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Exhibit 10.8    
  

$200,000,000

 

 

CREDIT
AGREEMENT

 

dated as of

 

August 5, 2002 

among

BLYTH, INC.

THE
BANKS LISTED HEREIN

JPMORGAN
CHASE BANK,

as Administrative Agent

BANK
OF AMERICA, N.A. and LASALLE BANK,

NATIONAL ASSOCIATION,

as Co-Syndication Agents 

and

FLEET
NATIONAL BANK and WACHOVIA BANK,

NATIONAL ASSOCIATION,

as Co-Documentation Agents

J.P. MORGAN SECURITIES INC.,

as Sole Lead Arranger and Sole Bookrunner 

  

 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	PAGE

	ARTICLE 1
 Definitions
	

SECTION 1.01.	
 	

Definitions	
 	

1
	SECTION 1.02.	 	Accounting Terms and Determinations	 	22
	SECTION 1.03.	 	Types of Borrowings	 	22
	

ARTICLE 2
 The Credits
	

SECTION 2.01.	
 	

Commitments to Lend	
 	

23
	SECTION 2.02.	 	Method of Committed Borrowing	 	24
	SECTION 2.03.	 	Competitive Bid Borrowings	 	25
	SECTION 2.04.	 	Notice to Banks; Funding of Loans	 	29
	SECTION 2.05.	 	Notes	 	30
	SECTION 2.06.	 	Maturity of Loans	 	31
	SECTION 2.07.	 	Interest Rates	 	31
	SECTION 2.08.	 	Fees	 	32
	SECTION 2.09.	 	Optional Termination or Reduction of Commitments	 	33
	SECTION 2.10.	 	Method of Electing Interest Rates	 	33
	SECTION 2.11.	 	Scheduled Termination of Commitments	 	35
	SECTION 2.12.	 	Optional Prepayments	 	35
	SECTION 2.13.	 	General Provisions as to Payments	 	36
	SECTION 2.14.	 	Funding Losses	 	37
	SECTION 2.15.	 	Computation of Interest and Fees	 	37
	SECTION 2.16.	 	Letters of Credit	 	38
	SECTION 2.17.	 	Takeout of Swingline Loans	 	43
	SECTION 2.18.	 	Increaved Commitments, Additional Banks	 	44
	SECTION 2.19.	 	Currency Equivalents	 	45
	SECTION 2.20.	 	Judgment Currency	 	46
	

ARTICLE 3
 Conditions
	

SECTION 3.01.	
 	

Closing	
 	

47
	SECTION 3.02.	 	Borrowings and Issuances of Letters of Credit	 	47
	

ARTICLE 4
 Representations and Warranties
	

SECTION 4.01.	
 	

Corporate Existence and Power	
 	

49
	SECTION 4.02.	 	Corporate and Governmental Authorization; No Contravention	 	49
	SECTION 4.03.	 	Binding Effect	 	49
	SECTION 4.04.	 	Financial Information	 	49
	SECTION 4.05.	 	Litigation	 	50
	SECTION 4.06.	 	Compliance with ERISA	 	50
	SECTION 4.07.	 	Environmental Matters	 	50
	SECTION 4.08.	 	Taxes	 	51

i

 

	SECTION 4.09.	 	Not an Investment Company	 	51
	SECTION 4.10.	 	Full Disclosure	 	51
	

ARTICLE 5
 Covenants
	

SECTION 5.01.	
 	

Information	
 	

51
	SECTION 5.02.	 	Compliance with Law	 	54
	SECTION 5.03.	 	Insurance	 	54
	SECTION 5.04.	 	Maintenance of Properties	 	54
	SECTION 5.05.	 	Maintenance of Records; Inspection	 	54
	SECTION 5.06.	 	Payment of Taxes and Claims	 	55
	SECTION 5.07.	 	Corporate Existence Etc	 	55
	SECTION 5.08.	 	Transactions with Affiliates	 	55
	SECTION 5.09.	 	Prohibited Liens	 	55
	SECTION 5.10.	 	Subsidiary Indebtedness	 	57
	SECTION 5.11.	 	Investments	 	59
	SECTION 5.12.	 	Leverage Ratio	 	60
	SECTION 5.13.	 	Minimum Adjusted Consolidated Net Worth	 	60
	SECTION 5.14.	 	Mergers and Sales of Assets	 	60
	SECTION 5.15.	 	Use of Proceeds	 	60
	

ARTICLE 6
 Defaults
	

SECTION 6.01.	
 	

