In
      each
      instance, so long as no Event of Default has occurred and is continuing, this
      Section
      2.4(b)
      shall
      not be deemed to apply to any payment by Borrower specified by Borrower to
      be
      for the payment of specific Obligations then due and payable (or prepayable)
      under any provision of this Agreement.

     

    (iv) For
      purposes of the foregoing, “paid in full” means payment of all amounts owing
      under the Loan Documents according to the terms thereof, including loan fees,
      service fees, professional fees, interest (and specifically including interest
      accrued after the commencement of any Insolvency Proceeding), default interest,
      interest on interest, and expense reimbursements, whether or not any of the
      foregoing would be or is allowed or disallowed in whole or in part in any
      Insolvency Proceeding.

     

    (v) In
      the
      event of a direct conflict between the priority provisions of this Section
      2.4
      and
      other provisions contained in any other Loan Document, it is the intention
      of
      the parties hereto that such priority provisions in such documents shall be
      read
      together and construed, to the fullest extent possible, to be in concert with
      each other. In the event of any actual, irreconcilable conflict that cannot
      be
      resolved as aforesaid, the terms and provisions of this Section
      2.4
      shall
      control and govern.

     

    (c) Mandatory
      Prepayment.
      At any time that a Default shall have occurred and be continuing hereunder,
      the
      Borrower shall promptly prepay the Loans with all proceeds arising from the
      sale
      or other realization upon the ABL Facility Primary Collateral (as such term
      is
      defined in the Intercreditor Agreement).

     

    2.5 Overadvances.
      If, at
      any time or for any reason, the amount of Obligations owed by the Credit Parties
      to the Lender Group pursuant to Section
      2.1
      or
Section
      2.12
      is
      greater than either the Dollar or percentage limitations set forth in
Section
      2.1
      or
Section
      2.12,
      as
      applicable (an “Overadvance”),
      Borrower shall within three (3) Business Days pay to Agent, in cash, the amount
      of such excess, which amount shall be used by Agent to reduce the Obligations
      in
      accordance with the priorities set forth in Section
      2.4(b).
      In
      addition, Borrower hereby promises to pay the Obligations (including principal,
      interest, fees, costs, and expenses) in Dollars in full as and when due and
      payable under the terms of this Agreement and the other Loan
      Documents.

     

    2.6 Interest
      Rates and Letter of Credit Fee: Rates, Payments, and
      Calculations.

    
      
        
        

      

      
        -53-

        
          

        

      

      
        
        

      

    

     

    (a) Interest
      Rates.
      Except
      as provided in clause (c) below, all Obligations (except for undrawn Letters
      of
      Credit) that have been charged to the Loan Account pursuant to the terms hereof
      shall bear interest on the Daily Balance thereof as follows (i) if the relevant
      Obligation is an Advance that is a LIBOR Rate Loan, at a per annum rate equal
      to
      the LIBOR Rate plus the Applicable Margin for LIBOR Rate Loans and (ii)
      otherwise, at a per annum rate equal to the Base Rate plus the Applicable Margin
      for Base Rate Loans.

     

    (b) Letter
      of Credit Fees.
      Borrower
      shall pay Agent (for the ratable benefit of the Lenders), Letter of Credit
      fees
      (in addition to the charges, commissions, fees, and costs set forth in
Section 2.12(e))
      (i) with respect to standby Letters of Credit, which shall accrue at a rate
      equal to the Applicable Margin then in effect for standby Letters of Credit
      times
      the
      Daily Balance of the undrawn amount of all such outstanding standby Letters
      of
      Credit, and (ii) with respect to documentary Letters of Credit, which shall
      accrue at a rate equal to the Applicable Margin then in effect for documentary
      Letters of Credit times
      the
      Daily Balance of the undrawn amount of all such outstanding documentary Letters
      of Credit. 

     

    (c) Default
      Rate.
      Upon
      the occurrence and during the continuation of an Event of Default (and at the
      election of Agent or the Required Lenders),

     

    (i) 
      all
      Obligations (except for undrawn Letters of Credit) that have been charged to
      the
      Loan Account pursuant to the terms hereof shall bear interest on the Daily
      Balance thereof at a per annum rate equal to 2 percentage points above the
      per
      annum rate otherwise applicable hereunder, and

     

    (ii) 
      the
      Letter of Credit fee provided for above shall be increased to 2 percentage
      points above the per annum rate otherwise applicable hereunder.

     

    (d) Payment.
      Except
      as provided to the contrary in Section
      2.13(a),
      interest, Letter of Credit fees, and all other fees payable hereunder shall
      be
      due and payable, in arrears, on the first day of each month at any time that
      Obligations or Commitments are outstanding. Borrower hereby authorizes Agent,
      from time to time without prior notice to Borrower, to charge such interest
      and
      fees, all Lender Group Expenses (as and when incurred), the charges,
      commissions, fees, and costs provided for in Section
      2.12(e)
      (as and
      when accrued or incurred), the fees and costs provided for in Section
      2.11
      (as and
      when accrued or incurred), and all other payments as and when due and payable
      with respect to the Obligations to Borrower’s Loan Account, which amounts
      thereafter shall constitute Advances hereunder and shall accrue interest at
      the
      rate then applicable to Advances hereunder. Any interest not paid when due
      shall
      be compounded by being charged to Borrower’s Loan Account and shall thereafter
      constitute Advances hereunder and shall accrue interest at the rate then
      applicable to Advances that are Base Rate Loans hereunder.

    
      
        
        

      

      
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    (e) Computation.
      All
      interest and fees chargeable under the Loan Documents shall be computed on
      the
      basis of a 360 day year for the actual number of days elapsed. In the event
      the
      Base Rate is changed from time to time hereafter, the rates of interest
      hereunder based upon the Base Rate automatically and immediately shall be
      increased or decreased by an amount equal to such change in the Base Rate.
      

     

    (f) Intent
      to Limit Charges to Maximum Lawful Rate.
      In no
      event shall the interest rate or rates payable under this Agreement, plus any
      other amounts paid in connection herewith, exceed the highest rate permissible
      under any law that a court of competent jurisdiction shall, in a final
      determination, deem applicable. Borrower and the Lender Group, in executing
      and
      delivering this Agreement, intend legally to agree upon the rate or rates of
      interest and manner of payment stated within it; provided,
      however,
      that,
      anything contained herein to the contrary notwithstanding, if said rate or
      rates
      of interest or manner of payment exceeds the maximum allowable under applicable
      law, then, ipso
      facto,
      as of
      the date of this Agreement, Borrower is and shall be liable only for the payment
      of such maximum as allowed by law, and payment received from Borrower in excess
      of such legal maximum, whenever received, shall be applied to reduce the
      principal balance of the Obligations to the extent of such excess.

     

    2.7 Cash
      Management.

     

    (a) Each
      Credit Party shall establish and maintain cash management services of a type
      and
      on terms satisfactory to Agent at one or more of the banks set forth on
Schedule
      5.17
      (each, a
“Cash
      Management Bank”),
      and,
      in connection therewith, establish and maintain at such Cash Management Banks
      pursuant to the terms hereof one or more accounts designated (either in
Schedule
      5.17
      or
      pursuant to Section
      2.7(h))
      as
      concentration accounts (the “Concentration
      Accounts”)
      and
      additional accounts designated (either in Schedule
      5.17
      or
      pursuant to Section
      2.7(h))
      as (i)
      consolidated store deposit accounts (the “Consolidated
      Store Deposit Accounts”),
      (ii)
      individual store deposit accounts (the “Individual
      Store Accounts”)
      and
      (iii) the home office deposit account (the “Home
      Office Account”
and
      together with the Concentration Accounts, the Consolidated Store Deposit
      Accounts and the Individual Store Accounts, the “Cash
      Management Accounts”).
      

     

    (b) Except
      as
      otherwise specifically permitted in this Section
      2.7,
      each
      Credit Party shall (1) request in writing and otherwise take such reasonable
      steps to ensure that all of its Account Debtors forward payment of the amounts
      owed by them directly to a Cash Management Bank for deposit into a Concentration
      Account, (2) deposit or cause to be deposited promptly, and in any event no
      later than the first Business Day after the date of receipt thereof (and subject
      to Section
      2.7(g)
      with
      respect to payments from Credit Card Processors), all such available Collections
      from Account Debtors (including those sent directly to a Cash Management Bank)
      into a Concentration Account, and (3) deposit or cause to be deposited promptly,
      and in any event no later than the first Business Day after the date of receipt
      thereof, all other available Collections (including cash, checks, drafts and
      all
      other forms of daily store receipts or other similar items of payment) received
      by or otherwise under its control into a Cash Management Account provided,
      so long
      as no Triggering Period shall have occurred and be continuing, (i) the Credit
      Parties may maintain Collections in other Deposit Accounts as permitted under
      this Section 2.7, and (ii) the Agent shall permit all funds in any Concentration
      Account to be forwarded, by daily sweeps, to the Designated Account. For
      purposes of clarification, funds that need not be swept to the extent
      specifically provided in this Section
      2.7
      and
      after funds are swept pursuant to any provision of this Section
      2.7
      to the
      Designated Account, they may be used by the Borrower for its general corporate
      purposes. 

    
      
        
        

      

      
        -55-

        
          

        

      

      
        
        

      

    

     

    (c) Each
      Credit Party further agrees to cause each of its stores which utilize a
      Consolidated Store Deposit Account to cause all Collections for such store
      to be
      deposited into a Consolidated Store Deposit Account and each Credit Party agrees
      that with respect to each Consolidated Store Deposit Account, it shall, at
      all
      times require each applicable Cash Management Bank to forward, by automatic
      periodic transfers on a daily basis, if practicable, and otherwise, once every
      three (3) Business Days, all available amounts in each such Consolidated Store
      Deposit Account into a Concentration Account; provided,
      (i)
      immediately after giving effect to each such transfer from any Consolidated
      Store Deposit Account into a Concentration Account, each Credit Party may
      maintain an amount not to exceed (x) $50,000 of available funds in any such
      Consolidated Store Deposit Account and (y) $5,000,000 in available funds in
      the
      aggregate in all such Consolidated Store Deposit Accounts, (ii) so long as
      no
      Triggering Period shall have occurred and be continuing, Agent shall permit
      all
      funds in any Concentration Account to be forwarded, by daily sweeps, to the
      Designated Account.

     

    (d) Each
      Credit Party further agrees that with respect to each store which utilizes
      an
      Individual Store Account, such store shall cause all Collections for such store
      to be deposited into such Individual Store Account and each Credit Party agrees
      that with respect to each Individual Store Account it shall, at all times
      require each applicable Cash Management Bank to forward, by automatic periodic
      transfers on a regular basis, but in no event less frequently than once in
      any
      ten (10) day period, all available amounts in each such Individual Store Account
      into a Concentration Account; provided,
      however,
      that
      (i) such automatic transfers of funds therein shall be required only at any
      time
      the available balance thereof should exceed $5,000, (ii) immediately after
      giving effect to each such transfer from such Individual Store Account into
      a
      Concentration Account, the Credit Parties may maintain an available amount
      not
      to exceed $5,000 in such Individual Store Account, and (iii) so long as no
      Triggering Period shall have occurred and be continuing, Agent shall permit
      all
      funds in any Concentration Account to be forwarded, by daily sweeps, to the
      Designated Account.

    
      
        
        

      

      
        -56-

        
          

        

      

      
        
        

      

    

     

    (e) Each
      Credit Party further agrees that with respect to the Home Office Account, it
      shall, at all times require the applicable Cash Management Bank to forward,
      by
      automatic periodic transfers on a regular basis, but in no event less frequently
      than once in any ten (10) day period, all available amounts in the Home Office
      Account into (either directly or indirectly) a Concentration Account or another
      account under the control of WFRF or any of its Affiliates; provided,
      however,
      that
      (x) such automatic transfers of funds therein shall be required only at any
      time
      the available balance thereof should exceed $100,000, (y) immediately after
      giving effect to each such transfer from the Home Office Account into a
      Concentration Account or such other account under the control of WFRF or any
      of
      its Affiliates, the Credit Parties may maintain an available amount not to
      exceed $100,000 in such Home Office Account, and (z) so long as no Triggering
      Period shall have occurred and be continuing, Agent shall permit all funds
      in
      any Concentration Account to be forwarded, by daily sweeps, to the Designated
      Account.

     

    (f) Each
      Credit Party further agrees that with respect to the Group Concentration
      Account, it shall, at all times require the applicable Cash Management Bank
      to
      forward, by automatic periodic transfers on a daily basis, all available amounts
      in the Group Concentration Account into (either directly or indirectly) a
      Concentration Account; provided,
      however,
      that
      (x) such automatic transfers of funds therein shall be required only at any
      time
      the available balance thereof should exceed $5,000,000, (y) immediately after
      giving effect to each such transfer from the Group Concentration Account into
      a
      Concentration Account, the Credit Parties may maintain an available amount
      not
      to exceed $5,000,000 in such Group Concentration Account, and (z) so long as
      no
      Triggering Period shall have occurred and be continuing, Agent shall permit
      all
      funds in any Concentration Account to be forwarded, by daily sweeps, to the
      Designated Account.

     

    (g) With
      respect to each Concentration Account, each Cash Management Bank shall establish
      and maintain Cash Management Agreements with Agent and the applicable Credit
      Party, in form and substance acceptable to Agent in its Permitted Discretion;
      provided;
      however,
      that,
      with respect to Consolidated Store Deposit Accounts, Individual Store Accounts
      and the Home Office Account no Credit Party shall be obligated to establish
      a
      Cash Management Agreement. Each Cash Management Agreement shall provide, among
      other things, that (i) all items of payment deposited in such Concentration
      Account and proceeds thereof are subject to the control of Agent, (ii) the
      Cash Management Bank has no rights of setoff or recoupment or any other claim
      against the applicable Concentration Account other than for payment of its
      service fees and other charges directly related to the administration of such
      Concentration Account and for returned checks or other items of payment, and
      (iii) from and after the date that it receives written notification from
      Agent (a “Control
      Exercise Notice”),
      it immediately will forward by daily sweep all amounts in the applicable
      Concentration Account to the Agent’s Account or as otherwise directed by Agent
      to prepay the Obligations in such order as set forth in Section
      2.4(b);
      provided, that any such prepayments of the Loans pursuant to this Section
      2.7(f)
      may be
      reborrowed subject to Section
      3.3.
      Anything contained herein or in any other Loan Document to the contrary
      notwithstanding, Agent agrees that it shall not provide a Control Exercise
      Notice to the Cash Management Banks except during a Triggering Period. At any
      time during a Triggering Period but only during a Triggering Period, Agent
      shall
      be free to exercise its right to issue a Control Exercise Notice. Agent shall
      deliver to Borrower and the applicable Credit Party a copy of any such Control
      Exercise Notice promptly after delivery thereof to the applicable Cash
      Management Bank; provided,
      however
      that a
      non-willful failure to so do shall not affect the validity of any such Control
      Exercise Notice or otherwise limit Agent’s right to send any other Control
      Exercise Notice. Upon the subsequent termination of such Triggering Period,
      Agent shall withdraw such Control Exercise Notice and permit funds to be
      transferred as set forth above, including permitting each Credit Party access
      to
      funds in any Concentration Account (and daily sweeps thereof into any Designated
      Account), but subject in all events to the right of Agent to deliver a Control
      Exercise Notice during any subsequent Triggering Period.

    
      
        
        

      

      
        -57-

        
          

        

      

      
        
        

      

    

     

    (h) Each
      Credit Party may establish and maintain Credit Card Agreements with Agent and
      each Credit Card Processor. Each such Credit Card Agreement shall provide,
      among
      other things, that each such Credit Card Processor shall transfer all proceeds
      of credit card charges for sales by each Credit Party received by it (or other
      amounts payable by such Credit Card Processor) into a designated Concentration
      Account on a daily basis or such other periodic basis as Agent may otherwise
      direct. No Credit Party shall change any direction or designation set forth
      in
      the Credit Card Agreements regarding payment of charges without the prior
      written consent of Agent.

     

    (i) So
      long
      as no Event of Default has occurred and is continuing, Borrower may amend
Schedule
      5.17
      to add
      or replace a Cash Management Bank or Cash Management Account; provided,
      however,
      that in
      the case of any Concentration Account, (i) such prospective Cash Management
      Bank shall be reasonably satisfactory to Agent and Agent shall have consented
      in
      writing in advance to the opening of such Concentration Account with the
      prospective Cash Management Bank (which consent shall not be required with
      respect to any additional Concentration Account at an existing Cash Management
      Bank and otherwise shall not be unreasonably withheld), and (ii) prior to
      the time of the opening of any Concentration Account, the applicable Credit
      Party and such prospective Cash Management Bank shall have executed and
      delivered to Agent a Cash Management Agreement. Each Credit Party shall close
      any of its Concentration Accounts (and establish replacement cash
      management accounts in accordance with the foregoing sentence) promptly and
      in
      any event within 45 days of notice from Agent (or such longer period as such
      Credit Party and Agent may agree) that the creditworthiness of any Cash
      Management Bank is no longer acceptable in Agent’s reasonable judgment, or as
      promptly as practicable and in any event within 60 days of notice from Agent
      (or
      such longer period as such Credit Party and Agent may agree) that the operating
      performance, funds transfer, or availability procedures or performance of the
      Cash Management Bank with respect to Concentration Accounts or Agent’s liability
      under any Cash Management Agreement with such Cash Management Bank is no longer
      acceptable in Agent’s reasonable judgment.

    
      
        
        

      

      
        -58-

        
          

        

      

      
        
        

      

    

     

    The
      Cash
      Management Accounts shall be cash collateral accounts, with all cash, checks
      and
      similar items of payment in such accounts securing payment of the Obligations,
      and in which each Credit Party hereby grants a Lien to Agent.

     

    2.8 Crediting
      Payments.
      The
      receipt of any payment item by Agent (whether from transfers to Agent by the
      Cash Management Banks pursuant to the Cash Management Agreements or otherwise)
      shall not be considered a payment on account unless such payment item is a
      wire
      transfer of immediately available funds made to the Agent’s Account or unless
      and until such payment item is honored when presented for payment. Should any
      payment item not be honored when presented for payment, then the applicable
      Credit Party shall be deemed not to have made such payment and interest shall
      be
      calculated accordingly. Anything to the contrary contained herein
      notwithstanding, any payment item shall be deemed received by Agent only if
      it
      is received into the Agent’s Account on a Business Day on or before 2:00 p.m.
      (New York time). If any payment item is received into the Agent’s Account on a
      non-Business Day or after 2:00 p.m. (New York time) on a Business Day, it shall
      be deemed to have been received by Agent as of the opening of business on the
      immediately following Business Day. 

     

    2.9 Designated
      Account.
      Agent
      is authorized to make the Advances, and Issuing Lender is authorized to issue
      the Letters of Credit, under this Agreement based upon telephonic or other
      instructions received from anyone purporting to be an Authorized Person or,
      without instructions, if pursuant to Section
      2.6(d).
      Borrower agrees to establish and maintain the Designated Account with the
      Designated Account Bank for the purpose of receiving the proceeds of the
      Advances requested by Borrower and made by Agent or the Lenders hereunder.
      Unless otherwise agreed by Agent and Borrower, any Advance, Agent Advance,
      or
      Swing Loan requested by Borrower and made by Agent or the Lenders hereunder
      shall be made to the Designated Account.

     

    2.10 Maintenance
      of Loan Account; Statements of Obligations.
      Agent
      shall maintain an account on its books in the name of Borrower (the
“Loan
      Account”)
      on
      which Borrower will be charged with all Advances (including Agent Advances
      and
      Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrower or for
      Borrower’s account, the Letters of Credit issued by Issuing Lender for
      Borrower’s account, and with all other payment Obligations hereunder or under
      the other Loan Documents, including, accrued interest, fees and expenses, and
      Lender Group Expenses. In accordance with Section
      2.8,
      the
      Loan Account will be credited with all payments received by Agent from Borrower
      or for Borrower’s account, including all amounts received in the Agent’s Account
      from any Cash Management Bank. Agent shall render statements regarding the
      Loan
      Account to Borrower, including principal, interest, fees, and including an
      itemization of all charges and expenses constituting Lender Group Expenses
      owing, and such statements, absent manifest error, shall be conclusively
      presumed to be correct and accurate and constitute an account stated between
      Borrower and the Lender Group unless, within 30 days after receipt thereof
      by
      Borrower, Borrower shall deliver to Agent written objection thereto describing
      the error or errors contained in any such statements.

    
      
        
        

      

      
        -59-

        
          

        

      

      
        
        

      

    

     

    2.11 Fees.
      Borrower shall pay to Agent the following fees and charges, which fees and
      charges shall be non-refundable when paid (irrespective of whether this
      Agreement is terminated thereafter) and shall be apportioned among the Lenders
      in accordance with the terms of letter agreements between Agent and individual
      Lenders:

     

    (a) Unused
      Line Fee.
      On the
      first day of each month during the term of this Agreement, an unused line fee
      in
      an amount equal to 0.25% per annum times
      the
      result of (i) the Maximum Revolver Amount, less
      (ii) the
      sum of (A) the average Daily Balance of Advances that were outstanding during
      the immediately preceding month, plus
      (B) the
      average Daily Balance of the Letter of Credit Usage during the immediately
      preceding month, 

     

    (b) Fee
      Letter Fees.
      As and
      when due and payable under the terms of the Fee Letter, the fees set forth
      in
      the Fee Letter.

     

    2.12 Letters
      of Credit.

     

    (a) Subject
      to the terms and conditions of this Agreement, the Issuing Lender agrees to
      issue letters of credit for the account of Borrower (each, an “L/C”)
      or to
      purchase participations or execute indemnities or reimbursement obligations
      (each such undertaking, an “L/C
      Undertaking”)
      with
      respect to letters of credit issued by an Underlying Issuer (as of the Closing
      Date, the prospective Underlying Issuer is to be Wells Fargo) for the account
      of
      Borrower. To request the issuance of an L/C or an L/C Undertaking (or the
      amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
      Borrower shall hand deliver or telecopy (or transmit by electronic
      communication, if arrangements for doing so have been approved by the Issuing
      Lender) to the Issuing Lender and Agent (reasonably in advance of the requested
      date of issuance, amendment, renewal, or extension) a notice requesting the
      issuance of an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking
      to be amended, renewed, or extended, specifying the date of issuance, amendment,
      renewal, or extension (which shall be a Business Day), the date on which such
      L/C or L/C Undertaking is to expire, the amount of such L/C or L/C Undertaking,
      the name and address of the beneficiary thereof (or the beneficiary of the
      Underlying Letter of Credit, as applicable), and such other information as
      shall
      be necessary to prepare, amend, renew, or extend such L/C or L/C Undertaking.
      If
      requested by the Issuing Lender, Borrower also shall be an applicant under
      the
      application with respect to any Underlying Letter of Credit that is to be the
      subject of an L/C Undertaking. The Issuing Lender shall have no obligation
      to
      issue a Letter of Credit if any of the following would result after giving
      effect to the issuance of such requested Letter of Credit:

    
      
        
        

      

      
        -60-

        
          

        

      

      
        
        

      

    

     

    (i) the
      Letter of Credit Usage would exceed the Borrowing Base less
      the then
      extant amount of outstanding Advances, or

     

    (ii) the
      Letter of Credit Usage would exceed $200,000,000, or

     

    (iii) the
      Letter of Credit Usage would exceed the Maximum Revolver Amount less
      the then
      extant amount of outstanding Advances.

     

    Borrower
      and the Lender Group acknowledge and agree that certain Underlying Letters
      of
      Credit may be issued to support letters of credit that already are outstanding
      as of the Closing Date. Each Letter of Credit (and corresponding Underlying
      Letter of Credit) shall be in form and substance acceptable to the Issuing
      Lender (in the exercise of its Permitted Discretion), including the requirement
      that the amounts payable thereunder must be payable in Dollars. If Issuing
      Lender is obligated to advance funds under a Letter of Credit, Borrower
      immediately shall reimburse such L/C Disbursement to Issuing Lender by paying
      to
      Agent an amount equal to such L/C Disbursement not later than 2:00 p.m., New
      York time, on the date that such L/C Disbursement is made, if Borrower shall
      have received written or telephonic notice of such L/C Disbursement prior to
      1:00 p.m., New York time, on such date, or, if such notice has not been received
      by Borrower prior to such time on such date, then not later than 2:00 p.m.,
      New
      York time, on the Business Day that Borrower receives such notice, if such
      notice is received prior to 1:00 p.m., New York time, on the date of receipt,
      and, in the absence of such reimbursement, the L/C Disbursement immediately
      and
      automatically shall be deemed to be an Advance hereunder and, thereafter, shall
      bear interest at the rate then applicable to Advances that are Base Rate Loans
      under Section
      2.6.
      To the
      extent an L/C Disbursement is deemed to be an Advance hereunder, Borrower’s
      obligation to reimburse such L/C Disbursement shall be discharged and replaced
      by the resulting Advance. Promptly following receipt by Agent of any payment
      from Borrower pursuant to this paragraph, Agent shall distribute such payment
      to
      the Issuing Lender or, to the extent that Lenders have made payments pursuant
      to
Section
      2.12(c)
      to
      reimburse the Issuing Lender, then to such Lenders and the Issuing Lender as
      their interests may appear.

     

    (b) Promptly
      following receipt of a notice of L/C Disbursement pursuant to Section
      2.12(a),
      each
      Lender with a Revolver Commitment agrees to fund its Pro Rata Share of any
      Advance deemed made pursuant to the foregoing subsection on the same terms
      and
      conditions as if Borrower had requested such Advance and Agent shall promptly
      pay to Issuing Lender the amounts so received by it from the Lenders. By the
      issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing
      the amount thereof) and without any further action on the part of the Issuing
      Lender or the Lenders with Revolver Commitments, the Issuing Lender shall be
      deemed to have granted to each Lender with a Revolver Commitment, and each
      Lender with a Revolver Commitment shall be deemed to have purchased, a
      participation in each Letter of Credit, in an amount equal to its Pro Rata
      Share
      of the Risk Participation Liability of such Letter of Credit, and each such
      Lender agrees to pay to Agent, for the account of the Issuing Lender, such
      Lender’s Pro Rata Share of any payments made by the Issuing Lender under such
      Letter of Credit. In consideration and in furtherance of the foregoing, each
      Lender with a Revolver Commitment hereby absolutely and unconditionally agrees
      to pay to Agent, for the account of the Issuing Lender, such Lender’s Pro Rata
      Share of each L/C Disbursement made by the Issuing Lender and not reimbursed
      by
      Borrower on the date due as provided in clause (a) of this Section, or of any
      reimbursement payment required to be refunded to Borrower for any reason. Each
      Lender with a Revolver Commitment acknowledges and agrees that its obligation
      to
      deliver to Agent, for the account of the Issuing Lender, an amount equal to
      its
      respective Pro Rata Share of each L/C Disbursement made by the Issuing Lender
      pursuant to this Section
      2.12(b)
      shall be
      absolute and unconditional and such remittance shall be made notwithstanding
      the
      occurrence or continuation of an Event of Default or Default or the failure
      to
      satisfy any condition set forth in Section
      3
      hereof.
      If any such Lender fails to make available to Agent the amount of such Lender’s
      Pro Rata Share of each L/C Disbursement made by the Issuing Lender in respect
      of
      such Letter of Credit as provided in this Section, such Lender shall be deemed
      to be a Defaulting Lender and Agent (for the account of the Issuing Lender)
      shall be entitled to recover such amount on demand from such Lender together
      with interest thereon at the Defaulting Lender Rate until paid in
      full.

    
      
        
        

      

      
        -61-

        
          

        

      

      
        
        

      

    

     

    (c) Borrower
      hereby agrees to indemnify, save, defend, and hold the Lender Group harmless
      from any loss, cost, expense, or liability, and reasonable attorneys fees
      incurred by the Lender Group arising out of or in connection with any Letter
      of
      Credit; provided,
      however,
      that
      Borrower shall not be obligated hereunder to indemnify for any loss, cost,
      expense, or liability to the extent that it is caused by the gross negligence
      or
      willful misconduct of the Issuing Lender or any other member of the Lender
      Group. Borrower agrees to be bound by the Underlying Issuer’s regulations and
      interpretations of any Underlying Letter of Credit or by Issuing Lender’s
      interpretations of any L/C issued by Issuing Lender to or for Borrower’s
      account, even though this interpretation may be different from Borrower’s own,
      and Borrower understands and agrees that no member of the Lender Group shall
      be
      liable for any error, negligence, or mistake, whether of omission or commission
      (except, as to any member of the Lender Group, to the extent caused by its
      gross
      negligence or willful misconduct), in following Borrower’s instructions or those
      contained in the Letter of Credit or any modifications, amendments, or
      supplements thereto. Borrower understands that the L/C Undertakings may require
      Issuing Lender to indemnify the Underlying Issuer for certain costs or
      liabilities arising out of claims by Borrower against such Underlying Issuer.
      Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group
      harmless with respect to any loss, cost, expense (including reasonable attorneys
      fees), or liability incurred by the Lender Group under any L/C Undertaking
      as a
      result of the Lender Group’s indemnification of any Underlying Issuer;
provided,
      however,
      that
      Borrower shall not be obligated hereunder to indemnify for any loss, cost,
      expense, or liability to the extent that it is caused by the gross negligence
      or
      willful misconduct of the Issuing Lender or any other member of the Lender
      Group.

    
      
        
        

      

      
        -62-

        
          

        

      

      
        
        

      

    

     

    (d) Borrower
      hereby authorizes and directs any Underlying Issuer to deliver to the Issuing
      Lender all instruments, documents, and other writings and property received
      by
      such Underlying Issuer pursuant to such Underlying Letter of Credit and to
      accept and rely upon the Issuing Lender’s instructions with respect to all
      matters arising in connection with such Underlying Letter of Credit and the
      related application. 

     

    (e) Any
      and
      all charges, commissions, fees, and costs incurred by the Issuing Lender
      relating to Underlying Letters of Credit shall be Lender Group Expenses for
      purposes of this Agreement and immediately shall be reimbursable by Borrower
      to
      Agent for the account of the Issuing Lender; it being acknowledged and agreed
      by
      Borrower that the Underlying Issuer also imposes a schedule of charges for
      amendments, extensions, drawings, and renewals. 

     

    (f) If
      by
      reason of (i) any change after the Closing Date in any applicable law, treaty,
      rule, or regulation or any change in the interpretation or application thereof
      by any Governmental Authority, or (ii) compliance by the Underlying Issuer
      or
      the Lender Group with any direction, request, or requirement (irrespective
      of
      whether having the force of law) of any Governmental Authority or monetary
      authority including, Regulation D of the Federal Reserve Board as from time
      to
      time in effect (and any successor thereto):

     

    (i) any
      reserve, deposit, or similar requirement is or shall be imposed or modified
      in
      respect of any Letter of Credit issued hereunder, or

     

    (ii) there
      shall be imposed on the Underlying Issuer or the Lender Group any other
      condition regarding any Underlying Letter of Credit or any Letter of Credit
      issued pursuant hereto,

     

    and
      the
      result of the foregoing is to increase, directly or indirectly, the cost to
      the
      Lender Group of issuing, making, guaranteeing, or maintaining any Letter of
      Credit or to reduce the amount receivable in respect thereof by the Lender
      Group, then, and in any such case, Agent may, at any time within a reasonable
      period after the additional cost is incurred or the amount received is reduced,
      notify Borrower, and Borrower shall pay on demand such amounts as Agent may
      specify to be necessary to compensate the Lender Group for such additional
      cost
      or reduced receipt, together with interest on such amount from the date of
      such
      demand until payment in full thereof at the rate then applicable to Base Rate
      Loans hereunder. The determination by Agent of any amount due pursuant to this
      Section, as set forth in a certificate setting forth the calculation thereof
      in
      reasonable detail, shall, in the absence of manifest or demonstrable error,
      be
      final and conclusive and binding on all of the parties hereto.

    
      
        
        

      

      
        -63-

        
          

        

      

      
        
        

      

    

     

    (g) Borrower
      acknowledges and agrees that certain of the Qualified Import Letters of Credit
      may provide for the presentation of time drafts to the Underlying Issuer. If
      an
      Underlying Issuer accepts such a time draft that is presented under an
      Underlying Letter of Credit, it is acknowledged and agreed that (i) the
      Letter of Credit will require the Issuing Lender to reimburse the Underlying
      Issuer for amounts paid on account of such time draft on or after the maturity
      date thereof, (ii) the pricing provisions hereof (including Sections
      2.6(b)
      and
      2.12(e))
      shall
      continue to apply, until payment of such time draft on or after the maturity
      date thereof, as if the Underlying Letter of Credit were still outstanding,
      and
      (iii) on the date on which Issuing Lender makes payment to the Underlying
      Issuer of the amounts paid on account of such time draft, Borrower immediately
      shall reimburse such amount to Issuing Lender and such amount shall constitute
      an L/C Disbursement hereunder.

     

    2.13 LIBOR
      Option.

     

    (a) Interest
      and Interest Payment Dates.
      In lieu
      of having interest charged at the rate based upon the Base Rate, Borrower shall
      have the option (the “LIBOR
      Option”)
      to
      have interest on all or a portion of the Advances be charged at a rate of
      interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall be
      payable on the earliest of (i) the last day of the Interest Period applicable
      thereto, (ii) the date that is one month after the commencement of the
      applicable Interest Period, (iii) the occurrence of an Event of Default in
      consequence of which the Required Lenders or Agent on behalf thereof elect
      to
      accelerate the maturity of all or any portion of the Obligations, or (iv)
      termination of this Agreement pursuant to the terms hereof. On the last day
      of
      each applicable Interest Period in respect of a LIBOR Rate Loan, unless Borrower
      properly has exercised the LIBOR Option with respect thereto, the interest
      rate
      applicable to such LIBOR Rate Loan automatically shall convert to the rate
      of
      interest then applicable to Base Rate Loans of the same type hereunder. At
      any
      time that an Event of Default has occurred and is continuing, Borrower no longer
      shall have the option to request that Advances bear interest at the LIBOR Rate
      and Agent shall have the right to convert the interest rate on all outstanding
      LIBOR Rate Loans to the rate then applicable to Base Rate Loans
      hereunder.

     

    (b) LIBOR
      Election.

     

    (i) Borrower
      may, at any time and from time to time, so long as no Event of Default has
      occurred and is continuing, elect to exercise the LIBOR Option by notifying
      Agent prior to 2:00 p.m. (New York time) at least 3 Business Days prior to
      the
      commencement of the proposed Interest Period (the “LIBOR
      Deadline”).
      Notice of Borrower’s election of the LIBOR Option for a permitted portion of the
      Advances and an Interest Period pursuant to this Section shall be made by
      delivery to Agent of a LIBOR Notice received by Agent before the LIBOR Deadline,
      or by telephonic notice received by Agent before the LIBOR Deadline (to be
      confirmed by delivery to Agent of a LIBOR Notice received by Agent prior to
      5:00 p.m. (New York time) on the same day). Promptly upon its receipt of
      each such LIBOR Notice, Agent shall provide a copy thereof to each of the
      Lenders having a Revolver Commitment.

    
      
        
        

      

      
        -64-

        
          

        

      

      
        
        

      

    

     

    (ii) Each
      LIBOR Notice shall be irrevocable and binding on Borrower. In connection with
      each LIBOR Rate Loan, Borrower shall indemnify, defend, and hold Agent and
      the
      Lenders harmless against any loss, cost, or expense incurred by Agent or any
      Lender as a result of (a) the payment of any principal of any LIBOR Rate Loan
      other than on the last day of an Interest Period applicable thereto (including
      as a result of an Event of Default), (b) the conversion of any LIBOR Rate Loan
      other than on the last day of the Interest Period applicable thereto, or (c)
      the
      failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date
      specified in any LIBOR Notice delivered pursuant hereto (such losses, costs,
      and
      expenses, collectively, “Funding
      Losses”).
      Funding Losses shall, with respect to Agent or any Lender, be deemed to equal
      the amount determined by Agent or such Lender to be the excess, if any, of
      (i)
      the amount of interest that would have accrued on the principal amount of such
      LIBOR Rate Loan had such event not occurred, at the LIBOR Rate that would have
      been applicable thereto, for the period from the date of such event to the
      last
      day of the then current Interest Period therefor (or, in the case of a failure
      to borrow, convert, or continue, for the period that would have been the
      Interest Period therefor), minus
      (ii)
      the
      amount of interest that would accrue on such principal amount for such period
      at
      the interest rate which Agent or such Lender would be offered were it to be
      offered, at the commencement of such period, Dollar deposits of a comparable
      amount and period in the London interbank market. A certificate of Agent or
      a
      Lender delivered to Borrower setting forth any amount or amounts that Agent
      or
      such Lender is entitled to receive pursuant to this Section
      2.13
      shall be
      conclusive absent manifest error.

     

    (iii) Borrower
      shall have not more than 15 LIBOR Rate Loans in effect at any given time.
      Borrower only may exercise the LIBOR Option for LIBOR Rate Loans of at least
      $1,000,000 and integral multiples of $500,000 in excess thereof. 

     

    (c) Prepayments.
      Borrower
      may prepay LIBOR Rate Loans at any time; provided,
      however,
      that in
      the event that LIBOR Rate Loans are prepaid on any date that is not the last
      day
      of the Interest Period applicable thereto, including as a result of any
      automatic prepayment through the required application by Agent of proceeds
      of
      each Credit Party’s Collections in accordance with Section
      2.4(b)
      or for
      any other reason, including early termination of the term of this Agreement
      or
      acceleration of all or any portion of the Obligations pursuant to the terms
      hereof, Borrower shall indemnify, defend, and hold Agent and the Lenders and
      their Participants harmless against any and all Funding Losses in accordance
      with clause (b)(ii) above.

    
      
        
        

      

      
        -65-

        
          

        

      

      
        
        

      

    

     

    (d) Special
      Provisions Applicable to LIBOR Rate.

     

    (i) The
      LIBOR
      Rate may be adjusted by Agent with respect to any Lender on a prospective basis
      to take into account any additional or increased costs to such Lender of
      maintaining or obtaining any eurodollar deposits or increased costs due to
      changes in applicable law occurring subsequent to the commencement of the then
      applicable Interest Period, including changes in tax laws (except changes of
      general applicability in corporate income tax laws) and changes in the reserve
      requirements imposed by the Board of Governors of the Federal Reserve System
      (or
      any successor), excluding the Reserve Percentage, which additional or increased
      costs would increase the cost of funding loans bearing interest at the LIBOR
      Rate. In any such event, the affected Lender shall give Borrower and Agent
      notice of such a determination and adjustment and Agent promptly shall transmit
      the notice to each other Lender and, upon its receipt of the notice from the
      affected Lender, Borrower may, by notice to such affected Lender (y) require
      such Lender to furnish to Borrower a statement setting forth the basis for
      adjusting such LIBOR Rate and the method for determining the amount of such
      adjustment, or (z) repay the LIBOR Rate Loans with respect to which such
      adjustment is made (together with any amounts due under clause (b)(ii)
      above).

     

    (ii) In
      the
      event that any change in market conditions or any law, regulation, treaty,
      or
      directive, or any change therein or in the interpretation of application
      thereof, shall at any time after the date hereof, in the reasonable opinion
      of
      any Lender, make it unlawful or impractical for such Lender to fund or maintain
      LIBOR Advances or to continue such funding or maintaining, or to determine
      or
      charge interest rates at the LIBOR Rate, such Lender shall give notice of such
      changed circumstances to Agent and Borrower and Agent promptly shall transmit
      the notice to each other Lender and (y) in the case of any LIBOR Rate Loans
      of
      such Lender that are outstanding, the date specified in such Lender’s notice
      shall be deemed to be the last day of the Interest Period of such LIBOR Rate
      Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter shall
      accrue interest at the rate then applicable to Base Rate Loans, and (z) Borrower
      shall not be entitled to elect the LIBOR Option until such Lender determines
      that it would no longer be unlawful or impractical to do so. Each Lender at
      such
      time having as its lending office an office outside the United States agrees
      to
      use reasonable efforts to designate a different lending office if such
      designation will avoid the need for such a notice of changed circumstances
      and
      would not, in the good faith judgment of such Lender, otherwise be
      disadvantageous to such Lender.

    
      
        
        

      

      
        -66-

        
          

        

      

      
        
        

      

    

     

    (e) No
      Requirement of Matched Funding.
      Anything
      to the contrary contained herein notwithstanding, neither Agent, nor any Lender,
      nor any of their Participants, is required actually to acquire eurodollar
      deposits to fund or otherwise match fund any Obligation as to which interest
      accrues at the LIBOR Rate. The provisions of this Section shall apply as if
      each
      Lender or its Participants had match funded any Obligation as to which interest
      is accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest
      Period in the amount of the LIBOR Rate Loans.

     

    2.14 Capital Requirements.
      If,
      after the date hereof, any Lender determines that (i) the adoption of or change
      in any law, rule, regulation or guideline regarding capital requirements for
      banks or bank holding companies, or any change in the interpretation or
      application thereof by any Governmental Authority charged with the
      administration thereof, or (ii) compliance by such Lender or its parent bank
      holding company with any guideline, request, or directive of any such entity
      regarding capital adequacy (whether or not having the force of law), has the
      effect of reducing the return on such Lender’s or such holding company’s capital
      as a consequence of such Lender’s Commitments hereunder to a level below that
      which such Lender or such holding company could have achieved but for such
      adoption, change, or compliance (taking into consideration such Lender’s or such
      holding company’s then existing policies with respect to capital adequacy and
      assuming the full utilization of such entity’s capital) by any amount deemed by
      such Lender to be material, then such Lender may notify Borrower and Agent
      thereof. Following receipt of such notice, Borrower agrees to pay such Lender
      on
      demand the amount of such reduction of return of capital as and when such
      reduction is determined, payable within 90 days after presentation by such
      Lender of a statement in the amount and setting forth in reasonable detail
      such
      Lender’s calculation thereof and the assumptions upon which such calculation was
      based (which statement shall be deemed true and correct absent manifest error).
      Notwithstanding anything to the contrary in this Section, Borrower will not
      be
      required to compensate any Lender pursuant to this Section for any reduction
      incurred more than 270 days before such Lender notified Borrower of the change
      in law (or other circumstance) giving rise to such reduction. In determining
      such amount, such Lender may use any reasonable averaging and attribution
      methods.

     

    
      	
              3.

            	
              CONDITIONS;
                TERM OF AGREEMENT.

            

    

     

    3.1 Conditions
      Precedent to the Initial Extension of Credit.
      The
      obligation of the Lender Group (or any member thereof) to make the initial
      Advance (or otherwise to extend any credit provided for hereunder), is subject
      to the fulfillment, to the satisfaction of Agent in its Permitted Discretion,
      of
      each of the conditions precedent set forth below:

     

    (a) the
      Closing Date shall occur on or before August 17, 2007;

    
      
        
        

      

      
        -67-

        
          

        

      

      
        
        

      

    

     

    (b) Agent
      shall have received appropriate financing statements on Form UCC-1 duly filed
      in
      such office or offices as may be necessary or, in the opinion of Agent,
      desirable to perfect the Agent’s Liens in and to the Collateral, and Agent shall
      have received searches reflecting the filing of all such financing
      statements;

     

    (c) Agent
      shall have received each of the following documents, in form and substance
      satisfactory to Agent in its Permitted Discretion, duly executed, and each
      such
      document shall be in full force and effect:

     

    (i) the
      Disbursement Letter;

     

    (ii) the
      Compliance Certificate;

     

    (iii) the
      Fee
      Letter;

     

    (iv) the
      Post-Closing Agreement; 

     

    (v) the
      Intercreditor Agreement; and

     

    (i) the
      Pledge and Security Agreement, together with each of the following, except
      in
      each case as set forth in the Post Closing Agreement:

     

    (A) evidence
      reasonably satisfactory to the Agent that, upon the filing and recording of
      instruments delivered on or before the Closing Date, the Agent, for the benefit
      of the Secured Parties (as defined in the Pledge and Security Agreement) shall
      have a valid and perfected security interest (having the priority set forth
      in
      the Intercreditor Agreement) in the Collateral, including (x) the filing of
      financing statements under the Code (y) copies of search reports as of a recent
      date listing all effective financing statements that name any Credit Party
      as
      debtor, together with copies of such financing statements, none of which shall
      cover the Collateral except for those that shall be terminated on the Closing
      Date or are otherwise permitted hereunder and (z) such other such documents
      duly
      executed by each Credit Party as the Agent may reasonably request with respect
      to the perfection of its security interests in the Collateral (including patent,
      trademark and copyright security agreements suitable for filing with the Patent
      and Trademark Office or the Copyright Office, as the case may be, and other
      applicable documents under the laws of any jurisdiction with respect to the
      perfection of Liens created by the Pledge and Security Agreement);

     

    (B) to
      the
      extent delivered to the Term Agent in connection with the Term Loan Agreement
      on
      the Closing Date or within such other time period as provided therein, copies
      of
      all certificates, instruments and other documents representing all Pledged
      Stock
      being pledged to the Term Agent and copies stock powers for such certificates,
      instruments and other documents executed in blank;

    
      
        
        

      

      
        -68-

        
          

        

      

      
        
        

      

    

     

    (C) all
      Deposit Account Control Agreements, duly executed by the corresponding Deposit
      Account Bank and the applicable Credit Party; and

     

    (D) all
      Securities Account Control Agreements, duly executed by the applicable Credit
      Party and (1) all “securities intermediaries” (as defined in the Code) with
      respect to all Securities Accounts (as defined in the Code) and securities
      entitlements of the Borrower and each Guarantor and (2) all “commodities
      intermediaries” (as defined in the UCC) with respect to all commodities
      contracts and commodities accounts held by the Borrower and each
      Guarantor;

     

    (d) Mortgages
      for all of the Real Property of the Credit Parties (except as may be agreed
      to
      by the Agent) identified on Schedule
      3.1(d),
      together with all Mortgage Supporting Documents relating thereto;

     

    (e) Agent
      shall have received a certificate from the Secretary of each Credit Party
      attesting to the resolutions of such Credit Party’s Board of Directors (after
      giving effect to the Merger) authorizing its execution, delivery, and
      performance of this Agreement and the other Loan Documents to which such Credit
      Party is a party and authorizing specific officers of such Credit Party to
      execute the same;

     

    (f) Agent
      shall have received a certificate of insurance, together with the endorsements
      thereto, as are required by Section
      6.7,
      the
      form and substance of which shall be satisfactory to Agent in its Permitted
      Discretion;

     

    (g) Agent
      shall have received opinions of counsel, including certain local counsel in
      such
      jurisdictions as required by Agent, for the Credit Parties, each in form and
      substance satisfactory to Agent in its Permitted Discretion;

     

    (h) Borrower
      shall have delivered a Borrowing Base Certificate, dated as of the Closing
      Date
      based on the most recent completed fiscal month, and Borrower shall have the
      Required Closing Availability after giving effect to the initial extensions
      of
      credit hereunder and the payment of all fees and expenses required to be paid
      by
      Borrower on the Closing Date under this Agreement or the other Loan
      Documents;

     

    (i) Borrower
      shall have paid all documented Lender Group Expenses incurred in connection
      with
      the transactions evidenced by this Agreement; provided that Agent shall have
      given notice to Borrower at least two days prior to the Closing Date with
      respect thereto; 

    
      
        
        

      

      
        -69-

        
          

        

      

      
        
        

      

    

     

    (j) each
      Credit Party shall have received all licenses, approvals or evidence of other
      actions required by any material Governmental Authority in connection with
      the
      execution and delivery by each such Credit Party of the Loan Documents or with
      the consummation of the transactions contemplated thereby, and
      all applicable governmental filings have been made and all applicable waiting
      periods shall have expired without, in either case, any action being taken
      by
      any competent authority, all applicable appeal periods shall have expired and
      there shall be no action by any Governmental Authority that would reasonably
      be
      expected to restrain, prevent or impose burdensome conditions on such
      Transactions;

     

    (k) all
      other
      documents and legal matters required in connection with the transactions
      contemplated by this Agreement shall have been delivered, executed, or recorded
      and shall be in form and substance satisfactory to Agent in its Permitted
      Discretion;

     

    (l) Agent
      shall have received the Borrower's Closing Date Business Plan;

     

    (m) the
      representations and warranties contained in Article V shall be true and complete
      in all material respects;

     

    (n) there
      shall not have occurred any Material Adverse Effect, as such term is defined
      in
      the Merger Agreement, since May 22, 2007;

     

    (o) The
      Merger and related Transactions shall have been consummated or shall be
      consummated simultaneously with or immediately following the Closing Date
      without any waiver, amendment or modification of, or condition set forth in,
      the
      Transaction Documents except (i) with the prior written consent, not to be
      unreasonably withheld, of the Agent or (ii) for waivers, amendments or
      modifications that do not, individually or in the aggregate, materially and
      adversely affect the interests of the Lenders;

     

    (p) The
      Lenders shall have received from each of the Borrower and the Target (for
      purposes of this subparagraph (o), each an “Applicable
      Party”)
      a consolidated balance sheet as of the end of the most recently ended fiscal
      quarter (for which quarter such Applicable Party has publicly filed financial
      information with the Securities and Exchange Commission) and related statements
      of income and cash flows of such Applicable Party and its subsidiaries for
      the
      most recently ended fiscal year and the interim period thereafter (for which
      year and interim period such Applicable Party has publicly filed financial
      information with the Securities and Exchange Commission) and the trailing four
      quarters ended on the last day of such interim period (such statements to
      present, (x) in the case of the Target and its subsidiaries, their actual
      financial position and (y) in the case of the Borrower and its Subsidiaries,
      their pro
      forma
      financial position after giving effect to each of the Transactions), together
      with a certificate of the chief financial officer of such Applicable Party
      to
      the effect that such statements accurately present such actual or pro
      forma
      financial position, as applicable, of such Applicable Party and its subsidiaries
      in accordance with GAAP and Regulation S-X. 

    
      
        
        

      

      
        -70-

        
          

        

      

      
        
        

      

    

     

    3.2 
      [Intentionally Omitted]

    

     

    3.3 Conditions
      Precedent to all Extensions of Credit.
      The
      obligation of the Lender Group (or any member thereof) to make any Advances
      hereunder at any time (or to extend any other credit hereunder) shall be subject
      to the following conditions precedent:

     

    (a) the
      representations and warranties contained in this Agreement and the other Loan
      Documents shall be true and correct in all material respects on and as of the
      date of such extension of credit, as though made on and as of such date (except
      to the extent that such representations and warranties relate solely to an
      earlier date or as otherwise specified therein);

     

    (b)  no
      Event of Default shall have occurred and be continuing on the date of such
      extension of credit, nor shall either result from the making thereof;

     

    (c) no
      injunction, writ, restraining order, or other order of any nature restricting
      or
      prohibiting, directly or indirectly, the extending of such credit shall have
      been issued and remain in force by any Governmental Authority against any Credit
      Party, Agent, any Lender, or any of their Affiliates; and 

     

    (d) no
      Material Adverse Change shall have occurred.

     

    3.4 Term.
      This
      Agreement shall continue in full force and effect for a term ending on August
      17, 2012 (the “Maturity
      Date”).
      The
      foregoing notwithstanding, the Lender Group, upon the election of the Required
      Lenders, shall have the right to terminate its obligations under this Agreement
      immediately and without notice upon the occurrence and during the continuation
      of an Event of Default.

     

    3.5 Effect
      of Termination.
      On the
      date of termination of this Agreement, all Obligations (including contingent
      reimbursement obligations of Borrower with respect to outstanding Letters of
      Credit and including all other Obligations) immediately shall become due and
      payable without notice or demand (including either (i) providing cash collateral
      to be held by Agent for the benefit of those Lenders with a Revolver Commitment
      in an amount equal to 105% of the then extant Letter of Credit Usage, or (ii)
      causing the original Letters of Credit to be returned to the Issuing Lender.
      No
      termination of this Agreement, however, shall relieve or discharge any Credit
      Party of its duties, Obligations, or covenants hereunder and the Agent’s Liens
      in the Collateral shall remain in effect until all Obligations have been paid
      in
      full (including by the provision of cash collateral set forth above) and the
      Lender Group’s obligations to provide additional credit hereunder have been
      terminated. When this Agreement has been terminated and all of the Obligations
      have been paid in full (including by the provision of cash collateral set forth
      above) and the Lender Group’s obligations to provide additional credit under the
      Loan Documents have been terminated irrevocably, Agent will, at Borrower’s sole
      expense, execute and deliver any pay-off letter, UCC termination statements,
      lien releases, mortgage releases, re-assignments of trademarks, discharges
      of
      security interests, and other similar discharge or release documents (and,
      if
      applicable, in recordable form) as are reasonably necessary to release, as
      of
      record, the Agent’s Liens and all notices of security interests and liens
      previously filed by Agent with respect to the Obligations. 

    
      
        
        

      

      
        -71-

        
          

        

      

      
        
        

      

    

     

    3.6 Early
      Termination by Borrower.
      Borrower has the option, at any time upon 5 Business Days prior written notice
      to Agent, to (A) permanently reduce the Revolver Commitment in the minimum
      amount of $1,000,000 and integral multiples of $500,000 in excess thereof and
      (B) terminate this Agreement in its entirety by paying to Agent, in cash, the
      Obligations (including either (i) providing cash collateral to be held by Agent
      for the benefit of those Lenders with a Revolver Commitment in an amount equal
      to 105% of the then extant Letter of Credit Usage, or (ii) causing the original
      Letters of Credit to be returned to the Issuing Lender. If Borrower has sent
      a
      notice of termination pursuant to the provisions of this Section, then the
      Commitments shall terminate and Borrower shall be obligated to repay the
      Obligations (including either (i) providing cash collateral to be held by Agent
      for the benefit of those Lenders with a Revolver Commitment in an amount equal
      to 105% of the then extant Letter of Credit Usage, or (ii) causing the original
      Letters of Credit to be returned to the Issuing Lender, on the date set forth
      as
      the date of termination of this Agreement in such notice. 

     

    
      	
              4.

            	
              [INTENTIONALLY
                OMITTED]. 

            

    

     

    
      	
              5.

            	
              REPRESENTATIONS
                AND WARRANTIES.

            

    

     

    In
      order
      to induce the Lender Group to enter into this Agreement, each Credit Party
      jointly and severally makes the following representations and warranties to
      the
      Lender Group which shall be true, correct, and complete, in all material
      respects, as of the date hereof, and shall be true, correct, and complete,
      in
      all material respects, as of the Closing Date, and at and as of the date of
      the
      making of each Advance (or other extension of credit) made thereafter, as though
      made on and as of the date of such Advance (or other extension of credit)
      (except to the extent that such representations and warranties relate solely
      to
      an earlier date) and such representations and warranties shall survive the
      execution and delivery of this Agreement:

     

    5.1 No
      Encumbrances.
      Except
      as disclosed on Schedule
      P-1
      hereto,
      each Credit Party has good and indefeasible title to its personal property
      assets and good and marketable title to its owned Real Property (subject to
      exceptions that do not, in the aggregate, materially impair the use of the
      personal property and Real Property of the Credit Parties taken as a whole),
      and
      in the case of the Collateral, free and clear of Liens except for Permitted
      Liens.

    
      
        
        

      

      
        -72-

        
          

        

      

      
        
        

      

    

     

    5.2 Eligible
      Accounts.
      The
      Eligible Accounts are bona
      fide
      existing
      payment obligations of Account Debtors created by the sale and delivery of
      Inventory or the rendition of services in the ordinary course of each Credit
      Party’s business, owed to such Credit Party without any known defenses,
      disputes, offsets, counterclaims, or rights of return or cancellation, except
      where the existence of such defenses, disputes, offsets, counterclaims, or
      rights of return or cancellation would not cause a Material Adverse Change.
      As
      to each Account that is identified by Borrower as an Eligible Account in a
      borrowing base report submitted to Agent, to the knowledge of Borrower, each
      such Account is not excluded as ineligible by virtue of one or more of the
      excluding criteria set forth in the definition of Eligible
      Accounts.

     

    5.3 Eligible
      Inventory .
      All
      Eligible Inventory is of good and merchantable quality, free from known defects,
      except where the existence of such defects would not cause a Material Adverse
      Change. As to each item of Inventory that is identified by Borrower as Eligible
      Inventory in a Borrowing Base Certificate submitted to Agent, to the knowledge
      of Borrower, such Inventory is not excluded as ineligible by virtue of one
      or
      more of the excluding criteria set forth in the definition of Eligible
      Inventory.

     

    5.4 Location
      of Inventory.
      All
      Eligible Inventory of each Credit Party is located only at, or in-transit
      between (or with respect to Eligible In-Transit Inventory which has been shipped
      from a location outside of the United States, in transit to), the locations
      identified on Schedule
      5.4
      (as such
      Schedule may be updated pursuant to Sections
      6.8
      and
6.13)
      other
      than Inventory located at any Pool Location and Inventory, the value of which,
      in the aggregate, does not exceed $1,000,000. Schedule
      5.4
      separately identifies each Leased Store Location and each Non-Owned Storage
      Facility.

     

    5.5 Inventory
      Records.
      Borrower keeps materially correct and accurate records itemizing and describing
      the type, quality, and quantity of its consolidated Inventory and the book
      value
      thereof. 

     

    5.6 State
      of Incorporation; Location of Chief Executive Office; FEIN; Organizational
      ID
      Number.
      (a) The
      jurisdiction of organization of each Credit Party is set forth on Schedule
      5.6(a).
      

     

    (b)
      The
      chief executive office of each Credit Party is located at the address indicated
      on Schedule
      5.6(b)
      (as such
      Schedule may be updated pursuant to Section
      6.7).
      

     

    (c)
      Each
      Credit Party’s FEIN and organizational identification number, if any, are
      identified on Schedule
      5.6(c).

     

    5.7 Due
      Organization and Qualification; Subsidiaries.
      

    
      
        
        

      

      
        -73-

        
          

        

      

      
        
        

      

    

    (a) Except
      as
      described in the Post-Closing Agreement, each Credit Party is duly organized
      and
      existing and in good standing under the laws of the jurisdiction of its
      organization and qualified to do business in any state where the failure to
      be
      so qualified reasonably could be expected to have a Material Adverse Change.
      

     

    (b) 
      As of
      the Closing Date, other than as described on Schedule
      5.7(b),
      and
      except for employee stock options, there are no subscriptions, options,
      warrants, or calls relating to any shares of any Credit Party’s capital Stock,
      including any right of conversion or exchange under any outstanding security
      or
      other instrument. Except as set forth on Schedule
      5.7(b),
      as of
      the Closing Date, no Credit Party is subject to any obligation (contingent
      or
      otherwise) to repurchase or otherwise acquire or retire any shares of its
      capital Stock or any security convertible into or exchangeable for any of its
      capital Stock.

     

    (c) Set
      forth
      on Schedule
      5.7(c),
      is a
      complete and accurate list of each Credit Party’s direct and indirect
      Subsidiaries, as of the Closing Date, showing: (i) with respect to all
      Subsidiaries other than Excluded Subsidiaries and Unrestricted Subsidiaries,
      (A)
      the jurisdiction of their organization, (B) the number of shares of each class
      of common and preferred Stock authorized for each Credit Party, and (C) the
      percentage of the outstanding shares of each such class owned directly or
      indirectly by such Credit Party and (ii) with respect to all Excluded
      Subsidiaries and Unrestricted Subsidiaries, (x) the jurisdiction of their
      organization and (y) the percentage of Stock owned directly or indirectly by
      any
      Credit Party in such Excluded Subsidiaries. All of the outstanding capital
      Stock
      of each such Restricted Subsidiary has been validly issued and is fully paid
      and
      non-assessable.

     

    5.8 Due
      Authorization; No Conflict.

    (a) The
      execution, delivery, and performance by each Credit Party of this Agreement
      and
      the Loan Documents to which it is a party have been duly authorized by all
      necessary action on the part of such Credit Party.

     

    (b) The
      execution, delivery, and performance by each Credit Party of this Agreement
      and
      the other Loan Documents to which it is a party do not and will not
      (i) violate any provision of federal, state, or local law or regulation
      applicable to such Credit Party, the Governing Documents of such Credit Party,
      or any order, judgment, or decree of any court or other Governmental Authority
      binding on such Credit Party, (ii) conflict with, result in a breach of, or
      constitute (with due notice or lapse of time or both) a default under any
      material contractual obligation of such Credit Party, including, without
      limitation, the Indenture or Senior Subordinated Notes, (iii) result in or
      require the creation or imposition of any Lien of any nature whatsoever upon
      any
      properties or assets of such Credit Party, other than Permitted Liens, or
      (iv) require any approval of such Credit Party’s equity holders or any
      approval or consent of any Person under any material contractual obligation
      of
      such Credit Party, other than consents or approvals that have been obtained
      and
      that are still in force and effect, unless such violation, imposition of Lien
      or
      failure to obtain approval or consent would not reasonably be expected to result
      in a Material Adverse Change.

    
      
        
        

      

      
        -74-

        
          

        

      

      
        
        

      

    

     

    (c) Other
      than the filing of financing statements, the execution, delivery, and
      performance by each Credit Party of this Agreement and the other Loan Documents
      to which each such Credit Party is a party do not and will not require any
      registration with, consent, or approval of, or notice to, or other action with
      or by, any Governmental Authority, other than consents or approvals that have
      been obtained and that are still in force and effect.

     

    (d) This
      Agreement and the other Loan Documents to which each Credit Party is a party,
      and all other documents contemplated hereby and thereby, when executed and
      delivered by such Credit Party will be the legally valid and binding obligations
      of such Credit Party, enforceable against such Credit Party in accordance with
      their respective terms, except as may be limited by equitable principles or
      by
      bankruptcy, insolvency, reorganization, moratorium, or similar laws relating
      to
      or limiting creditors’ rights generally.

     

    (e) The
      Agent’s Liens are validly created, perfected, and first priority Liens, subject
      only to Permitted Liens.

     

    5.9  Litigation.
      Other
      than those matters disclosed on Schedule
      5.9,
      there
      are no actions, suits, or proceedings pending or, to the best knowledge of
      each
      Credit Party, threatened against any Credit Party, except for (a) matters that
      are fully covered by insurance (subject to customary deductibles), and (b)
      matters arising after the Closing Date that are not reasonably likely to be
      decided adversely to any Credit Party or, if decided adversely to any Credit
      Party, reasonably could not be expected to result in a Material Adverse Change.
      

     

    5.10 No
      Material Adverse Change.
      All
      financial statements relating to the Credit Parties that have been delivered
      by
      Borrower to the Lender Group have been prepared in accordance with GAAP (except,
      in the case of unaudited financial statements, for the lack of footnotes and
      being subject to year-end audit adjustments) and present fairly in all material
      respects, the financial condition of Parent and its Subsidiaries as of the
      date
      thereof and results of operations for the period then ended. There has not
      been
      a Material Adverse Change since the date of the latest financial statements
      submitted to the Lender Group on or before the Closing Date.

     

    5.11 Fraudulent
      Transfer

     

    (a) The
      Credit Parties taken as a whole are Solvent and each Material Credit Party
      is
      Solvent.

    
      
        
        

      

      
        -75-

        
          

        

      

      
        
        

      

    

     

    (b) No
      transfer of property is being made by any Credit Party and no obligation is
      being incurred by any Credit Party in connection with the transactions
      contemplated by this Agreement or the other Loan Documents with the intent
      to
      hinder, delay, or defraud either present or future creditors of any Credit
      Party.

     

    5.12 Employee
      Benefits.
      As of
      the date hereof, no Credit Party or any of their ERISA Affiliates maintains
      or
      contributes to any Benefit Plan other than as listed on Schedule
      5.12
      hereto.

     

    5.13 Environmental
      Condition.
      Except
      for matters described on Schedule
      5.13
      hereto
      and except for other matters that would not reasonably be expected to result
      in
      a Material Adverse Change, (a) to each Credit Party’s knowledge, no owned Real
      Property of any Credit Party has ever been used by any Credit Party or by
      previous owners or operators in the disposal of, or to produce, store, handle,
      treat, release, or transport, any Hazardous Materials, where such production,
      storage, handling, treatment, release or transport was in violation of
      applicable Environmental Law, (b) to each Credit Party’s knowledge, no Credit
      Party’s owned Real Property has ever been designated or identified in any manner
      pursuant to any environmental protection statute as a Hazardous Materials
      disposal site, (c) no Credit Party has received notice that a Lien arising
      under
      any Environmental Law has attached to any revenues or to any Real Property
      owned
      or operated by any Credit Party, and (d) no Credit Party has received a summons,
      citation, notice, or directive from the U.S. Environmental Protection Agency
      or
      any other federal or state governmental agency concerning any action or omission
      by any Credit Party resulting in the releasing or disposing of Hazardous
      Materials into the environment in violation of any applicable Environmental
      Law.

     

    5.14 Investment
      Company Act.
      No
      Group Member 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, as
      amended.

     

    5.15 Intellectual
      Property.
      Except
      as disclosed on Schedule
      5.15
      hereto,
      each Credit Party owns, or holds licenses in, all trademarks, trade names,
      copyrights, patents, patent rights, and licenses that are necessary to the
      conduct of the business of the Credit Parties, taken as a whole, as currently
      conducted, except where the failure to do so, in the aggregate, would not result
      in a Material Adverse Change. 

     

    5.16 Leases.
      Except
      where the failure to do so would not cause a Material Adverse Change, each
      Credit Party enjoys peaceful and undisturbed possession under all leases
      material to its business and to which it is a party or under which it is
      operating. Except to the extent that such default would not cause a Material
      Adverse Change, all of such leases are valid and subsisting and no material
      default by any Credit Party exists under any of them.

     

    5.17 Deposit
      Accounts.
      Set
      forth on Schedule
      5.17
      are all
      of each Credit Party’s Deposit Accounts at which the Collateral is or may be
      held, including, with respect to each bank (i) the name and address of such
      Person, and (ii) the account numbers of the Deposit Accounts maintained with
      such Person. Schedule
      5.17
      separately identifies each Concentration Account, Consolidated Store Deposit
      Account, Individual Store Account and the Home Office Account.

    
      
        
        

      

      
        -76-

        
          

        

      

      
        
        

      

    

     

    5.18 Complete
      Disclosure.
      All
      factual information (taken as a whole) furnished by or on behalf of any Credit
      Party in writing to Agent or any Lender (including all information contained
      in
      the Schedules hereto or in the other Loan Documents) for purposes of or in
      connection with this Agreement, the other Loan Documents, or any transaction
      contemplated herein or therein is, and all other such factual information (taken
      as a whole) hereafter furnished by or on behalf of any Credit Party in writing
      to Agent or any Lender will be, true and accurate, in all material respects,
      on
      the date as of which such information is dated or certified and not incomplete
      by omitting to state any fact necessary to make such information (taken as
      a
      whole) not misleading in any material respect at such time in light of the
      circumstances under which such information was provided. On the Closing Date,
      the Closing Date Business Plan represents, and as of the date on which any
      other
      Projections are delivered to Agent, such additional Projections represent each
      Credit Party’s good faith best estimate of its future performance for the
      periods covered thereby, it being understood that such projections as to future
      events are not to be viewed as facts and that actual results during the period
      or periods covered by any projections may differ from the projected results
      and
      no assurance can be given that the Projections will be realized.

     

    5.19 Indebtedness.
      Set
      forth on Schedule
      5.19
      is a
      true and complete list of all Indebtedness of each Credit Party outstanding
      immediately prior to the Closing Date that is to remain outstanding after the
      Closing Date and such Schedule accurately reflects the aggregate principal
      amount of such Indebtedness (other than Indebtedness of any Credit Party owing
      to any other Credit Party).

     

    5.20 Credit
      Card Receipts.
      Schedule
      5.20
      sets
      forth each Credit Party’s Credit Card Processors and all material arrangements
      to which any Credit Party is a party with respect to the payment to any Credit
      Party of the proceeds of credit card charges for sales by such Credit
      Party.

     

    5.21 Margin
      Stock.
      No
      Credit Party is engaged in the business of extending credit for the purpose
      of
      purchasing or carrying margin stock (as defined in Regulation U of the Board
      of
      Governors of the Federal Reserve System), and no proceeds of any Advance or
      drawings under any Letter of Credit will be used to purchase or carry any margin
      stock or to extend credit to others for the purpose of purchasing or carrying
      any margin stock.

     

    5.22 Senior
      Debt.
      All
      Obligations hereunder constitute “Senior Debt” (as such term is defined in the
      Indenture) permitted under the Indenture and each of the Credit Parties
      acknowledge that Agent and each Lender are entering into this Agreement and
      are
      extending the Commitments in reliance on this Section
      5.22.

    
      
        
        

      

      
        -77-

        
          

        

      

      
        
        

      

    

     

    5.23 Anti-Terrorism
      Laws.
      

     

    (i) None
      of
      the Credit Parties or, to the knowledge of any of the Credit Parties, any of
      their Affiliates, is in violation of any laws relating to terrorism or money
      laundering (“Anti-Terrorism
      Laws”),
      including Executive Order No. 13224 on Terrorist Financing, effective
      September 24, 2001 (the “Executive
      Order”),
      and
      the Uniting and Strengthening America by Providing Appropriate Tools Required
      to
      Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56.

     

    (ii) No
      Credit
      Party or, to the knowledge of any of the Credit Parties, any of their Affiliates
      or their respective brokers or other agents acting or benefiting in any capacity
      in connection with the Obligations, is any of the following:

     

    (A) a
      Person
      or entity that is listed in the annex to, or is otherwise subject to the
      provisions of, the Executive Order;

     

    (B) a
      Person
      or entity owned or controlled by, or acting for or on behalf of, any Person
      or
      entity that is listed in the annex to, or is otherwise subject to the provisions
      of, the Executive Order;

     

    (C) a
      Person
      or entity with which any Lender is prohibited from dealing or otherwise engaging
      in any transaction by any Anti-Terrorism Law;

     

    (D) a
      Person
      or entity that commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order; or

     

    (E) a
      Person
      or entity that is named as a “specially designated national and blocked person”
on the most current list published by the U.S. Treasury Department Office of
      Foreign Asset Control at its official website or any replacement website or
      other replacement official publication of such list. 

     

    (iii) No
      Credit
      Party or to the knowledge of any Credit Party, any of its brokers or other
      agents acting in any capacity in connection with the Obligations (i) conducts
      any business or engages in making or receiving any contribution of funds, goods
      or services to or for the benefit of any Person described in clause (b) above,
      (ii) deals in, or otherwise engages in any transaction relating to, any property
      or interests in property blocked pursuant to the Executive Order, or (iii)
      engages in or conspires to engage in any transaction that evades or avoids,
      or
      has the purpose of evading or avoiding, or attempts to violate, any of the
      prohibitions set forth in any Anti-Terrorism Law.

    
      
        
        

      

      
        -78-

        
          

        

      

      
        
        

      

    

    

     

    5.24 Related
      Documents

     

    (a) The
      execution, delivery and performance by Borrower, Parent and each Restricted
      Subsidiary (collectively, the “Group
      Members”
      and each individually a “Group
      Member”)
      of the Related Documents to which it is a party and the consummation of the
      transactions contemplated thereby by such Group Member:

     

    (i) are
      within such Group Member’s respective corporate, limited liability company,
      partnership or other powers;

     

    (ii) on
      or
      prior to the Closing Date will have been duly authorized by all necessary
      corporate or other action, including the consent of stockholders where
      required;

     

    (iii) do
      not
      and will not (A) contravene or violate such Group Member’s Governing Documents,
      (B) violate any other Requirement of Law applicable to such Group Member, or
      any
      order or decree of any Governmental Authority or arbitrator, (C) conflict with
      or result in the breach of, constitute a default under, or result in or permit
      the termination or acceleration of, any Contractual Obligation of such Group
      Member, except for those that, in the aggregate, would not have a Material
      Adverse Effect or (D) result in the creation or imposition of any Lien upon
      any
      property of such Group Member (or any other Group Member) other than a Lien
      permitted under Section
      7.2;
      and

     

    (iv) do
      not
      require the consent of, authorization by, approval of, notice to, or filing
      or
      registration with, any Governmental Authority or any other Person, other than
      those that (A) will have been obtained at the Closing Date, each of which will
      be in full force and effect on the Closing Date, none of which will on the
      Closing Date impose materially adverse conditions upon the exercise of control
      by Borrower over any Group Members and (B) in the aggregate, if not obtained,
      would not have a Material Adverse Effect.

     

    (b) None
      of the Related Documents has been amended or modified in any respect and no
      provision therein has been waived, except in each case to the extent permitted
      by Section
      7.14.

     

    (c) The
      Obligations constitute “Senior Debt” as defined in the Subordinated Notes
      Indenture.

    
      
        
        

      

      
        -79-

        
          

        

      

      
        
        

      

    

     

    
      	
              6.

            	
              AFFIRMATIVE
                COVENANTS.

            

    

     

    Each
      Credit Party jointly and severally covenants and agrees that, until termination
      of all of the Commitments and payment in full of the Obligations, each Credit
      Party shall do all of the following:

     

    6.1 Accounting
      System.
      Maintain a system of accounting that enables the Parent and its Subsidiaries
      to
      produce consolidated financial statements in accordance with GAAP and maintain
      consolidated records pertaining to the Collateral that contain information
      as
      from time to time reasonably may be requested by Agent. Parent or one or more
      Credit Parties also shall keep an inventory reporting system that shows all
      additions, sales, claims, returns, and allowances with respect to Inventory
      of
      the Credit Parties and their Subsidiaries.

     

    6.2 Collateral
      Reporting.
      Provide
      Agent with the documents set forth on Schedule
      6.2
      in
      accordance with the delivery schedule set forth thereon. In addition, each
      Credit Party agrees to cooperate fully with Agent to facilitate and implement
      a
      system of electronic collateral reporting in order to provide electronic
      reporting of each of the items set forth on Schedule
      6.2.

     

    6.3 Financial
      Statements, Reports, Certificates.
      Deliver
      to Agent, with copies to each Lender:

     

    (a) as
      soon
      as available, but in any event within, 45 days after the end of each of the
      Borrower’s first three fiscal quarters:

     

    (i) a
      company
      prepared unaudited consolidated balance sheet, income statement, and statement
      of cash flow covering Borrower’s and Parent’s and its Subsidiaries’ operations
      during such period,

     

    (ii) a
      Compliance Certificate signed by the chief financial officer of Borrower to
      the
      effect that:

     

    (A)  the
      financial statements delivered hereunder have been prepared in accordance with
      GAAP (except for the lack of footnotes and being subject to quarterly and
      year-end audit adjustments) and fairly present in all material respects the
      financial condition of Parent and its Subsidiaries,

     

    (B)  the
      representations and warranties of each Credit Party contained in this Agreement
      and the other Loan Documents are true and correct in all material respects
      on
      and as of the date of such certificate, as though made on and as of such date
      (except to the extent that such representations and warranties relate solely
      to
      an earlier date), 

    
      
        
        

      

      
        -80-

        
          

        

      

      
        
        

      

    

     

    (C)  there
      does not exist any condition or event that constitutes an Event of Default
      or
      Triggering Period (or, to the extent of any non-compliance, describing such
      non-compliance as to which he or she may have knowledge and what action the
      Credit Parties have taken, are taking, or propose to take with respect thereto),
      

     

    (D) demonstrating,
      in reasonable detail, the calculations used in determining, when applicable
      (A)
      the Consolidated Coverage Test, (B) the Senior Secured Leverage Ratio and (C)
      compliance with the financial covenant contained in Section 7.17,
      and

     

    provided
      that,
      during a Triggering Period, the Agent may require, by written request, that
      the
      Borrower provide unaudited consolidated financial statements of the Borrower
      and
      its Subsidiaries, including balance sheet, income statement and cash flow
      statement on a monthly basis within 30 days of month-end,

     

    (b) as
      soon
      as available, but in any event within 90 days after the end of each of
      Borrower’s fiscal years, for such fiscal year and for the fourth fiscal quarter
      then most recently ended, consolidated financial statements of Parent and its
      Subsidiaries (and consolidating financial statements of Parent and its
      Subsidiaries, to the extent produced by Parent in the normal course of its
      operations) for each such fiscal year, audited by independent certified public
      accountants reasonably acceptable to Agent and certified, without any
      qualifications, by such accountants to have been prepared in accordance with
      GAAP (such audited financial statements to include a balance sheet, income
      statement, and statement of cash flow and, if prepared, such accountants’ letter
      to management), 

     

    (c) as
      soon
      as available, but in any event within 60 days after the start of each of
      Borrower’s fiscal years, copies of the Projections, in form and substance
      (including as to scope and underlying assumptions) satisfactory to Agent, in
      its
      sole discretion, for such fiscal year, quarter by quarter (or by such shorter
      periods as are reasonably requested by the Agent), which Projections shall
      represent Borrower’s good faith best estimate of the financial performance of
      Parent and its Subsidiaries during the period covered thereby, it being
      understood that such Projections as to future events are not to be viewed as
      facts and that actual results during the period or periods covered by any
      Projections may differ from the projected results and no assurance can be given
      that the Projections will be realized, 

     

    (d) if
      and
      when filed by Parent, 

     

    (i) Form
      10-Q
      quarterly reports, Form 10-K annual reports, and Form 8-K current reports,
      

     

    (ii) any
      other
      filings made by Parent with the SEC, and

    
      
        
        

      

      
        -81-

        
          

        

      

      
        
        

      

    

     

    (iii) any
      other
      information that is provided by Parent to its shareholders generally

     

    (provided,
      that for purposes of this clause (d), any information to be delivered hereunder
      shall be deemed to have been delivered when posted on the Parent’s website or
      otherwise made available on the website of the SEC),

     

    (e) as
      soon as practicable, and in any event within five days after a Responsible
      Officer of the Parent or the Borrower has actual knowledge of the existence
      of
      any Default, Event of Default or other event having had a Material Adverse
      Effect, the Borrower shall give the Agent notice specifying the nature of such
      Default or Event of Default or other event and
      a
      statement of the curative action that Borrower or such other Credit Party
      proposes to take with respect thereto, 

     

    (f) within
      30
      days after the later of (i) the service of process with respect thereto on
      any
      Credit Party or (ii) such time as exposure of the Credit Party could be
      reasonably determined, notice of all actions, suits, or proceedings brought
      by
      or against any Credit Party before any Governmental Authority which, if
      determined adversely to such Credit Party, reasonably would be expected to
      result in a Material Adverse Change, and

     

    (g) upon
      the
      request of Agent, any other report reasonably requested relating to the
      financial condition of any Credit Parties; provided that such reports shall
      not
      be overly burdensome for any Credit Party to prepare.

     

    Borrower
      agrees to cooperate with Agent to allow Agent to consult with its independent
      certified public accountants if Agent reasonably requests the right to do so
      (and Agent shall notify Borrower as to the timing of such consultations and
      permit Borrower to be present thereat or to otherwise participate therein)
      and
      that, in such connection, its independent certified public accountants are
      authorized to communicate with Agent and to release to Agent whatever financial
      information concerning any Credit Party that Agent reasonably may
      request.

     

    6.4 Returns.
      Cause
      returns and allowances, as between any Credit Party and their Account Debtors,
      to be on the same basis and in accordance with the usual customary practices
      of
      the Credit Parties, as they exist at the time of the execution and delivery
      of
      this Agreement, except where failure to do so could not reasonably be expected
      to result in a Material Adverse Change. 

     

    6.5 Maintenance
      of Properties.
      Maintain and preserve all of its properties which are necessary or useful in
      the
      proper conduct to its business in good working order and condition, ordinary
      wear and tear excepted, except where failure to do so could not reasonably
      be
      expected to result in a Material Adverse Change.

    
      
        
        

      

      
        -82-

        
          

        

      

      
        
        

      

    

     

    6.6 Taxes.
      Cause
      all assessments and taxes, whether real, personal, or otherwise, due or payable
      by, or imposed, levied, or assessed against each Credit Party or any of their
      respective assets to be paid in full, before delinquency or before the
      expiration of any extension period, except where the failure to do so,
      individually or in the aggregate, would not result in a Material Adverse Change.
      Each Credit Party will make timely payment or deposit of all tax payments and
      withholding taxes required of it and them by applicable laws, including those
      laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and
      federal income taxes, except where the failure to do so, individually or in
      the
      aggregate, would not result in a Material Adverse Effect.

     

    6.7 Insurance.
      

     

    (a) At
      each
      Credit Party’s expense, maintain insurance respecting such Credit Party’s assets
      wherever located, covering loss or damage by fire, theft, explosion, and all
      other hazards and risks, and maintain business interruption, public liability,
      and product liability insurance, as well as insurance against larceny,
      embezzlement, and criminal misappropriation, all as ordinarily are insured
      against by other Persons engaged in the same or similar businesses. All such
      policies of insurance shall be in such amounts which are customary for Persons
      engaged in the same or similar business and with nationally recognized insurance
      companies. Each Credit Party shall deliver copies of all such policies to Agent
      with a customary lender’s loss payable endorsement naming Agent as loss payee
      (with respect to the Collateral) or additional insured, as appropriate. Each
      such policy of insurance or endorsement shall contain a clause requiring the
      insurer to give not less than 30 days prior written notice to Agent in the
      event
      of cancellation of the policy.

     

    (b) Each
      Credit Party shall give Agent prompt notice of any loss of the Collateral valued
      in excess of $2 million covered by such insurance. Agent shall have the
      exclusive right to adjust any losses of the Collateral claimed under any such
      insurance policies during the continuation of an Event of Default, without
      any
      liability to such Credit Party whatsoever in respect of such adjustments. Any
      monies received as payment for any loss of the Collateral under any insurance
      policy mentioned above (other than liability insurance policies) during any
      Triggering Period or during the continuation of an Event of Default, shall
      be
      paid over to Agent to be applied to the prepayment of the Obligations with
      amounts so prepaid available to be reborrowed subject to Section
      3.3.
      

     

    (c) No
      Credit
      Party will take out separate insurance concurrent in form or contributing in
      the
      event of loss of the Collateral with that required to be maintained under this
      Section
      6.7,
      unless
      Agent is included thereon as named insured with the loss payable to Agent under
      a lender’s loss payable endorsement or its equivalent. Each Credit Party
      immediately shall notify Agent whenever such separate insurance is taken out,
      specifying the insurer thereunder and full particulars as to the policies
      evidencing the same, and copies of such policies promptly shall be provided
      to
      Agent.

    
      
        
        

      

      
        -83-

        
          

        

      

      
        
        

      

    

     

    6.8 Location
      of Inventory/Chief Executive Offices.
      Keep
      each Credit Party’s Inventory only at the locations identified on Schedule
      5.4
      (except
      for Inventory that (i) in the aggregate has a value of less than $1,000,000
      or
      (ii) is in transit between the locations identified on Schedule
      5.4)
      and
      their chief executive offices only at the locations identified on Schedule
      5.6(b);
      provided,
      however,
      that
      Borrower may amend (a) Schedule
      5.4,
      on
      behalf of any Credit Party as contemplated by Section
      6.13,
      and (b)
Schedule
      5.6,
      on
      behalf of any Credit Party, provided in the case of clause
      (b)
      hereof
      so long as (i) such amendment occurs by written notice to Agent not less than
      30
      days prior to the date such chief executive office is relocated and (ii) such
      new location is within the United States or any U.S. Territory. Within a
      commercially reasonable time following written notification with respect to
      any
      Non-Owned Warehouse, Borrower shall provide Agent a Collateral Access Agreement
      with respect thereto and if such agreement has not been obtained, Borrower’s
      Eligible Landed Inventory at that location shall be subject to the establishment
      of Reserves as set forth in the definition of “Eligible Landed
      Inventory”.

     

    6.9 Compliance
      with Laws. Comply
      with the requirements of all applicable laws, rules, regulations, and orders
      of
      any Governmental Authority, including the Fair Labor Standards Act and the
      Americans With Disabilities Act, other than laws, rules, regulations, and orders
      the non-compliance with which, individually or in the aggregate, would not
      reasonably be expected to result in a Material Adverse Change.

     

    6.10 Leases.
      Pay
      when due all rents and other amounts payable under any leases to which any
      Credit Party is a party or by which any Credit Party’s properties and assets are
      bound, unless such payments are the subject of a Permitted Protest or unless
      nonpayment of such rents and other amounts, individually or in the aggregate,
      could not reasonably be expected to result in a Material Adverse
      Change.

     

    6.11 Existence.
      At all
      times preserve and keep in full force and effect each Credit Party’s valid
      existence and good standing and any rights and franchises material to their
      businesses.

     

    6.12 Environmental.
      Except
      for such Environmental Liens, failures to comply, releases, Environmental
      Actions, notices, citations or orders which, individually or in the aggregate,
      would not reasonably be expected to result in a Material Adverse Change: (a)
      keep any property either owned or operated by any Credit Party free of any
      Environmental Liens or post bonds or other financial assurances sufficient
      to
      satisfy the obligations or liability evidenced by such Environmental Liens,
      (b)
      comply with all applicable Environmental Laws and provide to Agent documentation
      of such compliance which Agent reasonably requests, (c) promptly notify Agent
      of
      any release of a Hazardous Material in any reportable quantity from or onto
      property owned or operated by any Credit Party and take any Remedial Actions
      required to abate said release or otherwise to come into compliance with
      applicable Environmental Law, and (d) promptly, but in any event within 5 days
      of its receipt thereof, provide Agent with written notice of any of the
      following: (i) notice that an Environmental Lien has been filed against any
      of
      the real or personal property of any Credit Party, (ii) commencement of any
      Environmental Action or notice that an Environmental Action will be filed
      against any Credit Party, and (iii) notice of any violation, citation, or other
      administrative order received by any Credit Party. 

    
      
        
        

      

      
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    6.13 Disclosure
      Updates.
      Promptly and in no event later than 5 Business Days after obtaining knowledge
      thereof, notify Agent if any written information, exhibit, or report furnished
      to the Lender Group contained any untrue statement of a material fact or omitted
      to state any material fact necessary to make the statements contained therein
      not misleading in light of the circumstances in which made; provided, that
      with
      respect to Schedules
      E-1
      (in
      respect of Pool Locations), E-2,
      1.1(b),
      5.4,
      5.17,
      and
5.20,
      Borrower shall provide updates to such Schedules as necessary in its discretion
      to reflect material changes thereto occurring before any quarterly update
      thereto, but in any event no less than quarterly; provided,
      further,
      that
      any reference herein to any Schedule(s) shall be deemed to be a reference to
      such Schedule(s) as updated pursuant hereto. The foregoing to the contrary
      notwithstanding, any notification pursuant to the foregoing provision will
      not
      cure or remedy the effect of the prior untrue statement of a material fact
      or
      omission of any material fact nor shall any such notification have the affect
      of
      amending or modifying this Agreement or any of the Schedules
      hereto.

     

    6.14 Formation
      of Subsidiaries.
      At the
      time that any Credit Party forms or acquires any direct or indirect Wholly
      Owned
      Domestic Subsidiary after the Closing Date (other than an Excluded Subsidiary
      or
      Unrestricted Subsidiary), such Credit Party shall (a) cause such new Wholly
      Owned Domestic Subsidiary to provide to Agent a joinder to this Agreement (as
      a
      Guarantor and Credit Party), together with such other security documents, as
      well as appropriate UCC-1 financing statements, all in form and substance
      satisfactory to Agent (including being sufficient to grant Agent a first
      priority Lien (subject to Permitted Liens) in and to the assets of such newly
      formed or acquired Wholly Owned Domestic Subsidiary (other than any such assets
      that would not be required to be subject to Agent’s Liens if they were assets of
      any Credit Party)) and (b) provide to Agent all other documentation, including
      one or more opinions of counsel satisfactory to Agent, which in its reasonable
      opinion is appropriate with respect to the execution and delivery of the
      applicable documentation referred to above. Any document, agreement, or
      instrument executed or issued pursuant to this Section
      6.14
      shall be
      a Loan Document.

     

    6.15 Designation
      of Subsidiaries

     

    The
      board
      of directors of the Parent may at any time designate any Restricted Subsidiary
      (other than the Borrower) as an Unrestricted Subsidiary or any Unrestricted
      Subsidiary as a Restricted Subsidiary; provided
      that (a)
      immediately before and after such designation, no Default or Event of Default
      shall have occurred and be continuing, (b) no Restricted Subsidiary may be
      designated an Unrestricted Subsidiary if it previously had been designated
      as an
      Unrestricted Subsidiary, (c) any such designation shall be deemed to be an
      Investment requiring compliance with Section 7.10 (or reduction in an
      outstanding Investment, in the case of a designation of an Unrestricted
      Subsidiary as a Restricted Subsidiary), on the date of such designation in
      an
      amount equal to the sum of (i) the Parent’s direct or indirect equity
      ownership percentage of the net worth of such designated Restricted Subsidiary
      immediately prior to such designation (such net worth to be calculated without
      regard to any guarantee provided by such designated Restricted Subsidiary of
      the
      Parent’s, Borrower’s or another Restricted Subsidiary’s Indebtedness) and
      (ii) without duplication, the aggregate principal amount of any
      Indebtedness owed by such designated Restricted Subsidiary to the Parent,
      Borrower or any other Restricted Subsidiary immediately prior to such
      designation, all calculated, except as set forth in the parenthetical to clause
      (i) above, on a Consolidated basis in accordance with GAAP, and (c) no
      Subsidiary may be designated as an Unrestricted Subsidiary if it is a
“Restricted
      Subsidiary”
for
      the
      purpose of any other Indebtedness of the Parent. The designation of any
      Unrestricted Subsidiary as a Restricted Subsidiary shall constitute the
      incurrence at the time of designation of any Indebtedness or Liens of such
      Subsidiary existing at such time.

    
      
        
        

      

      
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    6.16 Segregation
      of Collateral

     

    The
      proceeds of any Term Facility Priority Collateral (as defined in the
      Intercreditor Agreement) in connection with an Asset Sale permitted by the
      terms
      of Section 8.4 of the Term Loan Agreement shall be segregated in a separate
      deposit account designated by Borrower to Agent.

     

    
      	
              7.

            	
              NEGATIVE
                COVENANTS.

            

    

     

    Each
      Credit Party, jointly and severally, covenants and agrees that, until
      termination of all of the Commitments and payment in full of the Obligations,
      such Credit Party will not and will not permit any of its Restricted
      Subsidiaries, to do any of the following:

     

    7.1 Indebtedness.
      Create,
      incur, assume, guarantee, or otherwise become, directly or indirectly, liable
      (“incur”) with respect to any Indebtedness, provided,
      however
      that a Credit Party may incur Indebtedness so long as (a) no Triggering Period
      is then continuing or would result therefrom, (b) no Default shall have occurred
      and be continuing, and (c) the Parent would be in compliance with the
      Consolidated Coverage Test for the most recently ended Test Period, determined
      on a Pro Forma Basis, after giving effect to the incurrence of such
      Indebtedness, provided
      further
      that the provisions of this Section
      7.1
      shall
      not prohibit the creation, incurrence, assumption, guarantee or existence of
      any
      of the following:

     

    (a) Indebtedness
      evidenced by this Agreement and the other Loan Documents, including the
      Guaranteed Obligations, together with Indebtedness owed to Underlying Issuers
      with respect to Underlying Letters of Credit and any other Obligations that
      constitute Indebtedness, including all Indebtedness under any Incremental
      Facility;

    
      
        
        

      

      
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    (b) Indebtedness
      evidenced by the Term Loan Agreement and the other Term Loan Documents, together
      with all Obligations as defined in the Term Loan Agreement, including all
      Indebtedness under any Incremental Term Loans as provided for under the Term
      Loan Agreement as in effect as of the date hereof (the “Term
      Loan Obligations”);

     

    (c) Qualified
      Refinancing Indebtedness;

     

    (d) Indebtedness
      existing as of the date hereof and set forth on Schedule
      5.19,

     

    (e) Permitted
      Purchase Money Indebtedness, 

     

    (f) refinancings,
      renewals, or extensions of Indebtedness permitted under clauses (d) and (e)
      of
      this Section
      7.1
      (and continuance or renewal of any Permitted Liens associated therewith) so
      long
      as: (i) the terms and conditions of such refinancings, renewals, or extensions
      do not, in Agent’s Permitted Discretion, materially impair the prospects of
      repayment of the Obligations by Borrower or materially impair Borrower’s
      creditworthiness, (ii) such refinancings, renewals, or extensions do not result
      in an increase in the then extant principal amount of the Indebtedness so
      refinanced, renewed, or extended, (iii) such refinancings, renewals, or
      extensions do not result in a shortening of the average weighted maturity of
      the
      Indebtedness so refinanced, renewed, or extended, nor are they on terms or
      conditions that, taken as a whole, are materially more burdensome or restrictive
      to Borrower, (iv) if the Indebtedness that is refinanced, renewed, or extended
      was subordinated in right of payment to the Obligations, then the terms and
      conditions of the refinancing, renewal, or extension Indebtedness must include
      subordination terms and conditions that are at least as favorable to the Lender
      Group as those that were applicable to the refinanced, renewed, or extended
      Indebtedness, (v) the Indebtedness that is refinanced, renewed, or extended
      is
      not recourse to any Person that is liable on account of the Obligations other
      than those Persons which were obligated with respect to the Indebtedness that
      was refinanced, renewed, or extended, (vi) is otherwise on terms, taken as
      a
      whole, no less favorable to the Group Members than those of such Indebtedness,
      other than market interest rates and fees, (vii) no Event of Default shall
      have
      occurred and be continuing (viii) the collateral, if applicable, granted
      pursuant to any such refinancing Indebtedness is the same or less than the
      collateral under the Indebtedness being extended, renewed or replaced and (ix)
      such modification, refinancing, refunding, renewal or extension shall not
      include: (A) Indebtedness of a Subsidiary of the Borrower that is not a
      Guarantor that refinances Indebtedness of the Borrower, (B) Indebtedness of
      a
      Subsidiary of the Borrower that is not a Guarantor that refinances Indebtedness
      of a Guarantor or (C) Indebtedness of the Borrower or a Restricted Subsidiary
      that refinances Indebtedness of an Unrestricted Subsidiary,

    
      
        
        

      

      
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    (g) Indebtedness
      of any Credit Party to any other Credit Party and Indebtedness of a Credit
      Party
      guaranteeing Indebtedness of another Credit Party otherwise permitted under
      this
Section
      7.1;

     

    (h) Indebtedness
      of the Borrower and the Restricted Subsidiaries which may be deemed to exist
      pursuant to any guaranties, performance, surety, statutory, appeal or similar
      bonds or obligations incurred in the ordinary course of business;

     

    (i) Indebtedness
      in respect of netting services, overdraft protections and otherwise in
      connection with Deposit Accounts or securities accounts maintained in the
      ordinary course of business;

     

    (j) guaranties
      in the ordinary course of business of the obligations of suppliers, customers,
      franchisees and licensees of any Credit Party;

     

    (k) endorsement
      of instruments or other payment items for deposit;

     

    (l) Indebtedness
      under Capital Leases arising out of Permitted Sale-Leasebacks made in compliance
      with Section
      7.16,
      in an
      aggregate amount not to exceed at any time $50,000,000;

     

    (m) Indebtedness
      under Hedge Agreements incurred for bona fide hedging purposes and not for
      speculation;

     

    (n) Indebtedness
      of any Person that becomes a Restricted Subsidiary after the Closing Date in
      connection with a Permitted Acquisition and any refinancing permitted under
      Section 7.1(f); provided,
      that (i) such Indebtedness exists at the time such Person becomes a Restricted
      Subsidiary and is not created in contemplation of or in connection with such
      Person becoming a Restricted Subsidiary, (ii) after giving effect to the
      assumption of such Indebtedness (A) the Parent would be in compliance with
      the
      Consolidated Coverage Test for the most recently ended Test Period, determined
      on a Pro Forma Basis, and (B) if such Indebtedness is secured by a Lien on
      any
      assets of such Person, the Senior Secured Leverage Ratio would be less than
      3.0
      to 1 on a Pro Forma Basis, (iii) such Indebtedness is not guaranteed in any
      respect by the Borrower, any Guarantor or any Restricted Subsidiary (other
      than
      by any such Person that so becomes a Restricted Subsidiary or is the survivor
      of
      a merger with such Person or any of its Subsidiaries) and (iv) except for
      Indebtedness consisting of Capital Lease Obligations, revenue bonds, purchase
      money Indebtedness or mortgages or other Liens on specific assets no portion
      of
      such Indebtedness matures prior to the Maturity Date;

    
      
        
        

      

      
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    (o) other
      Indebtedness of the Parent and the Restricted Subsidiaries in an aggregate
      principal amount not to exceed $100,000,000 at any time outstanding;
provided,
      however,
      that Indebtedness of Persons which are not Credit Parties pursuant to this
      clause (o) shall not exceed an aggregate principal amount of $50,000,000 at
      any
      time outstanding;
      and

     

    (p) Indebtedness
      of the Credit Parties not otherwise permitted under this Section 7.1 and
      refinancings thereof permitted pursuant to Section 7.1(f); provided,
      however,
      that after giving effect to the occurrence of such Indebtedness (A) no Default
      or Event of Default shall have occurred and be continuing and (B) the Parent
      would be in compliance with the Consolidated Coverage Test for the most recently
      ended Test Period, determined on a Pro Forma Basis after giving effect to the
      incurrence of such Indebtedness.

     

    7.2 Liens.
      Create,
      incur, or assume, directly or indirectly, any Lien on or with respect to any
      of
      its assets, of any kind, whether now owned or hereafter acquired, or any income
      or profits therefrom, except:

     

    (a) Permitted
      Liens (including Liens that are replacements of Permitted Liens to the extent
      that the original Indebtedness is refinanced, renewed, or extended under
Section
      7.1(d)
      or (p)
      and so long as the replacement Liens only encumber those assets that secured
      the
      refinanced, renewed, or extended Indebtedness); 

     

    (b) Liens
      on
      assets other than the Collateral securing Indebtedness in an aggregate amount
      not to exceed $50,000,000 at any time outstanding; and

     

    (c) Liens
      existing on the assets of any Person that becomes a Restricted Subsidiary (or
      is
      a Restricted Subsidiary that survives a merger with such Person), or existing
      on
      assets acquired, pursuant to a Permitted Acquisition to the extent the Liens
      on
      such assets secure Indebtedness permitted by Section 7.1(n); provided
      that
      such Liens attach at all times only to the same assets to which such Liens
      attached (and after-acquired property that is affixed or incorporated into
      the
      property covered by such Lien), and secure only the same Indebtedness or
      obligations that such Liens secured, immediately prior to such Permitted
      Acquisition and any refinancing thereof permitted by Section
      7.1(f).

     

    7.3 Restrictions
      on Fundamental Changes/Disposal of Assets.
      Enter
      into any transaction of merger or consolidation, or liquidate, wind-up or
      dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
      lease or sub-lease (as lessor or sublessor), transfer or otherwise dispose
      of,
      in one transaction or a series of transactions, all or any part of its business,
      assets or property of any kind whatsoever, whether real, personal or mixed
      and
      whether tangible or intangible, whether now owned or hereafter acquired, except:
      

    
      
        
        

      

      
        -89-

        
          

        

      

      
        
        

      

    

     

    (a)
      any Credit Party may be merged with or into a Credit Party, or be liquidated,
      wound up or dissolved, or all or any part of its business, property or assets
      may be conveyed, sold, leased, transferred or otherwise disposed of, in one
      transaction or a series of transactions, to any Credit Party; provided, (i)
      at
      the time of any such merger, no Event of Default shall exist or shall result
      from such merger, and (ii) in the case of such a merger, a Credit Party shall
      be
      the continuing or surviving Person;

     

    (b)Permitted
      Dispositions; 

     

    (c)
      Asset Sales not otherwise permitted hereunder; provided that (i) the
      consideration received for such assets shall be in an amount at least equal
      to
      the fair market value thereof; (ii) at the time of any such Asset Sale, no
      Event
      of Default shall exist or shall result from such Asset Sale; (iii) in the case
      of Asset Sales consisting of the Collateral and in the case of any Asset Sale
      if
      Availability is less than $60,000,000 at the time of such Asset Sale, no less
      than 80% of the consideration therefor shall be paid in cash; and (iv) at the
      time of such Asset Sale and after giving effect thereto, the aggregate sales
      price of all Asset Sales, together, since the Closing Date shall not exceed,
      in
      the case of Asset Sales consisting of the Collateral, (A) if availability is
      less than $60,000,000 at the time of such Asset Sale, 5% of the Consolidated
      Net
      Tangible Assets of the Parent and its Subsidiaries determined in accordance
      with
      GAAP and (B) if Availability is equal to or in excess of $60,000,000 at the
      time
      of such Asset Sale, 10% of the Consolidated Net Tangible Assets of the Parent
      and its Subsidiaries determined in accordance with GAAP, in each case as
      aggregated with all other Asset Sales occurring after the Closing Date;

     

    (d)
      Asset Sales of stores developed by any Credit Party in connection with Permitted
      Sale-Leasebacks, provided that the proceeds of any such Permitted Sale-Leaseback
      shall be entirely in cash and shall not be less than 100% of the fair market
      value of the property or equipment being sold; and

     

    (e)
      dispositions listed on Schedule
      7.3.

     

    7.4 Change
      Name.
      Except
      as specified in Schedule
      7.4
      as of
      the Closing Date, change the name, FEIN, organizational identification number,
      state of organization or organizational identity of any Credit Party;
provided,
      however,
      that
      any Credit Party may change any of the foregoing upon at least 30 days prior
      written notice to Agent of such change and so long as, at the time of such
      written notification, such Credit Party provides any financing statements
      necessary to perfect and continue perfected the Agent’s Liens.

     

    7.5 Nature
      of Business.
      Make
      any material change in the principal nature of its or their business. Any change
      in the types of products sold or the methods or channels of distribution shall
      not constitute a material change in the principal nature of the business of
      the
      Credit Parties.

    
      
        
        

      

      
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    7.6 Amendments.
      Amend
      or otherwise change the terms of any Subordinated Indebtedness if the effect
      of
      such amendment or other change is to increase the interest rate on such
      Indebtedness, change (to earlier dates) any dates upon which payments of
      principal or interest are due thereon, change any event of default or change
      any
      condition to an event of default with respect thereto (other than to eliminate
      any such event of default or increase any grace period related thereto or
      otherwise modify the same in a manner favorable to the Credit Parties), change
      the redemption, prepayment or defeasance provisions thereof, change the
      subordination provisions thereof (or of any guaranty thereof), or if the effect
      of any such amendment or change, together with all other amendments or changes
      made, is to increase materially the obligations of the obligor thereunder or
      to
      confer any additional rights on the holders of such Indebtedness (or a trustee
      or representative on their behalf) which would be adverse to any Credit Party
      or
      the Lenders. 

     

    7.7 Change
      of Control.
      Cause,
      permit, or suffer, directly or indirectly, any Change of Control.

     

    7.8 Distributions.
      Make or
      set apart any sum for any Restricted Payment, except that (i) Parent may make
      regularly scheduled payments of interest in respect of the Senior Subordinated
      Notes in accordance with the subordination provisions contained in the
      Indenture; (ii) any Credit Party may make Restricted Payments to any other
      Credit Party; and (iii) Parent may make Restricted Payments consisting of the
      repurchase of Parent stock in connection with the exercise of employee stock
      options in the ordinary course of business on a basis that is "net of taxes"
      or
      any equivalent gross exercise and repurchase to fund tax liabilities to the
      extent required under applicable employee contractual arrangements.

     

    Notwithstanding
      the foregoing, Borrower or any Restricted Subsidiary may make any Restricted
      Payment so long as (a) Availability after giving effect to such Restricted
      Payment is at least $50,000,000 both before and as projected by the Borrower
      on
      a Pro Forma Basis for the three month period following such Restricted Payment,
      (b) no Default or Event of Default is continuing or would result therefrom
      and
      (c) such Restricted Payments are in an amount not to exceed the sum of (i)
      $50,000,000 and (ii) the Applicable Amount in the aggregate at any time
      outstanding; provided,
      that
      Borrower shall give Agent prompt notice of any such Restricted Payment in an
      amount greater than $10,000,000. 

     

    7.9 Accounting
      Methods; Fiscal Year.
      Modify
      or change (a) its fiscal year, or (b) its method of accounting (other than
      as
      may be required to conform to GAAP or as otherwise permitted by GAAP and
      disclosed to the Lenders and the Agent), in each case other than as set forth
      in
Schedule
      7.9.
      

    
      
        
        

      

      
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    7.10 Investments.
      Directly or indirectly, make or acquire any Investment or incur any liabilities
      (including contingent obligations) for or in connection with any Investment,
      except for the following:

     

    (a) Investments
      existing on the date of this Agreement and disclosed on Schedule
      7.10;

     

    (b) Investments
      in cash and Cash Equivalents;

     

    (c) Investments
      in payment intangibles, chattel paper (each as defined in the Uniform Commercial
      Code) and Accounts, notes receivable and similar items arising or acquired
      in
      the ordinary course of business consistent with the past practice of the Group
      Members;

     

    (d) Investments
      received in settlement of amounts due to any Group Member effected in the
      ordinary course of business;

     

    (e) Investments
      (i) among Credit Parties, (ii) among Qualified Restricted Subsidiaries, (iii)
      among Restricted Subsidiaries that are not Qualified Restricted Subsidiaries
      or
      Guarantors, (iv) from any Restricted Subsidiary to any Credit Party, (v) from
      any Credit Party to any Qualified Restricted Subsidiary; provided,
      however,
      that at the date of, and after giving effect to any such Investment made
      pursuant to this clause (e)(v) or clause (i)(B) below, the Parent would be
      in
      compliance with the Consolidated Coverage Test for the most recently ended
      Test
      Period, determined on a Pro Forma Basis, and provided further, that, the
      aggregate outstanding amount of all such Investments permitted pursuant to
      this
      clause (e)(v),
      together with all such Investments in Permitted Acquisitions permitted pursuant
      to clause (i)(B) below,
      shall not exceed $250,000,000;

     

    (f) Investments
      in respect of (i) Hedge Agreements permitted under Section 7.18 and
      (ii) any note hedge transaction entered into in connection with any issuance
      of
      Qualified Refinancing Indebtedness;

     

    (g) loans
      or advances to employees of the Borrower or any Restricted Subsidiary in the
      ordinary course of business as presently conducted other than any loans or
      advances that would be in violation of Section
      402
      of the Sarbanes-Oxley Act; provided,
      however,
      that the aggregate principal amount of all loans and advances permitted pursuant
      to this clause (g) shall
      not exceed $10,000,000 at any time;

     

    (h) Obligations
      in respect of guarantees permitted by Section 7.1;

     

    (i) Investments
      in any Person that becomes a Credit Party or a Qualified Restricted Subsidiary
      or in any assets that are acquired by a Credit Party or a Qualified Restricted
      Subsidiary, in each case, in connection with any Permitted Acquisition
      consummated after the Closing Date; provided,
      however,
      that at the date of, and after giving effect to any such Investment made
      pursuant to this clause (i), the Parent would be in compliance with the
      Consolidated Coverage Test for the most recently ended Test Period, determined
      on a Pro Forma Basis, and provided further, that, (A) the fair market value
      (determined in good faith by the Borrower) of such Investments (or portion
      thereof) in Persons that become Loan Parties or in assets that are acquired
      by
      Loan Parties shall not exceed $500,000,000 in the aggregate, except for any
      such
      Investment to the extent the consideration for which consists of Qualified
      Capital Stock of the Parent and (B) the fair market value (determined in good
      faith by the Borrower) of such Investments (or portion thereof) in Persons
      that
      become Qualified Restricted Subsidiaries or in assets that are acquired by
      Qualified Restricted Subsidiaries shall not, together with all such Investments
      permitted pursuant to clause (e)(v) above,
      exceed $250,000,000 in the aggregate (it being understood that additional
      Investments in connection with Permitted Acquisitions, including Investments
      in
      Restricted Subsidiaries that are not Loan Parties or Qualified Restricted
      Subsidiaries, may be made in reliance on clause (j) below); 

    
      
        
        

      

      
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    (j) Investments
      in an amount not to exceed at the date of, and after giving effect to such
      Investment, the sum of (i) the greater of (a) $75,000,000 and (b) 2.5% of the
      Total Assets of the Borrower and the Restricted Subsidiaries taken as a whole
      at
      such time and (ii) the Applicable Amount in the aggregate at any time
      outstanding; provided,
      that Availability after giving effect to such Investment is at least
      $50,000,000; and

     

    (k) Investments
      permitted by Section 7.1(o).

     

    7.11 Transactions
      with Affiliates.
      Other
      than as set forth on Schedule
      7.11,
      the
      Parent shall not, nor shall it permit Borrower or any Restricted Subsidiary
      to
      effect any transaction with any of its respective Affiliates that is not a
      Restricted Subsidiary on a basis less favorable to the Borrower or such
      Restricted Subsidiary than would at the time be obtainable for a comparable
      transaction in arms-length dealing with an unrelated third party. 

     

    7.12 Use
      of Proceeds.
      Use the
      proceeds of the Advances for any purpose other than (a) on the Closing Date,
      to
      pay transactional fees, costs, and expenses incurred in connection with this
      Agreement, the other Loan Documents, and the transactions contemplated hereby
      and thereby, and (b) thereafter, consistent with the terms and conditions
      hereof, for its lawful and permitted purposes.

     

    7.13 Limitations
      on Restrictions on Subsidiary Distributions; No New Negative
      Pledge

     

    Except
      pursuant to the Loan Documents and any agreements governing Purchase Money
      Indebtedness or Capital Lease Obligations permitted by Section 7.1(l) (in the
      case of agreements permitted by such clause, any prohibition or limitation
      shall
      only be effective against the assets financed thereby), the Parent shall not,
      and shall not permit the Borrower or any of the Restricted Subsidiaries to,
      (a)
      agree to enter into or suffer to exist or become effective any consensual
      encumbrance or restriction of any kind on the ability of such Restricted
      Subsidiary to pay dividends or make any other distribution or transfer of funds
      or assets or make loans or advances to or other Investments in, or pay any
      Indebtedness owed to, the Borrower or any other Restricted Subsidiary or (b)
      enter into or suffer to exist or become effective any agreement prohibiting
      or
      limiting the ability of any Restricted Subsidiary, other than customary
      provisions in Joint Venture agreements and other similar agreements relating
      solely to the securities, assets and revenues of such Joint Venture, to create,
      incur, assume or suffer to exist any Lien upon any of its property, assets
      or
      revenues, whether now owned or hereafter acquired, to secure the Obligations,
      including any agreement requiring any other Indebtedness or Contractual
      Obligation to be equally and ratably secured with the Obligations.

    
      
        
        

      

      
        -93-

        
          

        

      

      
        
        

      

    

     

    7.14 Modification
      of Governing Documents

     

    The
      Parent shall not, nor shall it permit any Restricted Subsidiary to, change
      its
      capital structure (including in the terms of its outstanding Stock) or otherwise
      amend its Governing Documents, except for changes and amendments that do not
      materially affect the rights and privileges of any Restricted Subsidiary and
      do
      not materially affect the interests of the Secured Parties under the Loan
      Documents or in the Collateral.

     

    7.15 Modification
      of Related Documents.

     

    Alter,
      rescind, terminate, amend, supplement, waive or otherwise modify any provision
      of any Related Document (except for modifications that do not materially affect
      the rights and privileges of any Restricted Subsidiary under such Related
      Document and that do not materially affect the interests of the Secured Parties
      (as defined in the Pledge and Security Agreement) under the Loan Documents
      or in
      the Collateral). 

     

    7.16 Sales
      and Lease-Backs.
      Directly or indirectly, enter into or become liable as lessee or as a guarantor
      or other surety with respect to any lease of any property (whether real,
      personal or mixed), whether now owned or hereafter acquired (a “Sale-Leaseback”),
      which
      such Credit Party (a) has sold or transferred or is to sell or transfer to
      any
      other Person (other than a Credit Party), or (b) intends to use for
      substantially the same purpose as any other property which has been or is to
      be
      sold or transferred by such Credit Party to any Person (other than another
      Credit Party) in connection with such lease; provided,
      however
      that a Credit Party may enter into Sale-Leasebacks not involving the Collateral
      at market rates and subject to compliance with Section
      7.3(b)(iv)
      provided
      that the aggregate amount of such Sale-Leasebacks since the Closing Date shall
      not exceed $30,000,000 (“Permitted
      Sale-Leasebacks”).
      For
      the avoidance of doubt, Sale-Leasebacks that result in Capital Leases shall
      be
      treated as Indebtedness for all purposes of this Agreement.

     

    7.17 Minimum
      Fixed Charge Coverage Ratio

    
      
        
        

      

      
        -94-

        
          

        

      

      
        
        

      

    

     

    At
      any
      time that a Triggering Period has occurred and is continuing, Parent and its
      Restricted Subsidiaries shall have on a consolidated basis at the end of each
      fiscal month, a Consolidated Fixed Charge Coverage Ratio for the 12-month period
      then ended of not less than 1.0:1.0.

     

    7.18 No
      Speculative Transactions

     

    The
      Parent shall not, nor shall it permit any Restricted Subsidiary to, engage
      in
      any speculative transaction or in any transaction involving Hedge Agreements
      except for the sole purpose of hedging in the normal course of business and
      consistent with industry practices; provided,
      for the
      avoidance of doubt, the provisions of this Section 7.18 shall not apply to
      (a)
      any note hedge transaction entered into in connection with the issuance of
      any
      Qualified Refinancing Indebtedness or (b) any warrant transaction entered into
      concurrently with any note hedge transaction described in clause (a)
      above.

     

     

    
      	
              8.

            	
              EVENTS
                OF DEFAULT.

            

    

     

    Any
      one
      or more of the following events shall constitute an event of default (each,
      an
“Event
      of Default”)
      under
      this Agreement:

     

    8.1 If
      Borrower fails to pay (a) when due any installment of principal of any
      Obligations, whether at stated maturity, by acceleration or otherwise, (b)
      when
      due any amount payable to Issuing Lender in reimbursement of any drawing under
      a
      Letter of Credit; or (c) any interest on any Obligations or any fee or any
      other
      amount due with respect to the Obligations within three (3) Business Days after
      the date due;

     

    8.2 If
      Borrower: 

     

    (a) fails
      to
      perform, keep, or observe any term, provision, condition, covenant, or agreement
      contained in Sections
      6.7(a),
      6.11,
      and
7.1
      through
7.18
      of this
      Agreement;

     

    (b) fails
      or
      neglects to perform, keep, or otherwise observe any term, provision, condition,
      covenant, or agreement contained in Sections
      2.7(b),
      2.7(g),
      2.7(h),
      2.7(i),
      6.2
      or
6.9
      of this
      Agreement and such failure continues for a period of 15 days; or

     

    (c) fails
      or neglects to perform, keep, or observe any other term, provision, condition,
      covenant, or agreement contained in this Agreement, or in any of the other
      Loan
      Documents (giving effect to any grace periods, cure periods, or required
      notices, if any, expressly provided for in such Loan Documents), in each case,
      other than any such term, provision, covenant, or agreement that is the subject
      of another provision of this Section
      8
      (in which event such other provision of this Section 8 shall govern), and such
      failure continues for a period of 30 days from the earlier of (a) a Responsible
      Officer of the Borrower becoming aware of such failure or (b) notice thereof
      from Agent or a Lender;

    
      
        
        

      

      
        -95-

        
          

        

      

      
        
        

      

    

     

    8.3 If
      any
      money judgment, writ or warrant of attachment or similar process involving
      individually or in the aggregate, an amount in excess of $25,000,000 to the
      extent not adequately covered by insurance shall be entered or filed against
      the
      Borrower, the Parent or any of the Restricted Subsidiaries or any of their
      respective assets and shall remain unpaid, undischarged, unvacated, unbonded
      or
      unstayed for a period of sixty (60) days;

     

    8.4 If
      an
      Insolvency Proceeding is commenced by Borrower, Parent or any of the Restricted
      Subsidiaries or Borrower admits in writing its inability to, or is generally
      unable to, pay its debts as such debts become due; 

     

    8.5 If
      an
      Insolvency Proceeding is commenced against Borrower, Parent, or any Restricted
      Subsidiary, and any of the following events occur: (a) Borrower, Parent or
      such Restricted Subsidiary consents to the institution of such Insolvency
      Proceeding against it, (b) the petition commencing the Insolvency
      Proceeding is not timely controverted; provided, however, that, during the
      pendency of such period, each member of the Lender Group shall be relieved
      of
      its obligations to extend credit hereunder, (c) the petition commencing the
      Insolvency Proceeding is not dismissed within 60 calendar days of the date
      of
      the filing thereof; provided, however, that, during the pendency of such period,
      each member of the Lender Group shall be relieved of its obligations to extend
      credit hereunder, (d) an interim trustee is appointed to take possession of
      all or any substantial portion of the properties or assets of, or to operate
      all
      or any substantial portion of the business of, Borrower, Parent or any
      Restricted Subsidiary, or (e) an order for relief shall have been entered
      therein; 

     

    8.6 If
      there
      is a default in one or more agreements to which Borrower, Parent, or any
      Restricted Subsidiary is a party relative to Indebtedness of the Borrower,
      Parent, or any Restricted Subsidiary having a principal amount in excess of
      $25,000,000, or more, and such default (a) occurs at the final maturity of
      the
      obligations thereunder, or (b) results in a right by the other party thereto,
      irrespective of whether exercised, to accelerate the maturity of the obligations
      of the Borrower, Parent, or any Restricted Subsidiary thereunder or to terminate
      such agreement;

     

    8.7 If
      any
      material misstatement or misrepresentation exists now or hereafter in any
      warranty, representation, statement, or Record made to the Lender Group by
      any
      Credit Party, or any officer, employee, agent, or director of any Credit Party;
      

     

    8.8 If
      this
      Agreement or any other Loan Document that purports to create a Lien, shall,
      for
      any reason, fail or cease to create a valid and perfected and, except to the
      extent permitted by the terms hereof or thereof, first priority Lien on or
      security interest in the Collateral
      covered
      hereby or thereby; or

    
      
        
        

      

      
        -96-

        
          

        

      

      
        
        

      

    

     

    8.9 Any
      provision of any Loan Document shall at any time for any reason be declared
      to
      be null and void, or the validity or enforceability thereof shall be contested
      by Borrower, Parent, or any Restricted Subsidiary, or a proceeding shall be
      commenced by Borrower, Parent, or any Restricted Subsidiary, or by any
      Governmental Authority having jurisdiction over Borrower, Parent, or any
      Restricted Subsidiary, seeking to establish the invalidity or unenforceability
      thereof, or Borrower, Parent, or any Restricted Subsidiary shall deny that
      it
      has any liability or obligation purported to be created under any Loan
      Document.

     

    
      	
              9.

            	
              THE
                LENDER GROUP’S RIGHTS AND
                REMEDIES.

            

    

     

    9.1 Rights
      and Remedies.
      Upon
      the occurrence, and during the continuation, of an Event of Default, the
      Required Lenders (at their election but without notice of their election and
      without demand) may authorize and instruct Agent to do any one or more of the
      following on behalf of the Lender Group (and Agent, acting upon the instructions
      of the Required Lenders, shall do the same on behalf of the Lender Group),
      all
      of which are authorized by each Credit Party:

     

    (a) Declare
      all Obligations (or any portion thereof), whether evidenced by this Agreement,
      by any of the other Loan Documents, or otherwise, immediately due and
      payable;

     

    (b) Cease
      (or
      restrict) advancing money or extending credit to or for the benefit of Borrower
      under this Agreement, under any of the Loan Documents, or under any other
      agreement between Borrower and the Lender Group;

     

    (c) Upon
      notice to Borrower (except with respect to an Event of Default under
Sections
      8.4 or 8.5,
      in
      which case no notice shall be required), terminate this Agreement and any of
      the
      other Loan Documents as to any future liability or obligation of the Lender
      Group, but without affecting any of the Agent’s Liens in the Collateral and
      without affecting the Obligations;

     

    (d) Settle
      or
      adjust disputes and claims directly with any Credit Party’s Account Debtors for
      amounts and upon terms which Agent considers advisable, and in such cases,
      Agent
      will credit Borrower’s Loan Account with only the net amounts received by Agent
      in payment of such disputed Accounts after deducting all Lender Group Expenses
      incurred or expended in connection therewith;

     

    (e) Cause
      any
      Credit Party to hold all of its returned Inventory in trust for the Lender
      Group
      and segregate all such Inventory from all other assets of such Credit Party
      or
      in such Credit Party’s possession;

     

    (f) Without
      notice to or demand upon any Credit Party, make such payments and do such acts
      as Agent considers necessary or reasonable to protect its security interests
      in
      the Collateral. Each Credit Party agrees to assemble the Collateral if Agent
      so
      requires, and to make the Collateral available to Agent at a place that Agent
      may designate which is reasonably convenient to both parties. Each Credit Party
      authorizes Agent to enter the premises where the Collateral is located, to
      take
      and maintain possession of the Collateral, or any part of it, and to pay,
      purchase, contest, or compromise any Lien that in Agent’s determination appears
      to conflict with the Agent’s Liens in and to the Collateral and to pay all
      expenses incurred in connection therewith and to charge Borrower’s Loan Account
      therefor. With respect to any of any Credit Party’s owned or leased premises,
      each Credit Party hereby grants Agent a license to enter into possession of
      such
      premises and to occupy the same, without charge, in order to exercise any of
      the
      Lender Group’s rights or remedies provided herein, at law, in equity, or
      otherwise;

    
      
        
        

      

      
        -97-

        
          

        

      

      
        
        

      

    

     

    (g) Without
      notice to any Credit Party (such notice being expressly waived), and without
      constituting an acceptance of any collateral in full or partial satisfaction
      of
      an obligation (within the meaning of the Code), set off and apply to the
      Obligations any and all (i) balances and deposits of any Credit Party held
      by
      the Lender Group (including any amounts received in the Cash Management
      Accounts), or (ii) Indebtedness at any time owing to or for the credit or the
      account of any Credit Party held by the Lender Group;

     

    (h) Hold,
      as
      cash collateral, any and all balances and deposits of any Credit Party held
      by
      the Lender Group, and any amounts received in the Cash Management Accounts,
      to
      secure the full and final repayment of all of the Obligations;

     

    (i) Ship,
      reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
      for sale, and sell (in the manner provided for herein) the Collateral. Each
      Credit Party hereby grants to Agent a non-exclusive license or other right
      to
      use, without charge, such Credit Party’s instruments and General Intangibles,
      including, without limitation, labels, patents, copyrights, trade secrets,
      trade
      names, trademarks, service marks, and advertising matter, merchandising systems,
      inventory locations, fixed assets or any property of a similar nature, as it
      pertains to the Collateral, in completing production of, advertising for sale,
      and selling any Collateral and such Credit Party’s rights under all licenses and
      all franchise agreements shall inure to the Lender Group’s benefit;

     

    (j) Sell
      the
      Collateral at either a public or private sale, or both, by way of one or more
      contracts or transactions, for cash or on terms, in such manner and at such
      places (including any Credit Party’s premises) as Agent determines is
      commercially reasonable. It is not necessary that the Collateral be present
      at
      any such sale;

     

    (k) Agent
      shall give notice of the disposition of the Collateral as follows:

    
      
        
        

      

      
        -98-

        
          

        

      

      
        
        

      

    

     

    (i) Agent
      shall give Borrower on behalf of the Credit Parties, a notice in writing of
      the
      time and place of public sale, or, if the sale is a private sale or some other
      disposition other than a public sale is to be made of the Collateral, the time
      on or after which the private sale or other disposition is to be made;
      and

     

    (ii) The
      notice shall be personally delivered or mailed, postage prepaid, to Borrower
      as
      provided in Section
      12,
      at
      least 10 days before the earliest time of disposition set forth in the notice;
      no notice needs to be given prior to the disposition of any portion of the
      Collateral that is perishable or threatens to decline speedily in value or
      that
      is of a type customarily sold on a recognized market;

     

    (l) Agent,
      on
      behalf of the Lender Group, may credit bid and purchase at any public sale;
      

     

    (m) Agent
      may
      seek the appointment of a receiver or keeper to take possession of all or any
      portion of the Collateral or to operate same and, to the maximum extent
      permitted by law, may seek the appointment of such a receiver without the
      requirement of prior notice or a hearing; and

     

    (n) The
      Lender Group shall have all other rights and remedies available at law or in
      equity or pursuant to any other Loan Document.

     

    ;
      provided,
      however,
      that
      upon the occurrence of any Event of Default described in Section
      8.4
      or
Section
      8.5,
      in
      addition to the remedies set forth above, without any notice to any Credit
      Party
      or any other Person or any act by the Lender Group, the Commitments shall
      automatically terminate and the Obligations then outstanding, together with
      all
      accrued and unpaid interest thereon and all fees and all other amounts due
      under
      this Agreement and the other Loan Documents, shall automatically and immediately
      become due and payable, without presentment, demand, protest, or notice of
      any
      kind, all of which are expressly waived by each Credit Party.

     

    9.2 Remedies
      Cumulative.
      The
      rights and remedies of the Lender Group under this Agreement, the other Loan
      Documents, and all other agreements shall be cumulative. The Lender Group shall
      have all other rights and remedies not inconsistent herewith as provided under
      the Code, by law, or in equity. No exercise by the Lender Group of one right
      or
      remedy shall be deemed an election, and no waiver by the Lender Group of any
      Event of Default shall be deemed a continuing waiver. No delay by the Lender
      Group shall constitute a waiver, election, or acquiescence by it.

    
      
        
        

      

      
        -99-

        
          

        

      

      
        
        

      

    

     

    
      	
              10.

            	
              TAXES
                AND EXPENSES.

            

    

     

    If
      any
      Credit Party fails to pay any monies (whether taxes, assessments, insurance
      premiums, or, in the case of leased properties or assets, rents or other amounts
      payable under such leases) due to third Persons, or fails to make any deposits
      or furnish any required proof of payment or deposit, all as required under
      the
      terms of this Agreement, then, Agent, in its sole discretion and without prior
      notice to Borrower, may do any or all of the following: (a) make payment of
      the
      same or any part thereof, (b) set up such Reserves in Borrower’s Loan Account as
      Agent deems necessary to protect the Lender Group from the exposure created
      by
      such failure, or (c) in the case of the failure to comply with Section
      6.7
      hereof,
      obtain and maintain insurance policies of the type described in Section
      6.7
      and take
      any action with respect to such policies as Agent deems prudent. Any such
      amounts paid by Agent shall constitute Lender Group Expenses and any such
      payments shall not constitute an agreement by the Lender Group to make similar
      payments in the future or a waiver by the Lender Group of any Event of Default
      under this Agreement. Agent need not inquire as to, or contest the validity
      of,
      any such expense, tax, or Lien and the receipt of the usual official notice
      for
      the payment thereof shall be conclusive evidence that the same was validly
      due
      and owing.

     

    
      	
              11.

            	
              WAIVERS;
                INDEMNIFICATION.

            

    

     

    11.1 Demand;
      Protest; etc.
      Each
      Credit Party waives demand, protest, notice of protest, notice of default or
      dishonor, notice of payment and nonpayment, nonpayment at maturity, release,
      compromise, settlement, extension, or renewal of documents, instruments, chattel
      paper, and guarantees at any time held by the Lender Group on which each such
      Credit Party may in any way be liable.

     

    11.2 The
      Lender Group’s Liability for Collateral.
      Each
      Credit Party hereby agrees that: (a) so long as Agent complies with its
      obligations, if any, under the Code, the Lender Group shall not in any way
      or
      manner be liable or responsible for: (i) the safekeeping of the Collateral,
      (ii)
      any loss or damage thereto occurring or arising in any manner or fashion from
      any cause, (iii) any diminution in the value thereof, or (iv) any act or default
      of any carrier, warehouseman, bailee, forwarding agency, or other Person, and
      (b) all risk of loss, damage, or destruction of the Collateral shall be borne
      by
      the Credit Parties.

     

    11.3 Indemnification.
      Each
      Credit Party shall jointly and severally pay, indemnify, defend, and hold the
      Agent-Related Persons, the Lender-Related Persons, and each Participant (each,
      an “Indemnified
      Person”)
      harmless (to the fullest extent permitted by law) from and against any and
      all
      claims, demands, suits, actions, investigations, proceedings, and damages,
      and
      all reasonable attorneys fees and disbursements and other costs and expenses
      actually incurred in connection therewith (as and when they are incurred and
      irrespective of whether suit is brought), at any time asserted against, imposed
      upon, or incurred by any of them (a) in connection with or as a result of or
      related to the execution, delivery, enforcement, performance, or administration
      (including any restructuring or workout with respect hereto) of this Agreement,
      any of the other Loan Documents, or the transactions contemplated hereby or
      thereby or the monitoring of each Credit Party’s compliance with the terms of
      the Loan Documents, and (b) with respect to any investigation, litigation,
      or
      proceeding related to this Agreement, any other Loan Document, or the use of
      the
      proceeds of the credit provided hereunder (irrespective of whether any
      Indemnified Person is a party thereto), or any act, omission, event, or
      circumstance in any manner related thereto (all the foregoing, collectively,
      the
“Indemnified
      Liabilities”).
      The
      foregoing to the contrary notwithstanding, no Credit Party shall have any
      obligation to any Indemnified Person under this Section
      11.3
      with
      respect to any Indemnified Liability that a court of competent jurisdiction
      finally determines to have resulted from the gross negligence (as opposed to
      negligence) or willful misconduct of such Indemnified Person. This provision
      shall survive the termination of this Agreement and the repayment of the
      Obligations. If any Indemnified Person makes any payment to any other
      Indemnified Person with respect to an Indemnified Liability as to which any
      Credit Party was required to indemnify the Indemnified Person receiving such
      payment, the Indemnified Person making such payment is entitled to be
      indemnified and reimbursed by such Credit Party with respect
      thereto.

    
      
        
        

      

      
        -100-

        
          

        

      

      
        
        

      

    

     

    
      	
              12.

            	
              NOTICES.

            

    

     

    Unless
      otherwise provided in this Agreement, all notices or demands by the Credit
      Parties or Agent to the other relating to this Agreement or any other Loan
      Document shall be in writing and (except for financial statements and other
      informational documents which may be sent by first-class mail, postage prepaid)
      shall be personally delivered or sent by registered or certified mail (postage
      prepaid, return receipt requested), overnight courier, electronic mail (at
      such
      email addresses as Borrower or Agent, as applicable, may designate to each
      other
      in accordance herewith), or telefacsimile to the Credit Parties or Agent, as
      the
      case may be, at its address set forth below:

     

    
      	
              If
                to any Credit Party:

            	 	
              COLLECTIVE
                BRANDS FINANCE, INC.

            
	 	 	
              3231
                Southeast Sixth Avenue

            
	 	 	
              Topeka,
                Kansas 66607-2207

            
	 	 	
              Attn:
                General Counsel

            
	 	 	
              Fax
                No. (785) 368-7524

            
	 	 	 
	
              With
                a copy to:

            	 	
              SULLIVAN
                & CROMWELL LLP

            
	 	 	
              1888
                Century Park East, 21st
                Floor

            
	 	 	
              Los
                Angeles, California 90067

            
	 	 	
              Attn:
                Hydee Feldstein

            
	 	 	
              Fax
                No. (310) 712-8800

            

    

     

    
      
        
        

      

      
        -101-

        
          

        

      

      
        
        

      

    

     

    
      	
              If
                to Agent:

            	 	
              WELLS
                FARGO RETAIL FINANCE, LLC

            
	 	 	
              One
                Boston Place, 18th Floor

            
	 	 	
              Boston,
                Massachusetts, 02108

            
	 	 	
              Attn:
                Jennifer Cann

            
	 	 	
              Fax
                No. (617) 523-4032

            
	 	 	 
	
              With
                a copy to:

            	 	
              WINSTON
                & STRAWN LLP

            
	 	 	
              35
                West Wacker Drive

            
	 	 	
              Chicago,
                Illinois 60601

            
	 	 	
              Attn:
                Matthew D. O'Meara

            
	 	 	
              Fax
                No. (312) 558-7500

            

    

    

    Agent
      and
      any Credit Party may change the address at which they are to receive notices
      hereunder, by notice in writing in the foregoing manner given to the other
      party. All notices or demands sent in accordance with this Section
      12,
      other
      than notices by Agent in connection with enforcement rights against the
      Collateral under the provisions of the Code, shall be deemed received on the
      earlier of the date of actual receipt or 3 Business Days after the deposit
      thereof in the mail. Each Credit Party acknowledges and agrees that notices
      sent
      by the Lender Group in connection with the exercise of enforcement rights
      against Collateral under the provisions of the Code shall be deemed sent when
      deposited in the mail or personally delivered, or, where permitted by law,
      transmitted by telefacsimile or any other method set forth above.

     

    
      	
              13.

            	
              CHOICE
                OF LAW AND VENUE; JURY TRIAL
                WAIVER.

            

    

     

    (a) THE
      VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY
      PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER
      LOAN
      DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF,
      AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS
      ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED
      UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
      OF
      NEW YORK.

     

    (b) THE
      PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
      AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN
      THE
      STATE AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY IN THE STATE OF NEW YORK,
      PROVIDED,
      HOWEVER,
      THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY
      MAY
      BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT
      ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY
      BE
      FOUND. EACH OF THE CREDIT PARTIES AND THE LENDER GROUP WAIVE, TO THE EXTENT
      PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
      OF FORUM NON CONVENIENS
      OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE
      WITH
      THIS SECTION
      13(b).

    
      
        
        

      

      
        -102-

        
          

        

      

      
        
        

      

    

     

    (c) EACH
      OF THE CREDIT PARTIES AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS
      TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
      ANY
      OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
      CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
      OR
      STATUTORY CLAIMS. EACH OF THE CREDIT PARTIES AND THE LENDER GROUP REPRESENT
      THAT
      EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
      JURY
      TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
      LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
      TRIAL BY THE COURT.

     

    
      	
              14.

            	
              ASSIGNMENTS
                AND PARTICIPATIONS;
                SUCCESSORS.

            

    

     

    14.1 Assignments
      and Participations.

     

    (a) Any
      Lender may assign and delegate to one or more assignees (each an “Assignee”)
      that
      are Eligible Transferees all, or any ratable part of all, of the Obligations,
      the Commitments and the other rights and obligations of such Lender hereunder
      and under the other Loan Documents, in a minimum amount of $5,000,000;
provided,
      however,
      that
      Borrower and Agent may continue to deal solely and directly with such Lender
      in
      connection with the interest so assigned to an Assignee until (i) written notice
      of such assignment, together with payment instructions, addresses, and related
      information with respect to the Assignee, have been given to Borrower and Agent
      by such Lender and the Assignee, (ii) such Lender and its Assignee have
      delivered to Borrower and Agent an Assignment and Acceptance, and (iii) the
      assignor Lender or Assignee has paid to Agent for Agent’s separate account a
      processing fee in the amount of $5,000. Anything contained herein to the
      contrary notwithstanding, the payment of any fees shall not be required and
      the
      Assignee need not be an Eligible Transferee if such assignment is in connection
      with any merger, consolidation, sale, transfer, or other disposition of all
      or
      any substantial portion of the business or loan portfolio of the assigning
      Lender.

     

    (b) From
      and
      after the date that Agent notifies the assignor Lender (with a copy to Borrower)
      that it has received an executed Assignment and Acceptance and payment of the
      above-referenced processing fee, (i) the Assignee thereunder shall be a party
      hereto and, to the extent that rights and obligations hereunder have been
      assigned to it pursuant to such Assignment and Acceptance, shall have the rights
      and obligations of a Lender under the Loan Documents, and (ii) the assignor
      Lender shall, to the extent that rights and obligations hereunder and under
      the
      other Loan Documents have been assigned by it pursuant to such Assignment and
      Acceptance, relinquish its rights (except with respect to Section
      11.3
      hereof)
      and be released from any future obligations under this Agreement (and in the
      case of an Assignment and Acceptance covering all or the remaining portion
      of an
      assigning Lender’s rights and obligations under this Agreement and the other
      Loan Documents, such Lender shall cease to be a party hereto and thereto),
      and
      such assignment shall effect a novation between Borrower and the Assignee;
      provided,
      however,
      that
      nothing contained herein shall release any assigning Lender from obligations
      that survive the termination of this Agreement, including such assigning
      Lender’s obligations under Article
      16
      and
Section
      17.8
      of this
      Agreement.

    
      
        
        

      

      
        -103-

        
          

        

      

      
        
        

      

    

     

    (c) By
      executing and delivering an Assignment and Acceptance, the assigning Lender
      thereunder and the Assignee thereunder confirm to and agree with each other
      and
      the other parties hereto as follows: (1) other than as provided in such
      Assignment and Acceptance, such assigning Lender makes no representation or
      warranty and assumes no responsibility with respect to any statements,
      warranties or representations made in or in connection with this Agreement
      or
      the execution, legality, validity, enforceability, genuineness, sufficiency
      or
      value of this Agreement or any other Loan Document furnished pursuant hereto,
      (2) such assigning Lender makes no representation or warranty and assumes no
      responsibility with respect to the financial condition of Borrower or the
      performance or observance by Borrower of any of its obligations under this
      Agreement or any other Loan Document furnished pursuant hereto, (3) such
      Assignee confirms that it has received a copy of this Agreement, together with
      such other documents and information as it has deemed appropriate to make its
      own credit analysis and decision to enter into such Assignment and Acceptance,
      (4) such Assignee will, independently and without reliance upon Agent, such
      assigning Lender 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, (5) such
      Assignee appoints and authorizes Agent to take such actions and to exercise
      such
      powers under this Agreement as are delegated to Agent, by the terms hereof,
      together with such powers as are reasonably incidental thereto, and (6) such
      Assignee agrees that it will perform all of the obligations which by the terms
      of this Agreement are required to be performed by it as a Lender.

     

    (d) Immediately
      upon Agent’s receipt of the required processing fee payment and the fully
      executed Assignment and Acceptance, this Agreement shall be deemed to be amended
      to the extent, but only to the extent, necessary to reflect the addition of
      the
      Assignee and the resulting adjustment of the Commitments arising therefrom.
      The
      Commitment allocated to each Assignee shall reduce such Commitments of the
      assigning Lender pro tanto.

    
      
        
        

      

      
        -104-

        
          

        

      

      
        
        

      

    

     

    (e) Any
      Lender may at any time, with the written consent of Agent, sell to one or more
      commercial banks, financial institutions, or other Persons not Affiliates of
      such Lender (a “Participant”)
      participating interests in its Obligations, the Commitment, and the other rights
      and interests of that Lender (the “Originating
      Lender”)
      hereunder and under the other Loan Documents (provided that no written consent
      of Agent shall be required in connection with any sale of any such participating
      interests by a Lender to an Eligible Transferee); provided,
      however,
      that
      (i) the Originating Lender shall remain a “Lender” for all purposes of this
      Agreement and the other Loan Documents and the Participant receiving the
      participating interest in the Obligations, the Commitments, and the other rights
      and interests of the Originating Lender hereunder shall not constitute a
“Lender” hereunder or under the other Loan Documents and the Originating
      Lender’s obligations under this Agreement shall remain unchanged, (ii) the
      Originating Lender shall remain solely responsible for the performance of such
      obligations, (iii) Borrower, Agent, and the Lenders shall continue to deal
      solely and directly with the Originating Lender in connection with the
      Originating Lender’s rights and obligations under this Agreement and the other
      Loan Documents, (iv) no Lender shall transfer or grant any participating
      interest under which the Participant has the right to approve any amendment
      to,
      or any consent or waiver with respect to, this Agreement or any other Loan
      Document, except to the extent such amendment to, or consent or waiver with
      respect to this Agreement or of any other Loan Document would (A) extend the
      final maturity date of the Obligations hereunder in which such Participant
      is
      participating, (B) reduce the interest rate applicable to the Obligations
      hereunder in which such Participant is participating, (C) release all or
      substantially all of the Collateral or guaranties (except to the extent
      expressly provided herein or in any of the Loan Documents) supporting the
      Obligations hereunder in which such Participant is participating, (D) postpone
      the payment of, or reduce the amount of, the interest or fees payable to such
      Participant through such Lender, or (E) change the amount or due dates of
      scheduled principal repayments or prepayments or premiums, and (v) all amounts
      payable by Borrower hereunder shall be determined as if such Lender had not
      sold
      such participation, except that, if amounts outstanding under this Agreement
      are
      due and unpaid, or shall have been declared or shall have become due and payable
      upon the occurrence of an Event of Default, each Participant shall be deemed
      to
      have the right of set-off in respect of its participating interest in amounts
      owing under this Agreement to the same extent as if the amount of its
      participating interest were owing directly to it as a Lender under this
      Agreement. The rights of any Participant only shall be derivative through the
      Originating Lender with whom such Participant participates and no Participant
      shall have any rights under this Agreement or the other Loan Documents or any
      direct rights as to the other Lenders, Agent, Borrower, the Collections of
      any
      Credit Party, the Collateral, or otherwise in respect of the Obligations. No
      Participant shall have the right to participate directly in the making of
      decisions by the Lenders among themselves. Notwithstanding the foregoing, for
      purposes of Section
      16.11,
      a
      Participant shall be treated as a Lender that is an assignee of the Originating
      Lender.

    
      
        
        

      

      
        -105-

        
          

        

      

      
        
        

      

    

     

    (f) In
      connection with any such assignment or participation or proposed assignment
      or
      participation, a Lender may, subject to the provisions of Section
      18.8,
      disclose all documents and information which it now or hereafter may have
      relating to Borrower and its Subsidiaries and their respective
      businesses.

     

    (g) Any
      other
      provision in this Agreement notwithstanding, any Lender may at any time create
      a
      security interest in, or pledge, all or any portion of its rights under and
      interest in this Agreement, including without limitation, in favor of any
      Federal Reserve Bank in accordance with Regulation A of the Federal Reserve
      Bank
      or U.S. Treasury Regulation 31 CFR §203.24 (and such Federal Reserve Bank may
      enforce such pledge or security interest in any manner permitted under
      applicable law).

     

    (h) Agent,
      acting solely for this purpose as an agent of Borrower, shall maintain at one
      of
      its offices in the United States a copy of each Assignment and Acceptance
      delivered to it and a register for the recordation of the names and addresses
      of
      each Lender, and the Revolving Commitments of, and principal amount of the
      Advances owing to, such Lender pursuant to the terms hereof. The entries in
      such
      register shall be conclusive, and Borrower, Agent and Lenders may treat each
      Person whose name is recorded therein pursuant to the terms hereof as a Lender
      hereunder for all purposes of this Agreement, notwithstanding notice to the
      contrary. Such register shall be available for inspection by Borrower and any
      Lender, at any reasonable time upon reasonable prior notice to Agent.