Events of Default	
 	

61
	SECTION 6.02.	 	Notice of default	 	64
	SECTION 6.03.	 	Cash Cover	 	64
	

ARTICLE 7
 The Agents
	

SECTION 7.01.	
 	

Appointment and Authorization	
 	

65
	SECTION 7.02.	 	Administrative Agent and Affiliates	 	65
	SECTION 7.03.	 	Action by Administrative Agent	 	65
	SECTION 7.04.	 	Consultation with Experts	 	65
	SECTION 7.05.	 	Liability of Agent	 	65
	SECTION 7.06.	 	Indemnification	 	66
	SECTION 7.07.	 	Credit Decision	 	66
	SECTION 7.08.	 	Successor Administrative Agent	 	66
	SECTION 7.09.	 	Agents' Fees; Arranger Fee	 	67
	SECTION 7.10.	 	Co-Syndication Agents and Co-Documentation Agents	 	67
	

ARTICLE 8
 Change in Circumstances
	

SECTION 8.01.	
 	

Basis for Determining Interest Rate Inadequate or Unfair	
 	

67
	SECTION 8.02.	 	Illegality	 	68
	SECTION 8.03.	 	Increased Cost and Reduced Return	 	68
	SECTION 8.04.	 	Taxes	 	70
	SECTION 8.05.	 	Base Rate Loans Substituted for Affected Fixed Rate Loans	 	73
	SECTION 8.06.	 	Substitution of Bank	 	73

ii

 

	

ARTICLE 9
 Miscellaneous
	

SECTION 9.01.	
 	

Notices	
 	

74
	SECTION 9.02.	 	No Waivers	 	74
	SECTION 9.03.	 	Expenses; Indemnification	 	74
	SECTION 9.04.	 	Sharing of Set-Offs	 	75
	SECTION 9.05.	 	Amedments and Waivers	 	75
	SECTION 9.06.	 	Successors and Assigns	 	76
	SECTION 9.07.	 	Collateral	 	78
	SECTION 9.08.	 	GOVERNING LAW; SUBMISSION TO JURISDICTION	 	78
	SECTION 9.09.	 	Counterparts; Integration; Effectiveness	 	78
	SECTION 9.10.	 	WAIVER OF JURYTRIAL	 	78
	SECTION 9.11.	 	Confidentiality	 	79

iii

 

Pricing
Schedule 

Schedule 2.16—Existing
Letters of Credit 

Schedule 5.08—Specified
Affiliate Transactions 

Schedule 5.09—Existing
Liens 

Schedule 5.
10—Existing Indebtedness 

Schedule 5.11—Existing
Investments 

Exhibit A—Note 

Exhibit B—Notice
of Committed Borrowing 

Exhibit C—Competitive
Bid Quote Request 

Exhibit D—Invitation
for Competitive Bid Quotes 

Exhibit E—Competitive
Bid Quote 

Exhibits
F- I and F-2—Opinions of Counsel for the Borrower 

Exhibit G—Opinion
of Special Counsel for the Administrative Agent 

Exhibit H—Assignment
and Assumption Agreement 

Exhibit I—Extension
Agreement 

Exhibit J—Compliance
Certificate 

iv

 
 

CREDIT AGREEMENT    
  

        AGREEMENT dated as of August 5, 2002 among BLYTH, INC., the BANKS listed on the signature pages hereof, JPMORGAN CHASE BANK, as Administrative
Agent, BANK OF AMERICA, N.A. and LASALLE BANK, NATIONAL ASSOCIATION, as Co-Syndication Agents, and FLEET NATIONAL BANK and WACHOVIA BANK, NATIONAL ASSOCIATION, as
Co-Documentation Agents: 

        The
parties hereto agree as follows: 

 
 

ARTICLE I
  Definitions    
  

        SECTION 1.01. Definitions.    The following terms, as used herein, have the following meanings: 

        "Absolute Rate Auction" means a solicitation of Competitive Bid Quotes setting forth Competitive Bid Absolute Rates pursuant to
Section 2.03 for Competitive Bid Loans in Dollars. 

        "Acquisition" means an acquisition by the Borrower or any of its Consolidated Subsidiaries of a company, a division, a location or a line
of business or of all or substantially all of the assets of any of the foregoing. 

        "Additional Bank" has the meaning set forth in Section 2.18. 