     

    14.2 Successors.
      This
      Agreement shall bind and inure to the benefit of the respective successors
      and
      assigns of each of the parties; provided,
      however,
      that no
      Credit Party may assign this Agreement or any rights or duties hereunder without
      the Lenders’ prior written consent and any prohibited assignment shall be
      absolutely void ab
      initio.
      No
      consent to assignment by the Lenders shall release any Credit Party from its
      Obligations. A Lender may assign this Agreement and the other Loan Documents
      and
      its rights and duties hereunder and thereunder pursuant to Section
      14.1
      hereof
      and, except as expressly required pursuant to Section
      14.1
      hereof,
      no consent or approval by any Credit Party is required in connection with any
      such assignment.

     

    
      	
              15.

            	
              AMENDMENTS;
                WAIVERS.

            

    

     

    15.1 Amendments
      and Waivers.
      No
      amendment or waiver of any provision of this Agreement or any other Loan
      Document, and no consent with respect to any departure by any Credit Party
      therefrom, shall be effective unless the same shall be in writing and signed
      by
      the Required Lenders (or by Agent at the written request of the Required
      Lenders) and each Credit Party and then any such waiver or consent shall be
      effective only in the specific instance and for the specific purpose for which
      given; provided,
      however,
      that no
      such waiver, amendment, or consent shall, unless in writing and signed by all
      of
      the Lenders affected thereby and each Credit Party, do any of the
      following:

    
      
        
        

      

      
        -106-

        
          

        

      

      
        
        

      

    

     

    (a) increase
      or extend any Commitment of any Lender,

     

    (b) postpone
      or delay any date fixed by this Agreement or any other Loan Document for any
      payment of principal, interest, fees, or other amounts due hereunder or under
      any other Loan Document,

     

    (c) reduce
      the principal of, or the rate of interest on, any loan or other extension of
      credit hereunder, or reduce any fees or other amounts payable hereunder or
      under
      any other Loan Document,

     

    (d) change
      the percentage of the Commitments that is required to take any action hereunder,
      

     

    (e) amend
      or
      modify this Section or any provision of the Agreement providing for consent
      or
      other action by all Lenders,

     

    (f) release
      the Collateral other than as permitted by Section
      16.12,

     

    (g) change
      the definition of “Required Lenders” or “Pro Rata Share”,

     

    (h) contractually
      subordinate any of the Agent’s Liens other than with respect to a release of the
      Collateral otherwise permitted by Section
      16.12,

     

    (i) release
      any Credit Party from any obligation for the payment of money, other than,
      with
      respect to any Credit Party other than the Parent, Borrower or Payless Missouri,
      as would be permitted with respect to a release of the Collateral permitted
      by
Section
      16.12,
      or

     

    (j) change
      the definition of Borrowing Base or the definitions of Eligible Accounts,
      Eligible Inventory, Eligible In-Transit Inventory, Eligible Landed Inventory,
      Maximum Revolver Amount, or change Section
      2.1(b)
      (provided that Agent’s establishment and adjustment of the Reserves as permitted
      by Section
      2.1(b)
      shall
      not be considered a change for purposes of this Section
      15.1(j)),
      

     

    (k) amend
      any
      of the provisions of Section
      16,
      or

     

    (l) amend
      Section
      7.14,

    
      
        
        

      

      
        -107-

        
          

        

      

      
        
        

      

    

     

    and,
      provided
      further,
      however,
      that no
      amendment, waiver or consent shall, unless in writing and signed by Agent,
      Issuing Lender, or Swing Lender, as applicable, affect the rights or duties
      of
      Agent, Issuing Lender, or Swing Lender, as applicable, under this Agreement
      or
      any other Loan Document. The foregoing notwithstanding, any amendment,
      modification, waiver, consent, termination, or release of, or with respect
      to,
      any provision of this Agreement or any other Loan Document that relates only
      to
      the relationship of the Lender Group among themselves, and that does not affect
      the rights or obligations of any Credit Party, shall not require consent by
      or
      the agreement of such Credit Party. For purposes of clarification, other than
      as
      required by Section
      2.2,
      no
      Lender consent will be required with respect to the Revolver Increase (other
      than the requirement for any individual Lender to increase its Commitment
      hereunder).

     

    15.2 Replacement
      of Holdout Lender.

     

    (a) (i)
      If
      any action to be taken by the Lender Group or Agent hereunder requires the
      unanimous consent, authorization, or agreement of all Lenders, and a Lender
      fails to give its consent, authorization, or agreement or (ii) if any Lender
      gives notice to Borrower pursuant to Section
      2.14
      (in each
      case, a “Holdout
      Lender”),
      then
      Borrower or Agent, upon at least 5 Business Days prior irrevocable notice to
      the
      Holdout Lender, may permanently replace the Holdout Lender with one or more
      substitute Lenders (each, a “Replacement
      Lender”),
      and
      the Holdout Lender shall have no right to refuse to be replaced hereunder.
      Such
      notice to replace the Holdout Lender shall specify an effective date for such
      replacement, which date shall not be later than 15 Business Days after the
      date
      such notice is given.

     

    (b) Prior
      to
      the effective date of such replacement, the Holdout Lender and each Replacement
      Lender shall execute and deliver an Assignment and Acceptance, subject only
      to
      the Holdout Lender being repaid its share of the outstanding Obligations
      (including an assumption of its Pro Rata Share of the Risk Participation
      Liability) without any premium or penalty of any kind whatsoever. If the Holdout
      Lender shall refuse or fail to execute and deliver any such Assignment and
      Acceptance prior to the effective date of such replacement, the Holdout Lender
      shall be deemed to have executed and delivered such Assignment and Acceptance.
      The replacement of any Holdout Lender shall be made in accordance with the
      terms
      of Section
      14.1.
      Until
      such time as the Replacement Lenders shall have acquired all of the Obligations,
      the Commitments, and the other rights and obligations of the Holdout Lender
      hereunder and under the other Loan Documents, the Holdout Lender shall remain
      obligated to make the Holdout Lender’s Pro Rata Share of Advances and to
      purchase a participation in each Letter of Credit, in an amount equal to its
      Pro
      Rata Share of the Risk Participation Liability of such Letter of
      Credit.

     

    15.3 No
      Waivers; Cumulative Remedies.
      No
      failure by Agent or any Lender to exercise any right, remedy, or option under
      this Agreement or any other Loan Document, or delay by Agent or any Lender
      in
      exercising the same, will operate as a waiver thereof. No waiver by Agent or
      any
      Lender will be effective unless it is in writing, and then only to the extent
      specifically stated. No waiver by Agent or any Lender on any occasion shall
      affect or diminish Agent’s and each Lender’s rights thereafter to require strict
      performance by each Credit Party of any provision of this Agreement. Agent’s and
      each Lender’s rights under this Agreement and the other Loan Documents will be
      cumulative and not exclusive of any other right or remedy that Agent or any
      Lender may have. 

    
      
        
        

      

      
        -108-

        
          

        

      

      
        
        

      

    

     

    
      	
              16.

            	
              AGENT;
                THE LENDER GROUP.

            

    

     

    16.1 Appointment
      and Authorization of Agent.
      Each
      Lender hereby designates and appoints WFRF as its representative under this
      Agreement and the other Loan Documents and each Lender hereby irrevocably
      authorizes Agent to execute and deliver each of the other Loan Documents on
      its
      behalf and to take such other action on its behalf under the provisions of
      this
      Agreement and each other Loan Document and to exercise such powers and perform
      such duties as are expressly delegated to Agent by the terms of this Agreement
      or any other Loan Document, together with such powers as are reasonably
      incidental thereto. Agent agrees to act as such on the express conditions
      contained in this Section
      16.
      The
      provisions of this Section
      16
      (other
      than Section
      16.11
      and the
      release provisions in Section
      16.12)
      are
      solely for the benefit of Agent, and the Lenders, and the Credit Parties shall
      have no rights as a third party beneficiary of any of the provisions contained
      herein. Any provision to the contrary contained elsewhere in this Agreement
      or
      in any other Loan Document notwithstanding, Agent shall not have any duties
      or
      responsibilities, except those expressly set forth herein, nor shall Agent
      have
      or be deemed to have any fiduciary relationship with any Lender, and no implied
      covenants, functions, responsibilities, duties, obligations or liabilities
      shall
      be read into this Agreement or any other Loan Document or otherwise exist
      against Agent; it being expressly understood and agreed that the use of the
      word
“Agent” is for convenience only, that WFRF is merely the representative of the
      Lenders, and only has the contractual duties set forth herein. Except as
      expressly otherwise provided in this Agreement, Agent shall have and may use
      its
      sole discretion with respect to exercising or refraining from exercising any
      discretionary rights or taking or refraining from taking any actions that Agent
      expressly is entitled to take or assert under or pursuant to this Agreement
      and
      the other Loan Documents. Without limiting the generality of the foregoing,
      or
      of any other provision of the Loan Documents that provides rights or powers
      to
      Agent, Lenders agree that Agent shall have the right to exercise the following
      powers as long as this Agreement remains in effect: (a) maintain, in accordance
      with its customary business practices, ledgers and records reflecting the status
      of the Obligations, the Collateral, the Collections of each Credit Party, and
      related matters, (b) execute or file any and all financing or similar statements
      or notices, amendments, renewals, supplements, documents, instruments, proofs
      of
      claim, notices and other written agreements with respect to the Loan Documents,
      (c) make Advances, for itself or on behalf of Lenders as provided in the Loan
      Documents, (d) exclusively receive, apply, and distribute the Collections of
      each Credit Party as provided in the Loan Documents, (e) open and maintain
      such
      bank accounts and cash management arrangements as Agent deems necessary and
      appropriate in accordance with the Loan Documents for the foregoing purposes
      with respect to the Collateral and the Collections of each Credit Party, (f)
      perform, exercise, and enforce any and all other rights and remedies of the
      Lender Group with respect to each Credit Party, the Obligations, the Collateral,
      the Collections of each Credit Party, or otherwise related to any of same as
      provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses
      as Agent may deem necessary or appropriate for the performance and fulfillment
      of its functions and powers pursuant to the Loan Documents.

    
      
        
        

      

      
        -109-

        
          

        

      

      
        
        

      

    

     

    16.2 Delegation
      of Duties.
      Agent
      may execute any of its duties under this Agreement or any other Loan Document
      by
      or through agents, employees or attorneys-in-fact and shall be entitled to
      advice of counsel concerning all matters pertaining to such duties. Agent shall
      not be responsible for the negligence or misconduct of any agent or
      attorney-in-fact that it selects as long as such selection was made without
      gross negligence or willful misconduct. 

     

    16.3 Liability
      of Agent.
      None of
      the Agent-Related Persons shall (i) be liable for any action taken or omitted
      to
      be taken by any of them under or in connection with this Agreement or any other
      Loan Document or the transactions contemplated hereby (except for its own gross
      negligence or willful misconduct), or (ii) be responsible in any manner to
      any
      of the Lenders for any recital, statement, representation or warranty made
      by
      any Credit Party, or any officer or director thereof, contained in this
      Agreement or in any other Loan Document, or in any certificate, report,
      statement or other document referred to or provided for in, or received by
      Agent
      under or in connection with, this Agreement or any other Loan Document, or
      the
      validity, effectiveness, genuineness, enforceability or sufficiency of this
      Agreement or any other Loan Document, or for any failure of any Credit Party
      or
      any other party to any Loan Document to perform its obligations hereunder or
      thereunder. No Agent-Related Person shall be under any obligation to any Lender
      to ascertain or to inquire as to the observance or performance of any of the
      agreements contained in, or conditions of, this Agreement or any other Loan
      Document, or to inspect the Books or properties of any Credit Party or the
      books
      or records or properties of any Credit Party or its Affiliates.

     

    16.4 Reliance
      by Agent.
      Agent
      shall be entitled to rely, and shall be fully protected in relying, upon any
      writing, resolution, notice, consent, certificate, affidavit, letter, telegram,
      facsimile, telex or telephone message, statement or other document or
      conversation believed by it to be genuine and correct and to have been signed,
      sent, or made by the proper Person or Persons, and upon advice and statements
      of
      legal counsel (including counsel to any Credit Party or counsel to any Lender),
      independent accountants and other experts selected by Agent. Agent shall be
      fully justified in failing or refusing to take any action under this Agreement
      or any other Loan Document unless Agent shall first receive such advice or
      concurrence of the Lenders as it deems appropriate and until such instructions
      are received, Agent shall act, or refrain from acting, as it deems advisable.
      If
      Agent so requests, it shall first be indemnified to its reasonable satisfaction
      by the Lenders against any and all liability and expense that may be incurred
      by
      it by reason of taking or continuing to take any such action. Agent shall in
      all
      cases be fully protected in acting, or in refraining from acting, under this
      Agreement or any other Loan Document in accordance with a request or consent
      of
      the requisite Lenders and such request and any action taken or failure to act
      pursuant thereto shall be binding upon all of the Lenders.

    
      
        
        

      

      
        -110-

        
          

        

      

      
        
        

      

    

     

    16.5 Notice
      of Default or Event of Default.
      Agent
      shall not be deemed to have knowledge or notice of the occurrence of any Default
      or Event of Default, except with respect to defaults in the payment of
      principal, interest, fees, and expenses required to be paid to Agent for the
      account of the Lenders and, except with respect to Events of Default of which
      Agent has actual knowledge, unless Agent shall have received written notice
      from
      a Lender or Borrower referring to this Agreement, describing such Default or
      Event of Default, and stating that such notice is a “notice of default.” Agent
      promptly will notify the Lenders of its receipt of any such notice or of any
      Event of Default of which Agent has actual knowledge. If any Lender obtains
      actual knowledge of any Event of Default, such Lender promptly shall notify
      the
      other Lenders and Agent of such Event of Default. Each Lender shall be solely
      responsible for giving any notices to its Participants, if any. Subject to
      Section
      16.4,
      Agent
      shall take such action with respect to such Default or Event of Default as
      may
      be requested by the Required Lenders in accordance with Section
      9;
      provided,
      however,
      that
      unless and until Agent has received any such request, Agent may (but shall
      not
      be obligated to) take such action, or refrain from taking such action, with
      respect to such Default or Event of Default as it shall deem
      advisable.

     

    16.6 Credit
      Decision.
      Each
      Lender acknowledges that none of the Agent-Related Persons has made any
      representation or warranty to it, and that no act by Agent hereinafter taken,
      including any review of the affairs of any Credit Party or its Affiliates,
      shall
      be deemed to constitute any representation or warranty by any Agent-Related
      Person to any Lender. Each Lender represents to Agent that it has, independently
      and without reliance upon any Agent-Related Person and based on such documents
      and information as it has deemed appropriate, made its own appraisal of and
      investigation into the business, prospects, operations, property, financial
      and
      other condition and creditworthiness of each Credit Party and any other Person
      party to a Loan Document, and all applicable bank regulatory laws relating
      to
      the transactions contemplated hereby, and made its own decision to enter into
      this Agreement and to extend credit to Borrower. Each Lender also represents
      that it will, independently and without reliance upon any Agent-Related Person
      and based on such documents and information as it shall deem appropriate at
      the
      time, continue to make its own credit analysis, appraisals and decisions in
      taking or not taking action under this Agreement and the other Loan Documents,
      and to make such investigations as it deems necessary to inform itself as to
      the
      business, prospects, operations, property, financial and other condition and
      creditworthiness of each Credit Party and any other Person party to a Loan
      Document. Except for notices, reports, and other documents expressly herein
      required to be furnished to the Lenders by Agent and the Borrowing Base
      Certificate, Agent shall not have any duty or responsibility to provide any
      Lender with any credit or other information concerning the business, prospects,
      operations, property, financial and other condition or creditworthiness of
      any
      Credit Party and any other Person party to a Loan Document that may come into
      the possession of any of the Agent-Related Persons.

    
      
        
        

      

      
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    16.7 Costs
      and Expenses; Indemnification.
      Agent
      may incur and pay Lender Group Expenses to the extent Agent reasonably deems
      necessary or appropriate for the performance and fulfillment of its functions,
      powers, and obligations pursuant to the Loan Documents, including court costs,
      attorneys fees and expenses, fees and expenses of financial accountants,
      advisors, consultants, and appraisers, costs of collection by outside collection
      agencies, auctioneer fees and expenses, and costs of security guards or
      insurance premiums paid to maintain the Collateral, whether or not any Credit
      Party is obligated to reimburse Agent or Lenders for such expenses pursuant
      to
      the Loan Agreement or otherwise. Agent is authorized and directed to deduct
      and
      retain sufficient amounts from the Collections of each Credit Party received
      by
      Agent to reimburse Agent for such out-of-pocket costs and expenses prior to
      the
      distribution of any amounts to Lenders. In the event Agent is not reimbursed
      for
      such costs and expenses from the Collections of each Credit Party received
      by
      Agent, each Lender hereby agrees that it is and shall be obligated to pay to
      or
      reimburse Agent for the amount of such Lender’s Pro Rata Share thereof. Whether
      or not the transactions contemplated hereby are consummated, the Lenders shall
      indemnify upon demand the Agent-Related Persons (to the extent not reimbursed
      by
      or on behalf of any Credit Party and without limiting the obligation of any
      Credit Party to do so), according to their Pro Rata Shares, from and against
      any
      and all Indemnified Liabilities; provided,
      however,
      that no
      Lender shall be liable for the payment to any Agent-Related Person of any
      portion of such Indemnified Liabilities resulting solely from such Person’s
      gross negligence or willful misconduct nor shall any Lender be liable for the
      obligations of any Defaulting Lender in failing to make an Advance or other
      extension of credit hereunder. Without limitation of the foregoing, each Lender
      shall reimburse Agent upon demand for such Lender’s Pro Rata Share of any costs
      or out-of-pocket expenses (including attorneys, accountants, advisors, and
      consultants fees and expenses) 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,
      any other Loan Document, or any document contemplated by or referred to herein,
      to the extent that Agent is not reimbursed for such expenses by or on behalf
      of
      a Credit Party. The undertaking in this Section shall survive the payment of
      all
      Obligations hereunder and the resignation or replacement of Agent.

     

    16.8 Agent
      in Individual Capacity.
      WFRF
      and its Affiliates may make loans to, issue letters of credit for the account
      of, accept deposits from, acquire equity interests in, and generally engage
      in
      any kind of banking, trust, financial advisory, underwriting, or other business
      with any Credit Party and its Affiliates and any other Person party to any
      Loan
      Documents as though WFRF were not Agent hereunder, and, in each case, without
      notice to or consent of the other members of the Lender Group. The other members
      of the Lender Group acknowledge that, pursuant to such activities, WFRF or
      its
      Affiliates may receive information regarding any Credit Party or its Affiliates
      and any other Person party to any Loan Documents that is subject to
      confidentiality obligations in favor of such Credit Party or such other Person
      and that prohibit the disclosure of such information to the Lenders, and the
      Lenders acknowledge that, in such circumstances (and in the absence of a waiver
      of such confidentiality obligations, which waiver Agent will use its reasonable
      best efforts to obtain), Agent shall not be under any obligation to provide
      such
      information to them. The terms “Lender” and “Lenders” include WFRF in its
      individual capacity. 

    
      
        
        

      

      
        -112-

        
          

        

      

      
        
        

      

    

     

    16.9 Successor
      Agent.
      Agent
      may resign as Agent upon 45 days notice to the Lenders and Borrower. If Agent
      resigns under this Agreement, the Required Lenders shall, in consultation with
      Borrower, appoint a successor Agent for the Lenders. If no successor Agent
      is
      appointed and shall have accepted such appointment prior to the effective date
      of the resignation of Agent, Agent may appoint, after consulting with the
      Lenders and Borrower, a successor Agent. If Agent has materially breached or
      failed to perform any material provision of this Agreement or of applicable
      law,
      the Required Lenders may agree in writing to remove and replace Agent with
      a
      successor Agent from among the Lenders chosen in consultation with Borrower.
      In
      any such event (whether an appointment by Agent or by the Required Lenders)
      described in the two immediately preceding sentences, upon the acceptance of
      its
      appointment as successor Agent hereunder, such successor Agent shall succeed
      to
      all the rights, powers, and duties of the retiring Agent and the term “Agent”
shall mean such successor Agent and the retiring Agent’s appointment, powers,
      and duties as Agent shall be terminated. After any retiring Agent’s resignation
      hereunder as Agent, the provisions of this Section
      16
      shall
      inure to its benefit as to any actions taken or omitted to be taken by it while
      it was Agent under this Agreement. If no successor Agent has accepted
      appointment as Agent by the date which is 45 days following a retiring Agent’s
      notice of resignation, the retiring Agent’s resignation shall nevertheless
      thereupon become effective and the Lenders shall perform all of the duties
      of
      Agent hereunder until such time, if any, as the Lenders appoint a successor
      Agent as provided for above.

     

    16.10 Lender
      in Individual Capacity.
      Any
      Lender and its respective Affiliates may make loans to, issue letters of credit
      for the account of, accept deposits from, acquire equity interests in and
      generally engage in any kind of banking, trust, financial advisory, underwriting
      or other business with any Credit Party and its Affiliates and any other Person
      party to any Loan Documents as though such Lender were not a Lender hereunder
      without notice to or consent of the other members of the Lender Group. The
      other
      members of the Lender Group acknowledge that, pursuant to such activities,
      such
      Lender and its respective Affiliates may receive information regarding any
      Credit Party or its Affiliates and any other Person party to any Loan Documents
      that is subject to confidentiality obligations in favor of such Credit Party
      or
      such other Person and that prohibit the disclosure of such information to the
      Lenders, and the Lenders acknowledge that, in such circumstances (and in the
      absence of a waiver of such confidentiality obligations, which waiver such
      Lender will use its reasonable best efforts to obtain), such Lender not shall
      be
      under any obligation to provide such information to them. With respect to the
      Swing Loans and Agent Advances, Swing Lender shall have the same rights and
      powers under this Agreement as any other Lender and may exercise the same as
      though it were not the sub-agent of Agent.

    
      
        
        

      

      
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    16.11 Withholding
      Taxes.

     

    (a) If
      any
      Lender is a “foreign person” within the meaning of the IRC and such Lender
      claims exemption from, or a reduction of, U.S. withholding tax under Sections
      1441 or 1442 of the IRC, such Lender agrees with and in favor of Agent and
      Borrower, to deliver to Agent and Borrower:

     

    (i) if
      such
      Lender claims an exemption from withholding tax pursuant to its portfolio
      interest exception, (A) a statement of the Lender, signed under penalty of
      perjury, that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of
      the IRC, (II) a 10% shareholder of Borrower (within the meaning of Section
      871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation related
      to
      Borrower within the meaning of Section 864(d)(4) of the IRC, and (B) a properly
      completed and executed IRS Form W-8BEN, before the first payment of any interest
      under this Agreement to the Lender and at any other time reasonably requested
      by
      Agent or Borrower;

     

    (ii) if
      such
      Lender claims an exemption from, or a reduction of, withholding tax under a
      United States tax treaty, properly completed and executed IRS Form W-8BEN before
      the first payment of any interest to the Lender under this Agreement and at
      any
      other time reasonably requested by Agent or Borrower;

     

    (iii) if
      such
      Lender claims that interest paid under this Agreement is exempt from United
      States withholding tax because it is effectively connected with a United States
      trade or business of such Lender, two properly completed and executed copies
      of
      IRS Form W-8ECI before the first payment of any interest to the Lender is due
      under this Agreement and at any other time reasonably requested by Agent or
      Borrower; and 

     

    (iv) such
      other form or forms as may be required under the IRC or other laws of the United
      States as a condition to exemption from, or reduction of, United States
      withholding tax, as reasonably requested by Agent or Borrower at times
      reasonably requested by Agent or Borrower.

     

    Such
      Lender agrees promptly to notify Agent and Borrower of any change in
      circumstances which would modify or render invalid any claimed exemption or
      reduction.

     

    (b) If
      any
      Lender claims exemption from, or reduction of, withholding tax under a United
      States tax treaty by providing IRS Form W-8BEN and such Lender sells, assigns,
      grants a participation in, or otherwise transfers all or part of the Obligations
      of Borrower to such Lender, such Lender agrees to notify Agent of the percentage
      amount in which it is no longer the beneficial owner of Obligations of Borrower
      to such Lender. To the extent of such percentage amount, Agent will treat such
      Lender’s IRS Form W-8BEN as no longer valid.

    
      
        
        

      

      
        -114-

        
          

        

      

      
        
        

      

    

     

    (c) Subject
      to Section
      16.11(e),
      if any
      Lender is entitled to a reduction in the applicable withholding tax, Agent
      may
      withhold from any interest payment to such Lender an amount equivalent to the
      applicable withholding tax after taking into account such reduction. If the
      forms or other documentation required by subsection (a) of this Section are
      not
      delivered to Agent, then Agent may withhold from any interest payment to such
      Lender not providing such forms or other documentation an amount equivalent
      to
      the applicable withholding tax.

     

    (d) If
      the
      IRS or any other Governmental Authority of the United States or other
      jurisdiction asserts a claim that Agent did not properly withhold tax from
      amounts paid to or for the account of any Lender (because the appropriate form
      was not delivered, was not properly executed, or because such Lender failed
      to
      notify Agent of a change in circumstances which rendered the exemption from,
      or
      reduction of, withholding tax ineffective, or for any other reason) such Lender
      shall indemnify and hold Agent harmless for all amounts paid, directly or
      indirectly, by Agent as tax or otherwise, including penalties and interest,
      and
      including any taxes imposed by any jurisdiction on the amounts payable to Agent
      under this Section, together with all costs and expenses (including attorneys
      fees and expenses). The obligation of the Lenders under this subsection shall
      survive the payment of all Obligations and the resignation or replacement of
      Agent.

     

    (e) All
      payments made by Borrower hereunder or under any note will be made without
      setoff, counterclaim, or other defense, except as required by applicable law
      other than for Taxes (as defined below). To the extent permitted by applicable
      law, all such payments will be made free and clear of, and without deduction
      or
      withholding for, any present or future taxes, levies, imposts, duties, fees,
      assessments or other charges of whatever nature now or hereafter imposed by
      any
      jurisdiction (other than the United States) or by any political subdivision
      or
      taxing authority thereof or therein (other than of the United States) with
      respect to such payments (but excluding, any tax imposed by any jurisdiction
      or
      by any political subdivision or taxing authority thereof or therein (i) measured
      by or based on the net income or net profits of a Lender, or (ii) to the extent
      that such tax results from a change in the circumstances of the Lender,
      including a change in the residence, place of organization, or principal place
      of business of the Lender, or a change in the branch or lending office of the
      Lender participating in the transactions set forth herein) and all interest,
      penalties or similar liabilities with respect thereto (all such non-excluded
      taxes, levies, imposts, duties, fees, assessments or other charges being
      referred to collectively as “Taxes”).
      If
      any Taxes are so levied or imposed, Borrower agrees to pay the full amount
      of
      such Taxes, and such additional amounts as may be necessary so that every
      pay-ment of all amounts due under this Agreement or under any note, including
      any amount paid pursuant to this Section 16.11(e)
      after
      withholding or deduction for or on account of any Taxes, will not be less than
      the amount provided for herein; provided,
      however,
      that
      Borrower shall not be required to increase any such amounts payable to Agent
      or
      any Lender (i) that is not organized under the laws of the United States, if
      such Person fails to comply with the other requirements of this Section
      16.11,
      (ii) if
      the increase in such amount payable results from Agent’s or such Lender’s own
      willful mis-conduct or gross negligence or (iii) as provided in Section
      16.11(f).
      Borrower will furnish to Agent as promptly as possible after the date the
      payment of any Taxes is due pursuant to applicable law certified copies of
      tax
      receipts evidencing such payment by Borrower.

    
      
        
        

      

      
        -115-

        
          

        

      

      
        
        

      

    

     

    (f) Notwithstanding
      anything in this Section
      16.11,
      Borrower will not be required to make payments under this Section
      16.11
      (including any increased payments under Section
      16.11(e))
      with
      respect to taxes that are imposed on amounts payable to the Lender at the time
      the Lender becomes a party to this Agreement (or designates a new lending office
      outside the United States), except to the extent that such Lender (or its
      assignor, if any) was entitled, at the time of designation of a new lending
      office (or assignment), to receive additional amounts from Borrower with respect
      to such withholding tax pursuant to Section
      16.11.

     

    (g) If
      any
      payment by the Borrower is made to or for the account of the Lender after
      deduction for or on account of any Taxes, and increased payments are made by
      Borrower pursuant to this Section
      16.11,
      then,
      if the Lender reasonably determines that it has received or been granted a
      refund of, credit against or remission of such Taxes, such Lender shall
      reimburse to Borrower such amount as such Lender shall determine to be
      attributable to the relevant Taxes or deduction or withholding; provided, that
      (i) such Lender shall not be obligated to disclose to Borrower any information
      regarding its tax affairs and computations, and (ii) nothing herein shall be
      construed so as to interfere with the right of such Lender to arrange its tax
      affairs as it deems appropriate. If the Lender reasonably determines that a
      refund or credit is disallowed or reduced, Borrower shall promptly reimburse
      the
      Lender to the extent of such disallowance or reduction (and any interest paid
      to
      any applicable taxing authority).

     

    16.12 Collateral
      Matters.

     

    (a) The
      Lenders hereby irrevocably authorize Agent, at its option and in its sole
      discretion (it being understood that such release shall be mandatory under
      the
      circumstances described in clauses (ii) and (iv) below if no Event of Default
      has occurred and is continuing at the time of such circumstances described
      in
      clause (ii) and (iv) below), to release any Lien on any Collateral (i) upon
      the termination of the Commitments and payment and satisfaction in full by
      Borrower of all Obligations, (ii) constituting property being sold or
      disposed of if a release is required or desirable in connection therewith and
      if
      Borrower certifies to Agent that the sale or disposition is permitted under
      Section
      7.3
      of this
      Agreement or the other Loan Documents (and Agent may rely conclusively on any
      such certificate, without further inquiry) in which case Agent shall release
      such Collateral at the request of Borrower, (iii) constituting property in
      which no Credit Party owned any interest at the time the Agent’s Lien was
      granted nor at any time thereafter, or (iv) constituting property leased to
      any
      Credit Party under a lease that has expired or is terminated in a transaction
      permitted under this Agreement. Except as provided above, Agent will not execute
      and deliver a release of any Lien on any Collateral without the prior written
      authorization of (y) if the release is of all or substantially all of the
      Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon
      request by Agent or Borrower at any time, the Lenders will confirm in writing
      Agent’s authority to release any such Liens on particular types or items of
      Collateral pursuant to this Section 16.12;
      provided,
      however,
      that
      (1) Agent shall not be required to execute any document necessary to evidence
      such release on terms that, in Agent’s opinion, would expose Agent to liability
      or create any obligation or entail any consequence other than the release of
      such Lien without recourse, representation, or warranty, and (2) such release
      shall not in any manner discharge, affect, or impair the Obligations or any
      Liens (other than those expressly being released) upon (or obligations of any
      Credit Party in respect of) all interests retained by each Credit Party,
      including, the proceeds of any sale, all of which shall continue to constitute
      part of the Collateral. 

    
      
        
        

      

      
        -116-

        
          

        

      

      
        
        

      

    

     

    (b) Agent
      shall have no obligation whatsoever to any of the Lenders to assure that the
      Collateral exists or is owned by a Credit Party or is cared for, protected,
      or
      insured or has been encumbered, or that the Agent’s Liens have been properly or
      sufficiently or lawfully created, perfected, protected, or enforced or are
      entitled to any particular priority, or to exercise at all or in any particular
      manner or under any duty of care, disclosure or fidelity, or to continue
      exercising, any of the rights, authorities and powers granted or available
      to
      Agent pursuant to any of the Loan Documents, it being understood and agreed
      that
      in respect of the Collateral, or any act, omission, or event related thereto,
      subject to the terms and conditions contained herein, Agent may act in any
      manner it may deem appropriate, in its sole discretion given Agent’s own
      interest in the Collateral in its capacity as one of the Lenders and that Agent
      shall have no other duty or liability whatsoever to any Lender as to any of
      the
      foregoing, except as otherwise provided herein.

     

    16.13 Restrictions
      on Actions by Lenders; Sharing of Payments.

     

    (a) Each
      of
      the Lenders agrees that it shall not, without the express written consent of
      Agent, and that it shall, to the extent it is lawfully entitled to do so, upon
      the written request of Agent, set off against the Obligations, any amounts
      owing
      by such Lender to Borrower or any deposit accounts of any Credit Party now
      or
      hereafter maintained with such Lender. Each of the Lenders further agrees that
      it shall not, unless specifically requested to do so in writing by Agent, take
      or cause to be taken any action, including, the commencement of any legal or
      equitable proceedings, to foreclose any Lien on, or otherwise enforce any
      security interest in, any of the Collateral.

    
      
        
        

      

      
        -117-

        
          

        

      

      
        
        

      

    

     

    (b) If,
      at
      any time or times any Lender shall receive (i) by payment, foreclosure, setoff,
      or otherwise, any proceeds of the Collateral or any payments with respect to
      the
      Obligations, except for any such proceeds or payments received by such Lender
      from Agent pursuant to the terms of this Agreement, or (ii) payments from
      Agent in excess of such Lender’s ratable portion of all such distributions by
      Agent, such Lender promptly shall (1) turn the same over to Agent, in kind,
      and
      with such endorsements as may be required to negotiate the same to Agent, or
      in
      immediately available funds, as applicable, for the account of all of the
      Lenders and for application to the Obligations in accordance with the applicable
      provisions of this Agreement, or (2) purchase, without recourse or warranty,
      an
      undivided interest and participation in the Obligations owed to the other
      Lenders so that such excess payment received shall be applied ratably as among
      the Lenders in accordance with their Pro Rata Shares; provided,
      however,
      that to
      the extent that such excess payment received by the purchasing party is
      thereafter recovered from it, those purchases of participations shall be
      rescinded in whole or in part, as applicable, and the applicable portion of
      the
      purchase price paid therefor shall be returned to such purchasing party, but
      without interest except to the extent that such purchasing party is required
      to
      pay interest in connection with the recovery of the excess payment.

     

    16.14 Agency
      for Perfection.
      Agent
      hereby appoints each other Lender as its agent (and each Lender hereby accepts
      such appointment) for the purpose of perfecting the Agent’s Liens in assets
      which, in accordance with Article 9 of the Code can be perfected only by
      possession or control. Should any Lender obtain possession or control of any
      such Collateral, such Lender shall notify Agent thereof, and, promptly upon
      Agent’s request therefor shall deliver possession or control of such Collateral
      to Agent or in accordance with Agent’s instructions.

     

    16.15 Payments
      by Agent to the Lenders.
      All
      payments to be made by Agent to the Lenders shall be made by bank wire transfer
      of immediately available funds pursuant to such wire transfer instructions
      as
      each party may designate for itself by written notice to Agent. Concurrently
      with each such payment, Agent shall identify whether such payment (or any
      portion thereof) represents principal, premium, or interest of the
      Obligations.

     

    16.16 Concerning
      the Collateral and Related Loan Documents.
      Each
      member of the Lender Group authorizes and directs Agent to enter into this
      Agreement and the other Loan Documents. Each member of the Lender Group agrees
      that any action taken by Agent in accordance with the terms of this Agreement
      or
      the other Loan Documents relating to the Collateral and the exercise by Agent
      of
      its powers set forth therein or herein, together with such other powers that
      are
      reasonably incidental thereto, shall be binding upon all of the
      Lenders.

    
      
        
        

      

      
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    16.17 Field
      Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other
      Reports and Information.
      By
      becoming a party to this Agreement, each Lender:

     

    (a) is
      deemed
      to have requested that Agent furnish such Lender, promptly after it becomes
      available, a copy of each field audit or examination report (each a
“Report”
and
      collectively, “Reports”)
      prepared by Agent, and Agent shall so furnish each Lender with such Reports,
      

     

    (b) expressly
      agrees and acknowledges that each of Agent and Borrower (i) do not make any
      representation or warranty as to the accuracy of any Report, and (ii) shall
      not
      be liable for any information contained in any Report, except with respect
      to
      Borrower to the extent that it has supplied materially false or misleading
      information contained in any Report,

     

    (c) expressly
      agrees and acknowledges that the Reports are not comprehensive audits or
      examinations, that Agent or other party performing any audit or examination
      will
      inspect only specific information regarding the applicable Credit Party and
      will
      rely significantly upon the Books, as well as on representations of such Credit
      Party’s personnel,

     

    (d) agrees
      to
      keep all Reports and other material, non-public information regarding each
      Credit Party and its operations, assets, and existing and contemplated business
      plans in a confidential manner in accordance with Section
      18.8,
      and

     

    (e) without
      limiting the generality of any other indemnification provision contained in
      this
      Agreement, agrees: (i) to hold Agent and any other Lender preparing a Report
      harmless from any action the indemnifying Lender may take or fail to take or
      any
      conclusion the indemnifying Lender may reach or draw from any Report in
      connection with any loans or other credit accommodations that the indemnifying
      Lender has made or may make to any Credit Party, or the indemnifying Lender’s
      participation in, or the indemnifying Lender’s purchase of, a loan or loans of
      any Credit Party, and (ii) to pay and protect, and indemnify, defend and hold
      Agent, and any such other Lender preparing a Report harmless from and against,
      the claims, actions, proceedings, damages, costs, expenses, and other amounts
      (including, attorneys fees and costs) incurred by Agent and any such other
      Lender preparing a Report as the direct or indirect result of any third parties
      who might obtain all or part of any Report through the indemnifying
      Lender.

    
      
        
        

      

      
        -119-

        
          

        

      

      
        
        

      

    

     

    In
      addition to the foregoing: (x) any Lender may from time to time request of
      Agent
      in writing that Agent provide to such Lender a copy of any report or document
      provided by any Credit Party to Agent that has not been contemporaneously
      provided by such Credit Party to such Lender, and, upon receipt of such request,
      Agent promptly shall provide a copy of same to such Lender, (y) to the extent
      that Agent is entitled, under any provision of the Loan Documents, to request
      additional reports or information from any Credit Party, any Lender may, from
      time to time, reasonably request Agent to exercise such right as specified
      in
      such Lender’s notice to Agent, whereupon Agent promptly shall request of such
      Credit Party the additional reports or information reasonably specified by
      such
      Lender, and, upon receipt thereof from Borrower, Agent promptly shall provide
      a
      copy of same to such Lender, and (z) any time that Agent renders to such Credit
      Party a statement regarding the Loan Account, Agent shall send a copy of such
      statement to each Lender.

     

    16.18 Several
      Obligations; No Liability.
      Notwithstanding that certain of the Loan Documents now or hereafter may have
      been or will be executed only by or in favor of Agent in its capacity as such,
      and not by or in favor of the Lenders, any and all obligations on the part
      of
      Agent (if any) to make any credit available hereunder shall constitute the
      several (and not joint) obligations of the respective Lenders on a ratable
      basis, according to their respective Commitments, to make an amount of such
      credit not to exceed, in principal amount, at any one time outstanding, the
      amount of their respective Commitments. Nothing contained herein shall confer
      upon any Lender any interest in, or subject any Lender to any liability for,
      or
      in respect of, the business, assets, profits, losses, or liabilities of any
      other Lender. Each Lender shall be solely responsible for notifying its
      Participants of any matters relating to the Loan Documents to the extent any
      such notice may be required, and no Lender shall have any obligation, duty,
      or
      liability to any Participant of any other Lender. Except as provided in
Section
      16.7,
      no
      member of the Lender Group shall have any liability for the acts of any other
      member of the Lender Group. No Lender shall be responsible to any Credit Party
      or any other Person for any failure by any other Lender to fulfill its
      obligations to make credit available hereunder, nor to advance for it or on
      its
      behalf in connection with its Commitment, nor to take any other action on its
      behalf hereunder or in connection with the financing contemplated
      herein.

     

    16.19 Legal
      Representation of Agent.
      In
      connection with the negotiation, drafting, and execution of this Agreement
      and
      the other Loan Documents, or in connection with future legal representation
      relating to loan administration, amendments, modifications, waivers, or
      enforcement of remedies, Winston & Strawn LLP (“Winston”)
      only
      has represented and only shall represent WFRF in its capacity as Agent and
      as a
      Lender. Each other Lender hereby acknowledges that Winston does not represent
      it
      in connection with any such matters.

     

    
      	
              17.

            	
              GUARANTY.
                

            

    

     

    17.1 Guaranty
      of the Obligations.
      Subject
      to the provisions of Section
      17.2,
      Guarantors jointly and severally hereby irrevocably and unconditionally guaranty
      to Agent for the ratable benefit of the Lender Group the due and punctual
      payment in full of all Obligations when the same shall become due, whether
      at
      stated maturity, by required prepayment, declaration, acceleration, demand
      or
      otherwise (including amounts that would become due but for the operation of
      the
      automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section
      362(a)) (collectively, the “Guaranteed Obligations”).

    
      
        
        

      

      
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    17.2 Contribution
      by Guarantors.
      All
      Guarantors desire to allocate among themselves (collectively, the “Contributing
      Guarantors”),
      in a
      fair and equitable manner, their obligations arising under this Guaranty.
      Accordingly, in the event any payment or distribution is made on any date by
      a
      Guarantor (a “Funding
      Guarantor”)
      under
      this Guaranty that exceeds its Fair Share as of such date, such Funding
      Guarantor shall be entitled to a contribution from each of the other
      Contributing Guarantors in the amount of such other Contributing Guarantor’s
      Fair Share Shortfall as of such date, with the result that all such
      contributions will cause each Contributing Guarantor’s Aggregate Payments to
      equal its Fair Share as of such date. “Fair Share” means, with respect to a
      Contributing Guarantor as of any date of determination, an amount equal to
      (a)
      the ratio of (i) the Fair Share Contribution Amount with respect to such
      Contributing Guarantor to (ii) the aggregate of the Fair Share Contribution
      Amounts with respect to all Contributing Guarantors multiplied by (b) the
      aggregate amount paid or distributed on or before such date by all Funding
      Guarantors under this Guaranty in respect of the Guaranteed Obligations. “Fair
      Share Shortfall” means, with respect to a Contributing Guarantor as of any date
      of determination, the excess, if any, of the Fair Share of such Contributing
      Guarantor over the Aggregate Payments of such Contributing Guarantor. “Fair
      Share Contribution Amount” means, with respect to a Contributing Guarantor as of
      any date of determination, the maximum aggregate amount of the obligations
      of
      such Contributing Guarantor under this Guaranty that would not render its
      obligations hereunder or thereunder subject to avoidance as a fraudulent
      transfer or conveyance under Section 548 of Title 11 of the United States Code
      or any comparable applicable provisions of state law; provided, solely for
      purposes of calculating the “Fair Share Contribution Amount” with respect to any
      Contributing Guarantor for purposes of this Section
      17.2,
      any
      assets or liabilities of such Contributing Guarantor arising by virtue of any
      rights to subrogation, reimbursement or indemnification or any rights to or
      obligations of contribution hereunder shall not be considered as assets or
      liabilities of such Contributing Guarantor. “Aggregate Payments” means, with
      respect to a Contributing Guarantor as of any date of determination, an amount
      equal to (a) the aggregate amount of all payments and distributions made on
      or
      before such date by such Contributing Guarantor in respect of this Guaranty
      (including, without limitation, in respect of this Section
      17.2),
      minus
      (b) the aggregate amount of all payments received on or before such date by
      such
      Contributing Guarantor from the other Contributing Guarantors as contributions
      under this Section
      17.2.
      The
      amounts payable as contributions hereunder shall be determined as of the date
      on
      which the related payment or distribution is made by the applicable Funding
      Guarantor. The allocation among Contributing Guarantors of their obligations
      as
      set forth in this Section
      17.2
      shall
      not be construed in any way to limit the liability of any Contributing Guarantor
      hereunder. Each Guarantor is a third party beneficiary to the contribution
      agreement set forth in this Section
      17.2.

    
      
        
        

      

      
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    17.3 Payment
      by Guarantors.
      Subject
      to Section
      17.2,
      Guarantors hereby jointly and severally agree, in furtherance of the foregoing
      and not in limitation of any other right which any member of the Lender Group
      may have at law or in equity against any Guarantor by virtue hereof, that upon
      the failure of Borrower to pay any of the Guaranteed Obligations when and as
      the
      same shall become due, whether at stated maturity, by required prepayment,
      declaration, acceleration, demand or otherwise (including amounts that would
      become due but for the operation of the automatic stay under Section 362(a)
      of
      the Bankruptcy Code, 11 U.S.C. Section 362(a)), Guarantors will upon demand
      pay,
      or cause to be paid, in cash, to Agent for the ratable benefit of the Lender
      Group, an amount equal to the sum of the unpaid principal amount of all
      Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on
      such Guaranteed Obligations (including interest which, but for Borrower’s
      becoming the subject of a case under the Bankruptcy Code, would have accrued
      on
      such Guaranteed Obligations, whether or not a claim is allowed against Borrower
      for such interest in the related bankruptcy case) and all other Guaranteed
      Obligations then owed to the Lender Group as aforesaid.

     

    17.4 Liability
      of Guarantors Absolute.
      Each
      Guarantor agrees that its obligations hereunder are irrevocable, absolute,
      independent and unconditional and shall not be affected by any circumstance
      which constitutes a legal or equitable discharge of a guarantor or surety other
      than payment in full of the Guaranteed Obligations. In furtherance of the
      foregoing and without limiting the generality thereof, each Guarantor agrees
      as
      follows:

     

    (a) this
      Guaranty is a guaranty of payment when due and not of collectability. This
      Guaranty is a primary obligation of each Guarantor and not merely a contract of
      surety;

     

    (b) Agent
      may
      enforce this Guaranty upon the occurrence of an Event of Default notwithstanding
      the existence of any dispute between Borrower and any member of the Lender
      Group
      with respect to the existence of such Event of Default;

     

    (c) the
      obligations of each Guarantor hereunder are independent of the obligations
      of
      Borrower and the obligations of any other guarantor (including any other
      Guarantor) of the obligations of Borrower, and a separate action or actions
      may
      be brought and prosecuted against such Guarantor whether or not any action
      is
      brought against Borrower or any of such other guarantors and whether or not
      Borrower is joined in any such action or actions;

     

    (d) payment
      by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall
      in no way limit, affect, modify or abridge any Guarantor’s liability for any
      portion of the Guaranteed Obligations which has not been paid. Without limiting
      the generality of the foregoing, if Agent is awarded a judgment in any suit
      brought to enforce any Guarantor’s covenant to pay a portion of the Guaranteed
      Obligations, such judgment shall not be deemed to release such Guarantor from
      its covenant to pay the portion of the Guaranteed Obligations that is not the
      subject of such suit, and such judgment shall not, except to the extent
      satisfied by such Guarantor, limit, affect, modify or abridge any other
      Guarantor’s liability hereunder in respect of the Guaranteed
      Obligations;

    
      
        
        

      

      
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    (e) Any
      member of the Lender Group, upon such terms as it deems appropriate, without
      or
      demand and without affecting the validity or enforceability hereof or giving
      rise to any reduction, limitation, impairment, discharge or termination of
      any
      Guarantor’s liability hereunder, from time to time may (i) renew, extend,
      accelerate, increase the rate of interest on, or otherwise change the time,
      place, manner or terms of payment of the Guaranteed Obligations; (ii) settle,
      compromise, release or discharge, or accept or refuse any offer of performance
      with respect to, or substitutions for, the Guaranteed Obligations or any
      agreement relating thereto and/or subordinate the payment of the same to the
      payment of any other obligations; (iii) request and accept other guaranties
      of
      the Guaranteed Obligations and take and hold security for the payment of the
      Guaranteed Obligations; (iv) release, surrender, exchange, substitute,
      compromise, settle, rescind, waive, alter, subordinate or modify, with or
      without consideration, any security for payment of the Guaranteed Obligations,
      any other guaranties of the Guaranteed Obligations, or any other obligation
      of
      any Person (including any other Guarantor) with respect to the Guaranteed
      Obligations; (v) enforce and apply any security now or hereafter held by or
      for
      the benefit of such member of the Lender Bank Group in respect hereof or the
      Guaranteed Obligations and direct the order or manner of sale thereof, or
      exercise any other right or remedy that such member of the Lender Bank Group
      may
      have against any such security, in each case as such member of the Lender Bank
      Group in its discretion may determine consistent herewith and any applicable
      security agreement, including foreclosure on any such security pursuant to
      one
      or more judicial or nonjudicial sales, whether or not every aspect of any such
      sale is commercially reasonable, and even though such action operates to impair
      or extinguish any right of reimbursement or subrogation or other right or remedy
      of any Guarantor against Borrower or
      any
      security for the Guaranteed Obligations; and (vi) exercise any other right
      available to it under the Loan Documents; and

     

    (f) this
      Guaranty and the obligations of Guarantors hereunder shall be valid and
      enforceable and shall not be subject to any reduction, limitation, impairment,
      discharge or termination for any reason (other than payment in full of the
      Guaranteed Obligations), including the occurrence of any of the following,
      whether or not any Guarantor shall have had notice or knowledge of any of them:
      (i) any failure or omission to assert or enforce or agreement or election not
      to
      assert or enforce, or the stay or enjoining, by order of court, by operation
      of
      law or otherwise, of the exercise or enforcement of, any claim or demand or
      any
      right, power or remedy (whether arising under the Loan Documents or at law,
      in
      equity or otherwise) with respect to the Guaranteed Obligations or any agreement
      relating thereto, or with respect to any other guaranty of or security for
      the
      payment the Guaranteed Obligations (ii) any rescission, waiver, amendment or
      modification of, or any consent to departure from, any of the terms or
      provisions (including provisions relating to events of default) hereof, any
      of
      the other Loan Documents, or any agreement or instrument executed pursuant
      thereto, or of any other guaranty or security for the Guaranteed Obligations,
      in
      each case whether or not in accordance with the terms hereof or such Loan
      Document, or any agreement relating to such other guaranty or security; (iii)
      the Guaranteed Obligations or any agreement relating thereto, at any time being
      found to be illegal invalid or unenforceable in any respect; (iv) the
      application of payments received from any source (other than payments received
      pursuant to the other Loan Documents or from the proceeds of any security for
      the Guaranteed Obligations, except to the extent such security also serves
      as
      collateral for Indebtedness other than the Guaranteed Obligations) to the
      payment of Indebtedness other than the Guarantee Obligations, even though any
      member of the Lender Group might have elected to apply such payment to any
      part
      or all of the Guaranteed Obligations; (v) any member of the Lender Group’s
      consent to the change, reorganization or termination of the corporate structure
      or existence of any Credit Party and to any corresponding restructuring of
      the
      Guaranteed Obligations; (vi) any failure to perfect or continue perfection
      of a
      security interest in any collateral which secures any of the Guaranteed
      Obligations; (vii) any defenses, set-offs or counterclaims which Borrower may
      allege or assert against any member of the Lender Group in respect of the
      Guaranteed Obligations, including failure of consideration, breach of warranty,
      payment, statute of frauds, statute of limitations, accord and satisfaction
      and
      usury; and (viii) any other act or thing or omission, or delay to do any other
      act or thing, which may or might in any manner or to any extent vary the risk
      of
      any Guarantor as an obligor in respect of the Guaranteed
      Obligations.

    
      
        
        

      

      
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    17.5 Waivers
      by Guarantors.
      Each
      Guarantor hereby waives, for the benefit of the Lender Group: (a) any right
      to
      require any member of the Lender Group, as a condition of payment or performance
      by such Guarantor, to (i) proceed against Borrower, any other guarantor
      (including any other Guarantor) of the Guaranteed Obligations or any other
      Person, (ii) proceed against or exhaust any security held from Borrower, any
      such other guarantor or any other Person, (iii) proceed against or have resort
      to any balance of any Deposit Account or credit on the books of any member
      of
      the Lender Group in favor of Borrower or any other Person, or (iv) pursue any
      other remedy in the power of any member of the Lender Group whatsoever; (b)
      any
      defense arising by reason of the incapacity, lack of authority or any disability
      or other defense of Borrower or any other Guarantor including any defense based
      on or arising out of the lack of validity or the unenforceability of the
      Guaranteed Obligations or any agreement or instrument relating thereto or by
      reason of the cessation of the liability of Borrower or any other Guarantor
      from
      any cause other than payment in full of the Guaranteed Obligations; (c) any
      defense based upon any statute or rule of law which provides that the obligation
      of a surety must be neither larger in amount nor in other respects more
      burdensome than that of the principal; (d) any defense based upon any member
      of
      the Lender Group’s errors or omissions in the administration of the Guaranteed
      Obligations, except behavior which amounts to bad faith; (e) (i) any principles
      or provisions of law, statutory or otherwise, which are or might be in conflict
      with the terms hereof and any legal or equitable discharge of such Guarantor’s
      obligations hereunder, (ii) the benefit of any statute of limitations affecting
      such Guarantor’s liability hereunder or the enforcement hereof, (iii) any rights
      to set-offs, recoupments and counterclaims, and (iv) promptness, diligence
      and
      any requirement that any member of the Lender Group protect, secure, perfect
      or
      insure any security interest or lien or any property subject thereto; (f)
      notices, demands, presentments, protests, notices of protest, notices of
      dishonor and notices of any action or inaction, including acceptance hereof,
      notices of default hereunder, or any agreement or instrument related thereto,
      notices of any renewal, extension or modification of the Guaranteed Obligations
      or any agreement related thereto, notices of any extension of credit to Borrower
      and notices of any of the matters referred to in Section
      17.4
      and any
      right to consent to any thereof; and (g) any defenses or benefits that may
      be
      derived from or afforded by law which limit the liability of or exonerate
      guarantors or sureties, or which may conflict with the terms
      hereof.

    
      
        
        

      

      
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    17.6 Guarantors’
      Rights of Subrogation, Contribution, Etc.
      Until
      the Guaranteed Obligations shall have been indefeasibly paid in full and the
      Commitments shall have terminated and all Letters of Credit shall have expired
      or been cancelled, each Guarantor hereby waives any claim, right or remedy,
      direct or indirect, that such Guarantor now has or may hereafter have against
      Borrower or any other Guarantor or any of its assets in connection with this
      Guaranty or the performance by such Guarantor of its obligations hereunder,
      in
      each case whether such claim, right or remedy arises in equity, under contract,
      by statute, under common law or otherwise and including without limitation
      (a)
      any right of subrogation, reimbursement or indemnification that such Guarantor
      now has or may hereafter have against Borrower with respect to the Guaranteed
      Obligations, (b) any right to enforce, or to participate in, any claim, right
      or
      remedy that any member of the Lender Group now has or may hereafter have against
      Borrower, and (c) any benefit of, and any right to participate in, any
      collateral or security now or hereafter held by any member of the Lender Group.
      In addition, until the Guaranteed Obligations shall have been indefeasibly
      paid
      in full and the Commitments shall have terminated and all Letters of Credit
      shall have expired or been cancelled, each Guarantor shall withhold exercise
      of
      any right of contribution such Guarantor may have against any other guarantor
      (including any other Guarantor) of the Guaranteed Obligations, including,
      without limitation, any such right of contribution as contemplated by
Section
      17.2.
      Each
      Guarantor further agrees that, to the extent the waiver or agreement to withhold
      the exercise of its rights of subrogation, reimbursement, indemnification and
      contribution as set forth herein is found by a court of competent jurisdiction
      to be void or voidable for any reason, any rights of subrogation, reimbursement
      or indemnification such Guarantor may have against Borrower or against any
      collateral or security, and any rights of contribution such Guarantor may have
      against any such other guarantor, shall be junior and subordinate to any rights
      any member of the Lender Group may have against Borrower, to all right, title
      and interest any member of the Lender Group may have in any such collateral
      or
      security, and to any right any member of the Lender Group may have against
      such
      other guarantor. If any amount shall be paid to any Guarantor on account of
      any
      such subrogation, reimbursement, indemnification or contribution rights at
      any
      time when all Guaranteed Obligations shall not have been finally and
      indefeasibly paid in full, such amount shall be held in trust for Agent on
      behalf of the Lender Group and shall forthwith be paid over to Agent for the
      benefit of the Lender Group to be credited and applied against the Guaranteed
      Obligations, whether matured or unmatured, in accordance with the terms
      hereof.

    
      
        
        

      

      
        -125-

        
          

        

      

      
        
        

      

    

     

    17.7 Subordination
      Of Other Obligations.
      Any
      Indebtedness of Borrower or any Guarantor now or hereafter held by any Guarantor
      (the “Obligee
      Guarantor”)
      is
      hereby subordinated in right of payment to the Guaranteed Obligations, and
      any
      such indebtedness collected or received by the Obligee Guarantor after an Event
      of Default has occurred and is continuing shall be held in trust for Agent
      on
      behalf of the Lender Group and shall forthwith be paid over to Agent for the
      benefit of the Lender Group to be credited and applied against the Guaranteed
      Obligations but without affecting, impairing or limiting in any manner the
      liability of the Obligee Guarantor under any other provision
      hereof.

     

    17.8 Continuing
      Guaranty.
      This
      Guaranty is a continuing guaranty and shall remain in effect until all of the
      Guaranteed Obligations shall have been finally and indefeasibly paid in full
      and
      the Commitments shall have terminated and all Letters of Credit shall have
      expired or been cancelled. Each Guarantor hereby irrevocably waives any right
      to
      revoke this Guaranty as to future transactions giving rise to any Guaranteed
      Obligations.

     

    17.9 Authority
      of Guarantors or Borrower.
      It is
      not necessary for any member of the Lender Group to inquire into the capacity
      or
      powers of any Guarantor or Borrower or the officers, directors or any agents
      acting or purporting to act on behalf of any of them.

     

    17.10 Financial
      Condition of Borrower.
      Any
      Advance may be made to Borrower or continued from time to time, and any other
      agreements relating to the Obligations may be entered into from time to time,
      in
      each case without notice to or authorization from any Guarantor regardless
      of
      the financial or other condition of Borrower at the time of any such grant
      or
      continuation or at the time such other agreement is entered into, as the case
      may be. No member of the Lender Group shall have any obligation to disclose
      or
      discuss with any Guarantor its assessment, or any Guarantor’s assessment, of the
      financial condition of Borrower. Each Guarantor has adequate means to obtain
      information from Borrower on a continuing basis concerning the financial
      condition of Borrower and its ability to perform its obligations under the
      Loan
      Documents and each Guarantor assumes the responsibility for being and keeping
      informed of the financial condition of Borrower and of all circumstances bearing
      upon the risk of nonpayment of the Guaranteed Obligations. Each Guarantor hereby
      waives and relinquishes any duty on the part of any member of the Lender Group
      to disclose any matter, fact or thing relating to the business, operations
      or
      conditions of Borrower now known or hereafter known by any member of the Lender
      Group.

    
      
        
        

      

      
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    17.11 Bankruptcy,
      Etc.

     

    (a) The
      obligations of Guarantors hereunder shall not be reduced, limited, impaired,
      discharged, deferred, suspended or terminated by any case or proceeding,
      voluntary or involuntary, involving the bankruptcy, insolvency, receivership,
      reorganization, liquidation or arrangement of Borrower or any other Guarantor
      or
      by any defense which Borrower or any other Guarantor may have by reason of
      the
      order, decree or decision of any court or administrative body resulting from
      any
      such proceeding.

     

    (b) Each
      Guarantor acknowledges and agrees that any interest on any portion of the
      Guaranteed Obligations which accrues after the commencement of any case or
      proceeding referred to in clause (a) above (or, if interest on any portion
      of
      the Guaranteed Obligations ceases to accrue by operation of law by reason of
      the
      commencement of such case or proceeding, such interest as would have accrued
      on
      such portion of the Guaranteed Obligations if such case or proceeding had not
      been commenced) shall be included in the Guaranteed Obligations because it
      is
      the intention of Guarantors and the Lender Group that the Guaranteed Obligations
      which are guaranteed by Guarantors pursuant hereto should be determined without
      regard to any rule of law or order which may relieve Borrower of any portion
      of
      such Guaranteed Obligations. Guarantors will permit any trustee in bankruptcy,
      receiver, debtor in possession, assignee for the benefit of creditors or similar
      person to pay Agent, or allow the claim of Agent in respect of, any such
      interest accruing after the date on which such case or proceeding is
      commenced.

     

    (c) In
      the
      event that all or any portion of the Guaranteed Obligations are paid by
      Borrower, the obligations of Guarantors hereunder shall continue and remain
      in
      full force and effect or be reinstated, as the case may be, in the event that
      all or any part of such payment(s) are rescinded or recovered directly or
      indirectly from any member of the Lender Group as a preference, fraudulent
      transfer or otherwise, and any such payments which are so rescinded or recovered
      shall constitute Guaranteed Obligations for all purposes hereunder.

     

    
      	
              18.

            	
              GENERAL
                PROVISIONS.

            

    

     

    18.1 Effectiveness.
      This
      Agreement shall be binding and deemed effective when executed by each Credit
      Party, Agent, and each Lender whose signature is provided for on the signature
      pages hereof.

    
      
        
        

      

      
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    18.2 Section
      Headings.
      Headings and numbers have been set forth herein for convenience only. Unless
      the
      contrary is compelled by the context, everything contained in each Section
      applies equally to this entire Agreement.

     

    18.3 Interpretation.
      Neither
      this Agreement nor any uncertainty or ambiguity herein shall be construed
      against the Lender Group or the Credit Parties, whether under any rule of
      construction or otherwise. On the contrary, this Agreement has been reviewed
      by
      all parties and shall be construed and interpreted according to the ordinary
      meaning of the words used so as to accomplish fairly the purposes and intentions
      of all parties hereto.

     

    18.4 Severability
      of Provisions.
      Each
      provision of this Agreement shall be severable from every other provision of
      this Agreement for the purpose of determining the legal enforceability of any
      specific provision.

     

    18.5 Amendments
      in Writing.
      This
      Agreement only can be amended by a writing signed by Agent (on behalf of the
      requisite Lenders pursuant to Section
      15.1)
      and
      each Credit Party.

     

    18.6 Counterparts;
      Telefacsimile Execution.
      This
      Agreement may be executed in any number of counterparts and by different parties
      on separate counterparts, each of which, when executed and delivered, shall
      be
      deemed to be an original, and all of which, when taken together, shall
      constitute but one and the same Agreement. Delivery of an executed counterpart
      of this Agreement by telefacsimile shall be equally as effective as delivery
      of
      an original executed counterpart of this Agreement. Any party delivering an
      executed counterpart of this Agreement by telefacsimile also shall deliver
      an
      original executed counterpart of this Agreement but the failure to deliver
      an
      original executed counterpart shall not affect the validity, enforceability,
      and
      binding effect of this Agreement. The foregoing shall apply to each other Loan
      Document mutatis
      mutandis.

     

    18.7 Revival
      and Reinstatement of Obligations.
      If the
      incurrence or payment of the Obligations by any Credit Party or the transfer
      to
      the Lender Group of any property should for any reason subsequently be declared
      to be void or voidable under any state or federal law relating to creditors’
rights, including provisions of the Bankruptcy Code relating to fraudulent
      conveyances, preferences, or other voidable or recoverable payments of money
      or
      transfers of property (collectively, a “Voidable
      Transfer”),
      and
      if the Lender Group is required to repay or restore, in whole or in part, any
      such Voidable Transfer, or elects to do so upon the reasonable advice of its
      counsel, then, as to any such Voidable Transfer, or the amount thereof that
      the
      Lender Group is required or elects to repay or restore, and as to all reasonable
      costs, expenses, and attorneys fees of the Lender Group related thereto, the
      liability of such Credit Party automatically shall be revived, reinstated,
      and
      restored and shall exist as though such Voidable Transfer had never been
      made.

     

    18.8 Confidentiality.
      The
      Agent and the Lenders each individually (and not jointly or jointly and
      severally) agree that material, non-public information regarding any Credit
      

    
      
        
        

      

      
        -128-

        
          

        

      

      
        
        

      

    

     

    Party,
      its operations, assets, and existing and contemplated business plans shall
      be
      treated by Agent and the Lenders in a confidential manner, and shall not be
      disclosed by Agent and the Lenders to Persons who are not parties to this
      Agreement, except: (a) to attorneys for and other advisors, accountants,
      auditors, and consultants to any member of the Lender Group, who are advised
      about the confidentiality of such information (b) to Subsidiaries and Affiliates
      of any member of the Lender Group, provided that any such Subsidiary or
      Affiliate shall have agreed to receive such information hereunder subject to
      the
      terms of this Section
      18.8
      or
      similar confidentiality agreement, (c) as may be required by statute, decision,
      or judicial or administrative order, rule, or regulation (with prompt notice
      to
      Borrower so that Borrower may seek a protective order or other appropriate
      remedy and/or waive Agent’s or any Lender’s compliance with the provisions of
      this Section
      18.8),
      (d) as
      may be agreed to in advance by such Credit Party or as requested or required
      by
      any Governmental Authority pursuant to any subpoena or other legal process
      regulation (with prompt notice to Borrower so that Borrower may seek a
      protective order or other appropriate remedy and/or waive Agent’s or any
      Lender’s compliance with the provisions of this Section
      18.8),
      (e) as
      to any such information that is or becomes generally available to the public
      (other than as a result of prohibited disclosure by or on behalf of Agent or
      the
      Lenders), (f) in connection with any assignment, prospective assignment, sale,
      prospective sale, participation or prospective participations, or pledge or
      prospective pledge of any Lender’s interest under this Agreement, provided that
      any such assignee, prospective assignee, purchaser, prospective purchaser,
      participant, prospective participant, pledgee, or prospective pledgee shall
      have
      agreed in writing to receive such information hereunder subject to the terms
      of
      this Section, and (g) in connection with any litigation or other adversary
      proceeding involving parties hereto which such litigation or adversary
      proceeding involves claims related to the rights or duties of such parties
      under
      this Agreement or the other Loan Documents; provided,
      that
      the disclosing party shall use its best efforts to ensure that such documents
      are filed under seal. The provisions of this Section
      18.8
      shall
      survive the payment in full of the Obligations. Anything contained herein or
      in
      any other Loan Document to the contrary notwithstanding, the obligations of
      confidentiality contained herein and therein, as they relate to the transactions
      contemplated hereby, shall not apply to the federal tax structure or federal
      tax
      treatment of such transactions, and each party hereto (and any employee,
      representative, or agent of any party hereto) may disclose to any and all
      Persons, without limitation of any kind, the federal tax structure and federal
      tax treatment of such transactions (including all written materials related
      to
      such tax structure and tax treatment). The preceding sentence is intended to
      cause the transactions contemplated hereby to not be treated as having been
      offered under conditions of confidentiality for purposes of Section
      1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations
      promulgated under Section 6011 of the IRC, and shall be construed in a manner
      consistent with such purpose. In addition, each party hereto acknowledges that
      it has no proprietary or exclusive rights to the tax structure of the
      transactions contemplated hereby or any tax matter or tax idea related
      thereto.

     

    18.9 Integration.
      This
      Agreement, together with the other Loan Documents, reflects the entire
      understanding of the parties with respect to the transactions contemplated
      hereby and shall not be contradicted or qualified by any other agreement, oral
      or written, before the date hereof.

    
      
        
        

      

      
        -129-

        
          

        

      

      
        
        

      

    

     

    18.10 Patriot
      Act Notice.
      Agent
      and each Lender hereby notifies the Credit Parties that pursuant to the
      requirements of the Patriot Act, it is required to obtain, verify and record
      information that identifies each Credit Party, which information includes the
      name and address of such Credit Party and other information that will allow
      such
      Lender or Agent, as applicable to identify such Credit Party in accordance
      with
      the Patriot Act. Each Credit Party shall, and shall cause the Subsidiaries
      to
      provide to the extent commercially reasonable, such information and take such
      actions as are reasonably requested by Agent or any Lender in order to assist
      the Agent and the Lenders in maintaining compliance with the Patriot
      Act.

     

    18.11 Amendment
      and Restatement.

     

    (a) On
      the Closing Date, the Prior Loan Agreement shall be amended, restated and
      superseded in its entirety. The parties hereto acknowledge and agree that (i)
      this Agreement and the Loan Documents executed and delivered in connection
      herewith do not constitute a novation, payment and reborrowing, or termination
      of the “Obligations” (as defined in the Prior Loan Agreement) under the Prior
      Loan Agreement as in effect prior to the Closing Date; (ii) such “Obligations”
are in all respects continuing with only the terms thereof being modified as
      provided in this Agreement; (iii) the Liens as granted under the Collateral
      Documents securing payment of such “Obligations” are in all respects continuing
      and in full force and effect and secure the payment of the Obligations (as
      defined in this Agreement) and are hereby fully ratified and affirmed; and
      (iv)
      upon the effectiveness of this Agreement all loans and letters of credit
      outstanding under the Prior Loan Agreement immediately before the effectiveness
      of this Agreement will be part of the Loans and Letters of Credit hereunder
      on
      the terms and conditions set forth in this Agreement. Without limitation of
      the
      foregoing, each of Borrower and each other Credit Party hereby fully and
      unconditionally ratifies and affirms all Collateral Documents and agrees that
      all Collateral granted under the Prior Loan Agreement shall from and after
      the
      Closing Date secure all Obligations hereunder.

     

    (b) Notwithstanding
      the modifications effected by this Agreement of the representations, warranties
      and covenants of the Credit Parties contained in the Prior Loan Agreement,
      each
      of Borrower and each other Credit Party acknowledges and agrees that any causes
      of action or other rights created in favor of any Lender and its successors
      arising out of the representations and warranties of any Credit Party contained
      in or delivered (including representations and warranties delivered in
      connection with the making of the loans or other extensions of credit
      thereunder) in connection with the Prior Loan Agreement or any other Loan
      Document executed in connection therewith shall survive the execution and
      delivery of this Agreement; provided,
      that the Obligations under the other Loan Documents shall also continue in
      full
      force and effect including, without limitation, the Obligations of each Credit
      Party pursuant to the Guaranty.

    
      
        
        

      

      
        -130-

        
          

        

      

      
        
        

      

    

     

    (c) All
      indemnification obligations of each Credit Party pursuant to the Prior Loan
      Agreement (including any arising from a breach of the representations and
      warranties thereunder) shall survive the amendment and restatement of the Prior
      Loan Agreement pursuant to this Agreement.

     

    (d) On
      and after the Closing Date, each reference in the Loan Documents to the “Loan
      Agreement”, “thereunder”, “thereof” or similar words referring to the Loan
      Agreement shall mean and be a reference to this Agreement.

     

    [Signature
      pages to follow]

    
      
        
        

      

      
        -131-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the
      parties hereto have caused this Agreement to be executed and delivered as of
      the
      date first above written.

    

    AGENT:

    

    WELLS
      FARGO RETAIL FINANCE, LLC,

    a
      Delaware limited liability company, as Agent and as a Lender

    

    By:
       /s/
      Jennifer Cann            

    Name:
      Jennifer Cann

    Title:
       Senior
      Vice President

     

     

     

     

     

    
 

    
      
        Signature
          Page to Amended and Restated Loan and Guaranty Agreement

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    LENDERS:

    

    NATIONAL
      CITY BUSINESS CREDIT, INC., as
      a Lender

    

    By:
        /s/
      Daniel O’Rourke            

    Name:
      Daniel O’Rourke

    Title:  Director

    

    

     

     

     

     

    
 

    
      
        Signature
          Page to Amended and Restated Loan and Guaranty Agreement

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    BANK
      OF AMERICA, N.A., as
      a Lender

    

    By:
        /s/
      Stephan DeManna            

    Name:
      Stephen DeManna

    Title:  Managing
      Director

     

     

     

     

     

     

    
 

    
      
        Signature
          Page to Amended and Restated Loan and Guaranty Agreement

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    JPMORGAN
      CHASE BANK, N.A., as
      a Lender

    

    By:
        /s/
      Patrick J. Fravel            

    Name:
      Patrick J. Fravel

    Title:  Vice
      President

     

     

     

     

     

     

    
 

    
      
        Signature
          Page to Amended and Restated Loan and Guaranty Agreement

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    WACHOVIA
      BANK, NATIONAL ASSOCIATION, as
      a Lender

    

    By:
        /s/
      Joe Curdy                

    Name:
      Joe
      Curdy

    Title:
        Director

     

     

     

     

     

     

     

    
      
        Signature
          Page to Amended and Restated Loan and Guaranty Agreement

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    LASALLE
      RETAIL FINANCE, a division of LaSalle Business Credit, LLC, as Agent for
      Standard Federal Bank National Association, as
      a Lender

    

    By:
        /s/
      Steve Friedlander            

    Name:
      Steve Friedlander

    Title:  Senior
      Vice President

     

     

     

     

     

     

    
      
        Signature
          Page to Amended and Restated Loan and Guaranty Agreement

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    CITICORP
      NORTH AMERICA, INC., as
      a Lender

    

    By:
        /s/
      Jeffrey Nitz            

    Name:
      Jeffrey Nitz

    Title:  Director

     

     

     

     

     

    
 

    
      
        Signature
          Page to Amended and Restated Loan and Guaranty Agreement

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    CREDIT
      PARTIES:

    

    

    COLLECTIVE
      BRANDS FINANCE, INC.
      (f/k/a
      Payless ShoeSource Finance, Inc.),

    as
      Borrower

    

    By:
        /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  President

    

    COLLECTIVE
      BRANDS, INC.
      (f/k/a
      Payless ShoeSource, Inc.), a Delaware corporation, as Parent

    

    By:
      /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Senior
      Vice-President - Chief Financial Officer and Treasurer

    

    COLLECTIVE
      INTERNATIONAL, LP.,

    a
      Delaware limited partnership

     

    By:
      Payless Collective GP, LLC, its Managing Member

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    COLLECTIVE
      LICENSING INTERNATIONAL, LLC,

    a
      Delaware limited liability company

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President and Treasurer

    

 

    
      
        Signature
          Page to Amended and Restated Loan and Guaranty Agreement

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    DYELIGHTS,
      INC.,

    a
      Delaware corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    

    PAYLESS
      COLLECTIVE GP, LLC,

    a
      Delaware limited liability company

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Treasurer

    

    PAYLESS
      NYC, INC.,

    a
      Kansas
      corporation

    

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  President

    

    PAYLESS
      PURCHASING SERVICES, INC.,

    a
      Kansas corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  President

    

    PAYLESS
      SHOESOURCE DISTRIBUTION, INC.,

    a
      Kansas corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President and Treasurer

    

    PAYLESS
      SHOESOURCE GOLD VALUE, INC.,

    a
      Kansas corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  President

     

    
      
        Signature
          Page to Amended and Restated Loan and Guaranty Agreement

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    PAYLESS
      SHOESOURCE LEASING, LLC,

    a
      Delaware limited liability company

     

    By:
      Payless ShoeSource, Inc., its sole member

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Senior
      Vice President - Chief Financial Officer and Treasurer

    

    PAYLESS
      SHOESOURCE MERCHANDISING, INC.,

    a
      Kansas corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Senior
      Vice President and Treasurer

    

    PAYLESS
      SHOESOURCE WORLDWIDE, INC.

    a
      Kansas corporation

     

    By:
      /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Senior
      Vice President - Chief Financial Officer and Treasurer

    

    PAYLESS
      SHOESOURCE, INC.,

    a
      Missouri corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Senior
      Vice President - Chief Financial Officer and Treasurer

    

    PSS
      CANADA, INC.,

    a
      Kansas corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  President

    

    PSS
      DELAWARE COMPANY 2, INC.,

    a
      Delaware corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  President

     

    
      
        Signature
          Page to Amended and Restated Loan and Guaranty Agreement

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    PSS
      DELAWARE COMPANY 3, INC.,

    a
      Delaware corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  President

    

    PSS
      DELAWARE COMPANY 4, INC.,

    a
      Delaware corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  President

    

    PSS
      INVESTMENT I, INC.,

    a
      Nevada corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  President

    

    PSS
      INVESTMENT III, INC.,

    a
      Kansas corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  President

    

    ROBEEZ
      LOGISTICS INC.,

    a
      Nevada corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    ROBEEZ
      U.S. HOLDINGS INC.,

    a
      Nevada corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President
 

    
      
        Signature
          Page to Amended and Restated Loan and Guaranty Agreement

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ROBEEZ
      U.S., INC.,

    a
      Washington corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    SAN
      JOSE ACQUISITION CORP.,

    a
      Massachusetts corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  President

    

    SAUCONY
      UK, INC.,

    a
      Massachusetts corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    SAUCONY,
      INC.,

    a
      Massachusetts corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    SAUCONY/ECOM,
      INC.,

    a
      Delaware corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    SHOE
      SOURCING, INC.,

    a
      Kansas corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  President

    

    
      
        Signature
          Page to Amended and Restated Loan and Guaranty Agreement

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SPERRY
      TOP-SIDER, INC.,

    a
      Massachusetts corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    S
      R HOLDINGS INC.,

    a
      Delaware corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    STRIDE
      RITE INTERNATIONAL CORP.,

    a
      Massachusetts corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    SR/ECOM,
      INC.,

    a
      Massachusetts corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    SRCG
      LLC,

    a
      Delaware limited liability company

     

    By:
      Stride Rite Children's Group, Inc., its sole member

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    SRCG/ECOM,
      INC.,

    a
      Delaware corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig    

    Title:  Vice
      President

    

    
      
        Signature
          Page to Amended and Restated Loan and Guaranty Agreement

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SRL,
      INC.,

    a
      Delaware corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    SRR,
      INC.,

    a
      Delaware corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    STRIDE
      RITE CHILDREN'S GROUP, INC.,

    a
      Massachusetts corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    STRIDE
      RITE INTERNATIONAL HOLDINGS, INC.,

    a
      Delaware corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    STRIDE
      RITE INTERNATIONAL LLC,

    a
      Delaware limited liability company

     

    By:
      Stride Rite International Holdings, Inc., its sole member

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    STRIDE
      RITE INVESTMENT CORPORATION,

    a
      Massachusetts corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    
      
        Signature
          Page to Amended and Restated Loan and Guaranty Agreement

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    STRIDE
      RITE LLC,

    a
      Delaware limited liability company

     

    By:
      Stride Rite Children's Group, Inc., its sole member

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    STRIDE
      RITE SOURCING INTERNATIONAL, INC.,

    a
      Massachusetts corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    STS/ECOM,
      INC.,

    a
      Delaware corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    THE
      KEDS CORPORATION,

    a
      Massachusetts corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    TOMMY
      HILFIGER FOOTWEAR, INC.,

    a
      Massachusetts corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

    

    KEDS
      LLC,

    a
      Delaware limited liability company

     

    By:
      The Keds Corporation, its sole member

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  Vice
      President

     

    
      
        Signature
          Page to Amended and Restated Loan and Guaranty Agreement

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EASTBOROUGH,
      INC.,

    a
      Kansas corporation

     

    By:  /s/
      Ullrich E. Porzig            

    Name:
      Ullrich E. Porzig

    Title:  President

    

    

    

     

    
      
        Signature
          Page to Amended and Restated Loan and Guaranty Agreement

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF CONTENTS

    

    
      	
              1.

            	
              DEFINITIONS
                AND CONSTRUCTION.

            	
              1

            
	
               

            	
              1.1

            	
              Definitions

            	
              1

            
	
               

            	
              1.2

            	
              Accounting
                Terms

            	
              41

            
	
               

            	
              1.3

            	
              Code

            	
              41

            
	
               

            	
              1.4

            	
              Construction

            	
              41

            
	
               

            	
              1.5

            	
              Schedules
                and Exhibits

            	
              42

            
	
               

            	
               

            	
               

            
	
              2.

            	
              LOAN
                AND TERMS OF PAYMENT.

            	
              42

            
	
               

            	
              2.1

            	
              Revolver
                Advances

            	
              42

            
	
               

            	
              2.2

            	
              Revolver
                Increase

            	
              43

            
	
               

            	
              2.3

            	
              Borrowing
                Procedures and Settlements

            	
              44

            
	
               

            	
              2.4

            	
              Payments

            	
              51

            
	
               

            	
              2.5

            	
              Overadvances

            	
              53

            
	
               

            	
              2.6

            	
              Interest
                Rates and Letter of Credit Fee: Rates, Payments, and
                Calculations

            	
              53

            
	
               

            	
              2.7

            	
              Cash
                Management.

            	
              55

            
	
               

            	
              2.8

            	
              Crediting
                Payments

            	
              59

            
	
               

            	
              2.9

            	
              Designated
                Account

            	
              59

            
	
               

            	
              2.10

            	
              Maintenance
                of Loan Account; Statements of Obligations

            	
              59

            
	
               

            	
              2.11

            	
              Fees

            	
              60

            
	
               

            	
              2.12

            	
              Letters
                of Credit.

            	
              60

            
	
               

            	
              2.13

            	
              LIBOR
                Option

            	
              64

            
	
               

            	
              2.14

            	
              Capital
                Requirements

            	
              67

            
	
               

            	
               

            	
               

            
	
              3.

            	
              CONDITIONS;
                TERM OF AGREEMENT.

            	
              67

            
	
               

            	
              3.1

            	
              Conditions
                Precedent to the Initial Extension of Credit

            	
              67

            
	
               

            	
              3.2

            	
              [Intentionally
                Omitted]

            	
              71

            
	
               

            	
              3.3

            	
              Conditions
                Precedent to all Extensions of Credit

            	
              71

            
	
               

            	
              3.4

            	
              Term

            	
              71

            
	
               

            	
              3.5

            	
              Effect
                of Termination

            	
              71

            
	
               

            	
              3.6

            	
              Early
                Termination by Borrower

            	
              72

            
	
               

            	
               

            	
               

            
	
              4.

            	
              [INTENTIONALLY
                OMITTED].

            	
              72

            
	
               

            	
               

            	
               

            
	
              5.

            	
              REPRESENTATIONS
                AND WARRANTIES.

            	
              72

            
	
               

            	
              5.1

            	
              No
                Encumbrances

            	
              72

            
	
               

            	
              5.2

            	
              Eligible
                Accounts

            	
              73

            
	
               

            	
              5.3

            	
              Eligible
                Inventory

            	
              73

            
	
               

            	
              5.4

            	
              Location
                of Inventory

            	
              73

            
	
               

            	
              5.5

            	
              Inventory
                Records

            	
              73

            

    

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              5.6

            	
              State
                of Incorporation; Location of Chief Executive Office; FEIN; Organizational
                ID Number.

            	
              73

            
	
               

            	
              5.7

            	
              Due
                Organization and Qualification; Subsidiaries.

            	
              73

            
	
               

            	
              5.8

            	
              Due
                Authorization; No Conflict.

            	
              74

            
	
               

            	
              5.9

            	
              Litigation

            	
              75

            
	
               

            	
              5.10

            	
              No
                Material Adverse Change

            	
              75

            
	
               

            	
              5.11

            	
              Fraudulent
                Transfer

            	
              75

            
	
               

            	
              5.12

            	
              Employee
                Benefits

            	
              76

            
	
               

            	
              5.13

            	
              Environmental
                Condition

            	
              76

            
	
               

            	
              5.14

            	
              Investment
                Company Act

            	
              76

            
	
               

            	
              5.15

            	
              Intellectual
                Property

            	
              76

            
	
               

            	
              5.16

            	
              Leases

            	
              76

            
	
               

            	
              5.17

            	
              Deposit
                Accounts

            	
              76

            
	
               

            	
              5.18

            	
              Complete
                Disclosure

            	
              77

            
	
               

            	
              5.19

            	
              Indebtedness

            	
              77

            
	
               

            	
              5.20

            	
              Credit
                Card Receipts

            	
              77

            
	
               

            	
              5.21

            	
              Margin
                Stock

            	
              77

            
	
               

            	
              5.22

            	
              Senior
                Debt

            	
              77

            
	
               

            	
              5.23

            	
              Anti-Terrorism
                Laws.

            	
              78

            
	
               

            	
              5.24

            	
              Related
                Documents

            	
              79

            
	
               

            	
               

            	
               

            
	
              6.

            	
              AFFIRMATIVE
                COVENANTS.

            	
              80

            
	
               

            	
              6.1

            	
              Accounting
                System

            	
              80

            
	
               

            	
              6.2

            	
              Collateral
                Reporting

            	
              80

            
	
               

            	
              6.3

            	
              Financial
                Statements, Reports, Certificates

            	
              80

            
	
               

            	
              6.4

            	
              Returns

            	
              82

            
	
               

            	
              6.5

            	
              Maintenance
                of Properties

            	
              82

            
	
               

            	
              6.6

            	
              Taxes

            	
              83

            
	
               

            	
              6.7

            	
              Insurance.

            	
              83

            
	
               

            	
              6.8

            	
              Location
                of Inventory/Chief Executive Offices

            	
              84

            
	
               

            	
              6.9

            	
              Compliance
                with Laws

            	
              84

            
	
               

            	
              6.10

            	
              Leases

            	
              84

            
	
               

            	
              6.11

            	
              Existence.

            	
              84

            
	
               

            	
              6.12

            	
              Environmental

            	
              84

            
	
               

            	
              6.13

            	
              Disclosure
                Updates

            	
              85

            
	
               

            	
              6.14

            	
              Formation
                of Subsidiaries

            	
              85

            
	
               

            	
              6.15

            	
              Designation
                of Subsidiaries

            	
              85

            
	
               

            	
              6.16

            	
              Segregation
                of Collateral

            	
              86

            
	
               

            	
               

            	
               

            
	
              7.

            	
              NEGATIVE
                COVENANTS.

            	
              86

            
	
               

            	
              7.1

            	
              Indebtedness

            	
              86

            
	
               

            	
              7.2

            	
              Liens

            	
              89

            
	
               

            	
              7.3

            	
              Restrictions
                on Fundamental Changes/Disposal of Assets

            	
              89

            

    

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              7.4

            	
              Change
                Name

            	
              90

            
	
               

            	
              7.5

            	
              Nature
                of Business

            	
              90

            
	
               

            	
              7.6

            	
              Amendments

            	
              91

            
	
               

            	
              7.7

            	
              Change
                of Control

            	
              91

            
	
               

            	
              7.8

            	
              Distributions

            	
              91

            
	
               

            	
              7.9

            	
              Accounting
                Methods; Fiscal Year

            	
              91

            
	
               

            	
              7.10

            	
              Investments

            	
              92

            
	
               

            	
              7.11

            	
              Transactions
                with Affiliates

            	
              93

            
	
               

            	
              7.12

            	
              Use
                of Proceeds

            	
              93

            
	
               

            	
              7.13

            	
              Limitations
                on Restrictions on Subsidiary Distributions; No New Negative
                Pledge

            	
              93

            
	
               

            	
              7.14

            	
              Modification
                of Governing Documents

            	
              94

            
	
               

            	
              7.15

            	
              Modification
                of Related Documents.

            	
              94

            
	
               

            	
              7.16

            	
              Sales
                and Lease-Backs

            	
              94

            
	
               

            	
              7.17

            	
              Minimum
                Fixed Charge Coverage Ratio

            	
              94

            
	
               

            	
              7.18

            	
              No
                Speculative Transactions

            	
              95

            
	
               

            	
               

            	
               

            
	
              8.

            	
              EVENTS
                OF DEFAULT.

            	
              95

            
	
               

            	
               

            	
               

            
	
              9.

            	
              THE
                LENDER GROUP’S RIGHTS AND REMEDIES.

            	
              97

            
	
               

            	
              9.1

            	
              Rights
                and Remedies

            	
              97

            
	
               

            	
              9.2

            	
              Remedies
                Cumulative

            	
              99

            
	
               

            	
               

            	
               

            
	
              10.

            	
              TAXES
                AND EXPENSES.

            	
              100

            
	
               

            	
               

            	
               

            
	
              11.

            	
              WAIVERS;
                INDEMNIFICATION.

            	
              100

            
	
               

            	
              11.1

            	
              Demand;
                Protest; etc.

            	
              100

            
	
               

            	
              11.2

            	
              The
                Lender Group’s Liability for Collateral

            	
              100

            
	
               

            	
              11.3

            	
              Indemnification

            	
              100

            
	
               

            	
               

            	
               

            
	
              12.

            	
              NOTICES.

            	
              101

            
	
               

            	
               

            	
               

            
	
              13.

            	
              CHOICE
                OF LAW AND VENUE; JURY TRIAL WAIVER.

            	
              102

            
	
               

            	
               

            	
               

            
	
              14.

            	
              ASSIGNMENTS
                AND PARTICIPATIONS; SUCCESSORS.

            	
              103

            
	
               

            	
              14.1

            	
              Assignments
                and Participations

            	
              103

            
	
               

            	
              14.2

            	
              Successors

            	
              106

            
	
               

            	
               

            	
               

            
	
              15.

            	
              AMENDMENTS;
                WAIVERS.

            	
              106

            
	
               

            	
              15.1

            	
              Amendments
                and Waivers

            	
              106

            
	
               

            	
              15.2

            	
              Replacement
                of Holdout Lender.

            	
              108

            
	
               

            	
              15.3

            	
              No
                Waivers; Cumulative Remedies

            	
              108

            
	
               

            	
               

            	
               

            
	
              16.

            	
              AGENT;
                THE LENDER GROUP.

            	
              109

            

    

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              16.1

            	
              Appointment
                and Authorization of Agent

            	
              109

            
	
               

            	
              16.2

            	
              Delegation
                of Duties

            	
              110

            
	
               

            	
              16.3

            	
              Liability
                of Agent

            	
              110

            
	
               

            	
              16.4

            	
              Reliance
                by Agent

            	
              110

            
	
               

            	
              16.5

            	
              Notice
                of Default or Event of Default

            	
              111

            
	
               

            	
              16.6

            	
              Credit
                Decision

            	
              111

            
	
               

            	
              16.7

            	
              Costs
                and Expenses; Indemnification

            	
              112

            
	
               

            	
              16.8

            	
              Agent
                in Individual Capacity

            	
              112

            
	
               

            	
              16.9

            	
              Successor
                Agent

            	
              113

            
	
               

            	
              16.10

            	
              Lender
                in Individual Capacity

            	
              113

            
	
               

            	
              16.11

            	
              Withholding
                Taxes

            	
              114

            
	
               

            	
              16.12

            	
              Collateral
                Matters

            	
              116

            
	
               

            	
              16.13

            	
              Restrictions
                on Actions by Lenders; Sharing of Payments

            	
              117

            
	
               

            	
              16.14

            	
              Agency
                for Perfection

            	
              118

            
	
               

            	
              16.15

            	
              Payments
                by Agent to the Lenders

            	
              118

            
	
               

            	
              16.16

            	
              Concerning
                the Collateral and Related Loan Documents

            	
              118

            
	
               

            	
              16.17

            	
              Field
                Audits and Examination Reports; Confidentiality; Disclaimers by Lenders;
                Other Reports and Information

            	
              119

            
	
               

            	
              16.18

            	
              Several
                Obligations; No Liability

            	
              120

            
	
               

            	
              16.19

            	
              Legal
                Representation of Agent

            	
              120

            
	
               

            	
               

            	
               

            
	
              17.

            	
              GUARANTY.

            	
              120

            
	
               

            	
              17.1

            	
              Guaranty
                of the Obligations.

            	
              120

            
	
               

            	
              17.2

            	
              Contribution
                by Guarantors

            	
              121

            
	
               

            	
              17.3

            	
              Payment
                by Guarantors

            	
              122

            
	
               

            	
              17.4

            	
              Liability
                of Guarantors Absolute

            	
              122

            
	 	
              17.5

            	
              Waivers
                by Guarantors

            	
              124

            
	 	
              17.6

            	
              Guarantors’
                Rights of Subrogation, Contribution, Etc

            	
              125

            
	
               

            	
              17.7

            	
              Subordination
                Of Other Obligations

            	
              126

            
	
               

            	
              17.8

            	
              Continuing
                Guaranty

            	
              126

            
	
               

            	
              17.9

            	
              Authority
                of Guarantors or Borrower

            	
              126

            
	
               

            	
              17.10

            	
              Financial
                Condition of Borrower

            	
              126

            
	
               

            	
              17.11

            	
              Bankruptcy,
                Etc

            	
              127

            
	
               

            	
               

            	
               

            
	
              18.

            	
              GENERAL
                PROVISIONS.

            	
              127

            
	
               

            	
              18.1

            	
              Effectiveness

            	
              127

            
	
               

            	
              18.2

            	
              Section
                Headings

            	
              128

            
	
               

            	
              18.3

            	
              Interpretation

            	
              128

            
	
               

            	
              18.4

            	
              Severability
                of Provisions

            	
              128

            
	
               

            	
              18.5

            	
              Amendments
                in Writing

            	
              128

            
	
               

            	
              18.6

            	
              Counterparts;
                Telefacsimile Execution

            	
              128

            
	
               

            	
              18.7

            	
              Revival
                and Reinstatement of Obligations

            	
              128

            
	
               

            	
              18.8

            	
              Confidentiality

            	
              128

            

    

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              18.9

            	
              Integration

            	
              129

            
	
               

            	
              18.10

            	
              Patriot
                Act Notice

            	
              130

            
	
               

            	
              18.11

            	
              Amendment
                and Restatement.

            	
              130

            

    

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    

    EXHIBITS
      AND SCHEDULES

     

    
      	
              Exhibit
                A-1

            	
              Form
                of Assignment and Acceptance 

            

    

    
      	
              Exhibit
                C-1

            	
              Form
                of Compliance Certificate

            

    

    
      	
              Exhibit
                G

            	
              Form
                of Pledge and Security Agreement

            

    

    
      	
              Exhibit
                L-1

            	
              Form
                of LIBOR Notice 

            

    

    
      	
              Exhibit
                M

            	
              Form
                of Borrowing Base Certificate

            

    

    

     

    
      	
              Schedule
                A-1

            	
              Agent’s
                Account

            

    

    
      	
              Schedule
                A-2

            	
              Authorized
                Persons

            

    

    
      	
              Schedule
                C-1

            	
              Commitments

            

    

    
      	
              Schedule
                D-1

            	
              Designated
                Account

            

    

    
      	
              Schedule
                D-2

            	
              Group
                Concentration Account

            

    

    
      	
              Schedule
                E-1

            	
              Eligible
                Inventory Locations

            

    

    
      	
              Schedule
                E-2

            	
              Pool
                Locations

            

    

    
      	
              Schedule
                P-1

            	
              Permitted
                Liens

            

    

    
      	
              Schedule
                1.1(b)

            	
              Qualified
                Restricted Subsidiary

            

    

    
      	
              Schedule
                3.1(d)

            	
              Real
                Property

            

    

    
      	
              Schedule
                5.4

            	
              Locations
                of Inventory 

            

    

    
      	
              Schedule
                5.6(a)

            	
              States
                of Organization

            

    

    
      	
              Schedule
                5.6(b)

            	
              Chief
                Executive Offices

            

    

    
      	
              Schedule
                5.6(c)

            	
              FEINs

            

    

    
      	
              Schedule
                5.7(b)

            	
              Capitalization
                of Borrower

            

    

    
      	
              Schedule
                5.7(c)

            	
              Capitalization
                of Borrower’s Subsidiaries

            

    

    
      	
              Schedule
                5.9

            	
              Litigation

            

    

    
      	
              Schedule
                5.12

            	
              Employee
                Benefits

            

    

    
      	
              Schedule
                5.13

            	
              Environmental
                Matters

            

    

    
      	
              Schedule
                5.15

            	
              Intellectual
                Property

            

    

    
      	
              Schedule
                5.17

            	
              Deposit
                Accounts 

            

    

    
      	
              Schedule
                5.19

            	
              Permitted
                Indebtedness 

            

    

    
      	
              Schedule
                5.20

            	
              Credit
                Card Processors 

            

    

    
      	
              Schedule
                6.2

            	
              Collateral
                Reporting

            

    

    
      	
              Schedule
                6.15

            	
              Designation
                of Subsidiaries

            

    

    
      	
              Schedule
                7.3

            	
              Asset
                Dispositions

            

    

    
      	
              Schedule
                7.4

            	
              Name
                Change

            

    

    
      	
              Schedule
                7.9

            	
              Accounting
                Methods; Fiscal Year

            

    

    
      	
              Schedule
                7.10

            	
              Investments

            

    

    
      	
              Schedule
                7.11

            	
              Transactions
                with Affiliates

            

    

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    Schedule
      6.2

    Collateral
      Reporting

    

    Borrower
      shall provide Agent with the following documents at the following times in
      form
      reasonably satisfactory to Agent:

     

    (a) Borrowing
      Base Certificate.
      On a quarterly basis within 20 Business Days of the end of each of Borrower’s
      fiscal quarters for the immediately preceding fiscal quarter; provided,
      however,
      if Revolver Usage at any time exceeds $100,000,000 then the deliveries required
      by this clause
      (a)
      shall be on a monthly basis, not later than fifteen Business Days from the
      fiscal month end, Borrower shall provide to Agent a signed borrowing base
      certificate based on the most recent completed fiscal month, in form as approved
      by Agent and including a detailed calculation of the Borrowing Base (including
      detail regarding those Accounts of the Credit Parties that are not Eligible
      Accounts) in the form of Exhibit
      M
      to the Amended and Restated Loan and Guaranty Agreement (a “Borrowing Base
      Certificate”); provided,
      further,
      that, during any Triggering Period, Agent may require such borrowing base
      certificate on such more frequent basis as Agent may determine in its Permitted
      Direction. Such certificate may be sent to Agent electronically (with an
      electronic signature) or by facsimile transmission, provided, that in each
      case,
      upon request by Agent, the original thereof is forwarded to Agent on the date
      of
      such transmission. No adjustments to the borrowing base certificate may be
      made
      without supporting documentation and such other documentation as may be
      reasonably requested by Agent from time to time. 

     

    (b) Borrowing
      Base Certificate Supporting Documents.
      At any such time as Borrower shall deliver a Borrowing Base Certificate to
      Agent
      pursuant to subsection (a) above, Borrower shall provide to Agent each of the
      following documents in support thereof:

     

    (i) the
      store stock ledger and warehouse stock ledger reports of the Credit
      Parties;

     

    (ii) a
      summary report of the in-transit Inventory of the Credit Parties;

     

    (iii) a
      report of the gift card balances from the general ledger; and

     

    (iv) a
      report of the Credit Card Receivables of the Credit Parties.

     

    (c) Additional
      Documentation.
      In addition to subsections (a) and (b) above, Agent may, in its Permitted
      Discretion, from time to time require Borrower to deliver to Agent any of the
      following documents:

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    (i) a
      detailed aging, by total, of the Inventory of the Credit Parties, together
      with
      a reconciliation to the detailed calculation of the Borrowing Base previously
      provided to Agent;

     

    (ii) additional
      supporting documentation for the Borrowing Base Collateral as may be available,
      including copies of invoices in connection with Credit Parties’ Accounts, credit
      memos, remittance advices, deposit slips, shipping and delivery documents in
      connection with Credit Parties’ Accounts and, for Inventory acquired by any
      Credit Party, purchase orders and invoices;

     

    (iii) a
      detailed aging, by total, of the Accounts of the Credit Parties, together with
      a
      reconciliation to the detailed calculation of the Borrowing Base previously
      provided to Agent;

     

    (iv) Inventory
      reports specifying the cost and the retail value of Inventory, by category,
      with
      additional detail showing additions to and deletions therefrom;

     

    (v) “flash
      sales report”;

     

    (vi) reconciliation
      of the stock ledger to the general ledger; and

     

    (vii) such
      other reports or documents as to the Collateral or the financial condition
      of
      the Credit Parties, as requested by Agent.

     

    

    
      
        
        

      

      
        -8-EXECUTION
      COPY

    
 

    

    $725,000,000

    

    

    

    

    TERM
      LOAN AGREEMENT

    

    Dated
      as of August
      17, 2007

    

    among

    COLLECTIVE
      BRANDS FINANCE, INC. 

    as
      Borrower

    

    and

    

    THE
      LENDERS PARTY HERETO

    

    and

    

    CITICORP
      NORTH AMERICA, INC. 

    as
      Administrative Agent and Collateral Agent

    

    

    CITIGROUP
      GLOBAL MARKETS INC. and
      J.P.
      MORGAN SECURITIES INC.

    as
      Joint Bookrunners and Joint Lead Arrangers

    

     

    

    

    WEIL,
      GOTSHAL & MANGES LLP

    767
      FIFTH
      AVENUE

    NEW
      YORK,
      NEW YORK 10153-0119

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TERM
      LOAN AGREEMENT,
      dated
      as of August 17, 2007, among COLLECTIVE
      BRANDS FINANCE, INC.,
      a
      Nevada corporation (formerly known as “Payless
      ShoeSource Finance, Inc.”),
      COLLECTIVE
      BRANDS, INC.,
      a
      Delaware corporation (the name “Collective
      Brands, Inc.” to
      be
      changed on or prior to the Closing Date from “Payless
      ShoeSource, Inc.”,
      the
“Parent”), the
      Lenders (as defined below) and CITICORP
      NORTH AMERICA, INC., as
      administrative agent and collateral agent for the Lenders (in such
      capacity, the
      “Administrative
      Agent”).

    

    WITNESSETH

    

    WHEREAS,
      the
      Borrower has requested that the Lenders make term loans available for the
      purposes specified in this Agreement; and

    

    WHEREAS,
      the
      Lenders are willing to make available to the Borrower such term loans upon
      the
      terms and subject to the conditions set forth herein;

    

    NOW,
      THEREFORE,
      in
      consideration of the premises and the covenants and agreements contained herein,
      the parties hereto hereby agree as follows:

    

    ARTICLE
      I

    

    DEFINITIONS,
      INTERPRETATION AND ACCOUNTING TERMS

    

    Section
      1.1 Defined
      Terms

    

    As
      used
      in this Agreement, the following terms have the following meanings (such
      meanings to be equally applicable to both the singular and plural forms of
      the
      terms defined):

    

    “Acquisition
      Subsidiary”
      means
      San Jose Acquisition Corp., a Massachusetts corporation and a Wholly-Owned
      Subsidiary of the Parent.

    

    “Administrative
      Agent” has
      the
      meaning specified in the preamble to this Agreement.

    

    “Affected
      Lender”
has
      the
      meaning specified in Section
      2.15 (Substitution of Lenders).

    

    “Affiliate” means,
      with respect to any Person, any other Person directly or indirectly controlling
      or that is controlled by or is under common control with such Person, each
      officer, director, general partner or joint-venturer of such Person, and each
      Person that is the beneficial owner of 15% or more of any class of Voting Stock
      of such Person; provided,
      however,
      “Affiliate”
shall
      not include any holder of a minority interest in any Subsidiary of the Parent.
      For the purposes of this definition, “control” means
      the
      possession of the power to direct or cause the direction of the management
      and
      policies of such Person, whether through the ownership of voting securities,
      by
      contract or otherwise.

    

    “Agent
      Affiliate”
has
      the
      meaning specified in Section
      10.3 (Posting of Approved Electronic Communications).

    

    “Agreement” means
      this Term Loan Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Alternative
      Currency”
means
      any lawful currency other than Dollars that is freely transferable into
      Dollars.

    

    “Applicable
      Amount”
      shall mean, at any time (the “Reference
      Time”),
      an
      amount
      equal to (a) the sum, without duplication, of:

    

    (i) an
      amount
      equal to the greater of (x) zero and (y) 50% of cumulative Consolidated Net
      Income for the period from the Closing Date until the last day of the then most
      recent fiscal quarter for which Financial Statements have been delivered
      pursuant to Section
      6.1 (Financial Statements);
      provided
      that,
      the amount in this clause
      (i) shall
      only be available if the Parent would be in compliance with the financial
      covenant contained in Section
      5.1 (Financial Covenant)
      for the most recently ended Test Period, determined on a Pro Forma Basis after
      giving effect to any Investment, Restricted Payment or Optional Debt Prepayment
      actually made pursuant to Sections
      8.3(j)(ii) (Investments), 8.5(d)(ii) (Restricted Payments) and
      Section
      8.6(g)(ii) (Prepayment of Indebtedness);
      and

    

    (ii) the
      amount of any capital contributions (other than any such contribution consisting
      of Disqualified Stock) made in cash to, or any proceeds of an Equity Issuance
      received by, the Parent (and contributed as common equity to the Borrower)
      from
      and including the Closing Date through and including the Reference
      Time,

    

    minus
      (b) the
      sum, without duplication, of:

    

    (i) the
      aggregate amount of Investments made pursuant to Section 8.3(j)(ii)
      (Investments)
      following the Closing Date and prior to the Reference Time;

    

    (ii) the
      aggregate amount of Restricted Payments pursuant to Section 8.5(d)(ii)
      (Restricted Payments) following
      the Closing Date and prior to the Reference Time; and

    

    (iii) the
      aggregate amount of Optional Debt Prepayments made pursuant to Section
      8.6(g)(ii) (Prepayment of Indebtedness) following
      the Closing Date and prior to the Reference Time.

    

    “Applicable
      Lending Office”
means,
      with respect to each Lender, its Domestic Lending Office in the case of a Base
      Rate Loan, and its Eurodollar Lending Office in the case of a Eurodollar Rate
      Loan.

    

    “Applicable
      Margin” means
      (a)
      with respect to (i) Closing Date Term Loans maintained as Base Rate Loans,
      a
      rate equal to 1.75% per annum and (ii) Closing Date Term Loans maintained as
      Eurodollar Rate Loans, a rate equal to 2.75% per annum and (b) with respect
      to
      Incremental Term Loans, at the rates per annum for Base Rate Loans and
      Eurodollar Rate Loans to be agreed by the Administrative Agent, the Incremental
      Term Loan Lenders providing such Incremental Term Loans and the Borrower prior
      to the applicable Facility Increase Date.

    

    “Approved
      Electronic Communications”
means
      each notice, demand, communication, information, document and other material
      that any Loan Party is obligated to, or otherwise chooses to, provide to the
      Administrative Agent pursuant to any Loan Document or the transactions
      contemplated therein, including (a) any supplement to the Guaranty, any joinder
      to the Pledge and Security Agreement and any other written Contractual
      Obligation delivered or required to be delivered in respect of any Loan Document
      or the transactions contemplated therein and (b) any Financial Statement,
      financial and other report, notice, request, certificate and other information
      material; provided,
      however, that,
      “Approved
      Electronic Communication” shall
      exclude (i) any Notice of Borrowing, Notice of Conversion or Continuation,
      Facility Increase Notice and any other notice, demand, communication,
      information, document and other material relating to a request for a new, or
      a
      conversion of an existing, Borrowing, (ii) any notice pursuant to Section
      2.6 (Optional Prepayments) and
      Section
      2.7 (Mandatory Prepayments) and
      any
      other notice relating to the payment of any principal or other amount due under
      any Loan Document prior to the scheduled date therefor, (iii) all notices of
      any
      Default or Event of Default and (iv) any notice, demand, communication,
      information, document and other material required to be delivered to satisfy
      any
      of the conditions set forth in Article
      III (Conditions To Term Loans) or
      any
      other condition to any Borrowing or other extension of credit hereunder or
      any
      condition precedent to the effectiveness of this Agreement.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Approved
      Electronic Platform”
has
      the
      meaning specified in Section
      10.3 (Posting of Approved Electronic Communications).

    

    “Approved
      Fund”
means
      any Fund that is advised or managed by (a) a Lender, (b) an Affiliate of a
      Lender or (c) an entity or Affiliate of an entity that administers or manages
      a
      Lender.

    

    “Approved
      Securities Intermediary”
means
      a
“securities
      intermediary”
or
      “commodity
      intermediary”
(as
      such terms are defined in the UCC) selected or reasonably approved by the
      Administrative Agent.

    

    “Arrangers”
means,
      collectively, Citigroup Global Markets Inc. and J.P. Morgan Securities Inc.,
      each in its capacity as joint lead arranger and joint bookrunner.

    

    “Asset
      Sale”
has
      the
      meaning specified in Section
      8.4 (Sale of Assets).

    

    “Assignment
      and Acceptance”
means
      an assignment and acceptance entered into by a Lender and an Eligible Assignee,
      and accepted by the Administrative Agent, in substantially the form of
Exhibit A (Form
      of Assignment and Acceptance).

    

    “Attributable
      Debt”
      in
      respect of a Permitted Sale Leaseback transaction, as at the time of
      determination, the present value (discounted at the interest rate then borne
      by
      the Term Loans, compounded annually) of the total obligations of the lessee
      for
      rental payments during the remaining term of the lease included in such Sale
      Leaseback transaction (including any period for which such lease has been
      extended); provided,
      however,
      that if
      such Permitted Sale Leaseback transaction results in a Capital Lease Obligation,
      the amount of Indebtedness represented thereby will be determined in accordance
      with the definition of “Capital
      Lease Obligations”.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Base
      Rate”
means,
      for any period, a fluctuating interest rate per annum as shall be in effect
      from
      time to time, which rate per annum shall be equal at all times to the higher
      of
      the following:

    

    (a) the
      rate
      of interest announced publicly by Citibank in New York, New York, from time
      to
      time, as Citibank’s base rate; and

    

    (b) 0.5%
      per
      annum plus
      the
      Federal Funds Rate.

    

    “Base
      Rate Loan”
means
      any Term Loan during any period in which it bears interest based on the Base
      Rate.

    

    “Benefit
      Plan”
means
      a
“defined benefit plan” (as defined in Section 3(35)
      of
      ERISA) subject to Title IV of ERISA for which any Group Member or ERISA
      Affiliate of any Group Member has been an “employer” (as defined in
      Section 3(5) of ERISA) within the past six years.

    

    “Borrower”
has
      the
      meaning specified in the preamble to this Agreement.

    

    “Borrower’s
      Accountants”
means
      Deloitte Touche LLP or other independent nationally-recognized public
      accountants reasonably acceptable to the Administrative Agent.

    

    “Borrowing”
means
      any Closing Date Term Loan Borrowing or any borrowing under the Facility
      Increase, as the context may require. 

    

    “Business
      Day”
means
      a
      day of the year on which banks are not required or authorized to close in New
      York City and, if the applicable Business Day relates to notices,
      determinations, fundings and payments in connection with the Eurodollar Rate
      or
      any Eurodollar Rate Loans, a day on which dealings in Dollar deposits are also
      carried on in the London interbank market.

    

    “Capital
      Expenditures”
      means,
      for any Person for any period, the aggregate of amounts that would be reflected
      as capital expenditures on a statement of cash flows of such Person prepared
      in
      conformity with GAAP.

    

    “Capital
      Lease”
means,
      with respect to any Person, any lease of, or other arrangement conveying the
      right to use, property by such Person as lessee that would be accounted for
      as a
      capital lease on a balance sheet of such Person prepared in conformity with
      GAAP.

    

    “Capital
      Lease Obligations”
means,
      with respect to any Person, the capitalized amount of all Consolidated
      obligations of such Person or any of its Subsidiaries under Capital
      Leases.

    

    “Cash
      Equivalents”
means,
      as of any date of determination, (i) marketable securities (a) issued or
      directly and unconditionally guaranteed as to interest and principal by the
      federal government of the United States or (b) issued by any agency of the
      United States in each case maturing within thirteen months after such date;
      (ii)
      marketable direct obligations issued by any state of the United States or any
      political subdivision of any such state or any public instrumentality thereof,
      in each case maturing within thirteen months after such date and having, at
      the
      time of the acquisition thereof, a rating of at least A-1 from S&P or at
      least P-1 from Moody’s; (iii) (a) commercial paper maturing no more than
      thirteen months from the date of creation thereof and having, at the time of
      the
      acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
      Moody’s and (b) other corporate obligations maturing no more than thirteen
      months from the acquisition thereof and having, at the time of the acquisition
      thereof, a rating of at least AA from S&P or at least Aa2 from Moody’s; (iv)
      variable rate demand notes and auction rate securities maturing no more than
      thirteen months from the date of creation thereof; (v) certificates of deposit
      or bankers’ acceptances maturing within thirteen months after such date and
      issued or accepted by any Lender or by any commercial bank organized under
      the
      laws of the United States or any state thereof or the District of Columbia
      that
      (a) is at least “adequately capitalized” (as defined in the regulations of its
      primary Federal banking regulator) and (b) has Tier 1 capital (as defined in
      such regulations) of not less than $100,000,000; and (vi) shares of any money
      market mutual fund that (a) has substantially all of its assets invested
      continuously in the types of investments referred to in clauses (i) and (ii)
      above, (b) has net assets of not less than $500,000,000 and (c) has the highest
      rating obtainable from either S&P or Moody’s.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Change
      of Control”
      means any
      event or circumstance after which (a) any person or group of persons (within
      the
      meaning of the Securities Exchange Act of 1934, as amended) shall have acquired
      beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
      Exchange Commission under the Securities Act of 1934, as amended) of more than
      50% of the Voting Stock of the Parent, (b) a majority of the board of directors
      of the Parent shall not be Continuing Directors or
      (c)
      the Borrower shall cease to be a direct Wholly Owned Subsidiary of the
      Parent.

    

    “Citi”
means
      Citicorp North America, Inc., a Delaware corporation.

    

    “Citibank”
means
      Citibank, N.A., a national banking association.

    

    “Closing
      Date”
means
      August 17, 2007.

    

    “Closing
      Date Term Loan”
has
      the
      meaning specified in Section
      2.1(a) (The Term Loans).

    

    “Closing
      Date Term Loan Borrowing”
means
      a
      borrowing consisting of Closing Date Term Loans made on the Closing Date by
      the
      Lenders ratably according to their respective Term Loan Commitments.

    

    “Closing
      Date Term Loan Maturity Date”
means
      the 7th anniversary of the Closing Date.

    

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

    

    “Collateral”
means
      all property and interests in property and proceeds thereof now owned or
      hereafter acquired by any Loan Party in or upon which a Lien is granted under
      any Collateral Document.

    

    “Collateral
      Documents”
means
      the Pledge and Security Agreement, other pledge or security agreements
      (including those in respect of Intellectual Property), the Mortgages, the
      Deposit Account Control Agreements, the Securities Account Control Agreements
      and any other document executed and delivered by a Loan Party granting a Lien
      on
      any of its property to secure payment of the Secured Obligations.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Commitment
      Letter”
shall
      mean the letter dated May 22, 2007 addressed to the Borrower from the Arrangers
      and accepted by the Borrower on May 22, 2007, with respect to certain terms
      and
      conditions of the Term Loan Facility.

    

    “Compliance
      Certificate”
has
      the
      meaning specified in Section
      6.1(c) (Financial Statements).

    

    “Consolidated”
means,
      with respect to any Person, the consolidation of accounts of such Person and
      its
      Subsidiaries.

    

    “Consolidated
      Current Assets”
means,
      with respect to any Person at any date, the total Consolidated current assets
      (other than cash and Cash Equivalents) of such Person and its Subsidiaries
      at
      such date.

    

    “Consolidated
      Current Liabilities”
means,
      with respect to any Person at any date, all liabilities of such Person and
      its
      Subsidiaries at such date that should be classified as current liabilities
      on a
      Consolidated balance sheet of such Person and its Subsidiaries, but excluding,
      in the case of the Parent the sum of (a) the principal amount of any current
      portion of long-term Consolidated Funded Indebtedness and (b) (without
      duplication of clause
      (a) above)
      the then outstanding principal amount of the Term Loans.

    

    “Consolidated
      EBITDA”
means
      Consolidated EBITDAR minus
      the
      amount, if any, of rental expense added to Consolidated Net Income in
      calculating Consolidated EBITDAR.

    

    “Consolidated
      EBITDAR”
means,
      with respect to any Person for any period, Consolidated Net Income for such
      Person and its Subsidiaries for such period, plus
      (a)
      the
      sum of the following, without duplication and, in each case, to the extent
      deducted in determining such Consolidated Net Income: (i) any provision for
      income taxes, (ii) all interest expense (net of interest income), (iii)
      depreciation, amortization and rental expense, (iv) extraordinary, unusual
      or
      non-recurring charges, expenses or losses (including, whether or not otherwise
      includable as a separate item in the statement of such Consolidated Net Income
      for such period, losses on the sales of assets outside of the ordinary course
      of
      business), (v) losses or charges resulting from hedging activities, including
      but not limited to any decrease in the fair value of interest rate swap
      agreements and any losses on foreign currency contracts not entered into for
      speculative purposes, (vi) the amount of all non-cash charges for such period
      (including any impairment or writeoff of goodwill or other intangible assets
      but
      excluding any such non-cash charge, expense or loss to the extent that it
      represents an accrual of or reserve for cash expenses in any future period
      or an
      amortization of a prepaid cash expense that was paid in a prior period), (vii)
      the amortization of any financing costs or fees or original issue discount
      incurred in connection with any Indebtedness, (viii) any non-cash expenses
      due
      to purchase accounting associated with the Transactions and any future Permitted
      Acquisitions, (ix) any non-cash compensation charge or expense arising from
      any
      grant of stock, stock options or other equity based awards and (x) to the extent
      non-recurring and not capitalized, costs, fees, charges and expenses (including
      legal and consulting fees) incurred in connection with or written off as a
      result of (A) the Term Loan Facility, the Merger or the other Transactions,
      (B)
      Permitted Acquisitions and other investments permitted under this Agreement,
      (C)
      issuances of Stock or Stock Equivalents, and (D) disposition, incurrence or
      refinancing of any Indebtedness, including in each case, all deferred financing
      costs written off and premiums paid or other expenses incurred directly in
      connection with any early extinguishment of Indebtedness and any net loss from
      any write-off or forgiveness of Indebtedness; minus
      (b)
      the
      sum of the following to the extent included in determining Consolidated Net
      Income (i) income tax benefits for such period, (ii) any extraordinary, unusual
      or non-recurring income or gains for such period (including, whether or not
      otherwise includable as a separate item in the statement of such Consolidated
      Net Income for such period, gains on the sales of assets outside of the ordinary
      course of business and any net gain from any write-off or forgiveness of
      Indebtedness), (iii) other non-cash income or gains (other than the accrual
      of
      revenue in the ordinary course), and (iv) gains resulting from hedging
      activities, including but not limited to any increase in the fair value of
      interest rate swap agreements and any gains on foreign currency contracts not
      entered into for speculative purpose.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Consolidated
      Funded Indebtedness”
means,
      as of any date of determination, the sum (without duplication) of (a) the
      aggregate principal amount of Indebtedness of the Parent and the Restricted
      Subsidiaries outstanding as of such date, in the amount that would be reflected
      on a balance sheet prepared as of such date on a Consolidated basis in
      accordance with GAAP, and (b) the aggregate principal amount of Indebtedness
      outstanding as of such date of Persons other than the Parent or a Restricted
      Subsidiary, in the amount that would be reflected on a balance sheet of any
      such
      Person prepared as of such date on a Consolidated basis in accordance with
      GAAP,
      to the extent such Indebtedness is guaranteed by the Parent or a Restricted
      Subsidiary. For
      purposes of determining the Senior Secured Leverage Ratio and the Total Leverage
      Ratio for any Test Period, Consolidated Funded Indebtedness in respect of
      Indebtedness outstanding under the Revolving Credit Agreement shall be the
      average outstanding amount of such Indebtedness during such Test
      Period.

    

    “Consolidated
      Net Income”
means,
      with respect to any Person and its Subsidiaries, for any period, the net income
      (or loss) of such Person and its Subsidiaries for such period, determined on
      a
      Consolidated basis in accordance with GAAP; provided
      that
      there shall be excluded from the calculation of Consolidated Net Income (a)
      except as otherwise provided in the credit documentation with respect to
      calculations to be made on a Pro Forma Basis, the net income (or loss) 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, (b) the
      net income (or loss) of any Person that is an Unrestricted Subsidiary or in
      which such Person has a minority ownership interest, except to the extent any
      such income has actually been received by such Person in the form of cash
      dividends or distributions, and (c) the cumulative effect of a change in
      accounting principles.

    

    “Constituent
      Documents”
means,
      with respect to any Person, (a) the articles of incorporation, certificate
      of
      incorporation, constitution or certificate of formation (or the equivalent
      organizational documents) of such Person, (b) the by-laws or operating agreement
      (or the equivalent governing documents) of such Person and (c) any document
      setting forth the manner of election or duties of the directors or managing
      members of such Person (if any) and the designation, amount or relative rights,
      limitations and preferences of any class or series of such Person’s
      Stock.

    

    “Continuing
      Directors”
shall
      mean the directors of the Parent on the Closing Date and each other director
      of
      the Parent, if, in each case, such other director’s nomination for election to
      the board of directors of the Parent is recommended by at least 51% of the
      then
      Continuing Directors. 

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Contractual
      Obligation”
of
      any
      Person means any obligation, agreement, undertaking or similar provision of
      any
      Security issued by such Person or of any agreement, undertaking, contract,
      lease, indenture, mortgage, deed of trust or other instrument (excluding a
      Loan
      Document) to which such Person is a party or by which it or any of its property
      is bound or to which any of its property is subject.

    

    “Corporate
      Chart”
means
      a
      corporate organizational chart, list or other similar document in each case
      in
      form
      reasonably acceptable to
      the
      Administrative Agent and setting forth, for each Person that is a Loan Party,
      that is subject to Section
      7.11 (Additional Collateral and Guaranties) or
      that
      is a Subsidiary of any of them, (a) the full legal name of such Person (and
      any
      trade name, fictitious name or other name such Person may have had or operated
      under), (b) the jurisdiction of organization, the organizational number (if
      any) and the tax identification number (if any) of such Person, (c) the location
      of such Person’s chief executive office (or sole place of business) and (d) the
      number of shares of each class of such Person’s Stock authorized (if
      applicable), the number outstanding as of the date of delivery and the number
      and percentage of such outstanding shares for each such class owned (directly
      or
      indirectly) by any Loan Party or any Subsidiary of any of them.

    

    “Customary
      Permitted Liens”
means,
      with respect to any Person, any of the following Liens:

    

    (a) Liens
      with respect to the payment of taxes, assessments or governmental charges in
      each case that are not yet due or that are being contested in good faith by
      appropriate proceedings and with respect to which adequate reserves or other
      appropriate provisions are being maintained to the extent required by
      GAAP;

    

    (b) Liens
      of
      landlords arising by statute and liens of suppliers, mechanics, carriers,
      materialmen, warehousemen or workmen and other similar Liens, in each case
      (i)
      imposed by law or arising in the ordinary course of business, (ii) for amounts
      not yet due or that are being contested in good faith by appropriate proceedings
      and (iii) with respect to which adequate reserves or other appropriate
      provisions are being maintained to the extent required by GAAP;

    

    (c) deposits
      made in the ordinary course of business in connection with workers’
compensation, unemployment insurance or other types of social security benefits
      or to secure the performance of bids, tenders, sales, contracts (other than
      for
      the repayment of borrowed money) and surety, appeal, customs or performance
      bonds;

    

    (d) encumbrances
      arising by reason of zoning restrictions, easements, licenses, reservations,
      covenants, rights-of-way, utility easements, building restrictions and other
      similar encumbrances on the use of real property not materially detracting
      from
      the value of such real property or not materially interfering with the ordinary
      conduct of the business conducted and proposed to be conducted at such real
      property;

    

    (e) encumbrances
      arising under leases or subleases of real property that do not, in the
      aggregate, materially detract from the value of such real property or interfere
      with the ordinary conduct of the business conducted and proposed to be conducted
      at such real property; and

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    (f) financing
      statements with respect to a lessor’s rights in and to personal property leased
      to such Person in the ordinary course of such Person’s business other than
      through a Capital Lease.

    

    “Debt
      Issuance”
means
      the incurrence of Indebtedness of the type specified in clause
      (a) or
      (b)
      of
      the
      definition of “Indebtedness” by
      the
      Parent or any Restricted Subsidiary.

    

    “Default”
means
      any event that, with the passing of time or the giving of notice or both, would
      become an Event of Default.

    

    “Deposit
      Account”
has
      the
      meaning given to such term in the UCC.

    

    “Deposit
      Account Bank”
means
      a
      financial institution selected or approved by the Administrative
      Agent.

    

    “Deposit
      Account Control Agreement”
has
      the
      meaning specified in the Pledge and Security Agreement.

    

    “Disqualified
      Stock”
      shall
      mean any Stock or Stock Equivalent which, by its terms (or by the terms of
      any
      Security into which it is convertible or for which it is exchangeable), or
      upon
      the happening of any event, (a) matures (excluding any maturity as the result
      of
      an optional redemption by the issuer thereof) or is mandatorily redeemable,
      pursuant to a sinking fund obligation or otherwise, or is redeemable at the
      option of the holder thereof, in whole or in part, on or prior to the first
      anniversary of the Term Loan Maturity Date, (b) is convertible into or
      exchangeable (unless at the sole option of the issuer thereof) for (i) debt
      securities or (ii) any Stock or Stock Equivalent referred to in clause
      (a)
      above,
      in each case at any time on or prior to the first anniversary of the Term Loan
      Maturity Date, or (c) contains any repurchase obligation which may come into
      effect prior to payment in full of all Obligations; provided,
      however,
      that
      any Stock or Stock Equivalents that would not constitute Disqualified Stock
      but
      for provisions thereof giving holders thereof (or the holders of any security
      into or for which such Stock or Stock Equivalents is convertible, exchangeable
      or exercisable) the right to require the issuer thereof to redeem such Stock
      or
      Stock Equivalents upon the occurrence of a change in control or an asset sale
      occurring prior to the first anniversary of the Term Loan Maturity Date shall
      not constitute Disqualified Stock if such Stock or Stock Equivalents provide
      that the issuer thereof will not redeem any such Stock or Stock Equivalents
      pursuant to such provisions prior to the repayment in full of the Obligations;
      provided
      further,
      however,
      that
      any Stock or Stock Equivalents owned by a Group Member in a Joint Venture shall
      not constitute Disqualified Stock solely due to repurchase obligations triggered
      upon such Group Member’s failure to make a required capital contribution.

    

    “Dollar
      Equivalent”
of
      any
      amount means, at the time of determination thereof, (a) if such amount is
      expressed in Dollars, such amount, (b) if such amount is expressed in an
      Alternative Currency, the equivalent of such amount in Dollars determined by
      using the rate of exchange quoted by Citibank in New York, New York at 11:00
      a.m. (New York time) on the date of determination (or, if such date is not
      a
      Business Day, the last Business Day prior thereto) to prime banks in New York
      for the spot purchase in the New York foreign exchange market of such amount
      of
      Dollars with such Alternative Currency and (c) if such amount is denominated
      in
      any other currency, the equivalent of such amount in Dollars as reasonably
      determined by the Administrative Agent using any method of determination it
      deems appropriate.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Dollars”
and
      the
      sign “$”
each
      mean the lawful money of the United States of America.

    

    “Domestic
      Lending Office”
means,
      with respect to any Lender, the office of such Lender specified as its
“Domestic
      Lending Office”
      opposite its name on Schedule II (Applicable
      Lending Offices and Addresses for Notices) or
      on the
      Assignment and Acceptance by which it became a Lender or such other office
      of
      such Lender as such Lender may from time to time specify to the Borrower and
      the
      Administrative Agent.

    

    “Domestic
      Person”
means
      any “United
      States person”
under
      and as defined in Section
      770l(a)(30)
      of the
      Code.

    

    “Domestic
      Subsidiary”
means
      any Restricted Subsidiary of the Parent that was formed under the laws of the
      United States or any state of the United States or the District of
      Columbia.

    

    “EDGAR”
means
      the Electronic Data-Gathering, Analysis, and Retrieval System maintained by
      the
      Securities and Exchange Commission. 

    

    “Eligible
      Assignee”
means
      (a) a Lender or an Affiliate or Approved Fund of any Lender, (b) a commercial
      bank having total assets whose Dollar Equivalent exceeds $5,000,000,000, (c)
      a
      finance company, insurance company or any other financial institution or Fund,
      in each case reasonably acceptable to the Administrative Agent and regularly
      engaged in making, purchasing or investing in loans and having a net worth,
      determined in accordance with GAAP, whose Dollar Equivalent exceeds $250,000,000
      (or, to the extent net worth is less than such amount, a finance company,
      insurance company, other financial institution or Fund, reasonably acceptable
      to
      the Administrative Agent and the Borrower) or (d) a savings and loan association
      or savings bank organized under the laws of the United States or any State
      thereof having a net worth, determined in accordance with GAAP, whose Dollar
      Equivalent exceeds $250,000,000.

    

    “Environmental
      Actions”
means
      any complaint, summons, citation, notice, directive, order, claim, litigation,
      investigation, judicial or administrative proceeding, judgment, letter, or
      other
      communication, each, by or from any Governmental Authority, or any third party
      involving (x) violations of Environmental Laws or (y) releases of Hazardous
      Materials (a) from any assets, properties, or businesses of any Group Member,
      or
      any of their predecessors in interest, or (b) from or onto any facilities which
      received Hazardous Materials generated by any Group Member, or any of their
      predecessors in interest.

    

    “Environmental
      Laws”
means
      all applicable Requirements of Law now or hereafter in effect and as amended
      or
      supplemented from time to time, relating to pollution or the regulation and
      protection of human or animal health, safety, the environment or natural
      resources, including the Comprehensive Environmental Response, Compensation,
      and
      Liability Act of 1980, as amended (42 U.S.C. § 9601 et
      seq.); the
      Hazardous Material Transportation Act, as amended (49 U.S.C. § 5101 et
      seq.); the
      Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. § 136
et
      seq.);
      the
      Resource Conservation and Recovery Act, as amended (42 U.S.C. § 6901
et
      seq.); the
      Toxic
      Substance Control Act, as amended (15 U.S.C. § 2601 et
      seq.); the
      Clean
      Air Act, as amended (42 U.S.C. § 7401 et
      seq.); the
      Federal Water Pollution Control Act, as amended (33 U.S.C. § 1251 et
      seq.); the
      Occupational Safety and Health Act, as amended (29 U.S.C. § 651 et
      seq.); the
      Safe
      Drinking Water Act, as amended (42 U.S.C. § 300f et
      seq.); and
      each
      of their state and local counterparts or equivalents and any transfer of
      ownership notification or approval statute, including the Industrial Site
      Recovery Act (N.J. Stat. Ann. § 13:1K-6 et
      seq.).

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Environmental
      Liabilities and Costs”
means,
      with respect to any Person, all liabilities, obligations, responsibilities,
      Remedial Actions, losses, damages, punitive damages, consequential damages,
      treble damages, costs and expenses (including all fees, disbursements and
      expenses of counsel, experts and consultants and costs of investigation and
      feasibility studies), fines, penalties, sanctions and interest incurred as
      a
      result of any claim or demand by any other Person, whether based in contract,
      tort, implied or express warranty, strict liability, criminal or civil statute
      and whether arising under any Environmental Law, Permit, order or agreement
      with
      any Governmental Authority or other Person, in each case relating to any
      environmental, health or safety condition or to any Release or threatened
      Release and resulting from the past, present or future operations of, or
      ownership of property by, such Person or any of its Subsidiaries.

    

    “Environmental
      Lien”
means
      any Lien in favor of any Governmental Authority for Environmental Liabilities
      and Costs.

    

    “Equity
      Issuance”
means
      the issue or sale of any Stock of the Borrower, the Parent, or any Restricted
      Subsidiary of the Parent to any Person other than the Borrower, the Parent
      or
      any Restricted Subsidiary of the Parent.

    

    “ERISA”
means
      the United States Employee Retirement Income Security Act of 1974.

    

    “ERISA
      Affiliate”
means
      any trade or business (whether or not incorporated) under common control or
      treated as a single employer with any Group Member within the meaning of
Section
      414(b),
      (c),
      (m)
      or
(o)
      of the
      Code.

    

    “ERISA
      Event”
means
      (a) a reportable event described in Section
      4043(b)
      or
4043(c)(1),
      (2),
      (3),
      (5),
      (6),
      (8)
      or
(9)
      of ERISA
      with respect to a Title IV Plan or a Multiemployer Plan, (b) the withdrawal
      of
      the Borrower, the Parent, any of the Restricted Subsidiaries or any 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 the Borrower, the Parent,
      any
      of the Restricted Subsidiaries or any ERISA Affiliate from any Multiemployer
      Plan, (d) notice of reorganization or insolvency of a Multiemployer Plan, (e)
      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, (f) the institution of proceedings to terminate a Title IV Plan or
      Multiemployer Plan by the PBGC, (g) the failure to timely make any required
      contribution to a Title IV Plan or Multiemployer Plan, (h) the imposition of
      a
      lien under Section
      412
      of the
      Code or Section
      302
      of ERISA
      on the Borrower, the Parent, any of the Restricted Subsidiaries or any ERISA
      Affiliate, (i) 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 the imposition of any liability under Title
      IV
      of ERISA, other than for PBGC premiums due but not delinquent under Section
      4007
      of ERISA
      or (j) the acceleration of an obligation to pay a pension shortfall with respect
      to a Foreign Plan.

    

    “Eurocurrency
      Liabilities”
has
      the
      meaning assigned to that term in Regulation D of the Federal Reserve
      Board.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Eurodollar
      Base Rate”
means,
      with respect to any Interest Period for any Eurodollar Rate Loan, the offered
      rate for deposits in Dollars for the applicable Interest Period appearing on
      the
      Reuters Screen LIBOR01 Page as of 11:00 a.m. (London time) on the second full
      Business Day next preceding the first day of each Interest Period. In the event
      that such rate does not appear on the Reuters Screen LIBOR01 Page (or otherwise
      on the Reuters screen), the Eurodollar Base Rate for the purposes of this
      definition shall be determined by reference to such other comparable publicly
      available service for displaying eurodollar rates as may be reasonably selected
      by the Administrative Agent, or, in the absence of such availability, the
      Eurodollar Base Rate shall be the rate of interest as reasonably determined
      by
      the Administrative Agent to be the rate per annum at which deposits in Dollars
      are offered by the principal office of Citibank in London to major banks in
      the
      London interbank market at 11:00 a.m. (London time) two Business Days before
      the
      first day of such Interest Period in an amount substantially equal to the
      Eurodollar Rate Loan of Citibank for a period equal to such Interest
      Period.

    

    “Eurodollar
      Lending Office”
means,
      with respect to any Lender, the office of such Lender specified as its
“Eurodollar
      Lending Office” opposite
      its name on Schedule II (Applicable
      Lending Offices and Addresses for Notices) or
      on the
      Assignment and Acceptance by which it became a Lender (or, if no such office
      is
      specified, its Domestic Lending Office) or such other office of such Lender
      as
      such Lender may from time to time specify to the Borrower and the Administrative
      Agent.

    

    “Eurodollar
      Rate”
means,
      with respect to any Interest Period for any Eurodollar Rate Loan, an interest
      rate per annum equal to the rate per annum obtained by dividing (a) the
      Eurodollar Base Rate by (b)(i) a percentage equal to 100% minus
      (ii)
      the
      reserve percentage applicable two Business Days before the first day of such
      Interest Period under regulations issued from time to time by the Federal
      Reserve Board for determining the maximum reserve requirement (including any
      emergency, supplemental or other marginal reserve requirement) for a member
      bank
      of the Federal Reserve System in New York City with respect to liabilities
      or
      assets consisting of or including Eurocurrency Liabilities (or with respect
      to
      any other category of liabilities that includes deposits by reference to which
      the Eurodollar Rate is determined) having a term equal to such Interest
      Period.

    

    “Eurodollar
      Rate Loan”
means
      any Term Loan that, for an Interest Period, bears interest based on the
      Eurodollar Rate.

    

    “Event
      of Default” has
      the
      meaning specified in Section
      9.1 (Events of Default).

    

    “Excess
      Cash Flow”
means,
      for the Borrower, the Parent and the Restricted Subsidiaries for any period,
      (a)
      Consolidated EBITDAR of the Parent and the Restricted Subsidiaries for such
      period plus
      (b)
      the
      excess, if any, of Working Capital at the beginning of such period over Working
      capital at the end of such period for the Borrower, the Parent and the
      Restricted Subsidiaries minus
      (c)
      the
      sum of (without duplication) the following: (i) scheduled cash principal
      payments on the Term Loans during such period and optional cash principal
      payments on the Term Loans during such period, (ii) cash principal payments
      made
      by the Borrower, the Parent or any Restricted Subsidiary during such period
      on
      other Indebtedness to the extent such other Indebtedness and payments are
      permitted hereunder (to the extent (x) not financed by the incurrence of
      Indebtedness or an Equity Issuance and (y) in the case of optional cash payments
      of loans made under the Revolving Credit Agreement, accompanied by permanent
      reductions of commitments under the Revolving Credit Agreement in amounts
      corresponding to such payments), (iii) payments made by the Borrower, the Parent
      or any Restricted Subsidiary during such period on Capital Lease Obligations
      to
      the extent such Capital Lease Obligations and payments are permitted hereunder
      (to the extent not financed by the incurrence of Indebtedness or an Equity
      Issuance), (iv) Capital Expenditures (to the extent not financed by the
      incurrence of Indebtedness or an Equity Issuance) made by the Borrower, the
      Parent or any Restricted Subsidiary during such period to the extent permitted
      hereunder, (v) cash payments made by the Borrower, the Parent or any Restricted
      Subsidiary to satisfy tax obligations, (vi) cash interest expense of the
      Borrower, the Parent or any Restricted Subsidiary during such period, (vii)
      rental expense of the Borrower, the Parent or any Restricted Subsidiary during
      such period, and (vii) the excess, if any, of Working Capital at the end of
      such
      period over Working Capital at the beginning of such period.

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Excluded
      Assets”
means
      (a) any lease, license, contract, property right or agreement to which any
      Loan
      Party is a party or any of its rights or interests thereunder if and to the
      extent that a security interest is prohibited by or in violation of (i) any
      law,
      rule or regulation applicable to such Loan Party, or (ii) a term, provision
      or
      condition of or under, any such lease, license, contract, property right or
      agreement (unless in either clause
      (i) or
      (ii)
      above
      such law, rule or regulation or such term, provision or condition would be
      rendered unenforceable against the Term Loans pursuant to Sections
      9-406,
      9-407,
      or
9-408
      of the
      applicable Uniform Commercial Code); (b) any Stock or Stock Equivalents
      representing more than 66% of the outstanding Voting Stock issued by any Person
      that is not a “United States person” under and as defined in Section 7701(a)(30)
      of the IRC; (c) any assets of an Unrestricted Subsidiary or any assets of or
      Stock or Stock Equivalents in any of an Unrestricted Subsidiary’s direct or
      indirect subsidiaries; or (d) any assets of any Immaterial Subsidiary that
      is
      not a Loan Party.

    

    “Existing
      Agent”
means
      Bank of America, N.A., in its capacity as administrative agent under the Target
      Credit Agreement.

    

    “Existing
      Revolving Credit Agreement”
means
      that certain Loan, Guaranty and Security Agreement, dated as of January 15,
      2004
      (as amended and otherwise modified up to but not including the Closing Date),
      among the Borrower, the institutions party thereto as lenders and Wells Fargo
      Retail Finance, LLC, as administrative agent thereunder.

    

    “Facility
      Increase”
has
      the
      meaning specified in Section
      2.1(b) (The Term Loans).
      

    

    “Facility
      Increase Date”
has
      the
      meaning specified in
      Section 2.1(b) (The Term Loans).

    

    “Facility
      Increase Notice”
means
      a
      notice from the Borrower to the Administrative Agent requesting a Facility
      Increase, which may include any proposed term and condition for such proposed
      Facility Increase but shall include in any event the amount of such proposed
      Facility Increase.

    

    “Fair
      Market Value”
means
      (a) with respect to any asset or group of assets (other than a marketable
      Security) at any date, the value of the consideration obtainable in a sale
      of
      such asset at such date assuming a sale by a willing seller to a willing
      purchaser dealing at arm’s length and arranged in an orderly manner over a
      reasonable period of time having regard to the nature and characteristics of
      such asset, determined by the Board of Directors or a Responsible Officer of
      the
      Borrower or Parent or, if such asset shall have been the subject of a relatively
      contemporaneous appraisal by an independent third party appraiser, the basic
      assumptions underlying which have not materially changed since its date, the
      value set forth in such appraisal and (b) with respect to any marketable
      Security at any date, the closing sale price of such Security on the Business
      Day next preceding such date, as appearing in any published list of any national
      securities exchange or the NASDAQ Stock Market or, if there is no such closing
      sale price of such Security, the final price for the purchase of such Security
      at face value quoted on such Business Day by a financial institution of
      recognized standing regularly dealing in Securities of such type and selected
      by
      the Administrative Agent.

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Federal
      Funds Rate”
means,
      for any period, a fluctuating interest rate per annum equal for each day during
      such period to the weighted average of the rates on overnight Federal funds
      transactions with members of the Federal Reserve System arranged by Federal
      funds brokers, as published for such day (or, if such day is not a Business
      Day,
      for the next preceding Business Day) by the Federal Reserve Bank of New York,
      or, if such rate is not so published for any day that is a Business Day, the
      average of the quotations for such day on such transactions received by the
      Administrative Agent from three Federal funds brokers of recognized standing
      selected by it.

    

    “Federal
      Reserve Board”
means
      the Board of Governors of the United States Federal Reserve System, or any
      successor thereto.

    

    “Fee
      Letter”
shall
      mean (a) the letter dated May 22, 2007 addressed to the Borrower from the
      Arrangers and accepted by the Borrower on May 22, 2007, with respect to certain
      fees to be paid from time to time to the Arrangers and (b) if applicable, any
      additional fee letter entered into as part of any Facility Increase and executed
      by, among others, the Borrower and the Administrative Agent.

    

    “Financial
      Asset”
has
      the
      meaning given to such term in the UCC.

    

    “Financial
      Statements”
means
      the financial statements of the Parent and its Subsidiaries delivered in
      accordance with Section
      4.4 (Financial Statements) and
      Section
      6.1 (Financial Statements).

    

    “Foreign
      Plan”
      means
      any defined benefit pension plan maintained by the Borrower, the Parent or
      any
      of the Restricted Subsidiaries that is mandated or governed by any law, rule
      or
      regulation of any Government Authority other than the United States, any state
      thereof or any other political subdivision thereof.

    

    “Foreign
      Subsidiary”
      means
      any Subsidiary of the Parent that is not organized under the laws of any state
      of the United States of America or the District of Columbia.

    

    “Fund”
means
      any Person (other than a natural Person) that is or will be engaged in making,
      purchasing, holding or otherwise investing in commercial loans and similar
      extensions of credit in the ordinary course of its business.