        "Adjusted Consolidated Net Worth" means at any date the sum of (i) Consolidated Net Worth, determined as of such date, plus
(ii) an amount equal to the cumulative reduction in Consolidated Net Worth as a result of any Specified Non-Cash Charges occurring after January 31, 2002. 

        "Adjusted LIBO Rate" means, with respect to any Euro-Currency Loan for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate. 

        "Administrative Agent" means JPMCB in its capacity as administrative agent for the Banks under the Loan Documents, and its successors in
such capacity. 

        "Administrative Questionnaire" means, with respect to each Bank, an administrative questionnaire in the form prepared by the
Administrative Agent and submitted to the Administrative Agent (with a copy to the Borrower) duly completed by such Bank. 

        "Affiliate" means, at any time, (a) with respect to any Person (including the Borrower), any other Person that at such time
directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and (b) with respect to the Borrower, any Person
beneficially owning or holding, directly or indirectly, 20% or more of any class of voting or equity interests of the Borrower or any of its Subsidiaries or any corporation of which the Borrower and
its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 20% or more of any class of voting or equity interests. As used in this definition,
"Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires, any reference to an "Affiliate" is a reference to an Affiliate of the
Borrower. 

        "Agent" means the Administrative Agent, each of the Co-Documentation Agents or each of the Co-Syndication Agents,
as the context may require, and "Agents" means all of them. 

        "Alternative Currencies" means the Euro, Sterling, Yen or Swiss Francs; provided that any
other currency (except Dollars) shall also be an Alternative Currency if (1) the Borrower requests, by notice to the Banks through the Administrative Agent, that such currency be included as an
additional Alternative Currency for purposes of this Agreement, (ii) such currency is freely transferable and is freely convertible into Dollars in the London foreign exchange market,
(iii) deposits in such currency are customarily offered to banks in the London interbank market and (iv) no Bank shall have objected 

 

to the inclusion of such currency as an Alternative Currency by notice to the Borrower and the Administrative Agent given within five Euro-Currency Business Days of such Bank's receipt of
the notice referred to in clause (i). 

        "Alternative Currency Loan" means a Loan that is made in an Alternative Currency in accordance with the applicable Notice of Borrowing. 

        "Appeal Bond Lien" has the meaning set forth in the definition of Permitted Liens. 

        "Applicable Lending Officer" means, with respect to any Bank, (i) in the case of its Base Rate Loans, its Domestic Lending Office,
(ii) in the case of its Euro-Currency Loans, its Euro-Currency Lending Office, (iii) in the case of its Competitive Bid Loans, its Competitive Bid Lending office
and (iv) in the case of its Swingline Loans, its Swingline Lending Office. 

        "Assignee" has the meaning set forth in Section 9.06(c). 

        "Bank" means each bank listed on the signature pages hereof, each Additional Bank or Assignee which becomes a Bank pursuant to
Section 2.18 or 9.06(c), and their respective successors. 

        "Base Rate" means, for any day, a rate per annum equal to the greater of the Prime Rate in effect on such day or the Federal Funds Rate in
effect on such day plus 1/2 of 1%. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective from and including the effective date of
such change in the Prime Rate or the Federal Funds Rate. 

        "Base Rate Loan" means a Syndicated Loan which bears interest at the Base Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election or the provisions of Article 8. 

        "Base Rate Margin" means the applicable rate per annum determined in accordance with the Pricing Schedule. 

        "Board" means the Board of Governors of the Federal Reserve System of the United States of America. 

        "BofA" means Bank of America, N.A., and its successors. 

        "Borrower" means Blyth, Inc., a Delaware corporation, and its successors. 

        "Borrower's 2002 Form 10-K" means the Borrower's annual report on Form 10-K for the fiscal year
ended January 3 1, 2002, as filed with the Securities and Exchange Commission pursuant to the Exchange Act. 

        "Borrower's Latest Form 10-Q" means the Borrower's quarterly report on Form 10-Q for the quarter
ended April 30, 2002, as filed with the Securities and Exchange Commission pursuant to the Exchange Act. 

        "Borrowing" has the meaning set forth in Section 1.03. 

        "Candle America" means Candle Corporation of America, a New York corporation. 

        "Capital Lease" means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an
asset and the incurrence of a liability in accordance with GAAP. 