    

    “GAAP”
means
      generally accepted accounting principles in the United States of America as
      in
      effect from time to time set forth in the opinions and pronouncements of the
      Accounting Principles Board and the American Institute of Certified Public
      Accountants and the statements and pronouncements of the Financial Accounting
      Standards Board, or in such other statements by such other entity as may be
      in
      general use by significant segments of the accounting profession, that are
      applicable to the circumstances as of the date of determination.

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Governmental
      Authority”
means
      any nation, sovereign or government, any state or other political subdivision
      thereof and any entity or authority exercising executive, legislative, judicial,
      regulatory or administrative functions of or pertaining to government, including
      any central bank or stock exchange.

    

    “Group
      Members”
means,
      collectively, the Borrower, the Parent and each Restricted
      Subsidiary.

    

    “Guarantor”
means
      Parent and each Wholly Owned Domestic Subsidiary of the Parent that is a
      Restricted Subsidiary or any Restricted Subsidiary of the Parent that guarantees
      or otherwise provides direct credit support for any Indebtedness of the Parent
      of the type listed in clause
      (a)
      or
(b)
      of
      the
      definition of Indebtedness, each party to the Guaranty.

    

    “Guaranty”
means
      the guaranty, in substantially the form of Exhibit F (Form
      of Guaranty), executed
      by the Guarantors.

    

    “Guaranty
      Obligation”
means,
      as applied to any Person, any direct or indirect liability, contingent or
      otherwise, of such Person with respect to any Indebtedness of another Person,
      if
      the purpose or intent of such Person in incurring the Guaranty Obligation is
      to
      provide assurance to the obligee of such Indebtedness that such Indebtedness
      will be paid or discharged, that any agreement relating thereto will be complied
      with, or that any holder of such Indebtedness will be protected (in whole or
      in
      part) against loss in respect thereof, including (a) the direct or indirect
      guaranty, endorsement (other than for collection or deposit in the ordinary
      course of business), co-making, discounting with recourse or sale with recourse
      by such Person of Indebtedness of another Person and (b) any liability of such
      Person for Indebtedness of another Person through any agreement (contingent
      or
      otherwise) (i) to purchase, repurchase or otherwise acquire such Indebtedness
      or
      any security therefor or to provide funds for the payment or discharge of such
      Indebtedness (whether in the form of a loan, advance, stock purchase, capital
      contribution or otherwise), (ii) to maintain the solvency or any balance sheet
      item, level of income or financial condition of another Person, (iii) to make
      take-or-pay or similar payments, if required, regardless of non-performance
      by
      any other party or parties to an agreement, (iv) to purchase, sell or lease
      (as
      lessor or lessee) property, or to purchase or sell services, primarily for
      the
      purpose of enabling the debtor to make payment of such Indebtedness or to assure
      the holder of such Indebtedness against loss or (v) to supply funds to, or
      in
      any other manner invest in, such other Person (including to pay for property
      or
      services irrespective of whether such property is received or such services
      are
      rendered), if in the case of any agreement described under clause
      (b)(i),
      (ii),
      (iii),
      (iv)
      or
      (v)
      above
      the
      primary purpose or intent thereof is to provide assurance that Indebtedness
      of
      another Person will be paid or discharged, that any agreement relating thereto
      will be complied with or that any holder of such Indebtedness will be protected
      (in whole or in part) against loss in respect thereof. The amount of any
      Guaranty Obligation shall be equal to the amount of the Indebtedness so
      guaranteed or otherwise supported.

    

    “Hazardous
      Materials”
means
      any material, substance or waste that is classified, regulated or otherwise
      characterized under any Environmental Law as hazardous, toxic, a contaminant
      or
      a pollutant or by other words of similar meaning or regulatory effect, including
      any petroleum or petroleum-derived substance or waste, asbestos and
      polychlorinated biphenyls.

    

    “Hedging
      Contracts”
means
      all Interest Rate Contracts, foreign exchange contracts, currency swap or option
      agreements, forward contracts, commodity swap, purchase or option agreements,
      other commodity price hedging arrangements and all other similar agreements
      or
      arrangements designed to alter the risks of any Person arising from fluctuations
      in interest rates, currency values or commodity prices.

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Immaterial
      Subsidiary”
means
      any Domestic Subsidiary of the Parent designated in writing by the Borrower
      to
      the Administrative Agent whose total assets or revenues (in each case on a
      Consolidated basis with its Subsidiaries) are less than 3% of the total assets
      or revenues of the Parent and the Restricted Subsidiaries, taken as a whole;
      provided,
      however,
      that
      the aggregate total assets or revenues of all such subsidiaries designated
      as
“Immaterial
      Subsidiaries”
(on
      a
      Consolidated basis with their Subsidiaries), shall not exceed 5% of the total
      assets or revenue of the Parent and the Restricted Subsidiaries, taken as a
      whole.

    

    “Incremental
      Term Loan”
has
      the
      meaning set forth in Section
      2.1(b) (The Term Loans). 

    

    “Incremental
      Term Loan Lender”
has
      the
      meaning set forth in Section
      2.1(b) (The Term Loans).

    

    “Incremental
      Term Loan Maturity Date”
the
      date that is agreed to for such Incremental Term Loan by the Administrative
      Agent and the Borrower at the time the applicable Facility Increase becomes
      effective; provided,
      that
      no
      such date shall be earlier than the Closing Date Term Loan Maturity
      Date.

    

    “Included
      Asset Sale”
means
      any Asset Sale by the Parent or any of the Restricted Subsidiaries other than
      Asset Sales permitted pursuant to clauses
      (a)
      through
(i),
      (l)
      and
(n)
      of
      Section
      8.4 (Sale of Assets).

    

    “Indebtedness”
means,
      without duplication, (a) all obligations for borrowed money, (b) all obligations
      evidenced by bonds, debentures, notes, or other similar instruments and all
      reimbursement or other obligations in respect of letters of credit, bankers
      acceptances, interest rate swaps, or other financial products, (c) all
      obligations as a lessee under Capital Leases, (d) all obligations or liabilities
      of others secured by a Lien on any asset of a Person or its Subsidiaries,
      irrespective of whether such obligation or liability is assumed, (e) all
      obligations to pay the deferred purchase price of assets (other than trade
      payables incurred in the ordinary course of business), (f) all Attributable
      Debt
      in respect of Sale Leaseback transactions, (g) all obligations owing under
      Hedging Contracts, and (h) any obligation guaranteeing or intended to guarantee
      (whether directly or indirectly guaranteed, endorsed, co-made, discounted,
      or
      sold with recourse) any obligation of any other Person that constitutes
      Indebtedness under any of clauses
      (a) through
      (g)
      above.

    

    “Indemnified
      Matter” has
      the
      meaning specified in Section
      11.4 (Indemnities).

    

    “Indemnitee”
has
      the
      meaning specified in Section
      11.4 (Indemnities).

    

    “Intellectual
      Property”
has
      the
      meaning given such term in the Pledge and Security Agreement.

    

    “Intercreditor
      Agreement”
means
      an agreement, in substantially the form of Exhibit
      H (Form of Intercreditor Agreement),
      among
      the Administrative Agent, the Revolving Credit Agent and each Loan
      Party.

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Interest
      Period”
means,
      in the case of any Eurodollar Rate Loan, (a) initially, the period commencing
      on
      the date such Eurodollar Rate Loan is made or on the date of conversion of
      a
      Base Rate Loan to such Eurodollar Rate Loan and ending one, two, three or six
      months thereafter, as selected by the Borrower in its Notice of Borrowing or
      Notice of Conversion or Continuation given to the Administrative Agent pursuant
      to Section
      2.2 (Borrowing Procedures) or
      Section
      2.9 (Conversion/Continuation Option) and
      (b)
      thereafter, if such Term Loan is continued, in whole or in part, as a Eurodollar
      Rate Loan pursuant to Section
      2.9 (Conversion/Continuation Option),
      a
      period commencing on the last day of the immediately preceding Interest Period
      therefor and ending one, two, three or six months thereafter, as selected by
      the
      Borrower in its Notice of Conversion or Continuation given to the Administrative
      Agent pursuant to Section
      2.9 (Conversion/Continuation Option);
      provided,
      however, that
      all
      of the foregoing provisions relating to Interest Periods in respect of
      Eurodollar Rate Loans are subject to the following:

    

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

    

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

    

    (c) the
      Borrower may not select any Interest Period that ends after the date of a
      scheduled principal payment on the Term Loans as set forth in Article
      II (The Term Loan Facility) unless,
      after giving effect to such selection, the aggregate unpaid principal amount
      of
      the Term Loans for which Interest Periods end after such scheduled principal
      payment shall be equal to or less than the principal amount to which the Term
      Loans are required to be reduced after such scheduled principal payment is
      made.

    

    “Interest
      Rate Contracts”
means
      all interest rate swap agreements, interest rate cap agreements, interest rate
      collar agreements and interest rate insurance.

    

    “Inventory”
has
      the
      meaning given to such term in the UCC.

    

    “Investment”
means,
      with respect to any Person, (a) any purchase or other acquisition by such Person
      of (i) any Security issued by, (ii) a beneficial interest in any Security issued
      by, or (iii) any other equity ownership interest in, any other Person, (b)
      any
      purchase by such Person of all or a significant part of the assets of a business
      conducted by any other Person, or all or substantially all of the assets
      constituting the business of a division, branch or other unit operation of
      any
      other Person, (c) any loan, advance (other than deposits with financial
      institutions available for withdrawal on demand,
      prepaid expenses, accounts receivable and similar items made or incurred in
      the
      ordinary course of business as presently conducted) or capital contribution
      by
      such Person to any other Person, including all Indebtedness of any other Person
      to such Person arising from a sale of property by such Person other than in
      the
      ordinary course of its business, and (d) any Guaranty Obligation incurred by
      such Person in respect of Indebtedness of any other Person. For purposes of
      determining the value of any Investment outstanding for purposes of any
      subclause of Section
      8.3 (Investments),
      such
      amount, when aggregated with the amount of all other Investments made pursuant
      to such subclause, shall deemed to be the amount of all such Investments when
      made, purchased or acquired less any returns on such Investments (not to exceed
      the aggregate of the original amounts invested pursuant to such
      subclause).

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “IRS”
means
      the Internal Revenue Service of the United States or any successor
      thereto.

    

    “Joint
      Venture”
      means a
      corporation, limited liability company, joint venture or similar limited
      liability legal entity formed in order to conduct a common venture or enterprise
      between two or more Persons.

    

    “Land”
of
      any
      Person means all of those plots, pieces or parcels of land now owned, leased
      or
      hereafter acquired or leased or purported to be owned, leased or hereafter
      acquired or leased (including, in respect of the Loan Parties, as reflected
      in
      the most recent Financial Statements) by such Person.

    

    “Lender”
means
      each financial institution or other entity that (a) is listed on the signature
      pages hereof as a “Lender”,
      (b)
      from time to time becomes a party hereto by execution of an Assignment and
      Acceptance or (c) from time to time becomes a party hereto in connection with
      a
      Facility Increase by execution of an assumption agreement, in form and substance
      reasonably satisfactory to the Administrative Agent and the
      Borrower.

    

    “Lien”
means
      any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit
      arrangement, encumbrance, lien (statutory or other), security interest or
      preference, priority or other security agreement or preferential arrangement
      of
      any kind or nature whatsoever intended to assure payment of any Indebtedness
      or
      the performance of any other obligation, including any conditional sale or
      other
      title retention agreement, the interest of a lessor under a Capital Lease and
      any financing lease having substantially the same economic effect as any of
      the
      foregoing, and the filing of any financing statement under the UCC or comparable
      law of any jurisdiction naming the owner of the asset to which such Lien relates
      as debtor.

    

    “Loan
      Documents”
means,
      collectively, this Agreement, the Notes (if any), the Intercreditor Agreement,
      the Guaranty, the Fee Letter, each Hedging Contract between any Loan Party
      and
      any Person that was a Lender or an Affiliate of a Lender at the time it entered
      into such Hedging Contract, the Collateral Documents and each certificate,
      agreement or document executed by a Loan Party and delivered to the
      Administrative Agent or any Lender in connection with or pursuant to any of
      the
      foregoing.

    

    “Loan
      Party”
means
      each of the Borrower, each Guarantor and each other Subsidiary of the Parent
      that executes and delivers a Loan Document.

    

    “Material
      Adverse Change”
means
      (a) a material adverse change in the business, operations, results of
      operations, assets, liabilities or condition (financial or otherwise) of the
      Borrower, the Parent and the Restricted Subsidiaries taken as a whole, (b)
      a
      material impairment of the Loan Parties’ ability to perform their obligations
      under the Loans Documents to which they are parties or of the Administrative
      Agent or the Lenders to enforce the Obligations or realize upon the Collateral
      or (c) a material impairment of the enforceability or priority of the
      Administrative Agent’s Liens with respect to the Collateral as a result of an
      action or failure to act on the part of any Loan Party.

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Material
      Adverse Effect”
means
      an effect that results in or causes, or would reasonably be expected to result
      in or cause, a Material Adverse Change.

    

    “Merger”
means
      the merger of the Acquisition Subsidiary with and into the Target, with the
      Target being the surviving corporation, whereupon the outstanding shares of
      the
      Target will be converted into the right to receive the purchase price, in cash,
      and on terms and conditions otherwise set forth in the Merger
      Agreement.

    

    “Merger
      Agreement” means
      that certain Agreement and Plan of Merger dated as of May 22, 2007 among the
      Borrower, the Acquisition Subsidiary and the Target.

    

    “Moody’s”
means
      Moody’s Investors Service, Inc.

    

    “Mortgage
      Supporting Documents”
means,
      with respect to any Mortgage for a parcel of owned Real Property, each document
      (including title policies or marked-up unconditional insurance binders (in
      each
      case, together with copies of all documents referred to therein), maps, ALTA
      or
      TLTA, if applicable, as-built surveys, in form and as to date that is
      sufficiently acceptable to the title insurer issuing title insurance to the
      Administrative Agent for such title insurer to deliver endorsements to such
      title insurance as reasonably requested by the Administrative Agent,
      environmental assessments and reports and evidence regarding recording and
      payment of fees, insurance premium and taxes) that the Administrative Agent
      may
      reasonably request, to create, register, perfect, maintain, evidence the
      existence, substance, form or validity of or enforce a valid and enforceable
      first priority Lien on such parcel of owned Real Property in favor of the
      Administrative Agent for the benefit of the Secured Parties, subject only to
      such Liens as the Administrative Agent may approve.

    

    “Mortgages”
means
      the mortgages, deeds of trust or other real estate security documents made
      or
      required herein to be made by the Borrower or any other Loan Party, each in
      form
      and substance reasonably satisfactory to the Administrative Agent.

    

    “Multiemployer
      Plan”
means
      a
      multiemployer plan, as defined in Section 400l(a)(3)
      of
      ERISA, to which any Group Member or any ERISA Affiliate has any obligation
      or
      liability, contingent or otherwise.

    

    “Net
      Cash Proceeds”
means
      (a) with respect to any Included Asset Sale or Recovery Event, in each case,
      of
      Term Priority Collateral, the proceeds thereof received by any Group Member
      in
      the form of cash and Cash Equivalents (including any such proceeds subsequently
      received (as and when received) in respect of noncash consideration initially
      received) not reinvested in assets used or useful in the business of any Group
      Member within 365 days of receipt, net of (i) selling, recovery or other
      transactional expenses payable by any Group Member in connection with obtaining
      such proceeds (including reasonable and customary broker’s or investment
      banker’s fees or commissions, legal fees, transfer and similar taxes incurred in
      connection therewith and the Borrower’s good faith estimate of income taxes paid
      or payable in connection with such sale or other transaction), (ii) amounts
      provided as a reserve, in accordance with GAAP, against any liabilities under
      any indemnification obligations or purchase price adjustment associated with
      such Included Asset Sale or Recovery Event (provided that, to the extent and
      at
      the time any such amounts are released from such reserve, such amounts shall
      constitute Net Cash Proceeds) and (iii) the principal amount, premium or
      penalty, if any, interest and other amounts on any Indebtedness for borrowed
      money which is secured by the asset sold in such Included Asset Sale or involved
      in such Recovery Event and which is repaid with such proceeds (other than,
      in
      connection with an Included Asset Sale, any such Indebtedness assumed by the
      purchaser of such asset) or (b) with respect to any Debt Issuance, the proceeds
      received by any Group Member in cash or Cash Equivalents, net of reasonable
      and
      customary broker’s or advisor’s fees and other costs and expenses (including
      attorneys’ fees) incurred in connection therewith (including, if applicable, the
      cost of any Note Hedge Transaction entered into in connection with such Debt
      Issuance).

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Non-Consenting
      Lender”
has
      the
      meaning specified in Section
      11.1(c) (Amendments, Waivers, Etc.).

    

    “Non-U.S.
      Lender”
means
      each Lender (or the Administrative Agent) that is a Non-U.S.
      Person.

    

    “Non-U.S.
      Person”
means
      any Person that is not a Domestic Person.

    

    “Note”
means
      a
      promissory note of the Borrower payable to the order of any Lender in a
      principal amount equal to the amount of the Term Loan owing to such
      Lender.

    

    “Note
      Hedge Transaction”
means
      any note hedge transaction entered into in connection with the issuance of
      Qualified Refinancing Indebtedness and which shall be paid for with the proceeds
      of such Qualified Refinancing Indebtedness.

    

    “Notice
      of Borrowing”
has
      the
      meaning specified in Section
      2.2(a) (Borrowing Procedures).

    

    “Notice
      of Conversion or Continuation”
has
      the
      meaning specified in Section
      2.9 (Conversion/Continuation Option).

    

    “Obligations”
means
      the Term Loans and all other amounts, obligations, covenants and duties owing
      by
      any Loan Party to the Administrative Agent, any Lender any Affiliate of any
      of
      them or any Indemnitee, of every type and description (whether by reason of
      an
      extension of credit or payment of any draft drawn or other payment thereunder,
      loan, guaranty, indemnification, foreign exchange or currency swap transaction,
      interest rate hedging transaction or otherwise), present or future, arising
      under this Agreement, any other Loan Document, whether direct or indirect
      (including those acquired by assignment), absolute or contingent, due or to
      become due, now existing or hereafter arising and however acquired and whether
      or not evidenced by any note, guaranty or other instrument or for the payment
      of
      money, including all fees, interest, charges, expenses, attorneys’ fees and
      disbursements and other sums chargeable to the Loan Parties under this Agreement
      and any other Loan Document (including Hedging Contracts that are Loan
      Documents).

    

    “Optional
      Debt Prepayment”
      has the meaning specified in Section
      8.6 (Prepayment of Indebtedness). 

    

    “Parent”
has
      the
      meaning specified in the preamble to this Agreement.

    

    “Patriot
      Act”
means
      the USA Patriot Act of 2001 (31 U.S.C. 5318 et
      seq.).

    

    “PBGC”
means
      the Pension Benefit Guaranty Corporation or any successor thereto.

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Permit”
means
      any permit, approval, authorization, license, variance or permission required
      from a Governmental Authority under an applicable Requirement of
      Law.

    

    “Permitted
      Acquisition”
means
      any Proposed Acquisition subject to the satisfaction of each of the following
      conditions at or prior to the consummation of the Proposed
      Acquisition:

    

    (a) the
      Administrative Agent shall receive prior written notice of such Proposed
      Acquisition, which notice shall include, without limitation, a
      reasonably
      detailed
      description of such
      Proposed Acquisition;

    

    (b) the
      Investment in such Permitted Acquisition is permitted under clause
      (i) or
      (j)
      of
      Section
      8.3 (Investments);
      

    

    (c) the
      Borrower (or the Parent or the Subsidiary making such Proposed Acquisition)
      and
      the Proposed Acquisition Target shall have executed such documents and taken
      such actions as may be required under Section
      7.11 (Additional Collateral and Guaranties);

    

    (d) the
      Administrative Agent shall have received copies of the agreements, related
      contracts, instruments and all opinions, certificates, lien search results
      and
      other documents, in each case to the extent actually received by any Loan Party
      (and subject to agreement to such additional confidentiality requirements as
      may
      be required to permit such Loan Party to deliver such copies), in each case
      reasonably requested by the Administrative Agent; and

    

    (e) at
      the
      time of such Proposed Acquisition and after giving effect thereto, (i) no
      Default or Event of Default shall have occurred and be continuing and (ii)
      all
      representations and warranties contained in Article
      IV (Representations and Warranties)
      and in
      the other Loan Documents shall be true and correct in all material respects
      and
      (iii) the
      Parent would be in compliance with the financial covenant contained in
Section
      5.1 (Financial
      Covenant)
      for the most recently ended Test Period, determined on a Pro Forma Basis after
      giving effect to such Proposed Acquisition (and the transactions contemplated
      thereby, including the incurrence or assumption of any Indebtedness in
      connection therewith).

    

    “Permitted
      Payment Restriction”
      means
      any consensual encumbrance or restriction (each, a “restriction”)
      on the
      ability of any Restricted Subsidiary to (a) pay dividends or make any other
      distributions on its Stock or Stock Equivalent to the Borrower, the Parent
      or a
      Restricted Subsidiary or pay any Indebtedness owed to the Parent or a Restricted
      Subsidiary or (b) make any loans or advances to the Parent or a Restricted
      Subsidiary, which restriction (i) satisfies all of the following conditions:
      (x)
      such restriction becomes effective only upon the occurrence of (1) specified
      events under its charter or (2) a default by such Restricted Subsidiary in
      the
      payment of principal of or interest, a bankruptcy default, a default on any
      financial covenant or any other material default, in each case on Indebtedness
      that was incurred by such Restricted Subsidiary in compliance with Section
      8.1 (Indebtedness)
      and (y)
      such restriction would not materially impair the Borrower’s ability to make
      scheduled payments of cash interest and to make required principal payments
      on
      the Term Loans, as determined in good faith by a Responsible Officer of the
      Parent or the Borrower or (ii) represents customary provisions of a Joint
      Venture and relates solely to the assets, revenues and business of such Joint
      Venture.

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Permitted
      Refinancing”
means
      Indebtedness constituting a refinancing or extension of Indebtedness permitted
      under this Agreement that (a) has an aggregate outstanding principal amount
      not
      greater than the aggregate principal amount of such Indebtedness outstanding
      at
      the time of such refinancing or extension, (b) has a weighted average maturity
      (measured as of the date of such refinancing or extension) no shorter than
      that
      of such Indebtedness, (c) has a maturity date no earlier than the stated
      maturity of such Indebtedness; provided,
      however,
      that
      the maturity date of any Permitted Refinancing of the Subordinated Notes shall
      have a maturity date no earlier than the Term Loan Maturity Date at the time
      of
      such refinancing or extension, (d) has Lien and payment subordinated terms,
      if
      applicable, that are no less favorable to the Lenders, in each case, than the
      corresponding terms of such Indebtedness and (e) is otherwise on terms, taken
      as
      a whole, no less favorable to the Group Members than those of such Indebtedness,
      other than market interest rates and fees. 

    

    “Permitted
      Sale Leaseback”
      shall
      mean any Sale Leaseback consummated by the Borrower or any of the Restricted
      Subsidiaries with any Person that is not an Affiliate of the Borrower after
      the
      Closing Date; provided
      that (i)
      after giving effect to such Sale Leaseback, no Default or Event of Default
      shall
      have occurred and be continuing and (ii) any such Sale Leaseback shall be
      consummated for fair value as determined at the time of consummation in good
      faith by a Responsible Officer of the Borrower or the Parent.

    

    “Person”
means
      an individual, partnership, corporation (including a business trust), joint
      stock company, estate, trust, limited liability company, unincorporated
      association, joint venture or other entity or a Governmental
      Authority.

    

    “Pledge
      and Security Agreement”
means
      an agreement, in substantially the form of Exhibit G (Form
      of Pledge and Security Agreement), executed
      by the Borrower and each Guarantor.

    

    “Pledged
      Debt Instruments”
has
      the
      meaning specified in the Pledge and Security Agreement.

    

    “Pledged
      Stock”
has
      the
      meaning specified in the Pledge and Security Agreement.

    

    “Proceeds”
has
      the
      meaning given to such term in the UCC.

    

    “Pro
      Forma Basis”
      means, as to any Person, for any events as described in clauses
      (i) and
      (ii)
      below
      that occur subsequent to the commencement of a period for which the financial
      effect of such events is being calculated, and giving effect to the events
      for
      which such calculation is being made, such calculation as will give pro
      forma
      effect to such events as if such events occurred on the first day of the
      applicable Test Period: 

    

    (i)
      in making any determination of Consolidated EBITDA or Consolidated EBITDAR,
      pro
      forma
      effect shall be given to any Asset Sale and to any Permitted Acquisition (or
      to
      any similar transaction or transactions that require a waiver or consent of
      the
      Required Lenders pursuant to Section
      8.3 (Investments) or
      8.4 (Asset
      Sales)),
      in each case that occurred during the Test Period (or, in the case of
      determinations made pursuant to the definition of “Permitted Acquisition”
occurring during the Test Period or thereafter and through and including the
      date upon which the respective Permitted Acquisition is consummated); and

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    (ii)
      in making any determination on a Pro Forma Basis, (x) all Indebtedness
      (including Indebtedness incurred or assumed and for which the financial effect
      is being calculated, whether incurred under this Agreement or otherwise incurred
      or permanently repaid during the Test Period (or, in the case of determinations
      made pursuant to the definition of “Permitted
      Acquisition”,
      occurring during the Test Period and through and including the date upon which
      the respective Permitted Acquisition is consummated) shall be deemed to have
      been incurred or repaid at the beginning of such period (if such Indebtedness
      was incurred under the Revolving Credit Agreement, such Indebtedness shall
      be
      deemed to be outstanding for the entire Test Period for purposes of determining
      the Senior Secured Leverage Ratio and the Total Leverage Ratio) and (y) interest
      expense of such Person attributable to interest on any Indebtedness, for which
      pro
      forma
      effect is being given as provided in preceding clause
      (x),
      bearing floating interest rates shall be computed on a pro
      forma
      basis as if the rates that would have been in effect during the period for
      which
pro
      forma
      effect is being given had been actually in effect during such
      periods.

    

    Pro
      forma
      calculations made pursuant to the definition of “Pro
      Forma Basis”
      shall be determined in good faith by a Responsible Officer of the Borrower
      and,
      for any fiscal period ending on or prior to the first anniversary of a Permitted
      Acquisition or Asset Sale (or any similar transaction or transactions that
      require a waiver or consent of the Required Lenders pursuant to Section
      8.3 (Investments) or
      8.4 (Asset
      Sales)),
      may include adjustments to reflect operating expense reductions and other
      operating improvements or synergies implemented or planned to be implemented
      and
      reasonably expected to result from such Permitted Acquisition, Asset Sale or
      other similar transaction, to the extent that the Borrower delivers to the
      Administrative Agent (i) a certificate of the Borrower signed by a Responsible
      Officer setting forth such operating expense reductions and other operating
      improvements or synergies and (ii) information and calculations supporting
      in
      reasonable detail such estimated operating expense reductions and other
      operating improvements or synergies.

    

    “Projections”
means
      the then most recent financial projections of the Parent, the Target and their
      respective Subsidiaries (on a combined basis) through the fiscal year ending
      2014, prepared for each fiscal quarter through the end of fiscal year ending
      2007 (and annually thereafter), to be delivered to the Lenders by the
      Borrower.

    

    “Proposed
      Acquisition”
means
      the proposed acquisition by the Borrower, the Parent or any of the Restricted
      Subsidiaries of all or substantially all of the assets or Stock of any Proposed
      Acquisition Target, or the merger of any Proposed Acquisition Target with or
      into the Borrower, the Parent or any Subsidiary of the Parent (and, in the
      case
      of a merger with the Borrower, with the Borrower being the surviving
      corporation).

    

    “Proposed
      Acquisition Target”
means
      any Person or group of Persons engaged in a particular line of business or
      any
      operating division thereof subject to a Proposed Acquisition.

    

    “Purchasing
      Lender”
has
      the
      meaning specified in Section
      11.7 (Sharing of Payments, Etc.).

    

    “Qualified
      Capital Stock”
      of any
      Person shall mean any Stock or Stock Equivalents of such Person that is not
      Disqualified Stock.

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Qualified
      Refinancing Indebtedness”
means
      Indebtedness incurred pursuant to Section
      8.1(m) (Indebtedness)
      to
      refinance, in part, the Obligations, in an aggregate principal amount not to
      exceed $450,000,000.

    

    “Qualified
      Restricted Subsidiary”
      means
      any Restricted Subsidiary that is not a Loan Party and that satisfies each
      of
      the following requirements: (i) except for Permitted Payment Restrictions,
      there
      are no restrictions, directly or indirectly, on the ability of such Restricted
      Subsidiary to pay dividends or make distributions to the holders of its Stock
      and Stock Equivalents; and (ii) the Stock and Stock Equivalents of such
      Restricted Subsidiary consist of Stock and Stock Equivalents majority owned
      by
      the Parent and its Qualified Restricted Subsidiaries.

    

    “Ratable
      Portion”
or
      (other than in the expression “equally
      and ratably”) “ratably” means,
      with respect to any Lender, the percentage obtained by dividing (a) the Term
      Loan Commitment of such Lender by (b) the aggregate Term Loan Commitments of
      all
      Lenders (or, at any time after the funding of the Closing Date Term Loans,
      the
      percentage obtained by dividing the principal amount of such Lender’s Term Loans
      by the aggregate Term Loans of all Lenders).

    

    “Real
      Property”
of
      any
      Person means the Land of such Person, together with the right, title and
      interest of such Person, if any, in and to the streets, the Land lying in the
      bed of any streets, roads or avenues, opened or proposed, in front of, the
      air
      space and development rights pertaining to the Land and the right to use such
      air space and development rights, all rights of way, privileges, liberties,
      tenements, hereditaments and appurtenances belonging or in any way appertaining
      thereto, all fixtures, all easements now or hereafter benefiting the Land and
      all royalties and rights appertaining to the use and enjoyment of the Land,
      including all alley, vault, drainage, mineral, water, oil and gas rights,
      together with all of the buildings and other improvements now or hereafter
      erected on the Land and any fixtures appurtenant thereto.

    

    “Recovery
      Event”
means
      any settlement of or payment in respect of any property or casualty insurance
      claim or any taking under power of eminent domain or by condemnation or similar
      proceeding of or relating to any property or asset of the Parent or any of
      the
      Restricted Subsidiaries other than any settlement, payment, taking or proceeding
      that results in cash consideration of less than $1,000,000,
      individually.

    

    “Register”
has
      the
      meaning specified in Section
      2.5(b) (Evidence of Debt).

    

    “Regulation
      S-X”
means
      Regulation S-X under the Securities Act of 1933, as amended from time to time,
      and any successor statute.

    

    “Related
      Documents”
means
      the Merger Agreement, the Subordinated Notes Indenture, the Revolving Credit
      Agreement and each other document and instrument executed with respect to any
      of
      the foregoing.

    

    “Release”
means,
      with respect to any Person, any release, spill, emission, leaking, pumping,
      injection, deposit, disposal, discharge, dispersal, leaching or migration,
      in
      each case, of any Hazardous Material into the indoor or outdoor environment
      or
      into or out of any property owned, leased or operated by such Person, including
      the movement of Hazardous Materials through or in the air, soil, surface water,
      ground water or property.

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Remedial
      Action”
means
      all actions required to (a) clean up, remove, treat or in any other way address
      any Hazardous Material in the indoor or outdoor environment, (b) prevent the
      Release or threat of Release or minimize the further Release so that a Hazardous
      Material does not migrate or endanger or threaten to endanger public health
      or
      welfare or the indoor or outdoor environment or (c) perform pre-remedial studies
      and investigations and post-remedial monitoring and care.

    

    “Requirement
      of Law”
means,
      with respect to any Person, the common law and all federal, state, local and
      foreign laws, treaties, rules and regulations, orders, judgments, decrees and
      other determinations of, concessions, grants, franchises, licenses and other
      Contractual Obligations with, any Governmental Authority or arbitrator,
      applicable to or binding upon such Person or any of its property or to which
      such Person or any of its property is subject.

    

    “Requisite
      Lenders”
means,
      collectively, Lenders having more than 50% of the aggregate outstanding amount
      of the Term Loan Commitments or, after the funding of the Closing Date Term
      Loans, more than fifty percent (50%) of the principal amount of all Term Loans
      then outstanding.

    

    “Responsible
      Officer”
means,
      with respect to any Person, any of the principal executive officers, managing
      members or general partners of such Person but, in any event, with respect
      to
      financial matters, the chief financial officer, treasurer or controller of
      such
      Person.

    

    “Restricted
      Payment”
means
      (a) any dividend, distribution or any other payment whether direct or indirect,
      on account of any Stock or Stock Equivalent of the Borrower, the Parent or
      any
      Restricted Subsidiary now or hereafter outstanding and (b) any redemption,
      retirement, sinking fund or similar payment, purchase or other acquisition
      for
      value, direct or indirect, of any Stock or Stock Equivalent of the Borrower,
      the
      Parent or any Restricted Subsidiary now or hereafter outstanding.

    

    “Restricted
      Subsidiary”
means
      each direct and indirect Subsidiary of the Parent other than one that has been
      designated as an Unrestricted Subsidiary by the Parent in accordance with the
      terms of this Agreement.

    

    “Revolving
      Credit Agent”
means
      Wells Fargo Retail Finance, LLC, in its capacity as administrative agent under
      the Revolving Credit Agreement.

    

    “Revolving
      Credit Agreement”
means
      that certain Amended and Restated Loan and Guaranty Agreement, dated as of
      the
      date hereof, among the Borrower, the institutions party thereto as lenders,
      the
      Revolving Credit Agent, and Citigroup Global Markets Inc., as co-lead arranger
      thereunder.

    

    “Revolving
      Credit Loan Documents”
means,
      collectively, the Revolving Credit Agreement, all guaranties, pledges, security
      agreements and similar agreements entered into in connection therewith to
      guaranty or secure any Revolving Credit Obligations and each other certificate,
      agreement and other document entered into in connection therewith (other than
      the Intercreditor Agreement).

    

    “Revolving
      Credit Obligations”
means
      the “Obligations”
under
      and as defined in the Revolving Credit Agreement.

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “S&P”
means
      Standard & Poor’s Rating Services.

    

    “Sale
      Leaseback”
      shall
      mean any transaction or series of related transactions pursuant to which the
      Borrower or any of the Restricted Subsidiaries (i) sells, transfers or otherwise
      disposes of any property, real or personal, whether now owned or hereafter
      acquired, and (ii) as part of such transaction, thereafter rents or leases
      such
      property or other property that it intends to use for substantially the same
      purpose or purposes as the property being sold, transferred or
      disposed.

    

    “Sarbanes-Oxley
      Act”
means
      the United States Sarbanes-Oxley Act of 2002.

    

    “Secured
      Obligations”
means,
      in the case of the Borrower, the Obligations and, in the case of any other
      Loan
      Party, the obligations of such Loan Party under the Guaranty and the other
      Loan
      Documents to which it is a party.

    

    “Secured
      Parties”
means
      the Lenders, the Administrative Agent and any other holder of any Secured
      Obligation.

    

    “Securities
      Account”
has
      the
      meaning given to such term in the UCC.

    

    “Securities
      Account Control Agreement”
has
      the
      meaning specified in the Pledge and Security Agreement.

    

    “Security”
means
      any Stock, Stock Equivalent, voting trust certificate, bond, debenture, note
      or
      other evidence of Indebtedness, whether secured, unsecured, convertible or
      subordinated, or any certificate of interest, share or participation in, any
      temporary or interim certificate for the purchase or acquisition of, or any
      right to subscribe to, purchase or acquire, any of the foregoing, but shall
      not
      include any evidence of the Obligations.

    

    “Selling
      Lender”
has
      the
      meaning specified in Section
      11.7 (Sharing of Payments, Etc.).

    

    “Senior
      Secured Leverage Ratio”
means,
      as of any date of determination, the ratio of (a) Consolidated Funded
      Indebtedness of the Parent and the Restricted Subsidiaries that is secured
      by
      Liens outstanding as of such date (minus the cash and Cash Equivalents of the
      Loan Parties that are not subject to any Lien securing Indebtedness other than
      the Obligations or Revolving Credit Obligations) to (b) the aggregate amount
      of
      Consolidated EBITDA of the Parent and the Restricted Subsidiaries for the most
      recently ended Test Period.

    

    “Solvent”
means,
      with respect to any Person as of any date of determination, that, as of such
      date, (a) the value of the assets of such Person (both at fair value and present
      fair saleable value) is greater than the total amount of liabilities (including
      contingent and unliquidated liabilities) of such Person, (b) such Person is
      able
      to pay all liabilities of such Person as such liabilities mature and (c) such
      Person does not have unreasonably small capital. In computing the amount of
      contingent or unliquidated liabilities at any time, such liabilities shall
      be
      computed at the amount that, in light of all the facts and circumstances
      existing at such time, represents the amount that can reasonably be expected
      to
      become an actual or matured liability.

    

    “Special
      Purpose Vehicle”
means
      any special purpose funding vehicle identified as such in writing by any Lender
      to the Administrative Agent.

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Stock”
means
      shares of capital stock (whether denominated as common stock or preferred
      stock), beneficial, partnership or membership interests, participations or
      other
      equivalents (regardless of how designated) of or in a corporation, partnership,
      limited liability company or equivalent entity, whether voting or
      non-voting.

    

    “Stock
      Equivalents”
means
      all securities convertible into or exchangeable for Stock and all warrants,
      options or other rights to purchase or subscribe for any Stock, whether or
      not
      presently convertible, exchangeable or exercisable.

    

    “Subordinated
      Notes”
means
      the 8.25% Senior Subordinated Notes due 2013 issued pursuant to the Subordinated
      Notes Indenture.

    

    “Subordinated
      Notes Indenture”
means
      the Indenture, dated as of July 28, 2003, between the Borrower and Wells Fargo
      Bank Minnesota, National Association, as trustee. 

    

    “Subsidiary”
means,
      with respect to any Person, any corporation, partnership, limited liability
      company or other business entity of which an aggregate of 50% or more of the
      outstanding Voting Stock is, at the time, directly or indirectly, owned or
      controlled by such Person or one or more Subsidiaries of such
      Person.

    

    “Substitute
      Institution”
has
      the
      meaning specified in Section
      2.15 (Substitution of Lenders).

    

    “Substitution
      Notice”
has
      the
      meaning specified in Section
      2.15 (Substitution of Lenders).

    

    “Target”
means
      The Stride Rite Corporation, a Massachusetts corporation.

    

    “Target
      Credit Agreement”
means
      that certain Credit Agreement, dated as of September 16, 2005, among the Target,
      the institutions party thereto as lenders and Bank of America, N.A. as
      administrative agent thereunder, among others.

    

    “Tax
      Affiliate”
means,
      with respect to any Person, (a) any Subsidiary of such Person and (b) any
      Affiliate of such Person with which such Person files or is eligible to file
      consolidated, combined or unitary tax returns; provided,
      that
      when used with respect the Borrower or Parent, the term “Tax
      Affiliate”
shall
      not include any Unrestricted Subsidiary.

    

    “Tax
      Return”
has
      the
      meaning specified in Section
      4.8(a) (Taxes).

    

    “Taxes”
has
      the
      meaning specified in Section
      2.14(a) (Taxes).

    

    “Term
      Loans”
means,
      collectively, the Closing Date Term Loans and the Incremental Term
      Loans.

    

    “Term
      Loan Commitment”
means,
      with respect to each Lender, (a) the commitment of such Lender to make its
      Term
      Loans to the Borrower in the aggregate principal amount not to exceed the amount
      set forth opposite such Lender’s name on Schedule
      I (Term Loan Commitments)
      under
      the caption “Term
      Loan Commitment”
as
      amended to reflect each Assignment and Acceptance executed by such Lender and
      as
      such amount may be reduced pursuant to this Agreement, and (b) any commitment
      by
      such Lender that is included as part of a Facility Increase to make its
      Incremental Term Loans to the Borrower on any Facility Increase Date, as such
      amount may be reduced pursuant to this Agreement. “Term
      Loan Commitments”
means
      the aggregate Term Loan Commitments of all Lenders.

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “Term
      Loan Facility”
means
      the Term Loan Commitments, the facility described in Section
      2.1(a) (The Term Loans)
      providing for Closing Date Term Loans to the Borrower by the Lenders on the
      Closing Date in an aggregate principal amount of $725,000,000 and the facility
      described in Section
      2.1(b) (The Term Loans)
      providing for one or more Incremental Term Loans to the Borrower by the
      Incremental Term Loan Lenders in an aggregate principal amount not to exceed
      $200,000,000.

    

    “Term
      Loan Maturity Date”
means
      (i) with respect to the Closing Date Term Loan, the Closing Date Term Loan
      Maturity Date and (ii) with respect to each Incremental Term Loan, the
      Incremental Term Loan Maturity Date.

    

    “Test
      Period”
shall
      mean, for any determination under this Agreement, the period of the most
      recently ended four consecutive fiscal quarters of the Parent for which
      Financial Statements have been delivered to the Administrative Agent pursuant
      to
Section
      6.1 (Financial Statements).

    

    “Title
      IV Plan”
means
      a
      pension plan, other than a Multiemployer Plan, covered by Title IV of ERISA
      and
      to which any Group Member or any ERISA Affiliate has any obligation or
      liability, contingent or otherwise.

    

    “Total
      Assets”
      means
      the total amount of all assets of the Borrower, the Parent and the Restricted
      Subsidiaries, determined on a Consolidated basis as shown on the most recent
      balance sheet of the Parent.

    

    “Total
      Leverage Ratio”
means,
      as of any date of determination, the ratio of (a) Consolidated Funded
      Indebtedness of the Parent and the Restricted Subsidiaries outstanding as of
      such date (minus the cash and Cash Equivalents of the Loan Parties that are
      not
      subject to any Lien securing Indebtedness other than the Obligations or
      Revolving Credit Obligations) to (b) the aggregate amount of Consolidated EBITDA
      of the Parent and the Restricted Subsidiaries for the most recently ended Test
      Period.

    

    “Total
      Liabilities”
of
      any
      Person means, at any date, all obligations that would be included in determining
      total liabilities as shown on the liabilities side of a Consolidated balance
      sheet of such Person and its Subsidiaries at such date; provided,
      however, that,
      regardless of whether the same would be so shown, “Total
      Liabilities”
of
      any
      Person shall include all Indebtedness of such Person or any of its Subsidiaries
      at such date (other than intercompany Indebtedness) and shall exclude the
      greater of the liquidation preference and the redemption price of any
      outstanding Disqualified Stock of such Person at such date.

    

    “Transactions”
means,
      collectively, the transactions contemplated in the Merger Agreement, the
      amendment and restatement of the Existing Revolving Credit Agreement pursuant
      to
      Revolving Credit Agreement, the refinancing in full of the Target Credit
      Agreement, the Borrowing of the Closing Date Term Loans under this Agreement
      and
      the payment of related fees and expenses.

    

    “UCC”
has
      the
      meaning specified in the Pledge and Security Agreement.

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

        TERM
          LOAN AGREEMENT

        COLLECTIVE
          BRANDS FINANCE, INC.

      

    

    

    “United
      States”
means
      the United States of America.

    

    “Unrestricted
      Subsidiary”
means
      each direct and indirect Subsidiary of the Parent that is designated by the
      board of directors of the Parent as an Unrestricted Subsidiary pursuant to
      a
Section
      7.12 (Designation of Subsidiaries)
      on or
      after the Closing Date and any Subsidiary of such Unrestricted
      Subsidiary.

    

    “U.S.
      Lender”
means
      each Lender (or the Administrative Agent) that is a Domestic
      Person.

    

    “Voting
      Stock”
means
      Stock of any Person having ordinary power to vote in the election of members
      of
      the board of directors, managers, trustees or other controlling Persons, of
      such
      Person (irrespective of whether, at the time, Stock of any other class or
      classes of such entity shall have or might have voting power by reason of the
      happening of any contingency).

    

    “Wholly-Owned”
means,
      with respect to a Subsidiary of any Person, any Subsidiary of such Person,
      all
      of the Stock of which (other than director’s qualifying shares, as may be
      required by law) is owned by such Person, either directly or indirectly through
      one or more Wholly-Owned Subsidiaries of such Person.

    

    “Withdrawal
      Liability”
means,
      with respect to the Parent or any of the Restricted Subsidiaries at any time,
      the aggregate liability incurred (whether or not assessed) with respect to
      all
      Multiemployer Plans pursuant to Section
      4201
      of ERISA
      or for increases in contributions required to be made pursuant to Section
      4243
      of
      ERISA.

    

    “Working
      Capital”
means,
      for any Person at any date, the amount, if any, by which the Consolidated
      Current Assets of such Person at such date exceeds the Consolidated Current
      Liabilities of such Person at such date.

    
       

      Section
        1.2 Computation
        of Time Periods

      

      In
        this
        Agreement, in the computation of periods of time from a specified date to
        a
        later specified date, the word “from” means “from
        and including” and
        the
        words “to” and
        “until” each
        mean
“to
        but excluding” and
        the
        word “through” means
        “to
        and including.”

      

      Section
        1.3 Accounting
        Terms and Principles

      

      (a) Except
        as
        set forth below, all accounting terms not specifically defined herein shall
        be
        construed in conformity with GAAP and all accounting determinations required
        to
        be made pursuant hereto shall, unless expressly otherwise provided herein,
        be
        made in conformity with GAAP.

      

      (b) If
        any
        change in the accounting principles used in the preparation of the most recent
        Financial Statements referred to in Section
        6.1 (Financial
        Statements)
        is
        hereafter required or permitted by the rules, regulations, pronouncements
        and
        opinions of the Financial Accounting Standards Board or the American Institute
        of Certified Public Accountants (or any successors thereto) and such change
        is
        adopted by the Borrower with the agreement of the Borrower’s Accountants and
        results in a change in any of the calculations required by Article
        VIII (Negative Covenants)
        that
        would not have resulted had such accounting change not occurred, the parties
        hereto agree to enter into negotiations in order to amend such provisions
        so as
        to equitably reflect such change such that the criteria for evaluating
        compliance with such covenants by the Borrower shall be the same after such
        change as if such change had not been made; provided, however, that no change
        in
        GAAP that would affect a calculation that measures compliance with any covenant
        contained in Article
        VIII (Negative Covenants)
        shall be
        given effect until such provisions are amended to reflect such changes in
        GAAP.

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      Section
        1.4 Conversion
        of Foreign Currencies

      

      (a) Consolidated
        Funded Indebtedness.
        Consolidated Funded Indebtedness denominated in any currency other than Dollars
        shall be calculated using the Dollar Equivalent thereof as of the date of
        the
        Financial Statements on which such Consolidated Funded Indebtedness is
        reflected.

      

      (b) Dollar
        Equivalents.
        The
        Administrative Agent shall reasonably determine the Dollar Equivalent of
        any
        amount as required hereby, and a determination thereof by the Administrative
        Agent shall be conclusive absent manifest error. The Administrative Agent
        may,
        but shall not be obligated to, rely on any determination made by any Loan
        Party
        in any document delivered to the Administrative Agent. The Administrative
        Agent
        may determine or redetermine the Dollar Equivalent of any amount on any date
        either in its own discretion or upon the request of any Lender.

      

      (c) Rounding-Off.
        The
        Administrative Agent may set up appropriate rounding off mechanisms or otherwise
        round-off amounts hereunder to the nearest higher or lower amount in whole
        Dollar or cent to ensure amounts owing by any party hereunder or that otherwise
        need to be calculated or converted hereunder are expressed in whole Dollars
        or
        in whole cents, as may be reasonably necessary or appropriate.

      

      Section
        1.5 Certain
        Terms

      

      (a) The
        terms
“herein,”
        “hereof,”
        “hereto”
and
        “hereunder”
and
        similar terms refer to this Agreement as a whole and not to any particular
        Article, Section, subsection or clause in, this Agreement.

      

      (b) Unless
        otherwise expressly indicated herein, (i) references in this Agreement to
        an
        Exhibit, Schedule, Article, Section, clause or sub-clause refer to the
        appropriate Exhibit or Schedule to, or Article, Section, clause or sub-clause
        in
        this Agreement and (ii) the words “above”
and
        “below”,
        when
        following a reference to a clause or a sub-clause of any Loan Document, refer
        to
        a clause or sub-clause within, respectively, the same Section or
        clause.

      

      (c) Each
        agreement defined in this ARTICLE
        I
        shall
        include all appendices, exhibits and schedules thereto. Unless the prior
        written
        consent of the Requisite Lenders or the Administrative Agent is required
        hereunder or under the Intercreditor Agreement for an amendment, restatement,
        supplement or other modification to any such agreement and such consent is
        not
        obtained, references in this Agreement to such agreement shall be to such
        agreement as so amended, restated, supplemented or modified.

      

      (d) References
        in this Agreement to any statute shall be to such statute as amended or modified
        from time to time and to any successor legislation thereto, in each case
        as in
        effect at the time any such reference is operative.

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (e) The
        term
“including”
when
        used in any Loan Document means “including
        without limitation”
except
        when used in the computation of time periods.

      

      (f) The
        terms
“Lender”
and
        “Administrative
        Agent”
        include, without limitation, their respective successors.

      

      (g) Upon
        the
        appointment of any successor Administrative Agent pursuant to Section
        10.7 (Successor Administrative Agent),
        references to Citi in Section
        10.4 (The Administrative Agent Individually)
        and to
        Citibank in the definitions of Base Rate, Dollar Equivalent, and Eurodollar
        Rate
        shall be deemed to refer to the financial institution then acting as the
        Administrative Agent or one of its Affiliates if it so designates.

      

      ARTICLE
        II

      

      THE
        TERM LOAN FACILITY

      

      Section
        2.1 The
        Term Loans

      

      (a) Closing
        Date Term Loans.
        On the
        terms and subject to the conditions contained in this Agreement, each Lender
        severally agrees to make a loan (each a “Closing
        Date Term Loan”)
        in
        Dollars to the Borrower on the Closing Date, in an amount not to exceed such
        Lender’s Term Loan Commitment. No amount of the Closing Date Term Loan repaid or
        prepaid by the Borrower may be reborrowed hereunder, and no Borrowing under
        the
        Term Loan Facility shall be allowed other than the advance set forth in the
        first sentence of this Section
        2.1(a) and
        any
        Incremental Term Loan advanced as part of any Facility Increase.

      

      (b) Incremental
        Term Loans.

      

      (i) The
        Borrower shall have the right to send to the Administrative Agent, after
        the
        Closing Date but on or prior to the Closing Date Term Loan Maturity Date,
        a
        Facility Increase Notice to request an increase in the aggregate principal
        amount of the Term Loan Facility (each a “Facility
        Increase”)
        to be
        effectuated by the disbursement of one or more additional Term Loans (each
        an
“Incremental
        Term Loan”)
        in
        excess of the Closing Date Term Loans, in a principal amount not to exceed
        $200,000,000 in the aggregate for all such requests. The Administrative Agent
        shall promptly notify each Lender of the proposed Facility Increase and of
        the
        proposed terms and conditions therefor agreed between the Borrower and the
        Administrative Agent. Each such Lender (and each of their Affiliates and
        Approved Funds) may, in its sole discretion, commit to participate in such
        Facility Increase by forwarding its commitment therefor to the Administrative
        Agent in form and substance reasonably satisfactory to the Administrative
        Agent.
        The Administrative Agent shall allocate, in its discretion (after consultation
        with the Borrower) but in amounts not to exceed for each such Lender the
        commitment received from such Lender, Affiliate or Approved Fund, the Term
        Loan
        Commitments to be made as part of the Facility Increase to the Lenders from
        which it has received such written commitments; provided,
        however,
        the
        Administrative Agent shall be entitled, after consultation with the Borrower,
        to
        allocate to any Eligible Assignee any amount of such Facility Increase whether
        or not it has obtained commitments from existing Lenders. Each Facility Increase
        shall become effective on a date agreed by the Borrower and the Administrative
        Agent (each a “Facility
        Increase Date”),
        which
        shall be in any case on or after the date of satisfaction of the conditions
        precedent set forth in Section
        3.2 (Conditions Precedent to Incremental Term Loans).
        The
        Administrative Agent shall notify the Lenders and the Borrower, on or before
        1:00 p.m. (New York time) on the day following the Facility Increase Date
        of the
        effectiveness of the Facility Increase on the Facility Increase Date and
        shall
        record in the Register all applicable additional information in respect of
        such
        Facility Increase.

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (ii) (A)
        The
        Incremental Term Loans and Term Loan Commitments extended pursuant to any
        Facility Increase shall rank pari
        passu
        in right
        of payment with all other Term Loans and Term Loan Commitments, (B) the weighted
        average life to maturity of the Incremental Term Loans shall not be shorter
        than
        the remaining average life to maturity of the Term Loans prior to giving
        effect
        to such Facility Increase, (C) the Incremental Term Loan Maturity Date for
        such
        Incremental Term Loans shall not be earlier than the Closing Date Term Loan
        Maturity Date, (D) the interest rate margins or yield to maturity applicable
        to
        such Incremental Term Loans shall not be more than 0.50% per annum higher
        than
        the interest rate margins or yield to maturity applicable to the Term Loans
        prior to giving effect to such Facility Increase, unless the interest rate
        margins or yield to maturity with respect to the Term Loans are increased
        by an
        amount equal to the difference between the interest rate margins or yield
        to
        maturity with respect to the Incremental Term Loans and the corresponding
        interest rate margins or yield to maturity for the Term Loans minus
        0.50%,
        (E) all other terms of such Incremental Term Loans, if not consistent with
        the
        terms of the existing Term Loan Facility, shall be as agreed between the
        Borrower and the Lenders providing such Incremental Term Loans, and (F) after
        giving effect to such Facility Increase, the Senior Secured Leverage Ratio,
        determined on a Pro Forma Basis, shall be less than 3.0 to 1.

      

      (iii) Any
        Facility Increase will be effected in accordance with procedures reasonably
        satisfactory to the Administrative Agent. Nothing in this Agreement shall
        be
        construed to obligate any Lender to negotiate for (whether or not in good
        faith), solicit, provide or consent to any increase in the Term Loan
        Commitments, and any such increase may be subject to changes in any term
        of this
        Agreement reasonably acceptable to the Administrative Agent and the
        Borrower.

      

      Section
        2.2 Borrowing
        Procedures

      

      (a) Each
        Borrowing shall be made on notice given by the Borrower to the Administrative
        Agent not later than 11:00 a.m. (New York time) (i) one Business Day, in
        the
        case of a Borrowing of Base Rate Loans and (ii) three Business Days, in the
        case
        of a Borrowing of Eurodollar Rate Loans, prior to the date of the proposed
        Borrowing. Each such notice shall be in substantially the form of Exhibit C (Form
        of Notice of Borrowing)
        (a
“Notice
        of Borrowing”),
        specifying, (A) the date of such proposed Borrowing (which, in the case of
        the
        Closing Date Term Loan Borrowing, shall be the Closing Date), (B) the aggregate
        amount of such proposed Borrowing, (C) whether any portion of the proposed
        Borrowing will be of Base Rate Loans or Eurodollar Rate Loans and (D) for
        each
        Eurodollar Rate Loan, the initial Interest Period or Periods thereof. Term
        Loans
        shall be made as Base Rate Loans unless, subject to Section
        2.12 (Special
        Provisions Governing Eurodollar Rate Loans),
        the
        Notice of Borrowing specifies that all or a portion thereof shall be Eurodollar
        Rate Loans.

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (b) The
        Administrative Agent shall give to each Lender prompt notice of the
        Administrative Agent’s receipt of a Notice of Borrowing and, if Eurodollar Rate
        Loans are properly requested in such Notice of Borrowing, the applicable
        interest rate determined pursuant to Section
        2.12(a) (Determination
        of Interest Rate).
        Each
        Lender shall, before 11:00 am. (New York time) on the date of the proposed
        Borrowing, make available to the Administrative Agent at its address referred
        to
        in Section
        11.8 (Notices,
        Etc.),
        in
        immediately available funds, such Lender’s Ratable Portion of such proposed
        Borrowing. Upon fulfillment (or due waiver in accordance with Section
        11.1 (Amendments,
        Waivers, Etc.))
        (i) on
        the Closing Date, of the applicable conditions set forth in Section
        3.1 (Conditions
        Precedent to Closing Date Term
        Loans)
        and
        (ii) at any time (including the Closing Date), of the applicable conditions
        set
        forth in Section
        3.2
        (Conditions
        Precedent to Incremental Term Loans),
        and
        after the Administrative Agent’s receipt of such funds, the Administrative Agent
        shall make such funds available to the Borrower.

      

      (c) Unless
        the Administrative Agent shall have received notice from a Lender prior to
        the
        date of any proposed Borrowing that such Lender will not make available to
        the
        Administrative Agent such Lender’s Ratable Portion of such Borrowing (or any
        portion thereof), the Administrative Agent may assume that such Lender has
        made
        such Ratable Portion available to the Administrative Agent on the date of
        such
        Borrowing in accordance with this Section
        2.2
        and the
        Administrative Agent may, in reliance upon such assumption, make available
        to
        the Borrower on such date a corresponding amount. If and to the extent that
        such
        Lender shall not have so made such Ratable Portion available to the
        Administrative Agent, such Lender and the Borrower severally agree to repay
        to
        the Administrative Agent forthwith on demand such corresponding amount together
        with interest thereon, for each day from the date such amount is made available
        to the Borrower until the date such amount is repaid to the Administrative
        Agent, at (i) in the case of the Borrower, the interest rate applicable at
        the
        time to the Term Loans comprising such Borrowing and (ii) in the case of
        such
        Lender, the Federal Funds Rate for the first Business Day and thereafter
        at the
        interest rate applicable at the time to the Term Loans comprising such
        Borrowing. If such Lender shall repay to the Administrative Agent such
        corresponding amount, such corresponding amount so repaid shall constitute
        such
        Lender’s Term Loan as part of such Borrowing for purposes of this Agreement. If
        the Borrower shall repay to the Administrative Agent such corresponding amount,
        such payment shall not relieve such Lender of any obligation it may have
        hereunder to the Borrower.

      

      (d) The
        failure of any Lender to make on the date specified any Term Loan or any
        payment
        required by it shall not relieve any other Lender of its obligations to make
        such Term Loan or payment on such date but no such other Lender shall be
        responsible for the failure of any Lender to make a Term Loan or payment
        required under this Agreement.

      

      Section
        2.3 Reduction
        and Termination of the Term Loan Commitments

      

      (a) Any
        unused Term Loan Commitment (other than with respect to a Facility Increase)
        shall terminate on the Closing Date.

      

      Section
        2.4 Repayment
        of Term Loans

      

      (a) The
        Borrower promises to repay the Closing Date Term Loans at the dates and in
        the
        amounts set forth below:

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

         

      

      
        	
                DATE

              	
                AMOUNT

              
	
                December
                  31, 2007

              	
                $1,812,500

              
	 	 
	
                March
                  31, 2008

              	
                $1,812,500

              
	
                June
                  30, 2008

              	
                $1,812,500

              
	
                September
                  30, 2008

              	
                $1,812,500

              
	
                December
                  31, 2008

              	
                $1,812,500

              
	 	 
	
                March
                  31, 2009

              	
                $1,812,500

              
	
                June
                  30, 2009

              	
                $1,812,500

              
	
                September
                  30, 2009

              	
                $1,812,500

              
	
                December
                  31, 2009

              	
                $1,812,500

              
	 	 
	
                March
                  31, 2010

              	
                $1,812,500

              
	
                June
                  30, 2010

              	
                $1,812,500

              
	
                September
                  30, 2010

              	
                $1,812,500

              
	
                December
                  31, 2010

              	
                $1,812,500

              
	 	 
	
                March
                  31, 2011

              	
                $1,812,500

              
	
                June
                  30, 2011

              	
                $1,812,500

              
	
                September
                  30, 2011

              	
                $1,812,500

              
	
                December
                  31, 2011

              	
                $1,812,500

              
	 	 
	
                March
                  31, 2012

              	
                $1,812,500

              
	
                June
                  30, 2012

              	
                $1,812,500

              
	
                September
                  30, 2012

              	
                $1,812,500

              
	
                December
                  31, 2012

              	
                $1,812,500

              
	 	 
	
                March
                  31, 2013

              	
                $1,812,500

              
	
                June
                  30, 2013

              	
                $1,812,500

              
	
                September
                  30, 2013

              	
                $1,812,500

              
	
                December
                  31, 2013

              	
                $1,812,500

              
	 	 
	
                March
                  31, 2014

              	
                $1,812,500

              
	
                June
                  30, 2014

              	
                $1,812,500

              
	 	 
	
                Term
                  Loan Maturity Date

              	
                $676,062,500;

              

      

      

      

      provided,
        however,
        that
        the Borrower shall repay the entire unpaid principal amount of the Term Loans
        on
        the Closing Date Term Loan Maturity Date.

      

      (b) The
        Borrower promises to repay the Incremental Term Loans on the dates and in
        the
        amounts to be agreed by the Administrative Agent and the Borrower prior to
        the
        applicable Facility Increase Date; provided,
        however,
        that
        the Borrower shall repay the entire unpaid principal amount of each such
        Incremental Term Loan on the Incremental Term Loan Maturity Date.

      

      (c) Payless
        ShoeSource, Inc., a Missouri corporation, and Payless ShoeSource Distribution,
        Inc., a Kansas corporation, hereby agree that, in addition to and without
        limitation to the obligations of such parties as Guarantors pursuant to the
        Guaranty, such parties hereby agree, in respect to the Obligations, to be
        jointly and severally liable with the Borrower as if such parties were borrowers
        hereunder.

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      Section
        2.5 Evidence
        of Debt

      

      (a) Each
        Lender shall maintain in accordance with its usual practice an account or
        accounts evidencing Indebtedness of the Borrower to such Lender resulting
        from
        each Term Loan of such Lender from time to time, including the amounts of
        principal and interest payable and paid to such Lender from time to time
        under
        this Agreement.

      

      (b) (i) The
        Administrative Agent, acting as agent of the Borrower solely for this purpose
        and for tax purposes, shall establish and maintain at its address referred
        to in
Section
        11.8 (Notices, Etc.)
        a record
        of ownership (the “Register”)
        in
        which the Administrative Agent agrees to register by book entry the
        Administrative Agent’s, each Lender’s interest in each Term Loan and in the
        right to receive any payments hereunder and any assignment of any such interest
        or rights. In addition, the Administrative Agent, acting as agent of the
        Borrower solely for this purpose and for tax purposes, shall establish and
        maintain accounts in the Register in accordance with its usual practice in
        which
        it shall record (i) the names and addresses of the Lenders, (ii) the Term
        Loan
        Commitments of each Lender from time to time, (iii) the amount of each Term
        Loan
        made and, if a Eurodollar Rate Loan, the Interest Period applicable thereto,
        (iv) the amount of any principal or interest due and payable, and paid, by
        the
        Borrower to, or for the account of, each Lender hereunder and (v) the amount
        of
        any sum received by the Administrative Agent hereunder from the Borrower,
        whether such sum constitutes principal or interest (and the type of Term
        Loan to
        which it applies), fees, expenses or other amounts due under the Loan Documents
        and each Lender’s share thereof, if applicable.

      

      (i) Notwithstanding
        anything to the contrary contained in this Agreement, the Term Loans (including
        the Notes evidencing such Term Loans) are registered obligations and the
        right,
        title, and interest of the Lenders and their assignees in and to such Term
        Loans, as the case may be, shall be transferable only upon notation of such
        transfer in the Register. A Note shall only evidence the Lender’s or a
        registered assignee’s right, title and interest in and to the related Term Loan.
        This Section
        2.5(b) and
        Section
        11.2 (Assignments
        and Participations)
        shall be
        construed so that the Term Loans are at all times maintained in “registered
        form”
within
        the meaning of Sections
        163(f), 871(h)(2)
        and
881(c)(2)
        of the
        Code and any related regulations (or any successor provisions of the Code
        or
        such regulations).

      

      (c) The
        entries made in the Register and in the accounts therein maintained pursuant
        to
clauses
        (a)
        and
(b)
        above
        shall, to the extent permitted by applicable law, be prima
        facie
        evidence
        of the existence and amounts of the obligations recorded therein; provided,
        however,
        that
        the failure of any Lender or the Administrative Agent to maintain such accounts
        or any error therein shall not in any manner affect the obligations of the
        Borrower to repay the Term Loans in accordance with their terms. In addition,
        the Loan Parties, the Administrative Agent and the Lenders shall treat each
        Person whose name is recorded in the Register as a Lender for all purposes
        of
        this Agreement. Information contained in the Register with respect to any
        Lender
        shall be available for inspection by the Borrower, the Administrative Agent
        or
        such Lender at any reasonable time and from time to time upon reasonable
        prior
        notice.

      

      (d) Notwithstanding
        any other provision of the Agreement, in the event that any Lender requests
        that
        the Borrower execute and deliver a promissory note or notes payable to such
        Lender in order to evidence the Indebtedness owing to such Lender by the
        Borrower hereunder, the Borrower shall promptly execute and deliver a Note
        or
        Notes to such Lender evidencing any Term Loans of such Lender, substantially
        in
        the forms of Exhibit
        B
        (Form
        of Term Note).

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      Section
        2.6 Optional
        Prepayments

      

      (a) The
        Borrower may, upon at least three Business Days’ prior notice to the
        Administrative Agent stating the proposed date and aggregate principal amount
        of
        the prepayment, prepay the outstanding principal amount of the Term Loans,
        in
        whole or in part, together with accrued interest to the date of such prepayment
        on the principal amount prepaid; provided,
        however,
        that if
        any prepayment of any Eurodollar Rate Loan is made by the Borrower other
        than on
        the last day of an Interest Period for such Term Loan, the Borrower shall
        also
        pay any amounts owing pursuant to Section
        2.12(e) (Breakage Costs);
        and,
provided,
        further,
        that
        each partial prepayment shall be in an aggregate amount not less than $1,000,000
        or integral multiples of $500,000 in excess thereof and that any such partial
        prepayment shall be applied to reduce ratably the remaining installments
        of such
        outstanding principal amount of the Term Loans in the stated order of their
        maturities. Upon the giving of such notice of prepayment, the principal amount
        of the Term Loans specified to be prepaid shall become due and payable on
        the
        date specified for such prepayment.

      

      (b) The
        Borrower shall have no right to prepay the principal amount of any Term Loan
        other than as provided in this
        Section 2.6.

      

      Section
        2.7 Mandatory
        Prepayments

      

      (a) Upon
        receipt by the Borrower, the Parent or any of the Restricted Subsidiaries
        of Net
        Cash Proceeds arising from an Included Asset Sale, Recovery Event or Debt
        Issuance (other than (i) a Debt Issuance permitted pursuant to clauses
        (a) through
        (l)
        of
        Section
        8.1 (Indebtedness)
        and (ii)
        any Debt Issuance permitted pursuant to clause
        (m)
        of
Section
        8.1 (Indebtedness)
        in
        excess of the first $450,000,000 in principal amount thereof) the Borrower
        shall
        prepay the Term Loans. Any such mandatory prepayment shall be applied in
        accordance with clause
        (c)
        below.

      

      (b) The
        Borrower shall prepay the Term Loans within 120 days after the last day of
        each
        fiscal year (beginning with the fiscal year ended January 31, 2009), in an
        amount equal to 25% of Excess Cash Flow for such fiscal year; provided,
        that the
        amount of such prepayment shall be reduced to 0% of such Excess Cash Flow
        if the
        Total Leverage Ratio of the Borrower at the end of such fiscal year is less
        than
        2.0 to 1. Any such mandatory prepayment shall be applied in accordance with
        clause (c)
        below.

      

      (c) Subject
        to the provisions of Section
        2.11(g) (Payments
        and Computations),
        any
        prepayments made by the Borrower required to be applied in accordance with
        this
clause (c)
        shall be
        applied to reduce ratably the remaining installments of such outstanding
        principal amount of the Term Loans on a pro rata
        basis.

      

      Section
        2.8 Interest

      

      (a) Rate
        of Interest.
        All
        Term Loans and the outstanding amount of all other Obligations (other than
        pursuant to Hedging Contracts that are Loan Documents, to the extent such
        Hedging Contracts provide for the accrual of interest on unpaid obligations)
        shall bear interest, in the case of Term Loans, on the unpaid principal amount
        thereof from the date such Term Loans are made and, in the case of such other
        Obligations, from the date such other Obligations are due and payable until,
        in
        all cases, paid in full, except as otherwise provided in clause
        (c)
        below,
        as follows:

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (i) if
        a Base
        Rate Loan or such other Obligation, at a rate per annum equal to the sum
        of (A)
        the Base Rate as in effect from time to time and (B) the Applicable Margin
        in
        effect from time to time; and

      

      (ii) if
        a
        Eurodollar Rate Loan, at a rate per annum equal to the sum of (A) the Eurodollar
        Rate determined for the applicable Interest Period and (B) the Applicable
        Margin
        in effect from time to time during such Eurodollar Interest Period.

      

      (b) Interest
        Payments.
        (i)
        Interest accrued on each Base Rate Loan shall be payable in arrears (A) on
        the
        first Business Day of each calendar month, commencing on the first such day
        following the making of such Base Rate Loan, (B) upon the payment or prepayment
        thereof in full or in part and (C) if not previously paid in full, at maturity
        (whether by acceleration or otherwise) of such Base Rate Loan, (ii) interest
        accrued on each Eurodollar Rate Loan shall be payable in arrears (A) on the
        last
        day of each Interest Period applicable to such Eurodollar Rate Loan and,
        if such
        Interest Period has a duration of more than three months, on each date during
        such Interest Period occurring every three months from the first day of such
        Interest Period, (B) upon the payment or prepayment thereof in full or in
        part
        and (C) if not previously paid in full, at maturity (whether by acceleration
        or
        otherwise) of such Eurodollar Rate Loan and (iii) interest accrued on the
        amount
        of all other Obligations shall be payable on demand from and after the time
        such
        Obligation becomes due and payable (whether by acceleration or
        otherwise).

      

      (c) Default
        Interest.
        Notwithstanding the rates of interest specified in clause (a)
        above or
        elsewhere herein, if the Borrower shall default in the payment of the principal
        of or interest on any Term Loan or any other amount becoming due hereunder,
        by
        acceleration or otherwise, the Borrower shall on demand from time to time
        pay
        interest on such defaulted amount up to (but not including) the date of actual
        payment (after as well as before judgment) at a rate that is two percent
        per
        annum in excess of the rate of interest applicable to such Term Loan or other
        Obligation from time to time. Such interest shall be payable on the date
        that
        would otherwise be applicable to such interest pursuant to clause
        (b)
        above or
        otherwise on demand.

      

      Section
        2.9 Conversion/Continuation
        Option

      

      (a) The
        Borrower may elect (i) at any time on any Business Day to convert Base Rate
        Loans or any portion thereof to Eurodollar Rate Loans and (ii) at the end
        of any
        applicable Interest Period, to convert Eurodollar Rate Loans or any portion
        thereof into Base Rate Loans or to continue such Eurodollar Rate Loans or
        any
        portion thereof for an additional Interest Period; provided,
        however,
        that
        the aggregate amount of the Eurodollar Rate Loans for each Interest Period
        must
        be in the amount of at least $5,000,000 or an integral multiple of $1,000,000
        in
        excess thereof. Each conversion or continuation shall be allocated among
        the
        Term Loans of each Lender in accordance with such Lender’s Ratable Portion. Each
        such election shall be in substantially the form of Exhibit D
        (Form
        of Notice of Conversion or Continuation)
        (a
“Notice
        of Conversion or Continuation”)
        and
        shall be made by giving the Administrative Agent at least three Business
        Days’
prior written notice specifying (A) the amount and type of Term Loan being
        converted or continued, (B) in the case of a conversion to or a continuation
        of
        Eurodollar Rate Loans, the applicable Interest Period and (C) in the case
        of a
        conversion, the date of such conversion.

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (b) The
        Administrative Agent shall promptly notify each Lender of its receipt of
        a
        Notice of Conversion or Continuation and of the options selected therein.
        Notwithstanding the foregoing, no conversion in whole or in part of Base
        Rate
        Loans to Eurodollar Rate Loans and no continuation in whole or in part of
        Eurodollar Rate Loans upon the expiration of any applicable Interest Period
        shall be permitted at any time at which (A) a Default or an Event of Default
        shall have occurred and be continuing or (B) the continuation of, or conversion
        into, a Eurodollar Rate Loan would violate any provision of Section
        2.12 (Special Provisions Governing Eurodollar Rate Loans).
        If,
        within the time period required under the terms of this Section
        2.9,
        the
        Administrative Agent does not receive a Notice of Conversion or Continuation
        from the Borrower containing a permitted election to continue any Eurodollar
        Rate Loans for an additional Interest Period or to convert any such Term
        Loans,
        then, upon the expiration of the applicable Interest Period, such Term Loans
        shall be automatically converted to Base Rate Loans. Each Notice of Conversion
        or Continuation shall be irrevocable.

      

      Section
        2.10 Fees

      

      The
        Parent has agreed to pay to the Administrative Agent and the Arrangers
        additional fees, the amount and dates of payment of which are embodied in
        the
        Fee Letter.

      

      Section
        2.11 Payments
        and Computations

      

      (a) The
        Borrower shall make each payment hereunder (including fees and expenses)
        not
        later than 11:00 a.m. (New York time) on the day when due, in the currency
        specified herein (or, if no such currency is specified, in Dollars) to the
        Administrative Agent at its address referred to in Section
        11.8 (Notices, Etc.)
        in
        immediately available funds without set-off or counterclaim. The Administrative
        Agent shall promptly thereafter cause to be distributed immediately available
        funds relating to the payment of principal, interest or fees to the Lenders,
        in
        accordance with the application of payments set forth in clause
        (f)
        or
(g)
        below,
        as applicable, for the account of their respective Applicable Lending Offices;
        provided,
        however,
        that
        amounts payable pursuant to Section
        2.13 (Capital Adequacy),
        Section
        2.14 (Taxes) or
        Section
        2.12(c)
        or
(d) (Special
        Provisions Governing Eurodollar Rate Loans) shall
        be
        paid only to the affected Lender or Lenders. Payments received by the
        Administrative Agent after 11:00 a.m. (New York time) shall be deemed to
        be
        received on the next Business Day.

      

      (b) All
        computations of interest and of fees shall be made by the Administrative
        Agent
        on the basis of a year of 360 days (or, in the case of Term Loans bearing
        interest based on Citibank’s base rate, 365 days), in each case for the actual
        number of days (including the first day but excluding the last day) occurring
        in
        the period for which such interest and fees are payable. Each determination
        by
        the Administrative Agent of a rate of interest hereunder shall be conclusive
        and
        binding for all purposes, absent manifest error.

      

      (c) Each
        payment by the Borrower of any Term Loan (including interest or fees in respect
        thereof) and each reimbursement of various costs, expenses or other Obligation
        shall be made in the currency in which such Term Loan was made or such cost,
        expense or other Obligation was incurred; provided,
        however,
        that
        other than for payments in respect of a Term Loan, Loan Documents duly executed
        by the Administrative Agent or any Hedging Contract may specify other currencies
        of payment for Obligations created by or directly related to such Loan Document
        or Hedging Contract.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (d) Whenever
        any payment hereunder shall be stated to be due on a day other than a Business
        Day, the due date for such payment shall be extended to the next succeeding
        Business Day, and such extension of time shall in such case be included in
        the
        computation of payment of interest or fees, as the case may be; provided,
        however,
        that if
        such extension would cause payment of interest on or principal of any Eurodollar
        Rate Loan to be made in the next calendar month, such payment shall be made
        on
        the immediately preceding Business Day. All repayments of any Term Loans
        shall
        be applied as follows: first,
        to
        repay such Term Loans outstanding as Base Rate Loans and then,
        to
        repay such Term Loans outstanding as Eurodollar Rate Loans, with those
        Eurodollar Rate Loans having earlier expiring Eurodollar Interest Periods
        being
        repaid prior to those having later expiring Eurodollar Interest
        Periods.

      

      (e) Unless
        the Administrative Agent shall have received notice from the Borrower prior
        to
        the date on which any payment is due hereunder that the Borrower will not
        make
        such payment in full, the Administrative Agent may assume that the Borrower
        has
        made such payment in full to the Administrative Agent on such date and the
        Administrative Agent may, in reliance upon such assumption, cause to be
        distributed to each Lender on such due date an amount equal to the amount
        then
        due such Lender. If and to the extent that the Borrower shall not have made
        such
        payment in full to the Administrative Agent, each Lender shall repay to the
        Administrative Agent forthwith on demand such amount distributed to such
        Lender
        together with interest thereon (at the Federal Funds Rate for the first Business
        Day and thereafter, at the rate applicable to Base Rate Loans) for each day
        from
        the date such amount is distributed to such Lender until the date such Lender
        repays such amount to the Administrative Agent.

      

      (f) Except
        for payments and other amounts received by the Administrative Agent and applied
        in accordance with the provisions of clause
        (g)
        below
        (or required to be applied in accordance with Section
        2.7(c) (Mandatory Prepayments)),
        all
        payments and any other amounts received by the Administrative Agent from
        or for
        the benefit of the Borrower shall be applied as follows: first,
        to pay
        principal of, and interest on, any portion of the Term Loans the Administrative
        Agent may have advanced pursuant to the express provisions of this Agreement
        on
        behalf of any Lender, for which the Administrative Agent has not then been
        reimbursed by such Lender or the Borrower, second,
        to pay
        all other Obligations then due and payable and third,
        as the
        Borrower so designates. Payments in respect of the Term Loans received by
        the
        Administrative Agent shall be distributed to each Lender in accordance with
        such
        Lender’s Ratable Portion of the Term Loans and all payments of fees and all
        other payments in respect of any other Obligation shall be allocated among
        such
        of the Lenders as are entitled thereto and, for such payments allocated to
        the
        Lenders, in proportion to their respective Ratable Portions.

      

      (g) The
        Borrower hereby irrevocably waives the right to direct the application of
        any
        and all payments in respect of the Obligations and any proceeds of Collateral
        after the occurrence and during the continuance of an Event of Default and
        agrees that, notwithstanding the provisions of Section
        2.7(c) (Mandatory Prepayments)
        and
clause
        (f)
        above,
        the Administrative Agent may, and, upon either (A) the written direction
        of the
        Requisite Lenders or (B) the acceleration of the Obligations pursuant to
        Section
        9.2 (Remedies)
        shall,
        subject to the provisions of the Intercreditor Agreement, apply all payments
        in
        respect of any Obligations and all other proceeds of Collateral in the following
        order:

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (i) first,
        to pay
        Secured Obligations in respect of any expense reimbursements or indemnities
        then
        due to the Administrative Agent;

      

      (ii) second,
        to pay
        Secured Obligations in respect of any expense reimbursements or indemnities
        then
        due to the Lenders;

      

      (iii) third,
        to pay
        Secured Obligations in respect of any fees then due to the Administrative
        Agent
        and the Lenders;

      

      (iv) fourth,
        to pay
        interest then due and payable in respect of the Term Loans;

      

      (v) fifth,
        to pay
        or prepay principal amounts on the Term Loans, ratably to the aggregate
        principal amount of such Term Loans;

      

      (vi) sixth,
        to pay
        amounts owing with respect to Hedging Contracts, ratable to the aggregate
        principal amount of such Obligations owing with respect to Hedging Contracts;
        and 

      

      (vii) seventh,
        to
        the
        ratable payment of all other Secured Obligations;

      

      provided,
        however,
        that if
        sufficient funds are not available to fund all payments to be made in respect
        of
        any Secured Obligation described in any of clauses
        (i),
        (ii),
        (iii),
        (iv),
        (v),
        (vi)
        and
(vi)
        above,
        the available funds being applied with respect to any such Secured Obligation
        (unless otherwise specified in such clause) shall be allocated to the payment
        of
        such Secured Obligation ratably, based on the proportion of the Administrative
        Agent’s and each Lender’s interest in the aggregate outstanding Secured
        Obligations described in such clauses. The order of priority set forth in
        clauses (i),
        (ii),
        (iii),
        (iv),
        (v),
        (vi)
        and
(vi)
        above
        may
        at any time and from time to time be changed by the agreement of the Requisite
        Lenders without necessity of notice to or consent of or approval by the
        Borrower, any Secured Party that is not a Lender or by any other Person that
        is
        not a Lender. The order of priority set forth in clauses
        (i),
        (ii)
        and
(iii)
        above
        may
        be changed only with the prior written consent of the Administrative Agent
        in
        addition to that of the Requisite Lenders.

      

      Section
        2.12 Special
        Provisions Governing Eurodollar Rate Loans

      

      (a) Determination
        of Interest Rate

      

      The
        Eurodollar Rate for each Interest Period for Eurodollar Rate Loans shall
        be
        determined by the Administrative Agent pursuant to the procedures set forth
        in
        the definition of “Eurodollar
        Rate.”
The
        Administrative Agent’s determination shall be presumed to be correct absent
        manifest error and shall be binding on the Borrower.

      

      (b) Interest
        Rate Unascertainable, Inadequate or Unfair

      

      In
        the
        event that (i) the Administrative Agent determines that adequate and fair
        means
        do not exist for ascertaining the applicable interest rates by reference
        to
        which the Eurodollar Rate then being determined is to be fixed or (ii) the
        Requisite Lenders notify the Administrative Agent that the Eurodollar Rate
        for
        any Interest Period will not adequately reflect the cost to the Lenders of
        making or maintaining such Term Loans for such Interest Period, the
        Administrative Agent shall forthwith so notify the Borrower and the Lenders,
        whereupon each Eurodollar Rate Loan shall automatically, on the last day
        of the
        current Interest Period for such Term Loan, convert into a Base Rate Loan
        and
        the obligations of the Lenders to make Eurodollar Rate Loans or to convert
        Base
        Rate Loans into Eurodollar Rate Loans shall be suspended until the
        Administrative Agent shall notify the Borrower that the Requisite Lenders
        have
        determined that the circumstances causing such suspension no longer
        exist.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

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            BRANDS FINANCE, INC.

        

      

      

      (c) Increased
        Costs

      

      If
        at any
        time any Lender determines that the introduction of, or any change in or
        in the
        interpretation of, any law, treaty or governmental rule, regulation or order
        (other than any change by way of imposition or increase of reserve requirements
        included in determining the Eurodollar Rate) or the compliance by such Lender
        with any guideline, request or directive from any central bank or other
        Governmental Authority (whether or not having the force of law), shall have
        the
        effect of increasing the cost to such Lender of agreeing to make or making,
        funding or maintaining any Eurodollar Rate Loans, then the Borrower shall
        from
        time to time, upon demand by such Lender (with a copy of such demand to the
        Administrative Agent), pay to the Administrative 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 the Borrower and the Administrative Agent by such Lender, shall be conclusive
        and binding for all purposes, absent manifest error. For the avoidance of
        any
        doubt, this clause
        (c)
        shall
        not apply to any increased costs attributable to Taxes, which shall be governed
        by this Section
        2.14 (Taxes).

      

      (d) Illegality

      

      Notwithstanding
        any other provision of this Agreement, if any Lender determines that the
        introduction of, or any change in or in the interpretation of, any law, treaty
        or governmental rule, regulation or order after the date of this Agreement
        shall
        make it unlawful, or any central bank or other Governmental Authority shall
        assert that it is unlawful, for any Lender or its Eurodollar Lending Office
        to
        make Eurodollar Rate Loans or to continue to fund or maintain Eurodollar
        Rate
        Loans, then, on notice thereof and demand therefor by such Lender to the
        Borrower through the Administrative Agent, (i) the obligation of such Lender
        to
        make or to continue Eurodollar Rate Loans and to convert Base Rate Loans
        into
        Eurodollar Rate Loans shall be suspended, and each such Lender shall make
        a Base
        Rate Loan as part of any requested Borrowing of Eurodollar Rate Loans and
        (ii)
        if the affected Eurodollar Rate Loans are then outstanding, the Borrower
        shall
        immediately convert each such Term Loan into a Base Rate Loan. If, at any
        time
        after a Lender gives notice under this clause
        (d),
        such
        Lender determines that it may lawfully make Eurodollar Rate Loans, such Lender
        shall promptly give notice of that determination to the Borrower and the
        Administrative Agent, and the Administrative Agent shall promptly transmit
        the
        notice to each other Lender. The Borrower’s right to request, and such Lender’s
        obligation, if any, to make Eurodollar Rate Loans shall thereupon be
        restored.

      

      (e) Breakage
        Costs

      

      In
        addition to all amounts required to be paid by the Borrower pursuant to
Section
        2.8 (Interest),
        the
        Borrower shall compensate each Lender, upon demand, for all losses, expenses
        and
        liabilities (including any loss or expense incurred by reason of the liquidation
        or reemployment of deposits or other funds acquired by such Lender to fund
        or
        maintain such Lender’s Eurodollar Rate Loans to the Borrower but excluding any
        loss of the Applicable Margin on the relevant Term Loans) that such Lender
        may
        sustain (i) if for any reason a proposed Borrowing, conversion into or
        continuation of Eurodollar Rate Loans does not occur on a date specified
        therefor in a Notice of Borrowing or a Notice of Conversion or Continuation
        given by the Borrower or in a telephonic request by it for borrowing or
        conversion or continuation or a successive Interest Period does not commence
        after notice therefor is given pursuant to Section
        2.9 (Conversion/Continuation Option),
        (ii) if
        for any reason any Eurodollar Rate Loan is prepaid (including mandatorily
        pursuant to Section
        2.7 (Mandatory Prepayments))
        on a
        date that is not the last day of the applicable Interest Period, (iii) as
        a
        consequence of a required conversion of a Eurodollar Rate Loan to a Base
        Rate
        Loan as a result of any of the events indicated in clause
        (d)
        above or
        (iv) as a consequence of any failure by the Borrower to repay Eurodollar
        Rate
        Loans when required by the terms hereof. The Lender making demand for such
        compensation shall deliver to the Borrower concurrently with such demand
        a
        written statement as to such losses, expenses and liabilities, and this
        statement shall be conclusive as to the amount of compensation due to such
        Lender, absent manifest error.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      Section
        2.13 Capital
        Adequacy

      

      If
        at any
        time any Lender determines that (a) the adoption of, or any change in or
        in the
        interpretation of, any law, treaty or governmental rule, regulation or order
        after the date of this Agreement regarding capital adequacy, (b) compliance
        with
        any such law, treaty, rule, regulation or order or (c) compliance with any
        guideline or request or directive from any central bank or other Governmental
        Authority (whether or not having the force of law) shall have the effect
        of
        reducing the rate of return on such Lender’s (or any corporation controlling
        such Lender’s) capital as a consequence of its obligations hereunder to a level
        below that which such Lender or such corporation could have achieved but
        for
        such adoption, change, compliance or interpretation, then, upon demand from
        time
        to time by such Lender (with a copy of such demand to the Administrative
        Agent),
        the Borrower shall pay to the Administrative Agent for the account of such
        Lender, from time to time as specified by such Lender, additional amounts
        sufficient to compensate such Lender for such reduction. A certificate as
        to
        such amounts submitted to the Borrower and the Administrative Agent by such
        Lender shall be conclusive and binding for all purposes absent manifest
        error.

      

      Section
        2.14 Taxes

      

      (a) Except
        as
        otherwise provided in this Section
        2.14,
        any and
        all payments by any Loan Party under each Loan Document shall be made free
        and
        clear of and without deduction for any and all present or future taxes, levies,
        imposts, deductions, charges or withholdings, and all liabilities with respect
        thereto, excluding (i) in the case of each Lender and the Administrative
        Agent
        (A) taxes measured by its net income, and franchise taxes imposed on it,
        and
        similar taxes imposed by a jurisdiction (or any political subdivision thereof)
        under the laws of which such Lender or the Administrative Agent (as the case
        may
        be) is organized, does business, or has an office, and (B) any U.S. withholding
        taxes payable with respect to payments under the Loan Documents under laws
        (including any statute, treaty or regulation) in effect on the Closing Date
        (or,
        in the case of (x) an Eligible Assignee, the date of the Assignment and
        Acceptance, (y) a successor Administrative Agent, the date of the appointment
        of
        such Administrative Agent or (z) a Lender that changes its Applicable Lending
        Office, the date of such change) applicable to such Lender or the Administrative
        Agent, as the case may be, but not excluding any U.S. withholding taxes payable
        as a result of any change in such laws occurring after the Closing Date (or
        the
        date of such Assignment and Acceptance or the date of such appointment of
        such
        Administrative Agent or the date of such change of the Applicable Lending
        Office
        of a Lender) and (ii) in the case of each Lender or the Administrative Agent,
        taxes measured by its net income, and franchise taxes imposed on it as a
        result
        of a present or former connection between such Lender or the Administrative
        Agent and the jurisdiction of the Governmental Authority imposing such tax
        or
        any taxing authority thereof or therein (other than any such connection arising
        solely from such Lender or the Administrative Agent having executed, delivered
        or performed its obligations or received a payment under, or having been
        a party
        or havng enforced this Agreement or other Loan Document) (all such non-excluded
        taxes, levies, imposts, deductions, charges, withholdings and liabilities
        being
        hereinafter referred to as “Taxes”).
        If
        any Taxes shall be required by law to be deducted from or in respect of any
        sum
        payable under any Loan Document to any Lender or the Administrative Agent
        (w)
        the sum payable shall be increased as may be necessary so that, after making
        all
        required deductions (including deductions applicable to additional sums payable
        under this Section
        2.14,
        such
        Lender or the Administrative Agent (as the case may be) receives an amount
        equal
        to the sum it would have received had no such deductions been made, (x) the
        relevant Loan Party shall make such deductions, (y) the relevant Loan Party
        shall pay the full amount deducted to the relevant taxing authority or other
        authority in accordance with applicable law and (z) the relevant Loan Party
        shall deliver to the Administrative Agent evidence of such payment.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (b) In
        addition, each Loan Party agrees to pay any present or future stamp or
        documentary taxes or any other excise or property taxes, charges or similar
        levies of the United States or any political subdivision thereof or any
        applicable foreign jurisdiction, and all liabilities with respect thereto,
        in
        each case arising from any payment made under any Loan Document or from the
        execution, delivery or registration of, or otherwise with respect to, any
        Loan
        Document (collectively, “Other
        Taxes”).

      

      (c) Each
        Loan
        Party shall, jointly and severally, indemnify each Lender and the Administrative
        Agent for the full amount of Taxes and Other Taxes (including any Taxes and
        Other Taxes imposed by any jurisdiction on amounts payable under this
Section
        2.14)
        paid by
        such Lender or the Administrative Agent (as the case may be) and any liability
        (including for penalties, interest and expenses) arising therefrom or with
        respect thereto, whether or not such Taxes or Other Taxes were correctly
        or
        legally asserted. This indemnification shall be made within 30 days from
        the
        date such Lender or the Administrative Agent (as the case may be) makes written
        demand therefor. Notwithstanding the foregoing, no Loan Party shall be required
        to indemnify any Lender or the Administrative Agent for amounts paid by such
        Lender or the Administrative Agent for Taxes to the extent such amounts are
        attributable to such Lender’s or the Administrative Agent’s failure to comply
        with the requirements of Section
        2.14(f).

      

      (d) Within
        30
        days after the date of any payment of Taxes or Other Taxes by any Loan Party,
        the Borrower shall furnish to the Administrative Agent, at its address referred
        to in Section
        11.8 (Notices, Etc.),
        the
        original or a certified copy of a receipt evidencing payment
        thereof.

      

      (e) Without
        prejudice to the survival of any other agreement of any Loan Party hereunder
        or
        under the Guaranty, the agreements and obligations of such Loan Party contained
        in this Section
        2.14
        shall
        survive the payment in full of the Obligations.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (f) (i) Each
        Non-U.S. Lender that is entitled to an exemption from U.S. withholding tax,
        or that is subject to such tax at a reduced rate under an applicable tax
        treaty,
        shall (v) on or prior to the Closing Date in the case of each Non-U.S. lender
        that is a signatory hereto, (w) on or prior to the date of the Assignment
        and
        Acceptance pursuant to which such Non-U.S. Lender becomes a Lender or the
        date a
        successor Administrative Agent becomes the Administrative Agent hereunder,
        (x) on or prior to the date on which any such form or certification expires
        or becomes obsolete, (y) after the occurrence of any event requiring a change
        in
        the most recent form or certification previously delivered by it to the Borrower
        and the Administrative Agent, and (z) from time to time if requested by the
        Borrower or the Administrative Agent, provide the Administrative Agent and
        the
        Borrower with two completed originals of each of the following, as
        applicable:

      

      (A) Form
        W-8ECI (claiming exemption from U.S. withholding tax because the income is
        effectively connected with a U.S. trade or business) or any successor
        form;

      

      (B) Form
        W-8BEN (claiming exemption from, or a reduction of, U.S. withholding tax
        under
        an income tax treaty) or any successor form;

      

      (C) in
        the
        case of a Non-U.S. Lender claiming exemption under Sections
        871(h)
        or
881(c)
        of the
        Code, a Form W-8BEN (claiming exemption from U.S. withholding tax under the
        portfolio interest exemption) or any successor form; or

      

      (D) any
        other
        applicable form, certificate or document prescribed by the IRS certifying
        as to
        such Non-U.S. Lender’s entitlement to such exemption from U.S. withholding tax
        or reduced rate with respect to all payments to be made to such Non-U.S.
        Lender
        under the Loan Documents.

      

      Unless
        the Borrower and the Administrative Agent have received forms or other documents
        satisfactory to them indicating that payments under any Loan Document to
        or for
        a Non-U.S. Lender are not subject to U.S. withholding tax or are subject
        to such
        tax at a rate reduced by an applicable tax treaty, the Loan Parties and the
        Administrative Agent shall withhold amounts required to be withheld by
        applicable Requirements of Law from such payments at the applicable statutory
        rate.

      

      (ii) Each
        U.S.
        Lender shall (v) on or prior to the Closing Date in the case of each U.S.
        Lender
        that is a signatory hereto, (w) on or prior to the date of the Assignment
        and Acceptance pursuant to which such U.S. Lender becomes a Lender or on
        or
        prior to the date a successor Administrative Agent becomes the Administrative
        Agent hereunder, (x) on or prior to the date on which any such form or
        certification expires or becomes obsolete, (y) after the occurrence of any
        event
        requiring a change in the most recent form or certification previously delivered
        by it to the Borrower and the Administrative Agent, and (z) from time to
        time if requested by the Borrower or the Administrative Agent, provide the
        Administrative Agent and the Borrower with two completed originals of Form
        W-9
        (certifying that such U.S. Lender is entitled to an exemption from U.S. backup
        withholding tax) or any successor form. Solely for purposes of this Section
        2.14(f),
        a U.S.
        Lender shall not include a Lender or an Administrative Agent that may be
        treated
        as an exempt recipient based on the indicators described in Treasury Regulation
        section 1.6049-4(c)(1)(ii). 

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (g) Any
        Lender claiming any additional amounts payable pursuant to this Section
        2.14
        shall
        use its reasonable efforts (consistent with its internal policies and
        Requirements of Law) to change the jurisdiction of its Applicable Lending
        Office
        if the making of such a change would avoid the need for, or reduce the amount
        of, any such additional amounts that would be payable or may thereafter accrue
        and would not, in the sole determination of such Lender, be otherwise
        disadvantageous to such Lender.

      

      Section
        2.15 Substitution
        of Lenders

      

      (a) In
        the
        event that (i)(A) any Lender makes a claim under Section
        2.12(c) (Increased Costs)
        or
Section
        2.13 (Capital Adequacy),
        (B) it
        becomes illegal for any Lender to continue to fund or make any Eurodollar
        Rate
        Loan and such Lender notifies the Borrower pursuant to Section
        2.12(d) (Illegality)
        or (C)
        any Loan Party is required to make any payment pursuant to Section
        2.14 (Taxes)
        that is
        attributable to a particular Lender, (ii) in the case of clause
        (i)(A)
        above,
        as a consequence of increased costs in respect of which such claim is made,
        the
        effective rate of interest payable to such Lender under this Agreement with
        respect to its Term Loans materially exceeds the effective average annual
        rate
        of interest payable to the Requisite Lenders under this Agreement and (iii)
        in
        the case of clauses
        (i)(A),
        (B)
        and
(C)
        above,
        Lenders holding at least 75% of the Term Loans are not subject to such increased
        costs or illegality, payment or proceedings (any such Lender, an “Affected
        Lender”),
        the
        Borrower may substitute any Lender and, if reasonably acceptable to the
        Administrative Agent, any other Eligible Assignee (a “Substitute
        Institution”)
        for
        such Affected Lender hereunder, after delivery of a written notice (a
“Substitution
        Notice”)
        by the
        Borrower to the Administrative Agent and the Affected Lender within a reasonable
        time (in any case not to exceed 90 days) following the occurrence of any
        of the
        events described in clause
        (i)
        above
        that the Borrower intends to make such substitution; provided, however, that,
        if
        more than one Lender claims increased costs, illegality or right to payment
        arising from the same act or condition and such claims are received by the
        Borrower within 30 days of each other, then the Borrower may substitute all,
        but
        not (except to the extent the Borrower has already substituted one of such
        Affected Lenders before the Borrower’s receipt of the other Affected Lenders’
claim) less than all, Lenders making such claims.

      

      (b) If
        the
        Substitution Notice was properly issued under this Section
        2.15,
        the
        Affected Lender shall sell, and the Substitute Institution shall purchase,
        all
        rights and claims of such Affected Lender under the Loan Documents and the
        Substitute Institution shall assume, and the Affected Lender shall be relieved
        of all prior unperformed obligations of the Affected Lender under the Loan
        Documents (other than in respect of any damages (which pursuant to Section
        11.5 (Limitation
        on Liability)
        do not
        include exemplary or punitive damages, to the extent permitted by applicable
        law) in respect of any such unperformed obligations). Such purchase and sale
        (and the corresponding assignment of all rights and claims hereunder) shall
        be
        recorded in the Register maintained by the Administrative Agent and shall
        be
        effective on (and not earlier than) the later of (i) the receipt by the Affected
        Lender of its Ratable Portion of the Term Loans, together with any other
        Obligations owing to it, (ii) the receipt by the Administrative Agent of
        an
        agreement in form and substance reasonably satisfactory to it and the Borrower
        whereby the Substitute Institution shall agree to be bound by the terms hereof
        and (iii) the payment in full to the Affected Lender in cash of all fees,
        unreimbursed costs and expenses and indemnities accrued and unpaid through
        such
        effective date. Upon the effectiveness of such sale, purchase and assumption,
        the Substitute Institution shall become a “Lender”
        hereunder for all purposes of this Agreement having a Term Loan Commitment
        in
        the amount of such Affected Lender’s Term Loan Commitment assumed by it and such
        Term Loan Commitment of the Affected Lender shall be terminated; provided,
        however,
        that
        all indemnities under the Loan Documents shall continue in favor of such
        Affected Lender.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (c) Each
        Lender agrees that, if it becomes an Affected Lender and its rights and claims
        are assigned hereunder to a Substitute Institution pursuant to this Section
        2.15,
        it
        shall execute and deliver to the Administrative Agent an Assignment and
        Acceptance to evidence such assignment, together with any Note (if such Term
        Loans are evidenced by a Note) evidencing the Term Loans subject to such
        Assignment and Acceptance; provided,
        however,
        that
        the failure of any Affected Lender to execute an Assignment and Acceptance
        shall
        not render such assignment invalid.

      

      ARTICLE
        III

      

      CONDITIONS
        TO TERM LOANS

      

      Section
        3.1 Conditions
        Precedent to Closing Date Term Loans

      

      The
        obligation of each Lender to make the Closing Date Term Loans requested to
        be
        made by it on the Closing Date is subject to the satisfaction or due waiver
        in
        accordance with Section
        11.1 (Amendments, Waivers, Etc.) of
        each
        of the following conditions precedent on or prior to the Closing
        Date:

      

      (a) Certain
        Documents.
        The
        Administrative Agent shall have received (and, to the extent any Borrowing
        of
        any Eurodollar Rate Loans is requested to be made on the Closing Date, in
        respect of the Notice of Borrowing for such Eurodollar Rate Loans, at least
        three Business Days prior to the Closing Date) each of the following, each
        dated
        the Closing Date unless otherwise indicated or agreed to by the Administrative
        Agent in its reasonable discretion, in form and substance reasonably
        satisfactory to the Administrative Agent and in sufficient copies for each
        Lender:

      

      (i) this
        Agreement, duly executed and delivered by the Borrower and, for the account
        of
        each Lender requesting the same, a Note of the Borrower conforming to the
        requirements set forth herein;

      

      (ii) the
        Intercreditor Agreement, duly executed and delivered by the Revolving Credit
        Agent and each Loan Party party thereto;

      

      (iii) the
        Guaranty, duly executed and delivered by each Guarantor;

      

      (iv) except
        as
        set forth on Schedule
        7.13 (Post-Closing Covenants)
        and
        subject to the proviso in Section
        7.11 (Additional Collateral and Guarantees),
        the
        Pledge and Security Agreement, duly executed and delivered by the Borrower
        and
        each Guarantor, together with each of the following:

      

      (A) evidence
        reasonably satisfactory to the Administrative Agent that, upon the filing and
        recording of instruments delivered on or before the Closing Date, the
        Administrative Agent (for the benefit of the Secured Parties) shall have
        a valid
        and perfected security interest (having the priority set forth in the
        Intercreditor Agreement) in the Collateral, including (x) the filing of
        financing statements under the UCC, (y) copies of UCC search reports as of
        a
        recent date listing all effective financing statements that name any Loan
        Party
        as debtor, together with copies of such financing statements, none of which
        shall cover the Collateral except for those that shall be terminated on the
        Closing Date or are otherwise permitted hereunder and (z) such other such
        documents duly executed by each Loan Party as the Administrative Agent may
        reasonably request with respect to the perfection of its security interests
        in
        the Collateral (including patent, trademark and copyright security agreements
        suitable for filing with the Patent and Trademark Office or the Copyright
        Office, as the case may be, and other applicable documents under the laws
        of any
        jurisdiction with respect to the perfection of Liens created by the Pledge
        and
        Security Agreement);

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (B) all
        certificates, instruments and other documents representing all Pledged Stock
        being pledged pursuant to such Pledge and Security Agreement and stock powers
        for such certificates, instruments and other documents executed in
        blank;

      

      (C) to
        the
        extent delivered in connection with the Revolving Credit Agreement on the
        Closing Date or within such other time period as provided therein, all Deposit
        Account Control Agreements, duly executed by the corresponding Deposit Account
        Bank and the applicable Loan Party; and

      

      (D) to
        the
        extent delivered in connection with the Revolving Credit Agreement on the
        Closing Date or within such other time period as provided therein, Securities
        Account Control Agreements, duly executed by the applicable Loan Party and
        (1)
        all “securities
        intermediaries”
(as
        defined in the UCC) with respect to all Securities Accounts and securities
        entitlements of the Borrower and each Guarantor and (2) all “commodities
        intermediaries”
(as
        defined in the UCC) with respect to all commodities contracts and commodities
        accounts held by the Borrower and each Guarantor;

      

      (v) except
        as
        set forth on Schedule
        7.13 (Post-Closing Covenants)
        and
        subject to the proviso in Section
        7.11 (Additional Collateral and Guarantees),
        Mortgages for all of the Real Property of the Loan Parties identified on
        Schedule
        4.19 (Real
        Property) (except
        as may be agreed to by the Administrative Agent), together with all Mortgage
        Supporting Documents relating thereto;

      

      (vi) a
        favorable opinion of (A) Sullivan & Cromwell LLP, counsel to the Loan
        Parties, in substantially the form of
        Exhibit E (Form of Opinion of counsel for the Loan
        Parties),
        (B)
        counsel to the Borrower in Nevada, (C) counsel to Payless ShoeSource, Inc.,
        a
        Missouri corporation, in Missouri and (D) counsel to Payless ShoeSource
        Worldwide, Inc. and Payless ShoeSource Distribution, Inc. each in Kansas,
        in
        each case addressed to the Administrative Agent and the Lenders and addressing
        such other matters as any Lender through the Administrative Agent may reasonably
        request;

      

      (vii) a
        copy of
        each Related Document certified as being complete and correct by a Responsible
        Officer of the Borrower or other Loan Party as the case may be;

      
        
          
          

        

        
          47

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (viii) a
        copy of
        the articles or certificate of incorporation (or equivalent Constituent
        Document) of each Loan Party, certified as of a recent date by the Secretary
        of
        State of the state of organization of such Loan Party, together with
        certificates of such official attesting to the good standing of each such
        Loan
        Party;

      

      (ix) a
        certificate of the Secretary or an Assistant Secretary of each Loan Party
        certifying (A) the names and true signatures of each officer of such Loan
        Party
        that has been authorized to execute and deliver any Loan Document or other
        document required hereunder to be executed and delivered by or on behalf
        of such
        Loan Party, (B) the by-laws (or equivalent Constituent Document) of such
        Loan
        Party as in effect on the date of such certification, (C) the resolutions
        of
        such Loan Party’s Board of Directors (or equivalent governing body) approving
        and authorizing the execution, delivery and performance of this Agreement
        and
        the other Loan Documents to which it is a party and (D) that there have been
        no
        changes in the certificate of incorporation (or equivalent Constituent Document)
        of such Loan Party from the certificate of incorporation (or equivalent
        Constituent Document) delivered pursuant to clause
        (viii) above;

      

      (x) a
        certificate of a Responsible Officer of the Borrower, stating that the Borrower
        is Solvent immediately before and after giving effect to the Closing Date
        Term
        Loans, the application of the proceeds thereof in accordance with Section
        7.9 (Application of Proceeds), the
        payment of all estimated legal, accounting and other fees related hereto
        and
        thereto and the other Transactions; and

      

      (xi) evidence
        reasonably satisfactory to the Administrative Agent that the insurance policies
        required by Section
        7.5 (Maintenance of Insurance)
        and any
        Collateral Document are in full force and effect, together with, unless
        otherwise agreed by the Administrative Agent, endorsements naming the
        Administrative Agent, on behalf of the Secured Parties, as an additional
        insured
        or loss payee under all insurance policies to be maintained with respect
        to the
        properties of the Borrower and each other Loan Party.

      

      (b) Fee
        and Expenses Paid.
        There
        shall have been paid to the Administrative Agent, for the account of the
        Administrative Agent and the Lenders, as applicable, all fees and expenses
        (including reasonable fees and expenses of counsel) invoiced at least two
        Business Days prior to the Closing Date and due and payable on or before
        the
        Closing Date (including all such fees described in the Fee Letter).

      

      (c) Refinancing
        of Target Credit Agreement.
        (i) The
        Administrative Agent shall have received a payoff letter duly executed and
        delivered by the Target and the Existing Agent or other evidence of such
        termination in each case in form and substance reasonably satisfactory to
        the
        Administrative Agent; (ii) all obligations
        under the Target Credit Agreement shall have been repaid in full and (iii)
        the
        Target Credit Agreement, all Loan Documents (as defined therein) and all
        Liens
        granted in connection therewith shall have been terminated and released on
        terms
        reasonably acceptable to the Administrative Agent.

      

      (d) Amendment
        and Restatement of Existing Revolving Credit Agreement.
        All
        obligations and Liens under the Existing Revolving Credit Agreement and any
        other Loan Documents (as defined therein) shall, through an amendment and
        restatement of such documents, become obligations and Liens under the Revolving
        Credit Loan Documents substantially on the terms set forth in that certain
        commitment letter dated May 22, 2007 addressed to the Borrower from Wells
        Fargo
        Retail Finance, LLC.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (e) Related
        Documents.
        The
        Administrative Agent shall be satisfied (i) that the terms and conditions
        of the Merger Agreement shall not have been amended, waived or modified without
        the approval of the Administrative Agent (other than (A) with the prior written
        consent, not to be unreasonably withheld, of the Arrangers and the
        Administrative Agent or (B) amendments, waivers and modifications to such
        terms
        that do not, individually or in the aggregate, materially and adversely affect
        the interests of the Lenders), (ii) that the Merger Agreement and the other
        Related Documents shall have been approved by all corporate action of the
        Borrower and each of the other parties thereto, shall have been executed
        and
        delivered by each such party and shall be in full force and effect, (iii)
        that
        subject only to the funding of the Closing Date Term Loans hereunder, all
        conditions precedent to the consummation of the Merger shall have been satisfied
        or waived as set forth in clause
        (i)
        above,
        and (iv) that subject only to the funding of the Closing Date Term Loans
        hereunder, the Merger shall have been consummated in accordance with the
        Merger
        Agreement and all applicable Requirements of Law and all representations
        and
        warranties made by the Target in the Merger Agreement as are material to
        the
        interests of the Lenders (but only to the extent that the Borrower and/or
        the
        Acquisition Subsidiary has the right to terminate its obligations under the
        Merger Agreement as a result of a breach of such representations and warranties
        in the Merger Agreement), shall be true and correct in all material respects
        on
        the Closing Date.

      

      (f) No
        Material Adverse Effect.
        Since
        May 22, 2007, there shall not have occurred any change, event, circumstances
        or
        development that has had, or would reasonably be expected to have, a Material
        Adverse Effect (as defined in the Merger Agreement as in effect on May 22,
        2007). 

      

      (g) Consents,
        Etc.
        All
        requisite material Governmental Authorities shall have approved or consented
        to
        the Transactions to the extent required on or prior to the Closing Date,
        all
        applicable governmental filings have been made and all applicable waiting
        periods shall have expired without, in either case, any action being taken
        by
        any competent authority, all applicable appeal periods shall have expired
        and
        there shall be no action by any Governmental Authority that would reasonably
        be
        expected to restrain, prevent or impose burdensome conditions on such
        Transactions.

      

      (h) Financial
        Statements of the Parent.
        The
        Lenders shall have received from the Parent a Consolidated balance sheet
        as of
        May 5, 2007 and related statements of income and cash flows of the Parent
        and
        its Subsidiaries on the Closing Date as of February 3, 2007 and May 5, 2007
        and
        the trailing four quarters ended on May 5, 2007, each on a Pro Forma Basis
        after
        giving effect to each of the Transactions, together with a certificate of
        the
        chief financial officer of the Parent and its Subsidiaries on the Closing
        Date
        in accordance with GAAP and Regulation S-X.

      

      (i) Projections.
        The
        Borrower shall have delivered to the Lenders the Projections.

      

      (j) Request
        for Borrowing.
        With
        respect to the Closing Date Term Loans, the Administrative Agent shall have
        received a duly executed Notice of Borrowing.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (k) Representations
        and Warranties; No Defaults.
        Both
        before and after giving effect thereto and to the application of the proceeds
        thereof, (i) the representations and warranties set forth in Sections
        4.1, 4.2, 4.6, 4.10, 4.12, 4.20(a)(iv)
        and
        (c)
        and
Section
        3.2
        of the
        Pledge and Security Agreement shall be true and correct on and as of the
        Closing
        Date and (ii) no Default or Event of Default shall have occurred and be
        continuing.

      

      (l) No
        Legal Impediments.
        The
        making of the Closing Date Term Loans does not violate any Requirement of
        Law on
        the date of or immediately following such Closing Date Term Loan and is not
        enjoined, temporarily, preliminarily or permanently.

      

      Section
        3.2 Conditions
        Precedent to Incremental Term Loans

      

      (a) Certain
        Documents.
        The
        Administrative Agent shall have received on or prior to the Facility Increase
        Date for such Facility Increase each of the following, each dated such Facility
        Increase Date unless otherwise indicated or agreed to by the Administrative
        Agent and each in form and substance reasonably satisfactory to the
        Administrative Agent:

      

      (i) written
        commitments duly executed by the applicable Incremental Term Loan Lenders
        in an
        aggregate amount equal to the amount of the proposed Facility Increase (as
        agreed between the Borrower and the Administrative Agent but in any case
        not to
        exceed, in the aggregate for all such Facility Increases, the maximum amount
        set
        forth in Section
        2.1(b) (The Term Loans))
        and, in
        the case of each Incremental Term Loan Lender that is not an existing Lender
        at
        the time of the applicable Facility Increase, an assumption agreement in
        form
        and substance reasonably satisfactory to the Administrative Agent and the
        Borrower and duly executed by the Borrower, the Administrative Agent and
        such
        Incremental Term Loan Lender;

      

      (ii) an
        amendment to this Agreement, effective as of the Facility Increase Date and
        executed by the Borrower, the Administrative Agent and the applicable
        Incremental Term Loan Lenders, to the extent necessary to implement the terms
        and conditions of the Facility Increase (including interest rates, fees and
        scheduled repayment dates and maturity), as agreed by the Borrower and the
        Administrative Agent but, which, in any case, except for interest, fees,
        scheduled repayment dates and maturity, shall not be applied materially
        differently to the Facility Increase and the existing Term Loan
        Facility;

      

      (iii) certified
        copies of resolutions of the Board of Directors (or equivalent governing
        body)
        of each Loan Party approving the consummation of such Facility Increase and
        the
        execution, delivery and performance of the corresponding amendments to this
        Agreement and the other Loan Documents to be executed in connection
        therewith;

      

      (iv) a
        favorable opinion of (A) counsel to the Loan Parties that is reasonably
        acceptable to Administrative Agent, in substantially the form of Exhibit E
        (Form of Opinion of counsel for the Loan Parties),
        (B)
        counsel to the Borrower in Nevada, (C) counsel to Payless ShoeSource, Inc.
        in
        Missouri and (D) counsel to Payless ShoeSource Worldwide, Inc. and Payless
        ShoeSource Distribution, Inc. each in Kansas, in each case addressed to the
        Administrative Agent and the Lenders and addressing such other matters as
        any
        Lender through the Administrative Agent may reasonably request; and

      
        
          
          

        

        
          50

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (v) such
        other documents as the Administrative Agent may reasonably request or as
        any
        Incremental Term Loan Lender participating in such Facility Increase may
        reasonably require as a condition to its commitment in such Facility
        Increase.

      

      (b) Fees
        and Expenses Paid.
        There
        shall have been paid to the Administrative Agent, for the account of the
        Administrative Agent and the Lenders (including any Person becoming a Lender
        as
        part of such Facility Increase on such Facility Increase Date), as applicable,
        all fees and expenses (including attorney costs of the Administrative Agent)
        due
        and payable on or before the Facility Increase Date (including all such fees
        described in the Fee Letters).

      

      (c) Other
        Conditions. As
        of the
        Facility Increase Date for such Facility Increase, such Facility Increase
        shall
        be made on the terms and conditions set forth in Section
        2.1(b) (The Term Loans).

      

      (d) Representations
        and Warranties; Events of Default.
        Both
        before and after giving effect to any Incremental Term Loan and to the
        application of the proceeds thereof, (i) the representations and warranties
        set
        forth in Article
        IV (Representations and Warranties)
        and in
        the other Loan Documents shall be true and correct in all material respects
        on
        and as of the date on which such Incremental Term Loan is made with the same
        effect as though made on and as of such date, except to the extent such
        representations and warranties expressly relate to an earlier date, in which
        case such representations and warranties shall have been true and correct
        in all
        material respects as of such earlier date and (ii) no Default or Event of
        Default shall have occurred and be continuing.

      

      (e) Request
        for Borrowing.
        With
        respect to any Incremental Term Loan, the Administrative Agent shall have
        received a duly executed Notice of Borrowing.

      

      (f) No
        Legal Impediments.
        The
        making of the Incremental Term Loans on such date does not violate any
        Requirement of Law on the date of or immediately following such Incremental
        Term
        Loan and is not enjoined, temporarily, preliminarily or
        permanently.

      

      Each
        submission by the Borrower to the Administrative Agent of a Notice of Borrowing
        and the acceptance by the Borrower of the proceeds of each Incremental Term
        Loan
        requested therein shall be deemed to constitute a representation and warranty
        by
        the Borrower as to the matters specified in clause
        (e) above on
        the
        date of the making of such Incremental Term Loan.

      

      Section
        3.3 Determinations
        of Borrowing Conditions

      

      For
        purposes of determining compliance with the conditions specified in Section
        3.1 (Conditions Precedent to Closing Date Term Loans)
        and
Section
        3.2 (Conditions Precedent to Incremental Term Loans), each
        Lender shall be deemed to have consented to, approved, accepted or be satisfied
        with, each document or other matter required thereunder to be consented to
        or
        approved by or reasonably acceptable or reasonably satisfactory to the Lenders
        unless an officer of the Administrative Agent responsible for the transactions
        contemplated by the Loan Documents shall have received notice from such Lender
        prior to the applicable Term Loan Borrowing hereunder specifying its objection
        thereto and such Lender shall not have made available to the Administrative
        Agent such Lender’s Ratable Portion of such Term Loan Borrowing.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      ARTICLE
        IV

      

      REPRESENTATIONS
        AND WARRANTIES

      

      To
        induce
        the Lenders and the Administrative Agent to enter into this Agreement, the
        Borrower represents and warrants each of the following to the Lenders and
        the
        Administrative Agent, on and as of the Closing Date and after giving effect
        to
        the Merger and the making of the Term Loans on the Closing Date and on and
        as of
        each date as required by Section
        3.2 (Conditions Precedent to Incremental Term Loans):

      

      Section
        4.1 Corporate
        Existence; Compliance with Law

      

      Each
        Group Member (a) is duly organized, validly existing and in good standing
        under
        the laws of the jurisdiction of its organization, (b) is duly qualified to
        do
        business as a foreign entity and in good standing under the laws of each
        jurisdiction where such qualification is necessary, except where the failure
        to
        be so qualified or in good standing would not, in the aggregate, have a Material
        Adverse Effect, (c) has all requisite power and authority and the legal
        right to own, pledge, mortgage and operate its properties, to lease the property
        it operates under lease and to conduct its business as now or currently proposed
        to be conducted, except where the failure to have such power, authority and
        legal right would not, in the aggregate, have a Material Adverse Effect,
        (d) is
        in compliance with its Constituent Documents, (e) is in compliance with all
        applicable Requirements of Law except where the failure to be in compliance
        would not, in the aggregate, have a Material Adverse Effect and (f) has all
        necessary Permits from or by, has made all necessary filings with, and has
        given
        all necessary notices to, each Governmental Authority having jurisdiction,
        to
        the extent required for such ownership, operation and conduct, except for
        Permits or filings that can be obtained or made by the taking of ministerial
        action to secure the grant or transfer thereof or the failure to obtain or
        make
        would not, in the aggregate, have a Material Adverse Effect.

      

      Section
        4.2 Corporate
        Power; Authorization; Enforceable Obligations

      

      (a) The
        execution, delivery and performance by each Loan Party of the Loan Documents
        to
        which it is a party and the consummation of the transactions contemplated
        thereby:

      

      (i) are
        within such Loan Party’s corporate, limited liability company, partnership or
        other powers;

      

      (ii) have
        been
        or, at the time of delivery thereof pursuant to Article
        III (Conditions To Term Loans)
        will
        have been duly authorized by all necessary action, including the consent
        of
        shareholders, partners and members where required;

      

      (iii) do
        not
        and will not (A) contravene or violate such Loan Party’s respective Constituent
        Documents, (B) violate any other Requirement of Law applicable to such Loan
        Party (including Regulations T, U and X of the Federal Reserve Board), or
        any
        order or decree of any Governmental Authority or arbitrator applicable to
        such
        Loan Party, (C) conflict with or result in the breach of, or constitute a
        default under, or result in or permit the termination or acceleration of,
        any
        Related Document or any other material Contractual Obligation of such Loan
        Party
        or (D) result in the creation or imposition of any Lien upon any property
        of
        such Loan Party, other than those in favor of the Secured Parties pursuant
        to
        the Collateral Documents; and

      
        
          
          

        

        
          52

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (iv) do
        not
        require the consent of, authorization by, approval of, notice to, or filing
        or
        registration with, any Governmental Authority or any other Person, other
        than
        those listed on Schedule 4.2 (Consents)
        and that
        have been or will be, prior to the Closing Date, obtained or made, copies
        of
        which have been or will be delivered to the Administrative Agent pursuant
        to
Section
        3.1 (Conditions Precedent to Closing Date Term Loans),
        and
        each of which on the Closing Date will be in full force and effect and, with
        respect to the Collateral, filings required to perfect the Liens created
        by the
        Collateral Documents.

      

      (b) This
        Agreement has been, and each of the other Loan Documents will have been upon
        delivery thereof pursuant to the terms of this Agreement, duly executed and
        delivered by each Loan Party party thereto. This Agreement is, and the other
        Loan Documents will be, when delivered hereunder, the legal, valid and binding
        obligation of each Loan Party party thereto, enforceable against such Loan
        Party
        in accordance with its terms.

      

      Section
        4.3 Ownership
        of Subsidiaries

      

      Set
        forth
        on Schedule
        4.3 (Ownership of Subsidiaries) is
        a
        complete and accurate list showing, as of the Closing Date, all Subsidiaries
        owned (directly or indirectly) by the Parent and, as to each such Subsidiary,
        the jurisdiction of its organization, the number of shares of each class
        of
        Stock authorized (if applicable), the number outstanding on the Closing Date
        and
        the number and percentage of the outstanding shares of each such class owned
        (directly or indirectly) by the Parent. No Stock of any Subsidiary owned
        (directly or indirectly) by the Parent is subject to any outstanding option,
        warrant, right of conversion or purchase of any similar right. All of the
        outstanding Stock of each owned (directly or indirectly) by the Parent has
        been
        validly issued, is fully paid and non-assessable (to the extent applicable)
        and
        is owned by the Parent or a Subsidiary of the Parent, free and clear of all
        Liens (other than the Lien in favor of the Secured Parties created pursuant
        to
        the Pledge and Security Agreement and the Revolving Credit Loan Documents),
        options, warrants, rights of conversion or purchase or any similar
        rights.

      

      Section
        4.4 Financial
        Statements

      

      (a) All
        Financial Statements relating to the Group Members that have been provided
        by
        Borrower to the Administrative Agent or the Lenders pursuant to Section
        3.1(h) (Conditions
        Precedent to Closing Date Term Loans) and
        Section
        6.1 (Financial Statements) have
        been
        prepared in accordance with GAAP (except, in the case of unaudited financial
        statements, for the lack of footnotes and being subject to year-end audit
        adjustments) and present fairly in all material respects, the financial
        condition of the Borrower, the Parent and its Subsidiaries as of the date
        thereof and results of operations for the period then ended.

      

      (b) The
        Projections have been prepared by the Parent in light of the past operations
        of
        its business, and reflect projections for the seven year period beginning
        on
        February 4, 2007, on a quarterly basis through the end of the fiscal year
        ending 2007 and on a year by year basis thereafter. The Projections are based
        upon estimates and assumptions stated therein, all of which the Parent believes
        to be reasonable and fair in light of current conditions and current facts
        known
        to the Parent and, as of the Closing Date, reflect the Parent’s good faith and
        reasonable estimates of the future financial performance of the Parent and
        its
        Subsidiaries and of the other information projected therein for the periods
        set
        forth therein.

      
        
          
          

        

        
          53

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (c) The
        consolidated balance sheet as of May 5, 2007 and the related statements of
        income and cash flows of the Borrower and its Subsidiaries on the Closing
        Date
        as of February 3, 2007 and May 5, 2007 and the trailing four quarters ended
        on
        May 5, 2007, in each case delivered to the Administrative Agent pursuant
        to
        Section 3.1(h)
        (Conditions Precedent to Closing Date Term Loans),
        reflects as of such date, on a Pro Forma Basis, the Consolidated financial
        condition of the Borrower and its Subsidiaries, and the assumptions expressed
        therein were reasonable based on the information available to the Borrower
        at
        the time so furnished and on the Closing Date.

      

      Section
        4.5 Material
        Adverse Change

      

      Since
        May
        5, 2007, there has been no Material Adverse Change and there have been no
        events
        or developments that, in the aggregate, have had a Material Adverse
        Effect.

      

      Section
        4.6 Solvency

      

      Both
        before and after giving effect to (a) the Term Loans to be made on the Closing
        Date or such other date as Term Loans requested hereunder are made, (b) the
        disbursement of the proceeds of such Term Loans pursuant to the instructions
        of
        the Borrower, (c) the Merger and the consummation of the other financing
        transactions contemplated hereby and (d) the payment and accrual of all
        transaction costs in connection with the foregoing, each Group Member is
        Solvent.

      

      Section
        4.7 Litigation

      

      Except
        as
        set forth on Schedule
        4.7 (Litigation),
        there
        are no pending or, to the knowledge of the Borrower, threatened actions,
        investigations or proceedings affecting any of the Group Members before any
        court, Governmental Authority or arbitrator other than those that, individually
        or when considered in the aggregate with other related actions, investigations
        or proceedings, would not have a Material Adverse Effect. The performance
        of any
        action by any Group Member required or contemplated by any Loan Document
        or any
        Related Document is not restrained or enjoined (either temporarily,
        preliminarily or permanently).

      

      Section
        4.8 Taxes

      

      (a) All
        material federal, state, local and foreign income and franchise and other
        material tax returns, reports and statements (collectively, the “Tax
        Returns”)
        required to be filed by the Borrower or any of its Tax Affiliates have been
        filed with the appropriate Governmental Authorities in all jurisdictions
        in
        which such Tax Returns are required to be filed, all such Tax Returns are
        true
        and correct in all material respects, and all material taxes, charges and
        other
        impositions reflected therein or otherwise due and payable have been paid
        prior
        to the date on which any material fine, penalty, interest, late charge or
        loss
        may be added thereto for non-payment thereof except where contested in good
        faith and by appropriate proceedings if adequate reserves therefor have been
        established on the books of the Borrower or such Tax 

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

       

      Affiliate
        in conformity with GAAP. [Except as disclosed on Schedule
        4.8,]1
        no Tax
        Return is under audit or examination by any Governmental Authority and no
        written, and to the knowledge of the Borrower oral, notice of such an audit
        or
        examination or any assertion of any claim for Taxes has been received by
        the
        Borrower or any of its Tax Affiliates. Proper amounts have been withheld
        by the
        Borrower and each of its Tax Affiliates from their respective employees for
        all
        periods in full and complete compliance with the tax, social security and
        unemployment withholding provisions of applicable Requirements of Law and
        such
        withholdings have been timely paid to the respective Governmental Authorities,
        except those that, in the aggregate, would not result in a Material Adverse
        Effect.

       

      (b) None
        of
        the Borrower or any of its Tax Affiliates has (i) 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 the filing of any Tax Return
        or the assessment or collection of any charges, (ii) incurred any obligation
        under any tax sharing agreement or arrangement other than those of which
        the
        Administrative Agent has received a copy prior to the date hereof, (iii)
        been a
        member of an affiliated, combined or unitary group other than the group of
        which
        the Borrower (or its Tax Affiliate) is the common parent or (iv) participated
        in
        a “listed
        transaction”
        within
        the meaning of Treasury Regulation section 1.6011-4((6)).

      

      Section
        4.9 Full
        Disclosure

      

      The
        information prepared or furnished by or on behalf of the Borrower in connection
        with this Agreement or the Related Documents or the consummation of the
        transactions contemplated hereunder and thereunder taken as a whole, does
        not
        contain any untrue statement of a material fact or omit to state a material
        fact
        necessary to make the statements contained therein or herein not misleading
        in
        any material respect at such time in light of the circumstances under which
        such
        information was provided. 

      

      Section
        4.10 Margin
        Regulations

      

      The
        Borrower is not engaged in the business of extending credit for the purpose
        of
        purchasing or carrying margin stock (within the meaning of Regulation U of
        the
        Federal Reserve Board), and no proceeds of any Term Loan will be used to
        purchase or carry any such margin stock or to extend credit to others for
        the
        purpose of purchasing or carrying any such margin stock in contravention
        of
        Regulation T, U or X of the Federal Reserve Board.

      

      Section
        4.11 No
        Burdensome Restrictions; No Defaults

      

      (a) No
        Group
        Member (i) is a party to any Contractual Obligation the compliance with one
        or
        more of which would have, in the aggregate, a Material Adverse Effect or
        the
        performance of which by any thereof, either unconditionally or upon the
        happening of an event, would result in the creation of a Lien (other than
        a Lien
        permitted under Section
        8.2 (Liens, Etc.))
        on the
        assets of any thereof or (ii) is subject to one or more charter or corporate
        restrictions that would, in the aggregate, have a Material Adverse
        Effect.

      

      (b) No
        Group
        Member is in default under or with respect to any Contractual Obligation
        owed by
        it and, to the knowledge of the Borrower, no other party is in default under
        or
        with respect to any Contractual Obligation owed to any of the Group Members,
        other than, in either case, those defaults that, in the aggregate, would
        not
        have a Material Adverse Effect.

      
        ______________________

        1Under
          discussion with S&C.

         

        
          
            
            

          

          
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              LOAN AGREEMENT

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              BRANDS FINANCE, INC.

          

        

      (c) No
        Default or Event of Default has occurred and is continuing.

      

      (d) To
        the
        best knowledge of the Borrower, there are no Requirements of Law applicable
        to
        any of the Group Members the compliance with which by such Group Member,
        as the
        case may be, would, in the aggregate, have a Material Adverse
        Effect.

      

      Section
        4.12 Investment
        Company Act

      

      No
        Group
        Member 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, as
        amended.

      

      Section
        4.13 Use
        of Proceeds

      

      (a) The
        proceeds of the Closing Date Term Loans are being used by the Borrower (and,
        to
        the extent distributed to them by the Borrower, each other Group Member)
        solely
        (a) to refinance all Indebtedness and other obligations outstanding under
        the
        Target Credit Agreement, (b) to finance the Merger and for the payment of
        related transaction costs, fees and expenses and (c) for the payment of
        transaction costs, fees and expenses incurred in connection with this Agreement,
        the Revolving Credit Agreement and the transactions contemplated
        hereby.

      

      (b) The
        proceeds of any Incremental Term Loans shall be used (a) to finance working
        capital needs and (b) for general corporate purposes.

      

      Section
        4.14 Insurance

      

      Each
        of
        the Group Members maintains in full force and effect such policies of insurance,
        including policies of life, fire, theft, product liability, public liability,
        property damage, other casualty, employee fidelity, workers’ compensation and
        employee health and welfare insurance, of a nature and provide such coverage
        as
        is customarily carried by businesses of the size and character of such Person,
        except to the extent that any failure to do so would not, individually or
        in the
        aggregate, have a Material Adverse Effect.

      

      Section
        4.15 Labor
        Matters

      

      (a) There
        are
        no strikes, work stoppages, slowdowns or lockouts pending or threatened against
        or involving the Group Members, other than those that, in the aggregate,
        would
        not have a Material Adverse Effect.

      

      (b) There
        are
        no unfair labor practices, grievances, complaints or arbitrations pending,
        or,
        to the Borrower’s knowledge, threatened, against or involving any Group Members,
        nor are there any arbitrations or grievances threatened involving any of
        the
        Group Members, other than those that, in the aggregate, would not have a
        Material Adverse Effect.

      
        
          
          

        

        
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            LOAN AGREEMENT

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            BRANDS FINANCE, INC.

        

      

      

      (c) Except
        as
        set forth on Schedule
        4.15 (Labor Matters),
        as of
        the Closing Date, there is no collective bargaining agreement covering any
        material number of employees of any Group Member.

      

      Section
        4.16 ERISA

      

      (a) Schedule
        4.16 (List of Plans)
        separately identifies all Title IV Plans, all Multiemployer Plans and all
        of the
        employee benefit plans within the meaning of Section
        3(3)
        of ERISA
        to which any Group Member has any obligation or liability, contingent or
        otherwise.

      

      (b) Each
        employee benefit plan of the Group Members intended to qualify under
Section
        401
        of the
        Code does so qualify, and any trust created thereunder is exempt from tax
        under
        the provisions of Section
        501
        of the
        Code, except where such failures, in the aggregate, would not have a Material
        Adverse Effect.

      

      (c) Each
        Title IV Plan is in compliance in all material respects with applicable
        provisions of ERISA, the Code and other Requirements of Law except for
        noncompliances that, in the aggregate, would not have a Material Adverse
        Effect.

      

      (d) There
        has
        been no, nor is there reasonably expected to occur, any ERISA Event other
        than
        those that, in the aggregate, would not have a Material Adverse
        Effect.

      

      (e) Except
        to
        the extent set forth on Schedule
        4.16 (List of Plans),
        none of
        the Group Members or any ERISA Affiliate would have any Withdrawal Liability
        as
        a result of a complete withdrawal as of the date hereof from any Multiemployer
        Plan.

      

      Section
        4.17 Environmental
        Matters

      

      (a) The
        operations of the Group Members have been and are in compliance with all
        Environmental Laws, including obtaining and complying with all required
        environmental, health and safety Permits, other than non-compliances that,
        in
        the aggregate, would not have a reasonable likelihood of the Group Members
        incurring Environmental Liabilities and Costs after the date hereof that
        would
        have a Material Adverse Effect.

      

      (b) None
        of
        the Group Members or any Real Property currently or, to the knowledge of
        the
        Borrower, previously owned, operated or leased by or for any of the Group
        Members is subject to any pending or, to the knowledge of the Borrower,
        threatened, claim, order, agreement, notice of violation, notice of potential
        liability or is the subject of any pending or threatened proceeding or
        governmental investigation under or pursuant to Environmental Laws other
        than
        those that, in the aggregate, are not reasonably likely to result in the
        Group
        Members incurring Environmental Liabilities and Costs that would have a Material
        Adverse Effect.

      

      (c) There
        are
        no facts, circumstances or conditions arising out of or relating to the
        operations or ownership of the Borrower or of Real Property owned, operated
        or
        leased by any of the Group Members that are not specifically included in
        the
        financial information furnished to the Lenders other than those that, in
        the
        aggregate, would not have a reasonable likelihood of the Group Members incurring
        Environmental Liabilities and Costs that would have a Material Adverse
        Effect.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (d) The
        Group
        Members have provided the Lenders with copies of all material environmental,
        health or safety audits, studies, assessments, inspections, investigations
        or
        other environmental health and safety reports relating to the operations
        of the
        Group Members or any Real Property of any of them that are in the possession,
        custody or control of the Group Members.

      

      (e) Except
        for other matters that would not reasonably be expected to result in a Material
        Adverse Effect, (i) no owned Real Property of any Group Member has ever been
        used by any Group Member or, to each Group Member’s knowledge, by previous
        owners or operators in the disposal of, or to produce, store, handle, treat,
        release, or transport, any Hazardous Materials, where such production, storage,
        handling, treatment, release or transport was in violation of or in a manner
        likely to give rise to liability under any Environmental Law, (ii) no Group
        Member’s owned Real Property and, to each Group Member’s knowledge, any leased
        Real Property has ever been designated or identified in any manner pursuant
        to
        any environmental protection statute as a Hazardous Materials disposal site,
        (iii) no Group Member has received notice that a Lien arising under any
        Environmental Law has attached to any revenues or to any Real Property owned
        or
        operated by any Group Member, and (iv) no Group Member has received a summons,
        citation, notice, or directive from the U.S. Environmental Protection Agency
        or
        any other federal or state governmental agency concerning any action or omission
        by any Group Member resulting in the releasing or disposing of Hazardous
        Materials into the environment in violation of or in a manner likely to give
        rise to liability under any Environmental Law.

      

      Section
        4.18 Intellectual
        Property

      

      Except
        as
        disclosed on Schedule
        4.18 (Intellectual Property),
        the
        Group Members own or license or otherwise have the continuing right to use
        all
        licenses, permits, patents, patent applications, trademarks, trademark
        applications, servicemarks, trade names, copyrights, copyright applications,
        Internet domain names, franchises, authorizations and other intellectual
        property rights (including all Intellectual Property) that are reasonably
        necessary for the operations of their respective businesses, without
        infringement upon, misappropriation of, or conflict with the rights of any
        other
        Person with respect thereto, including all trade names associated with any
        private label brands of the Group Members, except where such failure to own
        or
        license, individually or in the aggregate, would not have a Material Adverse
        Effect. To the Borrower’s knowledge no license, permit, patent, patent
        application, trademark, trademark application, servicemark, tradename,
        copyright, copyright application, Internet domain name, franchise authorization,
        other intellectual property right (including all Intellectual Property),
        slogan
        or other advertising device, product, process, method, substance, part or
        component, or other material now employed, by any of the Group Members infringes
        upon, misappropriates, or conflicts with any rights owned by any other Person,
        in any manner that would have a Material Adverse Effect and no claim or
        litigation regarding any of the foregoing is pending or threatened, except
        (i)
        that which would not otherwise have a Material Adverse Effect and (ii) as
        disclosed on Schedule
        4.7 (Litigation).

      

      Section
        4.19 Title;
        Real Property

      

      (a) Each
        Group Member has good and marketable title to, or valid leasehold interests
        in,
        all Real Property and good title to, or valid leasehold interests in, all
        personal property, in each case that is purported to be owned or leased by
        it,
        including those reflected on the most recent Financial Statements delivered
        by
        the Borrower, and none of such properties and assets is subject to any Lien;
        except (i) for Liens permitted under Section
        8.2 (Liens, Etc.),
        and
        (ii) where the loss thereof would not, individually or in the aggregate,
        result
        in a Material Adverse Effect.. The Group Members have received all deeds,
        assignments, waivers, consents, non-disturbance and recognition or similar
        agreements, bills of sale and other documents in respect of, and have duly
        effected all recordings, filings and other actions necessary to establish,
        protect and perfect, such Group Member’s right, title and interest in and to all
        such property, except where the lack thereof would not, individually or in
        the
        aggregate, result in a Material Adverse Effect.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (b) Set
        forth
        on Schedule
        4.19 (Real Property)
        is a
        complete and accurate list of all Real Property of each Loan Party, except
        for
        owned and leased Real Property the primary use of which is as a retail store,
        and showing, as of the Closing Date, the current street address (including,
        where applicable, county, state and other relevant jurisdictions), record
        owner
        and, where applicable, lessee thereof.

      

      (c) All
        Permits required to have been issued or appropriate to enable all Real Property
        of the Group Members to be lawfully occupied and used for all of the purposes
        for which they are currently occupied and used have been lawfully issued
        and are
        in full force and effect, other than those that, in the aggregate, would
        not
        have a Material Adverse Effect.

      

      (d) No
        Group
        Member has received any notice, or has any knowledge, of any pending, threatened
        or contemplated condemnation proceeding affecting any Real Property of any
        Group
        Member or any part thereof, except those that, in the aggregate, would not
        have
        a Material Adverse Effect.

      

      Section
        4.20 Related
        Documents

      

      (a) The
        execution, delivery and performance by each Group Member of the Related
        Documents to which it is a party and the consummation of the transactions
        contemplated thereby by such Group Member:

      

      (i) are
        within such Group Member’s respective corporate, limited liability company,
        partnership or other powers;

      

      (ii) on
        or
        prior to the Closing Date will have been duly authorized by all necessary
        corporate or other action, including the consent of stockholders where
        required;

      

      (iii) do
        not
        and will not (A) contravene or violate such Group Member’s Constituent
        Documents, (B) violate any other Requirement of Law applicable to such Group
        Member, or any order or decree of any Governmental Authority or arbitrator,
        except to the extent that, in the aggregate, such violation would not have
        a
        Material Adverse Effect, (C) conflict with or result in the breach of,
        constitute a default under, or result in or permit the termination or
        acceleration of, any Contractual Obligation of such Group Member, except
        for
        those that, in the aggregate, would not have a Material Adverse Effect or
        (D)
        result in the creation or imposition of any Lien upon any property of such
        Group
        Member (or any other Group Member) other than a Lien permitted under
Section
        8.2 (Liens, Etc.);
        and

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (iv) do
        not
        require the consent of, authorization by, approval of, notice to, or filing
        or
        registration with, any Governmental Authority or any other Person, other
        than
        those that (A) will have been obtained at the Closing Date, each of which
        will
        be in full force and effect on the Closing Date, none of which will on the
        Closing Date impose materially adverse conditions upon the exercise of control
        by the Borrower over any Group Members and (B) in the aggregate, if not
        obtained, would not have a Material Adverse Effect.

      

      (b) None
        of
        the Related Documents has been amended or modified in any respect and no
        provision therein has been waived, except in each case to the extent permitted
        by Section
        8.12 (Modification of Related Documents).

      

      (c) The
        Obligations constitute “Senior
        Debt”
as
        defined in the Subordinated Notes Indenture.

      

      ARTICLE
        V

      

      The
        Borrower agrees with the Lenders and the Administrative Agent to each of
        the
        following as long as any Obligation remains outstanding and, in each case,
        unless the Requisite Lenders otherwise consent in writing:

      

      Section
        5.1 Maximum
        Total Leverage Ratio

      

      The
        Borrower shall maintain, on the last day of each fiscal quarter set forth
        below,
        a Total Leverage Ratio of not more than the maximum ratio set forth below
        opposite such fiscal quarter:

       

      
        	
                FISCAL
                  QUARTER ENDING ON OR ABOUT

              	
                MAXIMUM
                  LEVERAGE RATIO

              
	
                October
                  31, 2007, January 31, 2008, April 30, 2008, July 31, 2008, October
                  31,
                  2008 and January 31, 2009

              	
                4.7
                  to 1

              
	
                April
                  30, 2009, July 31, 2009, October 31, 2009 and January 31,
                  2010

              	
                4.2
                  to 1

              
	
                April
                  30, 2010 and each fiscal quarter thereafter

              	
                4.0
                  to 1

              

      

       

      ARTICLE
        VI

      

      REPORTING
        COVENANTS

      

      The
        Borrower agrees with the Lenders and the Administrative Agent to each of
        the
        following, as long as any Obligation remains outstanding and, in each case,
        unless the Requisite Lenders otherwise consent in writing:

      

      Section
        6.1 Financial
        Statements

      

      The
        Borrower shall furnish to the Administrative Agent each of the
        following:

      

      (a) Quarterly
        Reports.
        Within
        45 days after the end of each of the first three fiscal quarters of each
        fiscal
        year, financial information regarding the Parent and its Subsidiaries consisting
        of Consolidated unaudited balance sheets as of the close of such quarter
        and the
        related statements of income and cash flow for such quarter and that portion
        of
        the fiscal year ending as of the close of such quarter, setting forth in
        comparative form the figures for the corresponding period in the prior year,
        in
        each case certified by the chief financial officer of the Borrower as fairly
        presenting the Consolidated financial condition of the Parent and its
        Subsidiaries as at the dates indicated and the results of their operations
        and
        cash flow for the periods indicated in accordance with GAAP (subject to the
        absence of footnote disclosure and normal year-end audit adjustments).

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (b) Annual
        Reports.
        Within
        90 days after the end of each fiscal year, financial information regarding
        the
        Parent and its Subsidiaries consisting of Consolidated balance sheets of
        the
        Parent and its Subsidiaries as of the end of such year and related statements
        of
        income and cash flows of the Parent and its Subsidiaries for such fiscal
        year,
        all prepared in conformity with GAAP and certified without qualification
        as to
        the scope of the audit or as to the Borrower being a going concern by the
        Borrower’s Accountants, together with the report of such accounting firm stating
        that (i) such Financial Statements fairly present the Consolidated financial
        condition of the Parent and its Subsidiaries as at the dates indicated and
        the
        results of their operations and cash flow for the periods indicated in
        conformity with GAAP applied on a basis consistent with prior years (except
        for
        changes with which the Borrower’s Accountants shall concur and that shall have
        been disclosed in the notes to the Financial Statements) and (ii) the
        examination by the Borrower’s Accountants in connection with such Consolidated
        Financial Statements has been made in accordance with generally accepted
        auditing standards, and accompanied by a certificate stating that in the
        course
        of the regular audit of the business of the Parent and its Subsidiaries such
        accounting firm has obtained no knowledge that a Default or Event of Default
        has
        occurred and is continuing, or, if in the opinion of such accounting firm,
        a
        Default or Event of Default has occurred and is continuing, a statement as
        to
        the nature thereof.

      

      (c) Compliance
        Certificate.
        Together with each delivery of any Financial Statement pursuant to clause (a)
        or
(b)
        above, a
        certificate of a Responsible Officer of the Borrower (each, a “Compliance
        Certificate”)
        (i)
        showing in reasonable detail the calculations used in determining (A) the
        Total
        Leverage Ratio, (B) the Senior Secured Leverage Ratio, (C) the Applicable
        Amount, (D) Excess Cash Flow (but only in connection with Financial Statements
        delivered pursuant to clause
        (b)
        above
        for the preceding four fiscal quarters) and (E) compliance with the financial
        covenant contained in Article
        V (Financial Covenant)
        and in
Section
        8.3 (Investments) (as
        applicable) and (ii) stating that no Default or Event of Default has occurred
        and is continuing or, if a Default or an Event of Default has occurred and
        is
        continuing, stating the nature thereof and the action that the Borrower proposes
        to take with respect thereto.

      

      (d) Other
        Collateral Updates.
        Together with each delivery of any Financial Statement pursuant to clause
        (a) or
        (b)
        above,
        a
        certificate of a Responsible Officer of the Borrower in form and substance
        reasonably satisfactory to the Administrative Agent that, to the knowledge
        of
        the Borrower, all certificates, statements, updates and other documents
        (including updated schedules) required to be delivered pursuant to the Pledge
        and Security Agreement by any Loan Party in the preceding fiscal quarter
        have
        been delivered thereunder (or such delivery requirement was otherwise duly
        waived or extended). The reporting requirements set forth in this clause
        (d)
        are in
        addition to, and are not intended to and shall not replace or otherwise modify,
        any obligation of any Loan Party under any Loan Document (including other
        notice
        or reporting requirements). Compliance with the reporting obligations in
        this
clause
        (d)
        shall
        only provide notice to the Administrative Agent and shall not, by itself,
        modify
        any obligation of any Loan Party under any Loan Document, update any Schedule
        to
        this Agreement or any schedule to any other Loan Document or cure, or otherwise
        modify in any way, any failure to comply with any covenant, or any breach
        of any
        representation or warranty, contained in any Loan Document or any other Default
        or Event of Default.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (e) Business
        Plan.
        As soon
        as approved by the board of directors of Parent and not later than 60 days
        after
        the end of each fiscal year, and containing substantially the types of financial
        information contained in the Projections, (i) the annual business plan of
        the
        Borrower, the Parent and its Subsidiaries for the next succeeding fiscal
        year
        approved by the Board of Directors of the Parent and (ii) forecasts prepared
        by
        management of the Parent for each of the succeeding fiscal years through
        the
        fiscal year in which the Term Loan Maturity Date is scheduled to occur,
        including, in each instance described in clauses
        (i)
        and
(ii)
        above,
        (x) a projected year-end Consolidated balance sheet and income statement
        and
        statement of cash flows and (y) a statement of all of the material assumptions
        on which such forecasts are based.

      

      Section
        6.2 Default
        Notices

      

      As
        soon
        as practicable, and in any event within five Business Days after a Responsible
        Officer of the Parent or the Borrower has actual knowledge of the existence
        of
        any Default, Event of Default or other event having had a Material Adverse
        Effect, the Borrower shall give the Administrative Agent notice specifying
        the
        nature of such Default or Event of Default or other event, including the
        anticipated effect thereof, which notice, if given by telephone, shall be
        promptly confirmed in writing on the next Business Day.

      

      Section
        6.3 Litigation

      

      Within
        30
        days after the later of (i) the service of process with respect thereto on
        any
        Loan Party or (ii) such time as exposure of the Loan Party could be reasonably
        determined, the Borrower shall give the Administrative Agent written notice
        of
        the commencement of all actions, suits and proceedings before any domestic
        or
        foreign Governmental Authority or arbitrator affecting any of the Group Members
        that (i) seeks injunctive or similar relief that could reasonably be expected
        to
        have a Material Adverse Effect or (ii) in the reasonable judgment of such
        Group
        Member, expose any of the Group Members to liability in an amount that, if
        adversely determined, would have a Material Adverse Effect.

      

      Section
        6.4 SEC
        Filings; Press Releases

      

      Promptly
        after the sending or filing thereof, the Borrower shall send notices to the
        Administrative Agent of (a) all reports and registration statements that
        the
        Borrower, the Parent or any of its Subsidiaries files with the Securities
        and
        Exchange Commission or any national or foreign securities exchange or the
        National Association of Securities Dealers, Inc. on Form 10-K, 10-Q or 8-K,
        and
        (b) all other statements concerning material changes or developments in the
        business of the Group Members made available by any Group Member to the public
        or its other creditors generally, provided,
        however,
        that
        the Borrower shall provide copies to the Administrative Agent of all (i)
        all
        documents listed in clauses
        (a)
        and
(b)
        above
        that are not publicly available or (ii) each document listed in clauses
        (a)
        and
(b)
        above
        upon the request of the Administrative Agent.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      Section
        6.5 Insurance

      

      As
        soon
        as is practicable and in any event within 90 days after the end of each fiscal
        year, the Borrower shall furnish the Administrative Agent (in sufficient
        copies
        for each of the Lenders) with (a) a report in form and substance reasonably
        satisfactory to the Administrative Agent and the Lenders outlining all material
        insurance coverage maintained as of the date of such report by any Loan Party
        and the duration of such coverage and (b) an insurance broker’s statement that
        all premiums then due and payable with respect to such coverage have been
        paid
        and confirming, with respect to any insurance maintained by any Loan Party,
        that
        the Administrative Agent has been named as loss payee or additional insured,
        as
        applicable.

      

      Section
        6.6 ERISA
        Matters

      

      The
        Borrower shall furnish the Administrative Agent (with sufficient copies for
        each
        of the Lenders) each of the following:

      

      (a) promptly
        and in any event within 30 days after any Group Member or any ERISA Affiliate
        knows or has reason to know that any ERISA Event has occurred, written notice
        describing such event;

      

      (b) promptly
        and in any event within 30 days after any Group Member or any ERISA Affiliate
        knows or has reason to know that a request for a minimum funding waiver under
        Section
        412
        of the
        Code has been filed with respect to any Title IV Plan or Multiemployer Plan,
        a
        written statement of a Responsible Officer of the Borrower describing such
        ERISA
        Event or waiver request and the action, if any, the Group Members and ERISA
        Affiliates propose to take with respect thereto and a copy of any notice
        filed
        with the PBGC or the IRS pertaining thereto; and

      

      (c) promptly
        and in any event within 5 days after the date that any Group Member or any
        ERISA
        Affiliate files a notice of intent to terminate any Title IV Plan, if such
        termination would require material additional contributions in order to be
        considered a standard termination within the meaning of Section
        4041(b)
        of
        ERISA, a copy of each notice.

      

      Section
        6.7 Environmental
        Matters

      

      The
        Borrower shall provide the Administrative Agent promptly and in any event
        within
        10 days after any Group Member learning of any of the following, written
        notice
        of each of the following:

      

      (a) that
        an
        Environmental Lien has been filed against any of the real or personal property
        of any Group Member;

      

      (b) commencement
        of any Environmental Action or notice that an Environmental Action will be
        filed
        against any Group Member;

      

      (c) the
        discovery by any Group Member of any condition that would reasonably be expected
        to result in collective Environmental Liabilities and costs whose Dollar
        Equivalent would have a Material Adverse Effect; 

      
        
          
          

        

        
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            LOAN AGREEMENT

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      (d) any
        proposed acquisition of stock, assets or real estate, any proposed leasing
        of
        property or any other action by any Group Member other than those the
        consequences of which, in the aggregate, have reasonable likelihood of
        subjecting the Group Members collectively to Environmental Liabilities and
        Costs
        that would have a Material Adverse Effect;

      

      (e) any
        proposed action by any Group Member or any proposed change in Environmental
        Laws
        that, in the aggregate, have a reasonable likelihood of requiring the Group
        Members to obtain additional environmental, health or safety Permits or make
        additional capital improvements to obtain compliance with Environmental Laws
        that, in the aggregate, would have a Material Adverse Effect or that shall
        subject the Group Members to additional Environmental Liabilities and Costs
        that
        would have a Material Adverse Effect;

      

      (f) notice
        of
        any violation citation or other administrative order received by any Loan
        Party
        that, in the aggregate, would have a Material Adverse Effect; and

      

      (g) upon
        written request by any Lender through the Administrative Agent, a report
        providing an update of the status of any environmental, health or safety
        compliance, hazard or liability issue identified in any notice or report
        delivered pursuant to this Agreement.

      

      Section
        6.8 Other
        Information

      

      The
        Borrower shall provide the Administrative Agent, or any Lender making a request
        through the Administrative Agent, with such other information respecting
        the
        business, properties, condition, financial or otherwise, or operations of
        the
        Borrower, the Parent or any Restricted Subsidiary as the Administrative Agent
        or
        such Lender through the Administrative Agent may from time to time reasonably
        request, including a Corporate Chart. Documents or notices required to be
        delivered pursuant to this clauses
        (a) and
        (b)
        of
Section
        6.1 (Financial Statements)
        and
Section
        6.3 (Litigation), which
        are
        made available via EDGAR, or any successor system of the Securities and Exchange
        Commission, in an annual or quarterly report of the Parent on Form 10-K or
        10-Q
        or in a current report of the Parent on Form 8-K, shall be deemed delivered
        to
        the Lenders on the date such documents are made so available; provided
        that,
        (i)
        the Parent shall have provided notice to the Administrative Agent that such
        document or notice is publicly available and (ii) upon the request of the
        Administrative Agent, the Borrower shall deliver paper copies (or in any
        other
        manner approved pursuant to Section
        11.8 (Notices, Etc.)
        of such
        documents or notices to the Administrative Agent.

      

      ARTICLE
        VII

      

      AFFIRMATIVE
        COVENANTS

      

      Each
        of
        the Parent and the Borrower agrees with the Lenders and the Administrative
        Agent
        to each of the following, as long as any Obligation remains outstanding and,
        in
        each case, unless the Requisite Lenders otherwise consent in
        writing:

      
        
          
          

        

        
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            LOAN AGREEMENT

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      Section
        7.1 Preservation
        of Corporate Existence, Etc.

      

      The
        Borrower and Parent each shall, and Parent shall cause each Restricted
        Subsidiary to, preserve and maintain its legal existence, rights (charter
        and
        statutory) and franchises, except as permitted by Sections
        8.4 (Sale of Assets),
        8.7
        (Restriction on Fundamental Changes)
        and
        Section 8.11 (Modification of Constituent Documents)
        and, in
        the case of statutory rights and franchises, for those that would not, in
        the
        aggregate, have a Material Adverse Effect..

      

      Section
        7.2 Compliance
        with Laws, Etc.

      

      The
        Borrower and Parent each shall, and Parent shall cause each Restricted
        Subsidiary to, comply with all applicable Requirements of Law, Contractual
        Obligations and Permits, except where the failure so to comply would not,
        in the
        aggregate, have a Material Adverse Effect.

      

      Section
        7.3 Conduct
        of Business

      

      The
        Borrower and Parent each shall, and Parent shall cause each Restricted
        Subsidiary to, (a) conduct its business in the ordinary course and (b) use
        its
        reasonable efforts, in the ordinary course and consistent with past practice,
        to
        preserve its business and the goodwill and business of the customers,
        advertisers, suppliers and others having business relations with the Borrower,
        the Parent or any Restricted Subsidiary, except in each case where the failure
        to comply with the covenants in each of clauses
        (a)
        and
(b)
        above
        would not, in the aggregate, have a Material Adverse Effect.

      

      Section
        7.4 Payment
        of Taxes, Etc.

      

      The
        Borrower and Parent each shall, and Parent shall cause each Restricted
        Subsidiary to, pay and discharge before the same shall become delinquent,
        all
        lawful governmental claims, taxes, assessments, charges and levies, except
        (i)
        where contested in good faith, by proper proceedings and adequate reserves
        therefor have been established on the books of the Borrower, the Parent or
        the
        appropriate Restricted Subsidiary in conformity with GAAP or (ii) where the
        failure to do so, individually or in the aggregate, would not result in a
        Material Adverse Effect.

      

      Section
        7.5 Maintenance
        of Insurance

      

      The
        Borrower and Parent each shall, and Parent shall cause each Restricted
        Subsidiary to, (a) maintain insurance with responsible and reputable insurance
        companies or associations in such amounts and covering such risks as is usually
        carried by companies engaged in similar businesses and owning similar properties
        in the same general areas in which the Borrower, the Parent or such Restricted
        Subsidiary operates, and such other insurance as may be required by any
        Collateral Document and (b) cause all such insurance relating to the Borrower,
        the Parent or any Loan Party to name the Administrative Agent on behalf of
        the
        Secured Parties as additional insured or loss payee, as appropriate, and
        to
        provide that no cancellation, material addition in amount or material change
        in
        coverage shall be effective until after 30 days’ written notice thereof to the
        Administrative Agent.

      
        
          
          

        

        
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            LOAN AGREEMENT

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            BRANDS FINANCE, INC.

        

      

      

      Section
        7.6 Access

      

      The
        Borrower and Parent each shall, and Parent shall cause each Restricted
        Subsidiary to, from time to time permit the Administrative Agent and the
        Lenders, or any agents or representatives thereof, within five Business Days
        after written notification of the same (except that during the continuance
        of an
        Event of Default, no such notice shall be required) to (a) examine and make
        copies of and abstracts from the records and books of account of the Borrower,
        the Parent and each Restricted Subsidiary, (b) visit the properties of the
        Borrower, the Parent and each Restricted Subsidiary, (c) discuss the affairs,
        finances and accounts of the Borrower, the Parent and each Restricted Subsidiary
        with any of their respective officers or directors and (d) communicate directly
        with any of its certified public accountants (including the Borrower’s
        Accountants), if any. The Borrower, the Parent and each Restricted Subsidiary
        shall authorize its certified public accountants (including the Borrower’s
        Accountants), if any, to disclose to the Administrative Agent or any Lender
        any
        and all financial statements and other information of any kind, as the
        Administrative Agent or any Lender reasonably requests and that such accountants
        may have with respect to the business, financial condition, results of
        operations or other affairs of the Borrower, the Parent and each Restricted
        Subsidiary.

      

      Section
        7.7 Keeping
        of Books

      

      The
        Borrower and Parent each shall, and Parent shall cause each Restricted
        Subsidiary to, keep proper books of record and account, in which full and
        correct entries shall be made in conformity with GAAP of all financial
        transactions and the assets and business of the Borrower, the Parent and
        each
        Restricted Subsidiary.

      

      Section
        7.8 Maintenance
        of Properties, Etc.

      

      The
        Borrower and Parent each shall, and Parent shall cause each Restricted
        Subsidiary to, maintain and preserve (a) in good working order and condition
        all
        of its properties necessary in the conduct of its business, (b) all rights,
        permits, licenses, approvals and privileges (including all Permits) used
        or
        useful or necessary in the conduct of its business and (c) all registered
        patents, trademarks, trade names, copyrights and service marks with respect
        to
        its business, except where failure to so maintain and preserve the items
        set
        forth in clauses
        (a),
        (b)
        and
(c)
        above
        would not, in the aggregate, have a Material Adverse Effect.

      

      Section
        7.9 Application
        of Proceeds

      

      The
        Borrower (and, to the extent distributed to them by the Borrower, the Parent
        and
        each Restricted Subsidiary) shall use the entire amount of the proceeds of
        the
        Term Loans as provided in Section
        4.13 (Use of Proceeds).

      

      Section
        7.10 Environmental

      

      The
        Borrower and Parent each shall, and Parent shall cause each Restricted
        Subsidiary to, comply in all material respects with Environmental Laws and,
        without limiting the foregoing, the Borrower shall, at its sole cost and
        expense, upon receipt of any notification or otherwise obtaining knowledge
        of
        any Release or other event that has any reasonable likelihood of any of the
        Borrower, the Parent or any Restricted Subsidiary incurring Environmental
        Liabilities and Costs that would have a Material Adverse Effect,
        (a) conduct, or pay for consultants to conduct, tests or assessments of
        environmental conditions at such operations or properties, including the
        investigation and testing of subsurface conditions and (b) take such Remedial
        Action and undertake such investigation or other action as required by
        Environmental Laws or as any Governmental Authority requires or as is
        appropriate and consistent with good business practice to address the Release
        or
        event and otherwise ensure compliance with Environmental Laws.

      
        
          
          

        

        
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            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      Section
        7.11 Additional
        Collateral and Guaranties

      

      Unless
        otherwise agreed by the Administrative Agent in its reasonable discretion,
        subject to Section
        7.13 (Post-Closing Covenants),
        to the
        extent not delivered to the Administrative Agent on or before the Closing
        Date
        (including in respect of after-acquired property and any Person (other than
        an
        Immaterial Subsidiary) that becomes a Wholly-Owned Domestic Subsidiary of
        any
        Loan Party after the Closing Date), the Borrower and Parent each agree promptly
        to do, or cause each other Group Member to do, each of the following (including
        in respect of any after-acquired property) in form and substance reasonably
        satisfactory to the Administrative Agent:

      

      (a) except
        for any Immaterial Subsidiary (other than with respect to its Stock or Stock
        Equivalents under clause
        (B)(1)
        below),
        cause such Group Member to (A) become a party to a Guaranty and applicable
        Collateral Documents or enter into new Collateral Documents and (B) take
        such
        other actions necessary or, in the reasonable judgment of the Administrative
        Agent, advisable to grant to the Administrative Agent for the benefit of
        the
        Secured Parties, subject only to the Liens permitted under Section
        8.2 (Liens, Etc.),
        a valid
        and enforceable perfected first-priority security interest in (1) all of
        the
        Stock and Stock Equivalents of such Borrower, the Parent or Restricted
        Subsidiary and (2) all property and assets of such Borrower, the Parent or
        Restricted Subsidiary, including, if applicable, the filing of UCC financing
        statements (or the applicable equivalent) and perfection (including, if
        applicable, the delivery of all certificates, together with undated powers
        or
        endorsements in blank) of security interest on Stock, Stock Equivalents,
        intercompany notes or debt Securities in such jurisdictions as may be required
        by the Collateral Documents, by any Requirement of Law or as may be reasonably
        requested by the Administrative Agent;

      

      (b) upon
        written request of the Administrative Agent, execute and deliver to the
        Administrative Agent, for the benefit of the Secured Parties, promptly and
        in
        any event not later than 60 days after receipt of such notice, a Mortgage
        (or
        similar security document) on any owned Real Property of any Loan Party with
        a
        fair market value of $10,000,000 or more, together with, if requested by
        the
        Administrative Agent, all Collateral Documents (including any Mortgage
        Supporting Documents) necessary or, in the reasonable judgment of the
        Administrative Agent, appropriate in the applicable jurisdiction to obtain
        the
        equivalent in such jurisdiction of a valid and enforceable perfected
        first-priority Lien on such Real Property, subject only to the Liens permitted
        under Section
        8.2 (Liens, Etc.);

      

      (c) to
        take
        such other actions necessary or, in the reasonable judgment of the
        Administrative Agent, advisable to ensure the validity or continuing validity
        of
        the guaranties or to create, maintain or perfect the security interest required
        to be granted pursuant to clauses
        (a) and
        (b)
        above,
        including such actions as may be required by the Collateral Documents or
        by any
        Requirement of Law or reasonably requested by the Administrative Agent;
        and

      
        
          
          

        

        
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            LOAN AGREEMENT

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            BRANDS FINANCE, INC.

        

      

      

      (d) if
        requested by the Administrative Agent, deliver to the Administrative Agent
        legal
        opinions relating to the matters described above, which opinions shall be
        in
        form and substance, and from counsel, reasonably satisfactory to the
        Administrative Agent;

      

      provided,
        however,
        that
        notwithstanding anything to the contrary contained in this Section
        7.11
        or in
Section
        3.1 (Conditions Precedent to Closing Date Term Loans),
        (i) any
        security interest required to be granted under the Loan Documents on any
        assets
        of a Group Member shall be subject to the Intercreditor Agreement and any
        Liens
        permitted under Section 8.2
        (Liens, Etc.),
        (ii)
        the Loan Documents shall not require any Group Member to enter into any control
        agreement for the perfection of security interests in Cash, Cash Equivalents
        or
        Securities in a deposit or securities account (other than any Cash Collateral
        Account) except to the extent the same is required under the terms of the
        Revolving Credit Agreement and (iii) the Loan Documents shall not require
        the
        creation or perfection of, pledges of or security interests in, or the obtaining
        of title insurance or legal opinions with respect to, any Excluded Assets or any
        leaseholds, commercial tort claims, motor vehicles or any other asset subject
        to
        certificates of title or letter of credit rights (other than any such rights
        constituting “supporting
        obligations”
        as
        defined in the UCC). Nothing herein shall restrict any Group Member that
        is not
        a Loan Party on the Closing Date from becoming a Loan Party; provided,
        however,
        that
        such Group Member shall have complied with the provisions of this Section
        7.11 as
        if it
        were a new Restricted Subsidiary.

      

      Section
        7.12 Designation
        of Subsidiaries

      

      The
        board
        of directors of the Parent may at any time designate any Restricted Subsidiary
        (other than the Borrower) as an Unrestricted Subsidiary or any Unrestricted
        Subsidiary as a Restricted Subsidiary; provided
        that (a)
        immediately before and after such designation, no Default or Event of Default
        shall have occurred and be continuing, (b) no Restricted Subsidiary may be
        designated an Unrestricted Subsidiary if it previously had been designated
        as an
        Unrestricted Subsidiary, (c) any such designation shall be deemed to be an
        Investment requiring compliance with Section
        8.3 (Investments)
        (or
        reduction in an outstanding Investment, in the case of a designation of an
        Unrestricted Subsidiary as a Restricted Subsidiary), on the date of such
        designation in an amount equal to the sum of (i) the Parent’s direct or
        indirect equity ownership percentage of the net worth of such designated
        Restricted Subsidiary immediately prior to such designation (such net worth
        to
        be calculated without regard to any guarantee provided by such designated
        Restricted Subsidiary of the Parent’s, Borrower’s or another Restricted
        Subsidiary’s Indebtedness) and (ii) without duplication, the aggregate
        principal amount of any Indebtedness owed by such designated Restricted
        Subsidiary to the Parent, Borrower or any other Restricted Subsidiary
        immediately prior to such designation, all calculated, except as set forth
        in
        the parenthetical to clause
        (i)
        above,
        on a Consolidated basis in accordance with GAAP, and (c) no Subsidiary may
        be designated as an Unrestricted Subsidiary if it is a “Restricted
        Subsidiary”
for
        the
        purpose of any other Indebtedness of the Parent. The designation of any
        Unrestricted Subsidiary as a Restricted Subsidiary shall constitute the
        incurrence at the time of designation of any Indebtedness or Liens of such
        Subsidiary existing at such time.

      

      Section
        7.13 Post-Closing
        Covenants

      

      Each
        of
        the Parent and the Borrower shall, and Parent shall cause each other Group
        Member to, comply with the terms and conditions set forth on Schedule
        7.13 (Post-Closing Covenants).

      
        
          
          

        

        
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            LOAN AGREEMENT

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      ARTICLE
        VIII

      

      NEGATIVE
        COVENANTS

      

      Each
        of
        the Parent and the Borrower agrees with the Lenders and the Administrative
        Agent
        to each of the following, as long as any Obligation or any Term Loan Commitment
        remains outstanding and, in each case, unless the Requisite Lenders otherwise
        consent in writing:

      

      Section
        8.1 Indebtedness

      

      The
        Parent shall not, nor shall it permit the Borrower or any Restricted Subsidiary
        to, directly or indirectly create, incur, assume or otherwise become or remain
        directly or indirectly liable with respect to any Indebtedness or Disqualified
        Stock, except for the following:

      

      (a) the
        Secured Obligations (other than in respect of Hedging Contracts not permitted
        to
        be incurred pursuant to clause
        (i)
        below)
        and Guaranty Obligations in respect thereto and Permitted Refinancings
        thereof;

      

      (b) the
        Revolving Credit Obligations and Permitted Refinancings thereof;

      

      (c) Indebtedness
        existing on the date of this Agreement and disclosed on Schedule 8.1
        (Existing Indebtedness)
        and
        Permitted Refinancings thereof;

      

      (d) Guaranty
        Obligations incurred by the Borrower or any Guarantor in respect of Indebtedness
        of the Borrower or any Guarantor that is otherwise permitted by this
Section
        8.1
        (other
        than clause
        (a)
        above);

      

      (e) Capital
        Lease Obligations, purchase money Indebtedness or other Indebtedness in respect
        of industrial revenue or similar bonds, in each case incurred by the Parent
        or a
        Restricted Subsidiary to finance the acquisition, construction or improvement
        of
        fixed assets and Permitted Refinancings thereof; provided,
        however,
        that
        the aggregate outstanding principal amount of all such Capital Lease
        Obligations, purchase money or other Indebtedness and Permitted Refinancings
        thereof at the date such Capital Lease Obligation, purchase money or other
        Indebtedness is incurred, and after giving effect thereto, shall not exceed
        the
        greater of (i) $50,000,000 and (ii) 2.0% of the Total Assets of the Borrower,
        the Parent and the Restricted Subsidiaries taken as a whole;

      

      (f) Attributable
        Debt incurred by the Parent or any Restricted Subsidiary pursuant to Permitted
        Sale Leaseback transactions; provided,
        however,
        that
        the aggregate principal amount all such of Attributable Debt outstanding
        at the
        date such Permitted Sale Leaseback transaction is consummated, and after
        giving
        effect thereto, shall not exceed the greater of (i) $50,000,000 and
        (ii) 2.0% of Total Assets of the Borrower and the Restricted Subsidiaries
        taken as a whole at any time;

      

      (g) Indebtedness
        arising from intercompany loans (i) among Loan Parties, (ii) among Qualified
        Restricted Subsidiaries, (iii) among Restricted Subsidiaries that are not
        Qualified Restricted Subsidiaries or Guarantors, (iv) from any Restricted
        Subsidiary to any Loan Party; provided,
        however,
        any
        such loans shall be subordinated to the Obligations on terms that expressly
        prohibit payment of any amount thereof (including interest thereon) at any
        time
        an Event of Default has occurred and is continuing, (v) from any Loan Party
        to
        any Qualified Restricted Subsidiary, (vi) from any Loan Party or Qualified
        Restricted Subsidiary to any Restricted Subsidiary that is not a Loan Party
        or
        Qualified Restricted Subsidiary or to any Unrestricted Subsidiary and (vii)
        from
        any Restricted Subsidiary that is not a Qualified Restricted Subsidiary or
        a
        Guarantor to any Unrestricted Subsidiary; provided,
        however,
        that,
        in the case of clauses
        (v),
        (vi)
        and
        (vii)
        above,
        the Investment in such intercompany loan to such Subsidiary is permitted
        under
        Section 8.3 (Investments);

      
        
          
          

        

        
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            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (h) Indebtedness
        of the Borrower and the Restricted Subsidiaries arising under any performance
        or
        surety bond entered into in the ordinary course of business;

      

      (i) Obligations
        under Hedging Contracts permitted under
        Section 8.15 (No Speculative Transactions);

      

      (j) other
        Indebtedness of the Parent and the Restricted Subsidiaries in an aggregate
        principal amount not to exceed $100,000,000 at any time outstanding;
provided,
        however,
        that
        Indebtedness of Persons which are not Loan Parties pursuant to this clause
        (j)
        shall
        not exceed an aggregate principal amount of $50,000,000 at any time
        outstanding;

      

      (k) Indebtedness
        of any Person that becomes a Restricted Subsidiary after the Closing Date
        in
        connection with a Permitted Acquisition and any Permitted Refinancing thereof;
        provided,
        that
        (i) such Indebtedness exists at the time such Person becomes a Restricted
        Subsidiary and is not created in contemplation of or in connection with such
        Person becoming a Restricted Subsidiary, (ii) after giving effect to the
        assumption of such Indebtedness (A) the
        Parent would be in compliance with the financial covenant contained in
Section
        5.1 (Financial Covenant)
        for the most recently ended Test Period, determined on a Pro Forma
        Basis,
        and (B)
        if such Indebtedness is secured by a Lien on any assets of such Person, the
        Senior Secured Leverage Ratio would be less than 3.0 to 1 on a Pro Forma
        Basis,
        (iii) such Indebtedness is not guaranteed in any respect by the Borrower,
        any
        Guarantor or any Restricted Subsidiary (other than by any such Person that
        so
        becomes a Restricted Subsidiary or is the survivor of a merger with such
        Person
        or any of its Subsidiaries) and (iv) except for Indebtedness consisting of
        Capital Lease Obligations, revenue bonds, purchase money Indebtedness or
        mortgages or other Liens on specific assets no portion of such Indebtedness
        matures prior to the Term Loan Maturity Date;

      

      (l) Indebtedness
        of the Borrower or the Restricted Subsidiaries arising from the issuance,
        for
        use in the ordinary course of business, of letters of credit in an aggregate
        amount not to exceed at any one time outstanding $75,000,000; and

      

      (m) Indebtedness
        of the Loan Parties not otherwise permitted under this Section
        8.1
        and
        Permitted Refinancings thereof; provided,
        however,
        that
        after giving effect to the occurrence of such Indebtedness (A) no Default
        or
        Event of Default shall have occurred and be continuing and (B) the
        Parent would be in compliance with the financial covenant contained in
Section
        5.1 (Financial Covenant)
        for the most recently ended Test Period, determined on a Pro Forma Basis
        after
        giving effect to the incurrence of such Indebtedness.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      Section
        8.2 Liens,
        Etc.

      

      The
        Parent shall not, nor shall it permit any Restricted Subsidiary to, create
        or
        suffer to exist, any Lien upon or with respect to any of their respective
        properties or assets, whether now owned or hereafter acquired, or assign,
        or
        permit any Restricted Subsidiary to assign, any right to receive income,
        except
        for the following:

      

      (a) Liens
        created pursuant to the Loan Documents;

      

      (b) Liens
        created pursuant to the Revolving Credit Loan Documents securing the Revolving
        Credit Obligations, subject to the terms of the Intercreditor
        Agreement;

      

      (c) Liens
        existing on the date of this Agreement and disclosed on Schedule
        8.2 (Existing Liens);

      

      (d) Customary
        Permitted Liens on the assets of the Borrower and the Restricted
        Subsidiaries;

      

      (e) purchase
        money Liens or Liens in favor of any Governmental Authority or a Subsidiary
        thereof granted by the Borrower or any of the Restricted Subsidiaries (including
        the interest of a lessor under a Capital Lease and purchase money Liens or
        Liens
        in favor of such Governmental Authority or Subsidiary thereof to which any
        property is subject at the time, on or after the date hereof, of the Borrower’s
        or such Restricted Subsidiary’s acquisition thereof) securing Indebtedness
        permitted under Section
        8.1(e) (Indebtedness)
        and
        limited in each case to the property purchased, constructed or improved with
        the
        proceeds of such purchase money or other Indebtedness or subject to such
        Capital
        Lease;

      

      (f) any
        Lien
        securing the renewal, extension, refinancing or refunding of any Indebtedness
        secured by any Lien permitted by clause
        (c)
        or
(e) above
        or this
clause
        (f)
        without
        any change in the assets subject to such Lien and to the extent such renewal,
        extension, refinancing or refunding is permitted by clause
        (c)
        or
(e)
        of
Section
        8.1(Indebtedness);

      

      (g) Liens
        in
        favor of lessors securing operating leases or, to the extent such transactions
        create a Lien hereunder, a Permitted Sale Leaseback, in each case to the
        extent
        such operating leases or Permitted Sale Leasebacks are permitted hereunder;
        

      

      (h) Liens
        existing on the assets of any Person that becomes a Restricted Subsidiary
        (or is
        a Restricted Subsidiary that survives a merger with such Person), or existing
        on
        assets acquired, pursuant to a Permitted Acquisition to the extent the Liens
        on
        such assets secure Indebtedness permitted by Section
        8.1(k) (Indebtedness);
        provided
        that
        such
        Liens attach at all times only to the same assets to which such Liens attached
        (and after-acquired property that is affixed or incorporated into the property
        covered by such Lien), and secure only the same Indebtedness or obligations
        that
        such Liens secured, immediately prior to such Permitted Acquisition and any
        Permitted Refinancing thereof; and

      

      (i) Liens
        not
        otherwise permitted by the foregoing clauses of this Section
        8.2
        securing
        obligations or other liabilities of any Restricted Subsidiary; provided,
        however,
        that
        the Dollar Equivalent of the aggregate outstanding amount of all such
        obligations and liabilities shall not exceed $50,000,000 at any
        time.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      Section
        8.3 Investments

      

      The
        Parent shall not, nor shall it permit Borrower or any Restricted Subsidiary
        to
        make or maintain, directly or indirectly, any Investment except for the
        following:

      

      (a) Investments
        existing on the date of this Agreement and disclosed on Error!
        Reference source not found.3
        (Existing Investments);

      

      (b) Investments
        in cash and Cash Equivalents;

      

      (c) Investments
        in payment intangibles, chattel paper (each as defined in the UCC) and Accounts,
        notes receivable and similar items arising or acquired in the ordinary course
        of
        business consistent with the past practice of the Group Members;

      

      (d) Investments
        received in settlement of amounts due to any Group Member effected in the
        ordinary course of business;

      

      (e) Investments
        (i) among Loan Parties, (ii) among Qualified Restricted Subsidiaries, (iii)
        among Restricted Subsidiaries that are not Qualified Restricted Subsidiaries
        or
        Guarantors, (iv) from any Restricted Subsidiary to any Loan Party, (v) from
        any
        Loan Party to any Qualified Restricted Subsidiary; provided,
        however,
        that at
        the date of, and after giving effect to any such Investment made pursuant
        to
        this clause
        (v)
        or
clause
        (i)(B)
        below,
        the Parent
        would be in compliance with the financial covenant contained in Section
        5.1 (Financial
        Covenant)
        for the most recently ended Test Period, determined on a Pro Forma Basis,
        and
provided
        further,
        that, the
        aggregate outstanding amount of all such Investments permitted pursuant to
        this
clause
        (v),
        together with all such Investments in Permitted Acquisitions permitted pursuant
        to clause
        (i)(B) below,
        shall not exceed $250,000,000;

      

      (f) Investments
        in respect of (i) Hedging Contracts permitted under Section
        8.15 (No Speculative Transactions) and
        (ii)
        any Note Hedge Transaction;

      

      (g) loans
        or
        advances to employees of the Borrower or any Restricted Subsidiary in the
        ordinary course of business as presently conducted other than any loans or
        advances that would be in violation of Section
        402
        of the
        Sarbanes-Oxley Act; provided,
        however,
        that
        the Dollar Equivalent of the aggregate principal amount of all loans and
        advances permitted pursuant to this clause
        (g) shall
        not
        exceed $10,000,000 at any time;

      

      (h) Guaranty
        Obligations permitted by Section
        8.1 (Indebtedness);
        

      

      (i) Investments
        in any Person that becomes a Loan Party or a Qualified Restricted Subsidiary
        or
        in any assets that are acquired by a Loan Party or a Qualified Restricted
        Subsidiary, in each case, in connection with any Permitted Acquisition
        consummated after the Closing Date; provided,
        however,
        that at
        the date of, and after giving effect to any such Investment made pursuant
        to
        this clause
        (i),
        the
Parent
        would be in compliance with the financial covenant contained in Section
        5.1 (Financial Covenant)
        for the most recently ended Test Period, determined on a Pro Forma Basis,
        and
provided
        further,
        that, (A) the fair market value (determined in good faith by the Borrower)
        of
        such Investments (or portion thereof) in Persons that become Loan Parties
        or in
        assets that are acquired by Loan Parties shall not exceed $500,000,000 in
        the
        aggregate, except for any such Investment to the extent the consideration
        for
        which consists of Qualified Capital Stock of the Parent and (B) the fair
        market
        value (determined in good faith by the Borrower) of such Investments (or
        portion
        thereof) in Persons that become Qualified Restricted Subsidiaries or in assets
        that are acquired by Qualified Restricted Subsidiaries shall not, together
        with all such Investments permitted pursuant to clause
        (e)(v) above,
        exceed
        $250,000,000 in the aggregate (it
        being
        understood that additional Investments in connection with Permitted
        Acquisitions, including Investments in Restricted Subsidiaries that are not
        Loan
        Parties or Qualified Restricted Subsidiaries, may be made in reliance on
        clause
        (j)
        below);
        and

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (j) Investments
        in an amount not to exceed at the date of, and after giving effect to such
        Investment, the sum of (i) the greater of (a) $75,000,000 and (b) 2.5% of
        the
        Total Assets of the Borrower and the Restricted Subsidiaries taken as a whole
        at
        such time and (ii) the Applicable Amount in the aggregate at any time
        outstanding.

      

      Section
        8.4 Sale
        of Assets

      

      The
        Parent shall not, nor shall it permit Borrower or any Restricted Subsidiary
        to,
        sell, convey, transfer, lease or otherwise dispose of, any of their respective
        assets or any interest therein (including the sale or factoring at maturity
        or
        collection of any accounts) to any Person, or permit or suffer any other
        Person
        to acquire any interest in any of their respective assets or, except in the
        case
        of the Borrower, issue or sell any shares of their Stock or any Stock
        Equivalents (any such disposition being an “Asset
        Sale”),
        except for the following:

      

      (a) the
        sale
        or disposition of Cash Equivalents, Inventory or other assets, in each case
        in
        the ordinary course of business;

      

      (b) the
        sale
        or disposition of equipment that has become obsolete, damaged, surplus or
        otherwise no longer used or useful in the ordinary course of business or
        is
        replaced in the ordinary course of business; 

      

      (c) any
        Recovery Event (without giving effect to the limitations in the definition
        thereof); 

      

      (d) sales
        or
        other dispositions without recourse and in the ordinary course of business
        of
        overdue accounts receivable in connection with the compromise or collection
        thereof; 

      

      (e) the
        licensing, sublicensing or other similar ordinary course transfers (but not
        sales) of intellectual property rights (on an exclusive or non-exclusive
        basis)
        to the extent that the foregoing occurs on an arms-length basis;

      

      (f) the
        settlement, release or surrender of tort or other litigation claims;

      

      (g) asset
        contributions for no cash consideration (or its equivalent) to the extent
        constituting an Investment permitted by Section
        8.3(e) (Investments);

      

      (h) Assets
        Sales (i) among the Loan Parties, (ii) among Qualified Restricted Subsidiaries,
        and (iii) among Restricted Subsidiaries that are not Qualified Restricted
        Subsidiaries or Loan Parties;

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (i) a
        true
        lease or sublease of Real Property not constituting Indebtedness and not
        constituting a Sale Leaseback;

      

      (j) dispositions
        of property pursuant to a Permitted Sale Leaseback; provided,
        however,
        that
        with respect to any such Asset Sale pursuant to this clause
        (j),
        an
        amount equal to all Net Cash Proceeds of such Asset Sale are applied to the
        payment of the Obligations as set forth in, and to the extent required by,
        Section
        2.7 (Mandatory Prepayments);

      

      (k) as
        long
        as no Default or Event of Default is continuing or would result therefrom,
        any
        other Asset Sale for Fair Market Value, 75% of which shall be payable in
        cash
        upon such sale; provided,
        however,
        that
        with respect to any such Asset Sale pursuant to this clause
        (k),
        (i) the
        Dollar Equivalent of the aggregate consideration received during any fiscal
        year
        for all such Asset Sales shall not exceed 2.0% of the Total Assets of the
        Borrower and the Restricted Subsidiaries taken as a whole at any time
        outstanding and (ii) an amount equal to all Net Cash Proceeds of such Asset
        Sale
        are applied to the payment of the Obligations as set forth in, and to the
        extent
        required by, Section
        2.7 (Mandatory Prepayments);

      

      (l) any
        other
        sale or transfer or series of related sales or transfers that result in cash
        consideration of less than $1,000,000;

      

      (m) termination,
        sale or closure of up to 500 stores, subleases and franchises per annum,
        net of
        those acquired or opened; provided,
        however,
        that at
        no time shall the aggregate number of stores owned or franchised by the Group
        Members be less than 3,500;

      

      (n) transfers
        to insurers as part of insurance settlements for losses to governmental
        authority for condemned property; and

      

      (o) dispositions
        listed on Schedule
        8.4 (Asset Sales).

      

      Section
        8.5 Restricted
        Payments

      

      The
        Parent shall not, and shall not permit Borrower or any Restricted Subsidiary
        to,
        directly or indirectly, declare, order, pay, make or set apart any sum for
        any
        Restricted Payment except for the following:

      

      (a) Restricted
        Payments by any Subsidiary of the Parent to any Loan Party;

      

      (b) dividends
        and distributions declared and paid on the common Stock of the Parent and
        payable only in common Stock of the Parent; 

      

      (c) (i)
        payments of cash upon conversion, redemption, repayment, prepayment or
        repurchase of any Indebtedness to the extent such payments would be permitted
        under Section
        8.6(e) (Prepayment of Indebtedness),
        (ii)
        deliveries of the Borrower’s common stock upon conversion of any Qualified
        Refinancing Indebtedness to equity, (iii) payments of cash in respect of
        any
        interest payments due on any Qualified Refinancing Indebtedness, (iv) Restricted
        Payments in respect of any Note Hedge Transaction (including, but not limited
        to, the purchase and exercise of such Note Hedge Transaction), and (v)
        Restricted Payments in respect of any warrant transaction entered into
        concurrently with any Note Hedge Transaction;

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (d) as
        long
        as no Default or Event of Default has occurred and is continuing or would
        result
        therefrom, Restricted Payments in an amount not to exceed, together with
        any
        payment made pursuant to clause
        (g) of
        Section
        8.6 (Prepayment of Indebtedness),
        the sum
        of (i) $50,000,000 and (ii) the Applicable Amount in the aggregate at any
        time
        outstanding; 

      

      (e) repurchases
        of Parent stock in connection with the exercise of employee stock options
        in the
        ordinary course of business on a basis that is “net of taxes” or any equivalent
        gross exercise and repurchase to fund tax liabilities to the extent required
        under applicable employee contractual arrangements; and

      

      (f) dividends
        or distributions by Restricted Subsidiaries to another Restricted Subsidiary and
        to minority investors in such Restricted Subsidiary, in each case to the
        extent
        of their interest therein, provided,
        however,
        that
        any such Restricted Payment shall be made pro
        rata
        among
        all such investors.

      

      Section
        8.6 Prepayment
        of Indebtedness

      

      The
        Parent shall not, nor shall it permit Borrower or any Restricted Subsidiary
        to,
        prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled
        maturity thereof in any manner, or make any payment in violation of any
        subordination terms of, any Indebtedness (each an “Optional
        Debt Prepayment”);
        provided,
        however,
        that
        the Borrower, the Parent, and each Restricted Subsidiary may (a) prepay the
        Obligations in accordance with the terms of this Agreement, (b) prepay
        Indebtedness under the Target Credit Agreement with the proceeds of the Closing
        Date Term Loans hereunder, (c) prepay any intercompany Indebtedness permitted
        under Section
        8.1(g)
        and
(j)
        (Indebtedness),
        (d)
        enter into any Permitted Refinancing permitted under Section
        8.1 (Indebtedness),
        (e) as
        long as no Default or Event of Default has occurred and is continuing or
        would
        result therefrom, repay, redeem, purchase, defease or otherwise satisfy prior
        to
        the scheduled maturity thereof in any matter any senior unsecured, senior
        subordinated or other subordinated Indebtedness in an aggregate principal
        amount
        not to exceed $450,000,000; provided
        that,
        after giving effect to such payment, (i) the Senior Secured Leverage Ratio
        would
        not be greater than 2.0 to 1 on a Pro Forma Basis, and (ii) the
        Parent would be in compliance with the financial covenant contained in
Section
        5.1 (Financial Covenant)
        for the most recently ended Test Period, determined on a Pro Forma
        Basis,
        (f) to
        the extent not otherwise permitted hereby and as long as no Default or Event
        of
        Default has occurred and is continuing or would result therefrom, prepay
        Indebtedness of any Foreign Subsidiary in an amount not to exceed in the
        aggregate $10,000,000, and (g) to the extent not otherwise permitted hereby
        and
        as long as no Default or Event of Default has occurred and is continuing
        or
        would result therefrom, prepay Indebtedness in an amount not to exceed, together
        with any Restricted Payment made pursuant to Section
        8.5(d) (Restricted Payments),
        the sum
        of (i) $50,000,000 and (ii) the Applicable Amount in the aggregate at any
        time
        outstanding.

      

      Section
        8.7 Restriction
        on Fundamental Changes

      

      Except
        in
        connection with Investments in Permitted Acquisitions made pursuant to
Section
        8.3 (Investments)
        and
        Asset Sales expressly permitted under Section
        8.4 (Sale of Assets),
        the
        Parent shall not, nor shall it permit Borrower or any Restricted Subsidiary
        to,
        enter into any transaction of merger or consolidation, or liquidate, wind-up
        or
        dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
        lease or sub-lease (as lessor or sublessor), exchange, transfer or otherwise
        dispose of, in one transaction or a series of transactions, all or any part
        of
        its business, assets or property of any kind whatsoever, whether real, personal
        or mixed and whether tangible or intangible, whether now owned or hereafter
        acquired, or acquire by purchase or otherwise (other than purchases or other
        acquisitions of inventory, materials and equipment and Capital Expenditures
        in
        the ordinary course of business) the business, property or fixed assets of,
        or
        stock or other evidence of beneficial ownership of, any Person or any division
        or line of business or other business unit of any Person, except:

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (a) any
        Loan
        Party may be merged with or into any other Loan Party, or be liquidated,
        wound
        up or dissolved, or all or any part of its business, property or assets may
        be
        conveyed, sold, leased, transferred or otherwise disposed of, in one transaction
        or a series of transactions, to any other Loan Party; provided,
        in the
        case of such a merger, the continuing or surviving Person shall remain a
        Loan
        Party, provided,
        however,
        that if
        the Borrower is merged into another Loan Party, the Borrower must be the
        surviving entity;

      

      (b) any
        Restricted Subsidiary that is not a Loan Party may be merged with or into
        any
        other Restricted Subsidiary that is not a Loan Party or into any Loan Party,
        or
        be liquidated, wound up or dissolved, or all or any part of its business,
        property or assets may be conveyed, sold, leased, transferred or otherwise
        disposed of, in one transaction or a series of transactions, to any other
        Restricted Subsidiary that is not a Loan Party or to a Loan Party;
        and

      

      (c) in
        the
        case of either clause
        (a) or
        (b)
        above,
        prior to and after giving effect to any proposed transaction, no Default
        or
        Event of Default shall occur or be continuing.

      

      Section
        8.8 Change
        in Nature of Business

      

      (a) The
        Parent shall not, and shall not permit Borrower or any of the Restricted
        Subsidiaries to, make any material change in the nature or conduct of its
        business as carried on at the date hereof, whether in connection with a
        Permitted Acquisition or otherwise.

      

      (b) The
        Parent shall not engage in any business (but may incur liabilities) or hold
        any
        assets; provided,
        however,
        the
        Parent may (i) hold shares of Stock of the Borrower or Unrestricted Subsidiaries
        and (ii) have employees and hold assets used to provide administrative and
        operational support.

      

      Section
        8.9 Transactions
        with Affiliates

      

      Other
        than as set forth on Schedule
        8.9,
        the
        Parent shall not, nor shall it permit Borrower or any Restricted Subsidiary
        to
        effect any transaction with any of its respective Affiliates that is not
        a
        Restricted Subsidiary on a basis less favorable to the Borrower or such
        Restricted Subsidiary than would at the time be obtainable for a comparable
        transaction in arms-length dealing with an unrelated third party.

      

      Section
        8.10 Limitations
        on Restrictions on Subsidiary Distributions; No New Negative
        Pledge

      

      Except
        pursuant to the Loan Documents and any agreements governing purchase money
        Indebtedness or Capital Lease Obligations permitted by Section
        8.1(c) or
        (e)
        (Indebtedness) (in
        the
        case of agreements permitted by such clauses, any prohibition or limitation
        shall only be effective against the assets financed thereby), the Parent
        shall
        not, and shall not permit the Borrower or any of the Restricted Subsidiaries
        to,
        (a) agree to enter into or suffer to exist or become effective any consensual
        encumbrance or restriction of any kind on the ability of such Restricted
        Subsidiary, other than customary provisions in Joint Venture agreements and
        other similar agreements relating solely to the securities, assets and revenues
        of such Joint Venture, to pay dividends or make any other distribution or
        transfer of funds or assets or make loans or advances to or other Investments
        in, or pay any Indebtedness owed to, the Borrower or any other Restricted
        Subsidiary or (b) enter into or suffer to exist or become effective any
        agreement prohibiting or limiting the ability of any Restricted Subsidiary,
        other than customary provisions in Joint Venture agreements and other similar
        agreements relating solely to the securities, assets and revenues of such
        Joint
        Venture, to create, incur, assume or suffer to exist any Lien upon any of
        its
        property, assets or revenues, whether now owned or hereafter acquired, to
        secure
        the Obligations, including any agreement requiring any other Indebtedness
        or
        Contractual Obligation to be equally and ratably secured with the
        Obligations.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      Section
        8.11 Modification
        of Constituent Documents

      

      The
        Parent shall not, nor shall it permit any Restricted Subsidiary to, change
        its
        capital structure (including in the terms of its outstanding Stock) or otherwise
        amend its Constituent Documents, except for changes and amendments that do
        not
        materially affect the rights and privileges of any Restricted Subsidiary
        and do
        not materially affect the interests of the Secured Parties under the Loan
        Documents or in the Collateral.

      

      Section
        8.12 Modification
        of Related Documents

      

      The
        Parent shall not, nor shall it permit any Restricted Subsidiary to, alter,
        rescind, terminate, amend, supplement, waive or otherwise modify any provision
        of any Related Document (except for modifications that do not materially
        affect
        the rights and privileges of any Restricted Subsidiary under such Related
        Document and that do not materially affect the interests of the Secured Parties
        under the Loan Documents or in the Collateral).

      

      Section
        8.13 Accounting
        Changes; Fiscal Year

      

      The
        Parent shall not, nor shall it permit the Borrower to, change its (a) accounting
        treatment and reporting practices or tax reporting treatment, except as required
        by GAAP or any Requirement of Law and disclosed to the Lenders and the
        Administrative Agent or (b) fiscal year, in each case other than as set forth
        on
Schedule
        8.13 (Accounting Changes; Fiscal Year).

      

      Section
        8.14 Margin
        Regulations

      

      The
        Parent shall not, nor shall it permit any Restricted Subsidiary to, use all
        or
        any portion of the proceeds of any credit extended hereunder to purchase
        or
        carry margin stock (within the meaning of Regulation U of the Federal Reserve
        Board) in contravention of Regulation U of the Federal Reserve
        Board.

      

      Section
        8.15 No
        Speculative Transactions

      

      The
        Parent shall not, nor shall it permit any Restricted Subsidiary to, engage
        in
        any speculative transaction or in any transaction involving Hedging Contracts
        except for the sole purpose of hedging in the normal course of business and
        consistent with industry practices; provided,
        for the
        avoidance of doubt, the provisions of this Section
        8.15
        shall
        not apply to (a) any Note Hedge Transaction or (b) any warrant transaction
        entered into concurrently with any Note Hedge Transaction.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      Section
        8.16 Compliance
        with ERISA

      

      The
        Parent shall not, nor shall it permit any Restricted Subsidiary or any ERISA
        Affiliate to, cause or permit to occur an ERISA Event (a) that could result
        in
        the imposition of a Lien that is not permitted by Section
        8.2(i) (Liens)
        or (b)
        that would have a Material Adverse Effect in the aggregate.

      

      ARTICLE
        IX

      

      EVENTS
        OF DEFAULT

      

      Section
        9.1 Events
        of Default

      

      Each
        of
        the following events shall be an Event of Default:

      

      (a) the
        Borrower shall fail to pay any principal of any Term Loan when the same becomes
        due and payable; or

      

      (b) the
        Borrower shall fail to pay any interest on any Term Loan, any fee under any
        of
        the Loan Documents or any other Obligation (other than one referred to in
        clause
        (a)
        above)
        and such non-payment continues for a period of three Business Days after
        the due
        date therefor; or

      

      (c) any
        representation or warranty made or deemed made by any Loan Party in any Loan
        Document or by any Loan Party (or any of its officers) in connection with
        any
        Loan Document shall prove to have been incorrect in any material respect
        when
        made or deemed made; or

      

      (d) any
        Loan
        Party shall fail to perform or observe (i) any term, covenant or agreement
        contained in Sections 6.2 (Default
        Notices),
        7.1
        (Preservation of Corporate Existence, Etc.),
        7.6
        (Access),
        7.9 (Application
        of Proceeds),
        7.11
        (Additional Collateral and Guaranties),
        7.12
        (Designation of Subsidiaries)
        or
Article
        VIII (Negative Covenants), (ii)
        any
        term, covenant or agreement contained in Section
        6.1 (Financial Statements)
        if such
        failure under this clause
        (ii)
        shall
        remain unremedied for 15 days after the earlier of (A) the date on which
        a
        Responsible Officer of the Borrower becomes aware of such failure and (B)
        the
        date on which written notice thereof shall have been given to the Borrower
        by
        the Administrative Agent or any Lender or (iii) any other term, covenant
        or
        agreement contained in this Agreement or in any other Loan Document if such
        failure under this clause
        (iii)
        shall
        remain unremedied for 30 days after the earlier of (A) the date on which
        a
        Responsible Officer of the Borrower becomes aware of such failure and (B)
        the
        date on which written notice thereof shall have been given to the Borrower
        by
        the Administrative Agent or any Lender; or

      

      (e) (i)
        the
        Borrower, the Parent or any Restricted Subsidiary shall fail to make any
        payment
        on any Indebtedness of the Borrower, the Parent or any such Restricted
        Subsidiary (other than the Obligations) or any Guaranty Obligation in respect
        of
        Indebtedness of any other Person, and, in each case, such failure relates
        to
        Indebtedness having a principal amount of $25,000,000 or more, when the same
        becomes due and payable (whether by scheduled maturity, required prepayment,
        acceleration, demand or otherwise), (ii) any other event shall occur or
        condition shall exist under any agreement or instrument relating to any such
        Indebtedness, if the effect of such event or condition is to accelerate,
        or to
        permit the acceleration of, the maturity of such Indebtedness or (iii) any
        such
        Indebtedness shall become or be declared to be due and payable, or be required
        to be prepaid or repurchased (other than by a regularly scheduled required
        prepayment), prior to the stated maturity thereof; provided,
        that
        other than with respect to payments defaults, any default under the Revolving
        Credit Agreement shall remain unremedied for 30 days; or

      
        
          
          

        

        
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            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (f) (i)
        the
        Borrower, the Parent or any Restricted Subsidiary shall generally not pay
        its
        debts as such debts become due, shall admit in writing its inability to pay
        its
        debts generally or shall make a general assignment for the benefit of creditors,
        (ii) any proceeding shall be instituted by or against the Borrower, the Parent
        or any Restricted Subsidiary seeking to adjudicate it as bankrupt or insolvent,
        or seeking liquidation, winding up, reorganization, arrangement, adjustment,
        protection, relief or composition of it or its debts, under any Requirement
        of
        Law relating to bankruptcy, insolvency or reorganization or relief of debtors,
        or seeking the entry of an order for relief or the appointment of a custodian,
        receiver, trustee or other similar official for it or for any substantial
        part
        of its property; provided, however, that, in the case of any such proceedings
        instituted against the Borrower, the Parent or any Restricted Subsidiary
        (but
        not instituted by the Borrower, the Parent or any Restricted Subsidiary)
        either
        such proceedings shall remain undismissed or unstayed for a period of 60
        days or
        more or any action sought in such proceedings shall occur or (iii) the Borrower,
        the Parent or any Restricted Subsidiary shall take any corporate action to
        authorize any action set forth in clauses
        (i)
        and
(ii)
        above;
        or

      

      (g) any
        money
        judgment, writ or warrant of attachment or similar process involving
        individually or in the aggregate, an amount in excess of $25,000,000 to the
        extent not adequately covered by insurance shall be entered or filed against
        the
        Borrower, the Parent or any of the Restricted Subsidiaries or any of their
        respective assets and shall remain unpaid, undischarged, unvacated, unbonded
        or
        unstayed for a period of sixty days; or

      

      (h) an
        ERISA
        Event shall occur and the Dollar Equivalent of the amount of all liabilities
        and
        deficiencies resulting therefrom, whether or not assessed, exceeds $25,000,000
        in the aggregate; or

      

      (i) any
        provision of any Loan Document after delivery thereof shall for any reason
        fail
        or cease to be valid and binding on, or enforceable against, any Loan Party
        party thereto, or any Loan Party shall so state in writing; or

      

      (j) any
        Collateral Document shall for any reason fail or cease to create a valid
        and
        enforceable Lien on any Collateral purported to be covered thereby or, except
        as
        permitted by the Loan Documents, such Lien shall fail or cease to be a perfected
        Lien having the priority set forth in the Intercreditor Agreement, or any
        Loan
        Party shall so state in writing; or

      

      (k) there
        shall occur any Change of Control.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      Section
        9.2 Remedies

      

      During
        the continuance of any Event of Default, the Administrative Agent (a) may,
        and, at the request of the Requisite Lenders, shall, by notice to the Borrower
        declare that all or any portion of the Term Loan Commitments be terminated,
        whereupon the obligation of each Lender to make any Term Loan shall immediately
        terminate and (b) may and, at the request of the Requisite Lenders, shall,
        by notice to the Borrower, declare the Term Loans, all interest thereon and
        all
        other amounts and Obligations payable under this Agreement to be forthwith
        due
        and payable, whereupon the Term Loans, all such interest and all such amounts
        and Obligations shall become and be forthwith due and payable, without
        presentment, demand, protest or further notice of any kind, all of which
        are
        hereby expressly waived by the Borrower; provided,
        however,
        that
        upon the occurrence of the Events of Default specified in Section
        9.1(f) (Events of Default),
        (x) the
        Term Loan Commitments of each Lender to make Term Loans shall each automatically
        be terminated and (y) the Term Loans, all such interest and all such amounts
        and
        Obligations shall automatically become and be due and payable, without
        presentment, demand, protest or any notice of any kind, all of which are
        hereby
        expressly waived by the Borrower. In addition to the remedies set forth above,
        the Administrative Agent may exercise any remedies provided for by the
        Collateral Documents in accordance with the terms thereof or any other remedies
        provided by applicable law.

      

      Section
        9.3 Rescission

      

      If
        at any
        time after termination of the Term Loan Commitments or acceleration of the
        maturity of the Term Loans, the Borrower shall pay all arrears of interest
        and
        all payments on account of principal of the Term Loans that shall have become
        due otherwise than by acceleration (with interest on principal and, to the
        extent permitted by law, on overdue interest, at the rates specified herein)
        and
        all Events of Default and Defaults (other than non-payment of principal of
        and
        accrued interest on the Term Loans due and payable solely by virtue of
        acceleration) shall be remedied or waived pursuant to Section
        11.1 (Amendments, Waivers, Etc.),
        then
        upon the written consent of the Requisite Lenders and written notice to the
        Borrower, the termination of the Term Loan Commitments or the acceleration
        and
        their consequences may be rescinded and annulled; provided,
        however,
        that
        such action shall not affect any subsequent Event of Default or Default or
        impair any right or remedy consequent thereon. The provisions of the preceding
        sentence are intended merely to bind the Lenders to a decision that may be
        made
        at the election of the Requisite Lenders, and such provisions are not intended
        to benefit the Borrower and do not give the Borrower the right to require
        the
        Lenders to rescind or annul any acceleration hereunder, even if the conditions
        set forth herein are met.

      

      ARTICLE
        X

      

      THE
        ADMINISTRATIVE AGENT

      

      Section
        10.1 Authorization
        and Action

      

      (a) Each
        Lender hereby appoints Citi as the Administrative Agent hereunder and each
        Lender authorizes the Administrative Agent to take such action as agent on
        its
        behalf and to exercise such powers under this Agreement and the other Loan
        Documents as are delegated to the Administrative Agent under such agreements
        and
        to exercise such powers as are reasonably incidental thereto. Without limiting
        the foregoing, each Lender hereby authorizes the Administrative Agent to
        execute
        and deliver, and to perform its obligations under, each of the Loan Documents
        to
        which the Administrative Agent is a party, to exercise all rights, powers
        and
        remedies that the Administrative Agent may have under such Loan Documents
        and,
        in the case of the Collateral Documents, to act as agent for the Lenders
        and the
        other Secured Parties under such Collateral Documents.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (b) As
        to any
        matters not expressly provided for by this Agreement and the other Loan
        Documents (including enforcement or collection), the Administrative Agent
        shall
        not be required to exercise any discretion or take any action, but shall
        be
        required to act or to refrain from acting (and shall be fully protected in
        so
        acting or refraining from acting) upon the instructions of the Requisite
        Lenders, and such instructions shall be binding upon all Lenders; provided,
        however,
        that
        the Administrative Agent shall not be required to take any action that (i)
        the
        Administrative Agent in good faith believes exposes it to personal liability
        unless the Administrative Agent receives an indemnification reasonably
        satisfactory to it from the Lenders with respect to such action or (ii) is
        contrary to this Agreement or applicable law. The Administrative Agent agrees
        to
        give to each Lender prompt notice of each notice given to it by any Loan
        Party
        pursuant to the terms of this Agreement or the other Loan
        Documents.

      

      (c) In
        performing its functions and duties hereunder and under the other Loan
        Documents, the Administrative Agent is acting solely on behalf of the Lenders
        except to the limited extent provided in Section
        2.5(b),
        and its
        duties are entirely administrative in nature. The Administrative Agent does
        not
        assume and shall not be deemed to have assumed any obligation other than
        as
        expressly set forth herein and in the other Loan Documents or any other
        relationship as the agent, fiduciary or trustee of or for any Lender or other
        holder of any Obligation. The Administrative Agent may perform any of its
        duties
        under any Loan Document by or through its agents or employees.

      

      (d) The
        Arranger shall have no obligations or duties whatsoever in such capacity
        under
        this Agreement or any other Loan Document and shall incur no liability hereunder
        or thereunder in such capacity.

      

      Section
        10.2 Administrative
        Agent’s Reliance, Etc.

      

      None
        of
        the Administrative Agent, any of its Affiliates or any of their respective
        directors, officers, agents or employees shall be liable for any action taken
        or
        omitted to be taken by it, him, her or them under or in connection with this
        Agreement or the other Loan Documents, except for its, his, her or their
        own
        gross negligence or willful misconduct. Without limiting the foregoing, the
        Administrative Agent (a) may rely on the Register to the extent set forth
        in
Section
        2.5 (Evidence of Debt),
        (b) may
        consult with legal counsel (including counsel to the Borrower or any other
        Loan
        Party), independent public accountants and other experts selected by it and
        shall not be liable for any action taken or omitted to be taken in good faith
        by
        it 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 by or
        on
        behalf of the Borrower, the Parent or any of its Subsidiaries in or in
        connection with this Agreement or any other Loan Document, (d) shall not
        have
        any duty to ascertain or to inquire either as to the performance or observance
        of any term, covenant or condition of this Agreement or any other Loan Document,
        as to the financial condition of any Loan Party or as to the existence or
        possible existence of any Default or Event of Default, (e) shall not be
        responsible to any Lender for the due execution, legality, validity,
        enforceability, genuineness, sufficiency or value of, or the attachment,
        perfection or priority of any Lien created or purported to be created under
        or
        in connection with, this Agreement, any other Loan Document 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 any other Loan Document
        by
        acting upon any notice, consent, certificate or other instrument or writing
        (which writing may be a telecopy or electronic mail) or any telephone message
        believed by it to be genuine and signed or sent by the proper party or
        parties.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      Section
        10.3 Posting
        of Approved Electronic Communications

      

      (a) Each
        of
        the Lenders, the Parent and the Borrower agree, and the Parent shall cause
        each
        Guarantor to agree, that the Administrative Agent may, but shall not be
        obligated to, make the Approved Electronic Communications available to the
        Lenders by posting such Approved Electronic Communications on IntraLinksTM or a
        substantially similar electronic platform chosen by the Administrative Agent
        to
        be its electronic transmission system (the “Approved
        Electronic Platform”).

      

      (b) Although
        the Approved Electronic Platform and its primary web portal are secured with
        generally-applicable security procedures and policies implemented or modified
        by
        the Administrative Agent from time to time (including, as of the Closing
        Date, a
        dual firewall and a User ID/Password Authorization System) and the Approved
        Electronic Platform is secured through a single-user-per-deal authorization
        method whereby each user may access the Approved Electronic Platform only
        on a
        deal-by-deal basis, each of the Lenders, the Parent and the Borrower
        acknowledges and agrees, and the Parent shall cause each Guarantor to
        acknowledge and agree, that the distribution of material through an electronic
        medium is not necessarily secure and that there are confidentiality and other
        risks associated with such distribution. In consideration for the convenience
        and other benefits afforded by such distribution and for the other consideration
        provided hereunder, the receipt and sufficiency of which is hereby acknowledged,
        each of the Lenders, the Parent and the Borrower hereby approves, and the
        Parent
        shall cause each Guarantor to approve, distribution of the Approved Electronic
        Communications through the Approved Electronic Platform and understands and
        assumes, and the Parent shall cause each Guarantor to understand and assume,
        the
        risks of such distribution.

      

      (c) The
        Approved Electronic Platform and the Approved Electronic Communications are
        provided “as
        is”
and
        “as
        available”.
        None
        of the Administrative Agent or any of its Affiliates or any of their respective
        officers, directors, employees, agents, advisors or representatives (the
        “Agent
        Affiliates”)
        warrant the accuracy, adequacy or completeness of the Approved Electronic
        Communications or the Approved Electronic Platform and each expressly disclaims
        liability for errors or omissions in the Approved Electronic Platform and
        the
        Approved Electronic Communications. No warranty of any kind, express, implied
        or
        statutory, including, without limitation, any warranty of merchantability,
        fitness for a particular purpose, non-infringement of third party rights
        or
        freedom from viruses or other code defects, is made by the Agent Affiliates
        in
        connection with the Approved Electronic Platform or the Approved Electronic
        Communications.

      

      (d) Each
        of
        the Lenders, the Parent and the Borrower agree, and the Parent shall cause
        each
        Guarantor to agree, that the Administrative Agent may, but (except as may
        be
        required by applicable law) shall not be obligated to, store the Approved
        Electronic Communications on the Approved Electronic Platform in accordance
        with
        the Administrative Agent’s generally-applicable document retention procedures
        and policies.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      Section
        10.4 The
        Administrative Agent Individually

      

      With
        respect to its Ratable Portion, Citi shall have and may exercise the same
        rights
        and powers hereunder and is subject to the same obligations and liabilities
        as
        and to the extent set forth herein for any other Lender. The terms “Lenders”,
        “Requisite
        Lenders”
and
        any
        similar terms shall, unless the context clearly otherwise indicates, include,
        without limitation, the Administrative Agent in its individual capacity as
        a
        Lender or as one of the Requisite Lenders. Citi and its Affiliates may accept
        deposits from, lend money to, and generally engage in any kind of banking,
        trust
        or other business with, any Loan Party as if Citi were not acting as the
        Administrative Agent.

      

      Section
        10.5 Lender
        Credit Decision

      

      Each
        Lender acknowledges that it shall, independently and without reliance upon
        the
        Administrative Agent or any other Lender, conduct its own independent
        investigation of the financial condition and affairs of the Borrower and
        each
        other Loan Party in connection with the making and continuance of the Term
        Loans. Each Lender also acknowledges that it shall, independently and without
        reliance upon the Administrative 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 and other Loan Documents. Except for the documents expressly required
        by any Loan Document to be transmitted by the Administrative Agent to the
        Lenders, the Administrative Agent shall not have any duty or responsibility
        to
        provide any Lender with any credit or other information concerning the business,
        prospects, operations, property, financial or other condition or
        creditworthiness of any Loan Party or any Affiliate of any Loan Party that
        may
        come into the possession of the Administrative Agent or any Affiliate thereof
        or
        any employee or agent of any of the foregoing.

      

      Section
        10.6 Indemnification

      

      Each
        Lender agrees to indemnify the Administrative Agent and each of its Affiliates,
        and each of their respective directors, officers, employees, agents and advisors
        (to the extent not reimbursed by the Borrower), from and against such Lender’s
        aggregate Ratable Portion of any and all liabilities, obligations, losses,
        damages, penalties, actions, judgments, suits, costs, expenses and disbursements
        (including fees, expenses and disbursements of financial and legal advisors)
        of
        any kind or nature whatsoever that may be imposed on, incurred by, or asserted
        against, the Administrative Agent or any of its Affiliates, directors, officers,
        employees, agents and advisors in any way relating to or arising out of this
        Agreement or the other Loan Documents or any action taken or omitted by the
        Administrative Agent under this Agreement or the other Loan Documents;
provided,
        however,
        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 the Administrative Agent’s or such Affiliate’s gross negligence
        or willful misconduct. Without limiting the foregoing, each Lender agrees
        to
        reimburse the Administrative Agent promptly upon demand for its ratable share
        of
        any out-of-pocket expenses (including fees, expenses and disbursements of
        financial and legal advisors) incurred by the Administrative 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 its rights or responsibilities
        under, this Agreement or the other Loan Documents, to the extent that the
        Administrative Agent is not reimbursed for such expenses by the Borrower
        or
        another Loan Party.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      Section
        10.7 Successor
        Administrative Agent

      

      The
        Administrative Agent may resign at any time by giving written notice thereof
        to
        the Lenders and the Borrower. Upon any such resignation, the Requisite Lenders
        shall have the right to appoint a successor Administrative Agent. If no
        successor Administrative Agent shall have been so appointed by the Requisite
        Lenders, and shall have accepted such appointment, within 30 days after the
        retiring Administrative Agent’s giving of notice of resignation, then the
        retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
        Administrative Agent, selected from among the Lenders. In either case, such
        appointment shall be subject to the prior written approval of the Borrower
        (which approval may not be unreasonably withheld and shall not be required
        upon
        the occurrence and during the continuance of an Event of Default). Upon the
        acceptance of any appointment as Administrative Agent by a successor
        Administrative Agent, such successor Administrative Agent shall succeed to,
        and
        become vested with, all the rights, powers, privileges and duties of the
        retiring Administrative Agent, and the retiring Administrative Agent shall
        be
        discharged from its duties and obligations under this Agreement and the other
        Loan Documents. Prior to any retiring Administrative Agent’s resignation
        hereunder as Administrative Agent, the retiring Administrative Agent shall
        take
        such action as may be reasonably necessary to assign to the successor
        Administrative Agent its rights as Administrative Agent under the Loan
        Documents. After such resignation, the retiring Administrative Agent shall
        continue to have the benefit of this Article
        X
        as to
        any actions taken or omitted to be taken by it while it was Administrative
        Agent
        under this Agreement and the other Loan Documents.

      

      Section
        10.8 Concerning
        the Collateral and the Collateral Documents; Releases

      

      (a) Each
        Lender agrees that any action taken by the Administrative Agent or the Requisite
        Lenders (or, where required by the express terms of this Agreement, a greater
        proportion of the Lenders) in accordance with the provisions of this Agreement
        or of the other Loan Documents, and the exercise by the Administrative Agent
        or
        the Requisite Lenders (or, where so required, such greater proportion) of
        the
        powers set forth herein or therein, together with such other powers as are
        reasonably incidental thereto, shall be authorized and binding upon all of
        the
        Lenders and other Secured Parties. Without limiting the generality of the
        foregoing, the Administrative Agent shall have the sole and exclusive right
        and
        authority to (i) act as the disbursing and collecting agent for the Lenders
        with
        respect to all payments and collections arising in connection herewith and
        with
        the Collateral Documents, (ii) execute and deliver each Collateral Document
        and
        accept delivery of each such agreement delivered by any of the Group Members,
        (iii) act as collateral agent for the Lenders and the other Secured Parties
        for
        purposes of the perfection of all security interests and Liens created by
        such
        agreements and all other purposes stated therein, provided,
        however,
        that
        the Administrative Agent hereby appoints, authorizes and directs each Lender
        to
        act as collateral sub-agent for the Administrative Agent and the Lenders
        for
        purposes of the perfection of all security interests and Liens with respect
        to
        the Collateral, including any Deposit Accounts maintained by a Loan Party
        with,
        and cash and Cash Equivalents held by, such Lender, (iv) manage, supervise
        and
        otherwise deal with the Collateral, (v) take such action as is necessary
        or
        desirable to maintain the perfection and priority of the security interests
        and
        Liens created or purported to be created by the Collateral Documents and
        (vi)
        except as may be otherwise specifically restricted by the terms hereof or
        of any
        other Loan Document, exercise all remedies given to the Administrative Agent,
        the Lenders, and the other Secured Parties with respect to the Collateral
        under
        the Loan Documents relating thereto, applicable law or otherwise.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (b) Each
        of
        the Lenders hereby consents to the release and hereby directs, in accordance
        with the terms hereof, the Administrative Agent to release (or, in the case
        of
clause
        (ii)
        below,
        release or subordinate) any Lien held by the Administrative Agent for the
        benefit of the Lenders against any of the following:

      

      (i) all
        of
        the Collateral and all Loan Parties, upon termination of the Term Loan
        Commitments and payment and satisfaction in full of all Term Loans and all
        other
        Obligations that the Administrative Agent has been notified in writing are
        then
        due and payable;

      

      (ii) any
        assets that are subject to a Lien permitted by Section
        8.2(e)
        or
(f)
        (Liens, Etc.);

      

      (iii) any
        part
        of the Collateral sold or disposed of by a Loan Party if such sale or
        disposition is permitted by this Agreement (or permitted pursuant to a waiver
        of
        or consent to a transaction otherwise prohibited by this
        Agreement);

      

      (iv) any
        Guarantor from its obligations under the Guaranty if in connection with the
        sale
        or other disposition of such Guarantor (or all or substantially all of its
        assets) permitted by this Agreement (or permitted pursuant to a waiver or
        consent of a transaction otherwise prohibited by this Agreement);
        and

      

      (v) any
        Guarantor from its obligations under the Guaranty if such Person ceases to
        be a
        Restricted Subsidiary as a result of a transaction or designation permitted
        hereunder.

      

      (c) Each
        of
        the Lenders hereby directs the Administrative Agent to execute and deliver
        the
        Intercreditor Agreement and to execute and deliver or file such termination
        and
        partial release statements and do such other things as are necessary to release
        Liens and/or guarantees to be released pursuant to this Section
        10.8
        or
        subordinated in accordance with, and subject to the terms and conditions
        of, the
        Intercreditor Agreement promptly upon the effectiveness of any such
        release.

      

      Section
        10.9 Collateral
        Matters Relating to Related Obligations

      

      The
        benefit of the Loan Documents and of the provisions of this Agreement relating
        to the Collateral shall extend to and be available in respect of any Secured
        Obligation arising under any Hedging Contract or that is otherwise owed to
        Persons other than the Administrative Agent, the Lenders (collectively,
“Related
        Obligations”)
        solely
        on the condition and understanding, as among the Administrative Agent and
        all
        Secured Parties, that (a) the Related Obligations shall be entitled to the
        benefit of the Loan Documents and the Collateral to the extent expressly
        set
        forth in this Agreement and the other Loan Documents and to such extent the
        Administrative Agent shall hold, and have the right and power to act with
        respect to, the Guaranty and the Collateral on behalf of and as agent for
        the
        holders of the Related Obligations, but the Administrative Agent is otherwise
        acting solely as agent for the Lenders and shall have no fiduciary duty,
        duty of
        loyalty, duty of care, duty of disclosure or other obligation whatsoever
        to any
        holder of Related Obligations, (b) all matters, acts and omissions relating
        in any manner to the Guaranty, the Collateral, or the omission, creation,
        perfection, priority, abandonment or release of any Lien, shall be governed
        solely by the provisions of this Agreement and the other Loan Documents and
        no
        separate Lien, right, power or remedy shall arise or exist in favor of any
        Secured Party under any separate instrument or agreement or in respect of
        any
        Related Obligation, (c) each Secured Party shall be bound by all actions
        taken
        or omitted, in accordance with the provisions of this Agreement and the other
        Loan Documents, by the Administrative Agent and the Requisite Lenders, each
        of
        whom shall be entitled to act at its sole discretion and exclusively in its
        own
        interest given its own Term Loan Commitments and its own interest in the
        Term
        Loans and other Obligations to it arising under this Agreement or the other
        Loan
        Documents, without any duty or liability to any other Secured Party or as
        to any
        Related Obligation and without regard to whether any Related Obligation remains
        outstanding or is deprived of the benefit of the Collateral or becomes unsecured
        or is otherwise affected or put in jeopardy thereby, (d) no holder of Related
        Obligations and no other Secured Party (except the Administrative Agent and
        the
        Lenders, to the extent set forth in this Agreement) shall have any right
        to be
        notified of, or to direct, require or be heard with respect to, any action
        taken
        or omitted in respect of the Collateral or under this Agreement or the Loan
        Documents and (e) no holder of any Related Obligation shall exercise any
        right
        of setoff, banker’s lien or similar right except to the extent provided in
Section
        11.6 (Right of Set-off)
        and then
        only to the extent such right is exercised in compliance with Section
        11.7 (Sharing of Payments, Etc.).

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      ARTICLE
        XI

      

      MISCELLANEOUS

      

      Section
        11.1 Amendments,
        Waivers, Etc.

      

      (a) No
        amendment or waiver of any provision of this Agreement or any other Loan
        Document nor consent to any departure by any Loan Party therefrom shall in
        any
        event be effective unless the same shall be in writing and (x) in the case
        of
        any such waiver or consent, signed by the Requisite Lenders (or by the
        Administrative Agent with the consent of the Requisite Lenders), (y) in the
        case of any amendment necessary to implement the terms of a Facility Increase
        in
        accordance with the terms hereof, by the Borrower, the Parent, the
        Administrative Agent and the Incremental Term Loan Lenders providing such
        Facility Increase, and (z) in the case of any other amendment, by the Requisite
        Lenders (or by the Administrative Agent with the consent of the Requisite
        Lenders), the Borrower and the Parent and then any such waiver or consent
        shall
        be effective only in the specific instance and for the specific purpose for
        which given; provided,
        however,
        that no
        amendment, waiver or consent shall, unless in writing and signed by each
        Lender
        directly affected thereby, in addition to the Requisite Lenders (or the
        Administrative Agent with the consent thereof), do any of the
        following:

      

      (i) waive
        any
        condition specified in Section
        3.1 (Conditions Precedent to Closing Date Term Loans)
        or
3.2
        (Conditions Precedent to Incremental Term Loans),
        except
        with respect to a condition based upon another provision hereof, the waiver
        of
        which requires only the concurrence of the Requisite Lenders and, in the
        case of
        the conditions specified in Section
        3.1 (Conditions Precedent to Closing Date Term Loans)
        and
3.2
        (Conditions Precedent to Incremental Loans),
        subject
        to the provisions of Section
        3.3 (Determinations of Borrowing Conditions);

      
        
          
          

        

        
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            LOAN AGREEMENT

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      (ii) except
        pursuant to a Facility Increase, increase the Term Loan Commitment of such
        Lender or subject such Lender to any additional obligation;

      

      (iii) extend
        the scheduled final maturity of any Term Loan owing to such Lender, or waive,
        reduce or postpone any scheduled date fixed for the payment or reduction
        of
        principal or interest of any such Term Loan or fees owing to such Lender
        (it
        being understood that Section
        2.7 (Mandatory Prepayments) does
        not
        provide for scheduled dates fixed for payment) or for the reduction of such
        Lender’s Term Loan Commitment;

      

      (iv) reduce,
        or release the Borrower from its obligations to repay, the principal amount
        of
        any Term Loan owing to such Lender (other than by the payment or prepayment
        thereof);

      

      (v) reduce
        the rate of interest on any Term Loan outstanding and owing to such Lender
        or
        any fee payable hereunder to such Lender;

      

      (vi) postpone
        any scheduled date fixed for payment of interest or fees owing to such Lender
        or
        waive any such payment;

      

      (vii) change
        the aggregate Ratable Portions of Lenders required for any or all Lenders
        to
        take any action hereunder;

      

      (viii) release
        all or substantially all of the Collateral except as provided in Section 8
        (Release of Collateral)
        of the
        Intercreditor Agreement and except as provided in Section
        10.8(b) (Concerning the Collateral and the Collateral
        Documents; Releases)
        or
        release the Borrower from its payment obligation to such Lender under this
        Agreement or the Notes owing to such Lender (if any) or release any Guarantor
        from its obligations under the Guaranty except as provided in Section
        10.8(b) (Concerning the Collateral and the Collateral
        Documents; Releases);
        or

      

      (ix) amend,
        Section
        10.8(b) (Concerning the Collateral and the Collateral Documents;
        Releases),
        Section
        11.7 (Sharing of Payments, Etc.),
        this
Section
        11.1
        or
        either definition of the terms “Requisite
        Lenders”
or
        “Ratable
        Portion”;

      

      (x) amend,
        Section 8
        (Release of Collateral)
        of the
        Intercreditor Agreement;

      

      and
        provided,
        further,
        that no
        amendment, waiver or consent shall, unless in writing and signed by the
        Administrative Agent in addition to the Lenders required above to take such
        action, affect the rights or duties of the Administrative Agent under this
        Agreement or the other Loan Documents; and provided,
        further,
        that
        the Administrative Agent may, with the consent of the Borrower, amend, modify
        or
        supplement this Agreement to cure any ambiguity, omission, defect or
        inconsistency, so long as such amendment, modification or supplement does
        not
        adversely affect the rights of any Lender.

      
        
          
          

        

        
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            LOAN AGREEMENT

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            BRANDS FINANCE, INC.

        

      

      

      (b) The
        Administrative Agent may, but shall have no obligation to, with the written
        concurrence of any Lender, execute amendments, modifications, waivers or
        consents on behalf of such Lender. Any waiver or consent shall be effective
        only
        in the specific instance and for the specific purpose for which it was given.
        No
        notice to or demand on the Borrower in any case shall entitle the Borrower
        to
        any other or further notice or demand in similar or other
        circumstances.

      

      (c) If,
        in
        connection with any proposed amendment, modification, waiver or termination
        requiring the consent of all Lenders, the consent of Requisite Lenders is
        obtained but the consent of any Lender whose consent is required is not obtained
        (any such Lender whose consent is not obtained as described in this Section
        11.1
        being
        referred to as a “Non-Consenting
        Lender”),
        then,
        as long as the Lender acting as the Administrative Agent is not a Non-Consenting
        Lender, at the Borrower’s request, an Eligible Assignee reasonably acceptable to
        the Administrative Agent shall have the right with the Administrative Agent’s
        consent and in the Administrative Agent’s sole discretion (but shall have no
        obligation) to purchase from such Non-Consenting Lender, and such Non-Consenting
        Lender agrees that it shall, upon the Administrative Agent’s request, sell and
        assign to the Lender acting as the Administrative Agent or such Eligible
        Assignee, all of the Term Loans of such Non-Consenting Lender for an amount
        equal to the principal balance of all such Term Loans held by the Non-Consenting
        Lender and all accrued and unpaid interest and fees with respect thereto
        through
        the date of sale; provided,
        however,
        that
        such purchase and sale shall be recorded in the Register maintained by the
        Administrative Agent and not be effective until (x) the Administrative Agent
        shall have received from such Eligible Assignee an agreement in form and
        substance reasonably satisfactory to the Administrative Agent and the Borrower
        whereby such Eligible Assignee shall agree to be bound by the terms hereof
        and
        (y) such Non-Consenting Lender shall have received payments of all Term Loans
        held by it and all accrued and unpaid interest and fees with respect thereto
        through the date of the sale. Each Lender agrees that, if it becomes a
        Non-Consenting Lender, it shall execute and deliver to the Administrative
        Agent
        an Assignment an Acceptance to evidence such sale and purchase and shall
        deliver
        to the Administrative Agent any Note (if the assigning Lender’s Term Loans are
        evidenced by Notes) subject to such Assignment and Acceptance; provided,
        however,
        that
        the failure of any Non-Consenting Lender to execute an Assignment and Acceptance
        shall not render such sale and purchase (and the corresponding assignment)
        invalid and such assignment shall be recorded in the Register.

      

      Section
        11.2 Assignments
        and Participations

      

      (a) Each
        Lender may sell, transfer, negotiate or assign to one or more Eligible Assignees
        all or a portion of its rights and obligations hereunder (including all of
        its
        rights and obligations with respect to the Term Loans); provided,
        however,
        that
        (i) if any such assignment shall be of the assigning Lender’s Term Loans and
        Term Loan Commitment, such assignment shall cover the same percentage of
        such
        Lender’s Term Loans and Term Loan Commitment, (ii) the aggregate amount being
        assigned pursuant to each such assignment (determined as of the date of the
        Assignment and Acceptance with respect to such assignment) shall in no event
        (if
        less than the Assignor’s entire interest) be less than $1,000,000 or an integral
        multiple of $1,000,000 in excess thereof, except, in either case, (A) with
        the
        consent of the Borrower and the Administrative Agent or (B) if such assignment
        is being made to a Lender or an Affiliate or Approved Fund of such Lender,
        and
        (iii) if such Eligible Assignee is not, prior to the date of such
        assignment, a Lender or an Affiliate or Approved Fund of a Lender, such
        assignment shall be subject to the prior consent of the Administrative Agent
        and
        the Borrower (which consents shall not be unreasonably withheld or delayed);
        and
provided,
        further,
        that,
        notwithstanding any other provision of this Section
        11.2,
        the
        consent of the Borrower shall not be required for any assignment occurring
        when
        any Event of Default shall have occurred and be continuing.

      
        
          
          

        

        
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            LOAN AGREEMENT

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            BRANDS FINANCE, INC.

        

      

      

      (b) The
        parties to each such assignment shall execute and deliver to the Administrative
        Agent, for its acceptance and recording in the Register, an Assignment and
        Acceptance, together with any Note (if the assigning Lender’s Term Loans are
        evidenced by a Note) subject to such assignment. Upon the execution, delivery,
        acceptance and recording in the Register of any Assignment and Acceptance
        and,
        other than in respect of assignments made pursuant to Section
        2.15 (Substitution of Lenders)
        and
Section
        11.1(c) (Amendments, Waivers, Etc.),
        the
        receipt by the Administrative Agent from the assignee of an assignment fee
        in
        the amount of $3,500 from and after the effective date specified in such
        Assignment and Acceptance, (i) the assignee thereunder shall become a party
        hereto and, to the extent that rights and obligations under the Loan Documents
        have been assigned to such assignee pursuant to such Assignment and Acceptance,
        have the rights and obligations of a Lender, (ii) the Notes (if any)
        corresponding to the Term Loans assigned thereby shall be transferred to
        such
        assignee by notation in the Register and (iii) the assignor thereunder
        shall, to the extent that rights and obligations under this Agreement have
        been
        assigned by it pursuant to such Assignment and Acceptance, relinquish its
        rights
        (except for those surviving the payment in full of the Obligations) and be
        released from its obligations under the Loan Documents, other than those
        relating to events or circumstances occurring prior to such assignment (and,
        in
        the case of an Assignment and Acceptance covering all or the remaining portion
        of an assigning Lender’s rights and obligations under the Loan Documents, such
        Lender shall cease to be a party hereto).

      

      (c) The
        Administrative Agent shall maintain at its address referred to in Section
        11.8 (Notices, Etc.)
        a copy
        of each Assignment and Acceptance delivered to and accepted by it and shall
        record in the Register the names and addresses of the Lenders and the principal
        amount of the Term Loans owing to each Lender from time to time and the Term
        Loan Commitments of each Lender. Any assignment pursuant to this Section
        11.2
        shall
        not be effective until such assignment is recorded in the Register.

      

      (d) Upon
        its
        receipt of an Assignment and Acceptance executed by an assigning Lender and
        an
        assignee, the Administrative Agent shall, if such Assignment and Acceptance
        has
        been completed, (i) accept such Assignment and Acceptance, (ii) record or
        cause
        to be recorded the information contained therein in the Register and (iii)
        give
        prompt notice thereof to the Borrower. Within five Business Days after its
        receipt of such notice, the Borrower, at its own expense, shall, if requested
        by
        such assignee, execute and deliver to the Administrative Agent new Notes
        to the
        order of such assignee in an amount equal to the Term Loan Commitments and
        Term
        Loans assumed by it pursuant to such Assignment and Acceptance and, if the
        assigning Lender has surrendered any Note for exchange in connection with
        the
        assignment and has retained Term Loan Commitments or Term Loans hereunder,
        new
        Notes to the order of the assigning Lender in an amount equal to the Term
        Loan
        Commitments and Term Loans retained by it hereunder. Such new Notes shall
        be
        dated the same date as the surrendered Notes and be in substantially the
        form of
Exhibit
        B (Form
        of Term Note).

      

      (e) In
        addition to the other assignment rights provided in this Section
        11.2,
        each
        Lender may do each of the following:

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

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            BRANDS FINANCE, INC.

        

      

      

      (i) grant
        to
        a Special Purpose Vehicle the option to make all or any part of any Term
        Loan
        that such Lender would otherwise be required to make hereunder and the exercise
        of such option by any such Special Purpose Vehicle and the making of Term
        Loans
        pursuant thereto shall satisfy (once and to the extent that such Term Loans
        are
        made) the obligation of such Lender to make such Term Loans thereunder;
provided,
        however,
        that
        (x) nothing herein shall constitute a commitment or an offer to commit by
        such a Special Purpose Vehicle to make Term Loans hereunder and no such Special
        Purpose Vehicle shall be liable for any indemnity or other Obligation (other
        than the making of Term Loans for which such Special Purpose Vehicle shall
        have
        exercised an option, and then only in accordance with the relevant option
        agreement) and (y) such Lender’s obligations under the Loan Documents shall
        remain unchanged, such Lender shall remain responsible to the other parties
        for
        the performance of its obligations under the terms of this Agreement and
        shall
        remain the holder of the Obligations for all purposes hereunder;
        and

      

      (ii) may
        at
        any time pledge or assign a security interest in all or any portion of its
        rights under this Agreement to secure obligations of such Lender, including
        without limitation any pledge or assignment to secure obligations to (A)
        a
        Federal Reserve Bank, (B) any holder of, or trustee for the benefit of, the
        holders of such Lender’s Securities and (C) any Special Purpose Vehicle to which
        such Lender has granted an option pursuant to clause
        (i)
        above;

      

      provided,
        however,
        that no
        such assignment or grant shall release such Lender from any of its obligations
        hereunder except as expressly provided in clause
        (i) above
        and
        except, in the case of a subsequent foreclosure pursuant to an assignment
        as
        collateral, if such foreclosure is made in compliance with the other provisions
        of this Section
        11.2 other
        than this clause
        (e)
        or
clause
        (f) below.
        Each party hereto acknowledges and agrees that, prior to the date that is
        one
        year and one day after the payment in full of all outstanding commercial
        paper
        or other senior debt of any such Special Purpose Vehicle, such party shall
        not
        institute against, or join any other Person in instituting against, any Special
        Purpose Vehicle that has been granted an option pursuant to this clause
        (e)
        any
        bankruptcy, reorganization, insolvency or liquidation proceeding (such agreement
        shall survive the payment in full of the Obligations). The terms of the
        designation of, or assignment to, such Special Purpose Vehicle shall not
        restrict such Lender’s ability to, or grant such Special Purpose Vehicle the
        right to, consent to any amendment or waiver to this Agreement or any other
        Loan
        Document or to the departure by the Borrower from any provision of this
        Agreement or any other Loan Document without the consent of such Special
        Purpose
        Vehicle except, as long as the Administrative Agent and the Lenders, Issuers
        and
        other Secured Parties shall continue to, and shall be entitled to continue
        to,
        deal solely and directly with such Lender in connection with such Lender’s
        obligations under this Agreement, to the extent any such consent would reduce
        the principal amount of, or the rate of interest on, any Obligations, amend
        this
clause
        (e)
        or
        postpone any scheduled date of payment of such principal or interest. Each
        Special Purpose Vehicle shall be entitled to the benefits of Sections
        2.13 (Capital Adequacy)
        and
2.14
        (Taxes)
        and of
2.12(d)
        (Illegality)
        as if it
        were such Lender; provided,
        however,
        that
        anything herein to the contrary notwithstanding, no Borrower shall, at any
        time,
        be obligated to make under Section
        2.13 (Capital Adequacy),
        2.14
        (Taxes)
        or
2.12(d)
        (Illegality)
        to any
        such Special Purpose Vehicle and any such Lender any payment in excess of
        the
        amount the Borrower would have been obligated to pay to such Lender in respect
        of such interest if such Special Purpose Vehicle had not been assigned the
        rights of such Lender hereunder; and provided,
        further,
        that
        such Special Purpose Vehicle shall have no direct right to enforce any of
        the
        terms of this Agreement against the Borrower, the Administrative Agent or
        the
        other Lenders.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

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      (f) Each
        Lender may sell participations to one or more Persons in or to all or a portion
        of its rights and obligations under the Loan Documents (including all its
        rights
        and obligations with respect to the Term Loans). The terms of such participation
        shall not, in any event, require the participant’s consent to any amendments,
        waivers or other modifications of any provision of any Loan Documents, the
        consent to any departure by any Loan Party therefrom, or to the exercising
        or
        refraining from exercising any powers or rights such Lender may have under
        or in
        respect of the Loan Documents (including the right to enforce the obligations
        of
        the Loan Parties), except if any such amendment, waiver or other modification
        or
        consent would (i) reduce the amount, or postpone any date fixed for, any
        amount
        (whether of principal, interest or fees) payable to such participant under
        the
        Loan Documents, to which such participant would otherwise be entitled under
        such
        participation or (ii) result in the release of all or substantially all of
        the Collateral other than in accordance with Section
        10.8(b) (Concerning the Collateral and the Collateral
        Documents; Releases).
        In the
        event of the sale of any participation by any Lender, (w) such Lender’s
        obligations under the Loan Documents shall remain unchanged, (x) such Lender
        shall remain solely responsible to the other parties for the performance
        of such
        obligations, (y) such Lender shall remain the holder of such Obligations
        for all
        purposes of this Agreement and (z) the Borrower, the Administrative Agent
        and
        the other Lenders shall continue to deal solely and directly with such Lender
        in
        connection with such Lender’s rights and obligations under this Agreement. Each
        participant shall be entitled to the benefits of Sections
        2.13 (Capital Adequacy)
        and
2.14
        (Taxes)
        and of
2.12(d)
        (Illegality)
        as if it
        were a Lender; provided,
        however,
        that
        anything herein to the contrary notwithstanding, the Borrower shall not,
        at any
        time, be obligated to make under Section
        2.13 (Capital Adequacy),
        2.14
        (Taxes)
        or
2.12(d)
        (Illegality) to
        the
        participants in the rights and obligations of any Lender (together with such
        Lender) any payment in excess of the amount the Borrower would have been
        obligated to pay to such Lender in respect of such interest had such
        participation not been sold and provided,
        further,
        that
        such participant in the rights and obligations of such Lender shall have
        no
        direct right to enforce any of the terms of this Agreement against the Borrower,
        the Administrative Agent or the other Lenders.

      

      Section
        11.3 Costs
        and Expenses

      

      (a) The
        Borrower agrees, so long as no Default or Event of Default has occurred and
        is
        continuing, within fifteen (15) days of receiving an invoice therefor and
        otherwise upon demand, to pay, or reimburse the Administrative Agent for,
        all of
        the Administrative Agent’s reasonable internal and external audit, legal,
        appraisal, valuation, filing, document duplication and reproduction and
        investigation expenses and for all other reasonable out-of-pocket costs and
        expenses of every type and nature (including the reasonable fees, expenses
        and
        disbursements of the Administrative Agent’s counsel, Weil, Gotshal & Manges
        LLP, local legal counsel, auditors, accountants, appraisers, printers, insurance
        and environmental advisors, and other consultants and agents) incurred by
        the
        Administrative Agent in connection with any of the following: (i) the
        Administrative Agent’s audit and investigation of the Borrower, the Parent and
        any of its Subsidiaries in connection with the preparation, negotiation or
        execution of any Loan Document or the Administrative Agent’s periodic audits of
        the Borrower, the Parent or any of its Subsidiaries, as the case may be,
        (ii)
        the preparation, negotiation, execution or interpretation of this Agreement
        (including, without limitation, the satisfaction or attempted satisfaction
        of
        any condition set forth in Article
        III (Conditions To Term Loans),
        any
        Loan Document or any proposal letter or commitment letter issued in connection
        therewith, or the making of the Term Loans hereunder, (iii) the creation,
        perfection or protection of the Liens under any Loan Document (including
        any
        reasonable fees, disbursements and expenses for local counsel in various
        jurisdictions), (iv) the ongoing administration of this Agreement and the
        Term
        Loans, including consultation with attorneys in connection therewith and
        with
        respect to the Administrative Agent’s rights and responsibilities hereunder and
        under the other Loan Documents, (v) the protection, collection or enforcement
        of
        any Obligation or the enforcement of any Loan Document, (vi) the commencement,
        defense or intervention in any court proceeding relating in any way to the
        Obligations, any Loan Party, any of the Parent’s Subsidiaries, the Merger, the
        Related Documents, this Agreement or any other Loan Document, (vii) the response
        to, and preparation for, any subpoena or request for document production
        with
        which the Administrative Agent is served or deposition or other proceeding
        in
        which the Administrative Agent is called to testify, in each case, relating
        in
        any way to the Obligations, any Loan Party, any of the Parent’s Subsidiaries,
        the Merger, the Related Documents, this Agreement or any other Loan Document
        or
        (viii) any amendment, consent, waiver, assignment, restatement, or supplement
        to
        any Loan Document or the preparation, negotiation and execution of the
        same.

      
        
          
          

        

        
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          TERM
            LOAN AGREEMENT

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      (b) The
        Borrower further agrees to pay or reimburse the Administrative Agent and
        each of
        the Lenders, so long as no Default or Event of Default has occurred and is
        continuing, within fifteen (15) days of receiving an invoice therefor and
        otherwise upon demand, for all out-of-pocket costs and expenses, including
        reasonable attorneys’ fees (including allocated costs of internal counsel and
        costs of settlement), incurred by the Administrative Agent or such Lenders
        in
        connection with any of the following: (i) in enforcing any Loan Document
        or
        Obligation or any security therefor or exercising or enforcing any other
        right
        or remedy available by reason of an Event of Default, (ii) in connection
        with
        any refinancing or restructuring of the credit arrangements provided hereunder
        in the nature of a “work-out”
or
        in
        any insolvency or bankruptcy proceeding, (iii) in commencing, defending or
        intervening in any litigation or in filing a petition, complaint, answer,
        motion
        or other pleadings in any legal proceeding relating to the Obligations, any
        Loan
        Party, any of the Parent’s Subsidiaries and related to or arising out of the
        transactions contemplated hereby or by any other Loan Document or Related
        Document or (iv) in taking any other action in or with respect to any suit
        or
        proceeding (bankruptcy or otherwise) described in clause (i),
        (ii)
        or
(iii)
        above.

      

      Section
        11.4 Indemnities

      

      (a) The
        Borrower agrees to indemnify and hold harmless the Administrative Agent and
        each
        Lender (including each Person obligated on a Hedging Contract that is a Loan
        Document if such Person was a Lender at the time of it entered into such
        Hedging
        Contract) and each of their respective Affiliates, and each of the directors,
        officers, employees, agents, trustees, representatives, attorneys, consultants
        and advisors of or to any of the foregoing (including those retained in
        connection with the satisfaction or attempted satisfaction of any condition
        set
        forth in Article
        III (Conditions To Term Loans)
        (each
        such Person being an “Indemnitee”)
        from
        and against any and all claims, damages, liabilities, obligations, losses,
        penalties, actions, judgments, suits, costs, disbursements and expenses,
        joint
        or several, of any kind or nature (including fees, disbursements and expenses
        of
        financial and legal advisors to any such Indemnitee) that may be imposed
        on,
        incurred by or asserted against any such Indemnitee in connection with or
        arising out of any investigation, litigation or proceeding, whether or not
        such
        investigation, litigation or proceeding is brought by any such indemnitee
        or any
        of its directors, security holders or creditors or any such Indemnitee,
        director, security holder or creditor is a party thereto, whether direct,
        indirect, or consequential and whether based on any federal, state or local
        law
        or other statutory regulation, securities or commercial law or regulation,
        or
        under common law or in equity, or on contract, tort or otherwise, in any
        manner
        relating to or arising out of this Agreement, any other Loan Document, any
        Obligation, any Related Document, or any act, event or transaction related
        or
        attendant to any thereof, or the use or intended use of the proceeds of the
        Term
        Loans or in connection with any investigation of any potential matter covered
        hereby (collectively, the “Indemnified
        Matters”);
        provided,
        however,
        that
        the Borrower shall not have any liability under this Section
        11.4
        to an
        Indemnitee with respect to any Indemnified Matter that has resulted primarily
        from the gross negligence or willful misconduct of that Indemnitee, as
        determined by a court of competent jurisdiction in a final non-appealable
        judgment or order. Without limiting the foregoing, “Indemnified
        Matters”
include
        (i) all Environmental Liabilities and Costs arising from or connected with
        the
        past, present or future operations of the Borrower, the Parent or any of
        its
        Subsidiaries involving any property subject to a Collateral Document, or
        damage
        to real or personal property or natural resources or harm or injury alleged
        to
        have resulted from any Release of Hazardous Materials on, upon or into such
        property or any contiguous real estate, (ii) any costs or liabilities incurred
        in connection with any Remedial Action concerning the Borrower, the Parent
        or
        any of its Subsidiaries, (iii) any costs or liabilities incurred in connection
        with any Environmental Lien and (iv) any costs or liabilities incurred in
        connection with any other matter under any Environmental Law and applicable
        state property transfer laws, whether, with respect to any such matter, such
        Indemnitee is a mortgagee pursuant to any leasehold mortgage, a mortgagee
        in
        possession, the successor in interest to the Borrower, the Parent or any
        of its
        Subsidiaries, or the owner, lessee or operator of any property of the Borrower,
        the Parent or any of its Subsidiaries by virtue of foreclosure, except, with
        respect to those matters referred to in clauses
        (i),
        (ii),
        (iii)
        and
(iv)
        above,
        to the extent (x) incurred following foreclosure by the Administrative Agent
        or
        any Lender, or the Administrative Agent or any Lender having become the
        successor in interest to the Borrower, the Parent or any of its Subsidiaries
        and
        (y) attributable solely to acts of the Administrative Agent, such Lender
        or any
        agent on behalf of the Administrative Agent or such Lender.

      
        
          
          

        

        
          92

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      (b) The
        Borrower shall indemnify the Administrative Agent and the Lenders for, and
        hold
        the Administrative Agent and the Lenders harmless from and against, any and
        all
        claims for brokerage commissions, fees and other compensation made against
        the
        Administrative Agent and the Lenders for any broker, finder or consultant
        with
        respect to any agreement, arrangement or understanding made by or on behalf
        of
        any Loan Party or any of its Subsidiaries in connection with the transactions
        contemplated by this Agreement.

      

      (c) The
        Borrower, at the request of any Indemnitee, shall have the obligation to
        defend
        against any investigation, litigation or proceeding or requested Remedial
        Action, in each case contemplated in clause
        (a)
        above,
        and the Borrower, in any event, may participate in the defense thereof with
        legal counsel of the Borrower’s choice. In the event that such indemnitee
        requests the Borrower to defend against such investigation, litigation or
        proceeding or requested Remedial Action, the Borrower shall promptly do so
        and
        such Indemnitee shall have the right to have legal counsel of its choice
        participate in such defense. No action taken by legal counsel chosen by such
        Indemnitee in defending against any such investigation, litigation or proceeding
        or requested Remedial Action, shall vitiate or in any way impair the Borrower’s
        obligation and duty hereunder to indemnify and hold harmless such
        Indemnitee.

      

      (d) The
        Borrower agrees that any indemnification or other protection provided to
        any
        Indemnitee pursuant to this Agreement (including pursuant to this Section
        11.4)
        or any
        other Loan Document shall (i) survive payment in full of the Obligations
        and
        (ii) inure to the benefit of any Person that was at any time an Indemnitee
        under
        this Agreement or any other Loan Document.

      
        
          
          

        

        
          93

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      Section
        11.5 Limitation
        of Liability

      

      (a) The
        Borrower agrees that no Indemnitee shall have any liability (whether in
        contract, tort or otherwise) to any Loan Party or any of their respective
        Subsidiaries or any of their respective equity holders or creditors for or
        in
        connection with the transactions contemplated hereby and in the other Loan
        Documents and Related Documents, except to the extent such liability is
        determined in a final non-appealable judgment by a court of competent
        jurisdiction to have resulted primarily from such Indemnitee’s gross negligence
        or willful misconduct. In no event, however, shall any Indemnitee be liable
        on
        any theory of liability for any special, indirect, consequential or punitive
        damages (including, without limitation, any loss of profits, business or
        anticipated savings). The Borrower hereby waives, releases and agrees (each
        for
        itself and on behalf of its Subsidiaries) not to sue upon any such claim
        for any
        special, indirect, consequential or punitive damages, whether or not accrued
        and
        whether or not known or suspected to exist in its favor.

      

      (b) IN
        NO
        EVENT SHALL ANY AGENT AFFILIATE HAVE ANY LIABILITY TO ANY LOAN PARTY, LENDER
        OR
        ANY OTHER PERSON FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL,
        INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT
        OR
        CONTRACT OR OTHERWISE) ARISING OUT OF ANY LOAN PARTY OR ANY AGENT AFFILIATE’S
        TRANSMISSION OF APPROVED ELECTRONIC COMMUNICATIONS THROUGH THE INTERNET OR
        ANY
        USE OF THE APPROVED ELECTRONIC PLATFORM, EXCEPT TO THE EXTENT SUCH LIABILITY
        OF
        ANY AGENT AFFILIATE IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT
        OF
        COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FORM SUCH AGENT AFFILIATE’S
        GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

      

      Section
        11.6 Right
        of Set-off

      

      Upon
        the
        occurrence and during the continuance of any Event of Default each Lender
        and
        each Affiliate of a Lender is hereby authorized at any time and from time
        to
        time, to the fullest extent permitted by law, to set off and apply any and
        all
        deposits (general or special, time or demand, provisional or final) at any
        time
        held and other Indebtedness at any time owing by such Lender or its Affiliates
        to or for the credit or the account of the Borrower against any and all of
        the
        Obligations now or hereafter existing whether or not such Lender shall have
        made
        any demand under this Agreement or any other Loan Document and even though
        such
        Obligations may be unmatured. Each Lender agrees promptly to notify the Borrower
        after any such set-off and application made by such Lender or its Affiliates;
        provided,
        however,
        that
        the failure to give such notice shall not affect the validity of such set-off
        and application. Each Lender agrees that it shall not, without the express
        consent of the Requisite Lenders (and that, it shall, to the extent lawfully
        entitled to do so, upon the request of the Requisite Lenders) exercise its
        set-off rights under this Section
        11.6
        against
        any deposit accounts of the Loan Parties and their Subsidiaries maintained
        with
        such Lender or any Affiliate thereof. The rights of each Lender under this
        Section
        11.6
        are in
        addition to the other rights and remedies (including other rights of set-off)
        that such Lender may have.

      
        
          
          

        

        
          94

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      Section
        11.7 Sharing
        of Payments, Etc.

      

      (a) If
        any
        Lender (directly or through an Affiliate thereof) obtains any payment (whether
        voluntary, involuntary, through the exercise of any right of set-off (including
        pursuant to Section
        11.6 (Right
        of Set-off))
        or
        otherwise) of the Term Loans owing to it, any interest thereon, fees in respect
        thereof or amounts due pursuant to Section
        11.3 (Costs and Expenses) or
        11.4
        (Indemnities)
        (other
        than payments pursuant to Section
        2.12 (Special Provisions Governing Eurodollar Rate Loans),
        2.13
        (Capital Adequacy)
        or
2.14
        (Taxes)
        or
        otherwise receives any Collateral or any “Proceeds”
(as
        defined in the Pledge and Security Agreement) of Collateral (other than payments
        pursuant to Section
        2.12 (Special Provisions Governing Eurodollar Rate Loans),
        2.13
        (Capital Adequacy)
        or
2.14
        (Taxes))
        (in
        each case, whether voluntary, involuntary, through the exercise of any right
        of
        set-off (including pursuant to Section
        11.6 (Right
        of Set-off))
        or
        otherwise) in excess of its Ratable Portion of all payments of such Obligations
        obtained by all the Lenders, such Lender (a “Purchasing
        Lender”)
        shall
        forthwith purchase from the other Lenders (each, a “Selling
        Lender”)
        such
        participations in their Term Loans or other Obligations as shall be necessary
        to
        cause such Purchasing Lender to share the excess payment ratably with each
        of
        them.

      

      (b) If
        all or
        any portion of any payment received by a Purchasing Lender is thereafter
        recovered from such Purchasing Lender, such purchase from each Selling Lender
        shall be rescinded and such Selling Lender shall repay to the Purchasing
        Lender
        the purchase price to the extent of such recovery together with an amount
        equal
        to such Selling Lender’s ratable share (according to the proportion of (i) the
        amount of such Selling Lender’s required repayment in relation to (ii) the total
        amount so recovered from the Purchasing Lender) of any interest or other
        amount
        paid or payable by the Purchasing Lender in respect of the total amount so
        recovered.

      

      (c) The
        Borrower agrees that any Purchasing Lender so purchasing a participation
        from a
        Selling Lender pursuant to this Section
        11.7
        may, to
        the fullest extent permitted by law, exercise all its rights of payment
        (including the right of set-off) with respect to such participation as fully
        as
        if such Lender were the direct creditor of the Borrower in the amount of
        such
        participation.

      

      Section
        11.8 Notices,
        Etc.

      

      (a) Addresses
        for Notices.
        All
        notices, demands, requests, consents and other communications provided for
        in
        this Agreement shall be given in writing, or by any telecommunication device
        capable of creating a written record (including electronic mail), and addressed
        to the party to be notified as follows:

      

      
        	 	
                (i)

              	
                if
                  to the Borrower:

              

      

       

      Payless
        ShoeSource, Inc.

      3231
        Southeast Sixth Avenue

      Topeka,
        Kansas 66607-2207

       

      
        
          
          

        

        
          95

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

         

      

      Attention:
        Rick Porzig, Chief Financial Officer

      Copy:
        Michael Massey, General Counsel

      Telecopy
        no: (785) 233-5171

      E-Mail
        Addresses: 

      rick_porzig@payless.com;michael_massey@payless.com

      

      (ii) if
        to any
        Lender, at its Domestic Lending Office specified opposite its name on
Schedule II (Applicable
        Lending Offices and Addresses for Notices)
        or on
        the signature page of any applicable Assignment and Acceptance;

       

      
        	 	
                (iii)

              	
                if
                  to the Administrative Agent:

              

      

       

      CITICORP
        NORTH AMERICA, INC.

      388
        Greenwich Street, 20th Floor

      New
        York,
        New York 10013

      Attention:
        Jeffrey Nitz

      Telecopy
        no: (212) 816-7845

      E-Mail
        Address: jeffrey.nitz@citigroup.com

      

      with
        a
        copy to:

      

      CITCORP
        NORTH AMERICA, INC. - LOAN ADMINISTRATION

      2
        Penns
        Way - Suite 100

      New
        Castle, Delaware 19720

      Attention:
        Lisa Rodriguez

      Telecopy
        no: (302) 894-6070

      E-Mail
        Address: oploanswebadmin@citi.com

      

      WEIL,
        GOTSHAL&
        MANGES
        LLP

      767
        Fifth
        Avenue

      New
        York,
        New York 10153-0119

      Attention:
        Daniel S. Dokos

      Telecopy
        no: (212) 310-8007

      E-Mail
        Address: daniel.dokos@weil.com

      

      or
        at
        such other address as shall be notified in writing (x) in the case of the
        Borrower and the Administrative Agent, to the other parties and (y) in the
        case
        of all other parties, to the Borrower and the Administrative Agent.

       

      (b) Effectiveness
        of Notices.
        All
        notices, demands, requests, consents and other communications described in
        clause
        (a)
        above
        shall be effective (i) if delivered by hand, including any overnight courier
        service, upon personal delivery, (ii) if delivered by mail, when deposited
        in
        the mails, (iii) if delivered by posting to an Approved Electronic Platform
        (to
        the extent permitted by Section
        10.3
        to be
        delivered thereunder), an Internet website or a similar telecommunication
        device
        requiring a user prior access to such Approved Electronic Platform, website
        or
        other device (to the extent permitted by Section
        10.3
        to be
        delivered thereunder), when such notice, demand, request, consent and other
        communication shall have been made generally available on such Approved
        Electronic Platform, Internet website or similar device to the class of Person
        being notified (regardless of whether any such Person must accomplish, and
        whether or not any such Person shall have accomplished, any action prior
        to
        obtaining access to such items, including registration, disclosure of contact
        information, compliance with a standard user agreement or undertaking a duty
        of
        confidentiality) and such Person has been notified that such communication
        has
        been posted to the Approved Electronic Platform and (iv) if delivered by
        electronic mail or any other telecommunications device, when transmitted
        to an
        electronic mail address (or by another means of electronic delivery) as provided
        in clause
        (a)
        above;
provided,
        however,
        that
        notices and communications to the Administrative Agent pursuant to Article
        II (The Term Loan Facility)
        or
Article
        X (The Administrative Agent)
        shall
        not be effective until received by the Administrative Agent.

      
        
          
          

        

        
          96

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

       

      (c) Use
        of
        Electronic Platform. Notwithstanding clause
        (a)
        and
(b)
        above
        (unless the Administrative Agent requests that the provisions of clause
        (a)
        and
(b)
        above be
        followed) and any other provision in this Agreement or any other Loan Document
        providing for the delivery of any Approved Electronic Communication by any
        other
        means the Loan Parties shall deliver all Approved Electronic Communications
        to
        the Administrative Agent by properly transmitting such Approved Electronic
        Communications in an electronic/soft medium in a format reasonably acceptable
        to
        the Administrative Agent to oploanswebadmin@Citi.com or such other electronic
        mail address (or similar means of electronic delivery) as the Administrative
        Agent may notify the Borrower. Nothing in this clause
        (c)
        shall
        prejudice the right of the Administrative Agent or any Lender to deliver
        any
        Approved Electronic Communication to any Loan Party in any manner authorized
        in
        this Agreement or to request that the Borrower effect delivery in such
        manner.

       

      Section
        11.9 No
        Waiver; Remedies

       

      No
        failure on the part of any Lender or the Administrative Agent to exercise,
        and
        no delay in exercising, any right hereunder shall operate as a waiver thereof;
        nor shall any single or partial exercise of any such right preclude any other
        or
        further exercise thereof or the exercise of any other right. The remedies
        herein
        provided are cumulative and not exclusive of any remedies provided by
        law.

       

      Section
        11.10 Binding
        Effect

       

      This
        Agreement shall become effective when it shall have been executed by the
        Borrower and the Administrative Agent and when the Administrative Agent shall
        have been notified by each Lender that such Lender has executed it and
        thereafter shall be binding upon and inure solely to the benefit of the
        Borrower, the Administrative Agent and each Lender and, in each case, their
        respective successors and assigns; provided,
        however,
        that
        the Borrower shall not have the right to assign its rights hereunder or any
        interest herein without the prior written consent of the Lenders.

       

      Section
        11.11 Governing
        Law

       

      This
        Agreement and the rights and obligations of the parties hereto shall be governed
        by, and construed and interpreted in accordance with, the law of the State
        of
        New York.

      
        
          
          

        

        
          97

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

       

      Section
        11.12 Submission
        to Jurisdiction; Service of Process

       

      (a) Any
        legal
        action or proceeding with respect to this Agreement or any other Loan Document
        may be brought in the courts of the State of New York located in the City
        of New
        York or of the United States of America for the Southern District of New
        York,
        and, by execution and delivery of this Agreement, the Borrower hereby accepts
        for itself and in respect of its property, generally and unconditionally,
        the
        jurisdiction of the aforesaid courts. The parties hereto hereby irrevocably
        waive any objection, including any objection to the laying of venue or based
        on
        the grounds of forum
        non conveniens,
        that
        any of them may now or hereafter have to the bringing of any such action
        or
        proceeding in such respective jurisdictions.

       

      (b) The
        Borrower hereby irrevocably consents to the service of any and all legal
        process, summons, notices and documents in any suit, action or proceeding
        brought in the United States of America arising out of or in connection with
        this Agreement or any other Loan Document by the mailing (by registered or
        certified mail, postage prepaid) or delivering of a copy of such process
        to the
        Borrower at its address specified in Section
        11.8 (Notices, Etc.).
        The
        Borrower agrees that a final judgment in any such action or proceeding shall
        be
        conclusive and may be enforced in other jurisdictions by suit on the judgment
        or
        in any other manner provided by law.

       

      (c) Nothing
        contained in this Section
        11.12
        shall
        affect the right of the Administrative Agent or any Lender to serve process
        in
        any other manner permitted by law or commence legal proceedings or otherwise
        proceed against the Borrower or any other Loan Party in any other
        jurisdiction.

       

      (d) If
        for
        the purposes of obtaining judgment in any court it is necessary to convert
        a sum
        due hereunder in Dollars into another currency, the parties hereto agree,
        to the
        fullest extent that they may effectively do so, that the rate of exchange
        used
        shall be that at which in accordance with normal banking procedures the
        Administrative Agent could purchase Dollars with such other currency at the
        spot
        rate of exchange quoted by the Administrative Agent at 11:00 a.m. (New York
        time) on the Business Day preceding that on which final judgment is given,
        for
        the purchase of Dollars, for delivery two Business Days thereafter.

       

      Section
        11.13 Waiver
        of Jury Trial

       

      EACH
        OF
        THE ADMINISTRATIVE AGENT, THE LENDERS, THE PARENT AND THE BORROWER IRREVOCABLY
        WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
        OR ANY OTHER LOAN DOCUMENT.

       

      Section
        11.14 Marshaling;
        Payments Set Aside

       

      None
        of
        the Administrative Agent or any Lender shall be under any obligation to marshal
        any assets in favor of the Borrower or any other party or against or in payment
        of any or all of the Obligations. To the extent that the Borrower makes a
        payment or payments to the Administrative Agent or the Lenders or any such
        Person receives payment from the proceeds of the Collateral or exercise their
        rights of setoff, and such payment or payments or the proceeds of such
        enforcement or setoff or any part thereof are subsequently invalidated, declared
        to be fraudulent or preferential, set aside or required to be repaid to a
        trustee, receiver or any other party, then to the extent of such recovery,
        the
        obligation or part thereof originally intended to be satisfied, and all Liens,
        right and remedies therefor, shall be revived and continued in full force
        and
        effect as if such payment had not been made or such enforcement or setoff
        had
        not occurred.

      
        
          
          

        

        
          98

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

       

      Section
        11.15 Section
        Titles

       

      The
        section titles 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, except when used to reference a Section. Any
        reference to the number of a clause, sub-clause or subsection hereof immediately
        followed by a reference in parenthesis to the title of the Section containing
        such clause, sub-clause or subsection is a reference to such clause, sub-clause
        or subsection and not to the entire Section; provided,
        however,
        that,
        in case of direct conflict between the reference to the title and the reference
        to the number of such Section, the reference to the title shall govern absent
        manifest error. If any reference to the number of a Section (but not to any
        clause, sub-clause or subsection thereof) is followed immediately by a reference
        in parenthesis to the title of a Section, the title reference shall govern
        in
        case of direct conflict absent manifest error.

       

      Section
        11.16 Execution
        in Counterparts

       

      This
        Agreement may be executed in any number of counterparts and by different
        parties
        in separate counterparts, each of which when so executed shall be deemed
        to be
        an original and all of which taken together shall constitute one and the
        same
        agreement. Signature pages may be detached from multiple separate counterparts
        and attached to a single counterpart so that all signature pages are attached
        to
        the same document. Delivery of an executed signature page of this Agreement
        by
        facsimile transmission, electronic mail or by posting on the Approved Electronic
        Platform shall be as effective as delivery of a manually executed counterpart
        hereof. A set of the copies of this Agreement signed by all parties shall
        be
        lodged with the Borrower and the Administrative Agent.

       

      Section
        11.17 Entire
        Agreement

       

      This
        Agreement, together with all of the other Loan Documents and all certificates
        and documents delivered hereunder or thereunder, embodies the entire agreement
        of the parties and supersedes all prior agreements and understandings relating
        to the subject matter hereof. In the event of any conflict between the terms
        of
        this Agreement and any other Loan Document, the terms of this Agreement shall
        govern.

       

      Section
        11.18 Confidentiality

       

      Each
        of the Administrative Agent and the Lenders agrees to maintain the
        confidentiality of the Information (as defined below) and not to use or disclose
        such Information, except that Information may be used or disclosed (a) to
        its Affiliates and to its and its Affiliates’ respective managers,
        administrators, trustees, partners, directors, officers, employees, agents,
        advisors and other representatives (it being understood that the Persons
        to whom
        such disclosure is made will be informed of the confidential nature of such
        Information and instructed to keep such Information confidential), (b) to
        the extent requested by any regulatory authority purporting to have jurisdiction
        over it (including any self-regulatory authority, such as the National
        Association of Insurance Commissioners), (c) to the extent required by
        applicable laws or regulations or by any subpoena or similar legal process,
        (d) to any other party hereto, (e) in connection with the exercise of
        any remedies hereunder or under any other Loan Document or any action or
        proceeding relating to this Agreement or any other Loan Document or the
        enforcement of rights hereunder or thereunder, (f) subject to an agreement
        containing provisions substantially the same as those of this Section, to
        (i) any Eligible Assignee of or Participant in, or any prospective Eligible
        Assignee of or Participant in, any of its rights or obligations under this
        Agreement or (ii) any actual or party (or its managers, administrators,
        trustees, partners, directors, officers, employees, agents, advisors and
        other
        representatives) to any swap or derivative or similar transaction under which
        payments are to be made by reference to the Borrower and its Obligations,
        this
        Agreement or payments hereunder, (iii) any rating agency (it being understood
        that, prior to any such disclosure, such rating agency shall undertake to
        preserve the confidentiality of any Information relating to the Loan Parties
        received by it from such Lender), or (iv) the CUSIP Service Bureau or any
        similar organization, (g) with the written consent of the Borrower or
        (h) to the extent such Information (x) becomes publicly available
        other than as a result of a breach of this Section or (y) becomes available
        to the Administrative Agent, any Lender, or any of their respective Affiliates
        on a nonconfidential basis from a source other than the Borrower.

      
        
          
          

        

        
          99

          
            

          

        

        
          
          

          TERM
            LOAN AGREEMENT

          COLLECTIVE
            BRANDS FINANCE, INC.

        

      

      

      For
        purposes of this Section, “Information”
        means
        all information received from the Parent or any of its Subsidiaries relating
        to
        the Parent or any of its Subsidiaries or any of their respective businesses,
        other than any such information that is available to the Administrative Agent
        or
        any Lender on a nonconfidential basis prior to disclosure by the Parent or
        any
        of its Subsidiaries, provided that, in the case of information received from
        the
        Parent or any of its Subsidiaries after the date hereof, such information
        is
        clearly identified at the time of delivery as confidential. Any Person required
        to maintain the confidentiality of Information as provided in this Section
        shall
        be considered to have complied with its obligation to do so if such Person
        has
        exercised the same degree of care to maintain the confidentiality of such
        Information as such Person would accord to its own confidential
        information.

      

      Section
        11.19 Patriot
        Act Notice. 

       

      Each
        Lender subject to the Patriot Act hereby notifies the Borrower that, pursuant
        to
Section
        326
        of the
        Patriot Act, it is required to obtain, verify and record information that
        identifies the Borrower, including the name and address of the Borrower and
        other information that will allow such Lender to identify the Borrower in
        accordance with the Patriot Act.

       

      [Signature
        Pages Follow]

      
        
          
          

        

        
          100

          
            

          

        

        
          
          

        

        

          IN
            WITNESS WHEREOF, the parties hereto have caused this Agreement to be
            executed by
            their respective officers thereunto duly authorized, as of the date first
            above
            written.

        

        COLLECTIVE
          BRANDS FINANCE, INC.
(formerly
          known as Payless ShoeSource Finance, Inc.),
as
          Borrower

        

        By: 
          /s/
          Ullrich E. Porzig        

        Name:
          Ullrich E. Porzig

        Title:
          President

         

        COLLECTIVE
          BRANDS, INC.

          (formerly
            known as Payless ShoeSource, Inc.)
as
            a
            Loan Party

        

        

        By: 
          /s/
          Ullrich E. Porzig        

        Name:
          Ullrich E. Porzig

        Title:
          Senior Vice President

         

        PAYLESS
          SHOESOURCE, INC.,
          a
          Missouri corporation

        as
          a
          Loan Party

        

        By: 
          /s/
          Ullrich E. Porzig        

        Name:
          Ullrich E. Porzig

        Title:
          Senior Vice President

         

        PAYLESS
          SHOESOURCE DISTRIBUTION, INC.

        as
          a
          Loan Party

        

        By: 
          /s/
          Ullrich E. Porzig        

        Name:
          Ullrich E. Porzig

        Title:
          Vice President

        

        

        
          
            
              [SIGNATURE
                PAGE TO TERM LOAN AGREEMENT]

              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

        

        

        CITICORP
          NORTH AMERICA, INC.,

        as
          Administrative Agent and Lender

         

        By: 
          /s/
          Michael M. Schadt

        Name:
          Michael M. Schadt

        Title:
          Director

      

       

       

       

       

       

       

      
        

        
          
            
              [SIGNATURE
                PAGE TO TERM LOAN AGREEMENT]

              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

        

        

        J.P.
          MORGAN CHASE BANK, N.A.,

        as
          Lender

         

        By: 
          /s/
          Patrick J. Fravel

        Name:
          Patrick J. Fravel

        Title:
          Vice President

         

         

         

         

         

         

        
          
            [SIGNATURE
              PAGE TO TERM LOAN AGREEMENT]

            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
         

        TABLE
          OF CONTENTS

        

        
          	
                  Section
                    1.1

                	
                  Defined
                    Terms

                	
                  1

                
	
                  Section
                    1.2

                	
                  Computation
                    of Time Periods

                	
                  29

                
	
                  Section
                    1.3

                	
                  Accounting
                    Terms and Principles

                	
                  29

                
	
                  Section
                    1.4

                	
                  Conversion
                    of Foreign Currencies

                	
                  30

                
	
                  Section
                    1.5

                	
                  Certain
                    Terms

                	
                  30

                
	
                  ARTICLE
                    II

                	
                  THE
                    TERM LOAN FACILITY

                	
                  31

                
	
                  Section
                    2.1

                	
                  The
                    Term Loans

                	
                  31

                
	
                  Section
                    2.2

                	
                  Borrowing
                    Procedures

                	
                  33

                
	
                  Section
                    2.3

                	
                  Reduction
                    and Termination of the Term Loan Commitments

                	
                  34

                
	
                  Section
                    2.4

                	
                  Repayment
                    of Term Loans

                	
                  34

                
	
                  Section
                    2.5

                	
                  Evidence
                    of Debt

                	
                  35

                
	
                  Section
                    2.6

                	
                  Optional
                    Prepayments

                	
                  36

                
	
                  Section
                    2.7

                	
                  Mandatory
                    Prepayments

                	
                  37

                
	
                  Section
                    2.8

                	
                  Interest

                	
                  38

                
	
                  Section
                    2.9

                	
                  Conversion/Continuation
                    Option

                	
                  39

                
	
                  Section
                    2.10

                	
                  Fees

                	
                  39

                
	
                  Section
                    2.11

                	
                  Payments
                    and Computations

                	
                  39

                
	
                  Section
                    2.12

                	
                  Special
                    Provisions Governing Eurodollar Rate Loans

                	
                  42

                
	
                  Section
                    2.13

                	
                  Capital
                    Adequacy

                	
                  43

                
	
                  Section
                    2.14

                	
                  Taxes

                	
                  44

                
	
                  Section
                    2.15

                	
                  Substitution
                    of Lenders

                	
                  46

                
	
                  ARTICLE
                    III

                	
                  CONDITIONS
                    TO TERM LOANS

                	
                  47

                
	
                  Section
                    3.1

                	
                  Conditions
                    Precedent to Closing Date Term Loans

                	
                  47

                
	
                  Section
                    3.2

                	
                  Conditions
                    Precedent to Incremental Term Loans

                	
                  51

                
	
                  Section
                    3.3

                	
                  Determinations
                    of Borrowing Conditions

                	
                  53

                
	
                  ARTICLE
                    IV

                	
                  REPRESENTATIONS
                    AND WARRANTIES

                	
                  53

                
	
                  Section
                    4.1

                	
                  Corporate
                    Existence; Compliance with Law

                	
                  54

                
	
                  Section
                    4.2

                	
                  Corporate
                    Power; Authorization; Enforceable Obligations

                	
                  54

                
	
                  Section
                    4.3

                	
                  Ownership
                    of Subsidiaries

                	
                  55

                
	
                  Section
                    4.4

                	
                  Financial
                    Statements

                	
                  55

                
	
                  Section
                    4.5

                	
                  Material
                    Adverse Change

                	
                  56

                

        

         

        
          
            
            

          

          
            i

            
              

            

          

          
            
            

          

        

         

          

          TABLE
            OF CONTENTS

          (continued)

          Page

           

        

        
          	
                  Section
                    4.6

                	
                  Solvency

                	
                  56

                
	
                  Section
                    4.7

                	
                  Litigation

                	
                  56

                
	
                  Section
                    4.8

                	
                  Taxes

                	
                  57

                
	
                  Section
                    4.9

                	
                  Full
                    Disclosure

                	
                  57

                
	
                  Section
                    4.10

                	
                  Margin
                    Regulations

                	
                  57

                
	
                  Section
                    4.11

                	
                  No
                    Burdensome Restrictions; No Defaults

                	
                  58

                
	
                  Section
                    4.12

                	
                  Investment
                    Company Act

                	
                  58

                
	
                  Section
                    4.13

                	
                  Use
                    of Proceeds

                	
                  58

                
	
                  Section
                    4.14

                	
                  Insurance

                	
                  59

                
	
                  Section
                    4.15

                	
                  Labor
                    Matters

                	
                  59

                
	
                  Section
                    4.16

                	
                  ERISA

                	
                  59

                
	
                  Section
                    4.17

                	
                  Environmental
                    Matters

                	
                  60

                
	
                  Section
                    4.18

                	
                  Intellectual
                    Property

                	
                  60

                
	
                  Section
                    4.19

                	
                  Title;
                    Real Property

                	
                  61

                
	
                  Section
                    4.20

                	
                  Related
                    Documents

                	
                  62

                
	
                  ARTICLE
                    V

                	
                  FINANCIAL
                    COVENANT

                	
                  63

                
	
                  Section
                    5.1

                	
                  Maximum
                    Leverage Ratio

                	
                  63

                
	
                  ARTICLE
                    VI

                	
                  REPORTING
                    COVENANTS

                	
                  63

                
	
                  Section
                    6.1

                	
                  Financial
                    Statements

                	
                  63

                
	
                  Section
                    6.2

                	
                  Default
                    Notices

                	
                  64

                
	
                  Section
                    6.3

                	
                  Litigation

                	
                  65

                
	
                  Section
                    6.4

                	
                  SEC
                    Filings; Press Releases

                	
                  65

                
	
                  Section
                    6.5

                	
                  Insurance

                	
                  65

                
	
                  Section
                    6.6

                	
                  ERISA
                    Matters

                	
                  65

                
	
                  Section
                    6.7

                	
                  Environmental
                    Matters

                	
                  66

                
	
                  Section
                    6.8

                	
                  Other
                    Information

                	
                  67

                
	
                  ARTICLE
                    VII

                	
                  AFFIRMATIVE
                    COVENANTS

                	
                  67

                
	
                  Section
                    7.1

                	
                  Preservation
                    of Corporate Existence, Etc

                	
                  67

                
	
                  Section
                    7.2

                	
                  Compliance
                    with Laws, Etc

                	
                  68

                
	
                  Section
                    7.3

                	
                  Conduct
                    of Business

                	
                  68

                
	
                  Section
                    7.4

                	
                  Payment
                    of Taxes, Etc

                	
                  68

                
	
                  Section
                    7.5

                	
                  Maintenance
                    of Insurance

                	
                  68

                

        

         

        
          
            
            

          

          
            ii

            
              

            

          

          
            
            

          

        

         

          

          TABLE
            OF CONTENTS

          (continued)

          Page

           

        

        
          	
                  Section
                    7.6

                	
                  Access

                	
                  68

                
	
                  Section
                    7.7

                	
                  Keeping
                    of Books

                	
                  69

                
	
                  Section
                    7.8

                	
                  Maintenance
                    of Properties, Etc

                	
                  69

                
	
                  Section
                    7.9

                	
                  Application
                    of Proceeds

                	
                  69

                
	
                  Section
                    7.10

                	
                  Environmental

                	
                  69

                
	
                  Section
                    7.11

                	
                  Additional
                    Collateral and Guaranties

                	
                  69

                
	
                  Section
                    7.12

                	
                  Designation
                    of Subsidiaries

                	
                  71

                
	
                  ARTICLE
                    VIII

                	
                  NEGATIVE
                    COVENANTS

                	
                  72

                
	
                  Section
                    8.1

                	
                  Indebtedness

                	
                  72

                
	
                  Section
                    8.2

                	
                  Liens,
                    Etc

                	
                  73

                
	
                  Section
                    8.3

                	
                  Investments

                	
                  74

                
	
                  Section
                    8.4

                	
                  Sale
                    of Assets

                	
                  75

                
	
                  Section
                    8.5

                	
                  Restricted
                    Payments

                	
                  75

                
	
                  Section
                    8.6

                	
                  Prepayment
                    of Indebtedness

                	
                  76

                
	
                  Section
                    8.7

                	
                  Restriction
                    on Fundamental Changes

                	
                  76

                
	
                  Section
                    8.8

                	
                  Change
                    in Nature of Business

                	
                  76

                
	
                  Section
                    8.9

                	
                  Transactions
                    with Affiliates

                	
                  77

                
	
                  Section
                    8.10

                	
                  Limitations
                    on Restrictions on Subsidiary Distributions; No New Negative
                    Pledge

                	
                  77

                
	
                  Section
                    8.11

                	
                  Modification
                    of Constituent Documents

                	
                  77

                
	
                  Section
                    8.12

                	
                  Modification
                    of Related Documents

                	
                  77

                
	
                  Section
                    8.13

                	
                  Accounting
                    Changes; Fiscal Year

                	
                  78

                
	
                  Section
                    8.14

                	
                  Margin
                    Regulations

                	
                  78

                
	
                  Section
                    8.15

                	
                  No
                    Speculative Transactions

                	
                  79

                
	
                  Section
                    8.16

                	
                  Compliance
                    with ERISA

                	
                  79

                
	
                  ARTICLE
                    IX

                	
                  EVENTS
                    OF DEFAULT

                	
                  79

                
	
                  Section
                    9.1

                	
                  Events
                    of Default

                	
                  79

                
	
                  Section
                    9.2

                	
                  Remedies

                	
                  81

                
	
                  Section
                    9.3

                	
                  Rescission

                	
                  82

                
	
                  ARTICLE
                    X

                	
                  THE
                    ADMINISTRATIVE AGENT

                	
                  82

                
	
                  Section
                    10.1

                	
                  Authorization
                    and Action

                	
                  82

                
	
                  Section
                    10.2

                	
                  Administrative
                    Agent’s Reliance, Etc

                	
                  83

                

        

         

        
          
            
            

          

          
            iii

            
              

            

          

          
            
            

          

        

         

          

          TABLE
            OF CONTENTS

          (continued)

          Page

           

        

        
          	
                  Section
                    10.3

                	
                  Posting
                    of Approved Electronic Communications

                	
                  84

                
	
                  Section
                    10.4

                	
                  The
                    Administrative Agent Individually

                	
                  85

                
	
                  Section
                    10.5

                	
                  Lender
                    Credit Decision

                	
                  85

                
	
                  Section
                    10.6

                	
                  Indemnification

                	
                  85

                
	
                  Section
                    10.7

                	
                  Successor
                    Administrative Agent

                	
                  86

                
	
                  Section
                    10.8

                	
                  Concerning
                    the Collateral and the Collateral Documents; Releases

                	
                  86

                
	
                  Section
                    10.9

                	
                  Collateral
                    Matters Relating to Related Obligations

                	
                  87

                
	
                  ARTICLE
                    XI

                	
                  MISCELLANEOUS

                	
                  88

                
	
                  Section
                    11.1

                	
                  Amendments,
                    Waivers, Etc

                	
                  88

                
	
                  Section
                    11.2

                	
                  Assignments
                    and Participations

                	
                  90

                
	
                  Section
                    11.3

                	
                  Costs
                    and Expenses

                	
                  92

                
	
                  Section
                    11.4

                	
                  Indemnities

                	
                  93

                
	
                  Section
                    11.5

                	
                  Limitation
                    of Liability

                	
                  94

                
	
                  Section
                    11.6

                	
                  Right
                    of Set-off

                	
                  95

                
	
                  Section
                    11.7

                	
                  Sharing
                    of Payments, Etc

                	
                  95

                
	
                  Section
                    11.8

                	
                  Notices,
                    Etc

                	
                  96

                
	
                  Section
                    11.9

                	
                  No
                    Waiver; Remedies

                	
                  97

                
	
                  Section
                    11.10

                	
                  Binding
                    Effect

                	
                  98

                
	
                  Section
                    11.11

                	
                  Governing
                    Law

                	
                  98

                
	
                  Section
                    11.12

                	
                  Submission
                    to Jurisdiction; Service of Process

                	
                  98

                
	
                  Section
                    11.13

                	
                  Waiver
                    of Jury Trial

                	
                  99

                
	
                  Section
                    11.14

                	
                  Marshaling;
                    Payments Set Aside

                	
                  99

                
	
                  Section
                    11.15

                	
                  Section
                    Titles

                	
                  99

                
	
                  Section
                    11.16

                	
                  Execution
                    in Counterparts

                	
                  99

                
	
                  Section
                    11.17

                	
                  Entire
                    Agreement

                	
                  100

                
	
                  Section
                    11.18

                	
                  Confidentiality

                	
                  100

                
	
                  Section
                    11.19

                	
                  Patriot
                    Act Notice.

                	
                  100

                

        

         

        
          
            
            

          

          
            iv

            
              

            

          

          
            
            

          

        

        
          

          TABLE
            OF CONTENTS

          (continued)

           

        

        Schedules

         

        
          	
                  Schedule I

                	
                  –

                	
                  Term
                    Loan Commitments

                
	
                  Schedule II

                	
                  –

                	
                  Applicable
                    Lending Offices and Addresses for Notices

                
	
                  Schedule 4.2

                	
                  –

                	
                  Consents

                
	
                  Schedule 4.3

                	
                  –

                	
                  Ownership
                    of Subsidiaries

                
	
                  Schedule 4.7

                	
                  –

                	
                  Litigation

                
	
                  Schedule
                    4.15

                	
                  –

                	
                  Labor
                    Matters

                
	
                  Schedule
                    4.16

                	
                  –

                	
                  List
                    of Plans

                
	
                  Schedule
                    4.17

                	
                  –

                	
                  Environmental
                    Matters

                
	
                  Schedule
                    4.18

                	
                  –

                	
                  Intellectual
                    Property

                
	
                  Schedule
                    4.19

                	
                  –

                	
                  Real
                    Property

                
	
                  Schedule
                    7.13

                	
                  –

                	
                  Post-Closing
                    Covenants

                
	
                  Schedule 8.1

                	
                  –

                	
                  Existing
                    Indebtedness

                
	
                  Schedule
                    8.2

                	
                  –

                	
                  Existing
                    Liens

                
	
                  Schedule 8.3

                	
                  –

                	
                  Existing
                    Investments

                
	
                  Schedule
                    8.4

                	
                  –

                	
                  Asset
                    Sales

                
	
                  Schedule 8.13

                	
                  –

                	
                  Accounting
                    Change; Fiscal Year

                

        

        

        Exhibits

         

        
          	
                  Exhibit A

                	
                  –

                	
                  Form
                    of Assignment and Acceptance

                
	
                  Exhibit
                    B

                	
                  –

                	
                  Form
                    of Term Note

                
	
                  Exhibit C

                	
                  –

                	
                  Form
                    of Notice of Borrowing

                
	
                  Exhibit D

                	
                  –

                	
                  Form
                    of Notice of Conversion or Continuation

                
	
                  Exhibit E

                	
                  –

                	
                  Form
                    of Opinion of counsel for the Loan Parties

                
	
                  Exhibit F

                	
                  –

                	
                  Form
                    of Guaranty

                
	
                  Exhibit G

                	
                  –

                	
                  Form
                    of Pledge and Security Agreement

                
	
                  Exhibit H

                	
                  –

                	
                  Form
                    of Intercreditor Agreement

                

        

        

        
          
            
            

          

          
            v

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