        "Cash Equivalents" means (a) marketable securities issued or directly and unconditionally guaranteed by the United States
Government or issued by any agency or instrumentality thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of issuance thereof;
(b) obligations of a municipality, a state, a territory or a possession of the United States, or any political subdivision of any of the foregoing or of the District of Columbia as 

2

 

described in Section 103(a) of the Code if these investments are rated at least AA- by S&P or its equivalent by another nationally recognized credit rating agency or are secured,
as to payments of principal and interest, by a letter of credit provided by a financial institution or by insurance provided by a bond insurance company whose debt is rated at least AA- by
S&P or its equivalent by another nationally recognized credit rating agency; (c) commercial paper maturing no more than 270 days from the date of acquisition thereof and, at the time of
acquisition, rated at least A-1 by S&P or at least P-1 by Moody's, (d) investments in short term asset management accounts offered by any bank described in
clause (e) of this definition for the purpose of investing in loans to a corporation (other than an Affiliate of the Parent or any of its Subsidiaries) organized under the laws of the United
States of America or any state thereof or the District of Columbia and rated at least A-1 by S&P or at least P-1 by Moody's; (e) certificates of deposit or bankers'
acceptances maturing within one year from the date of acquisition thereof issued by any bank or trust company organized under the laws of the United States of America or any state thereof or the
District of Columbia having unimpaired capital, surplus and undivided profits of not less than $250,000,000 and (f) tax exempt and tax advantaged auction rate products issued by financial
institutions and rated at least AA- by Standard & Poor's Ratings Services or its equivalent by another nationally recognized credit rating agency. 

        "CCW" means Candle Corporation Worldwide, Inc., a Delaware corporation. 

        "Closing Date" means the date on or after the Effective Date on which all of the conditions specified in Section 3.01 shall have
been satisfied. 

        "Code" means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from
time to time. 

        "Co-Documentation Agents" means, collectively, Fleet and Wachovia, each in its capacity as a Co-Documentation
Agent under the Loan Documents. 

        "Commitment" means (i) with respect to each Bank listed on the signature pages hereto, the amount set forth opposite its name on
such signature pages, (ii) with respect to any Additional Bank, the amount of the Commitment assumed by it pursuant to Section 2.18 and (iii) with respect to any Assignee, the
amount of the transferor Bank's Commitment assigned to it pursuant to Section 9.06(c), in each case as such amount may be changed from time to time pursuant to Section 2.09, 2.18 or
9.06(c); provided that, if the context so requires, the term "Commitment" means the obligation of a Bank to extend credit up to such amount to the
Borrower hereunder. 

        "Committed Loan" means a Syndicated Loan or a Swingline Loan. 

        "Competitive Bid Absolute Rate" has the meaning set forth in Section 2.03(d)(ii)(D). 

        "Competitive Bid Absolute Rate Loan" means a Loan to be made by a Bank pursuant to an Absolute Rate Auction. 

        "Competitive Bid Lending Office" means, as to each Bank, its Domestic Lending Office or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Competitive Bid Lending Office by notice to the Borrower and the Administrative Agent; provided that any Bank
may from time to time by notice to the Borrower and the Administrative Agent designate separate Competitive Bid Lending Offices for (i) its Competitive Bid LIBOR Loans, (ii) its
Competitive Bid Absolute Rate Loans and (iii) its Competitive Bid Loans in different currencies, in which case all references herein to the Competitive Bid Lending Office of such Bank shall be
deemed to refer to any or all of such offices, as the context may require. 

        "Competitive Bid LIBOR Loan" means a Loan to be made by a Bank pursuant to a LIBOR Auction (including such a Loan bearing interest at the
Base Rate pursuant to Section 8.01(a)). 

3

 

        "Competitive Bid Loan" means a Competitive Bid LIBOR Loan or a Competitive Bid Absolute Rate Loan. 

        "Competitive Bid Margin" has the meaning set forth in Section 2.03 (d)(ii)(C). 

        "Competitive Bid Quote" has the meaning set forth in Section 2.03(d). 

        "Consolidated Assets" means at any date the consolidated assets of the Borrower and its Consolidated Subsidiaries determined as of such
date. 

        "Consolidated Debt" means at any date the Indebtedness of the Borrower and its Consolidated Subsidiaries, determined on a consolidated
basis as of such date. 

        "Consolidated EBITDA" means, for any period, the sum of (i) Consolidated Net Income for such period plus (ii) to the extent
deducted in the determination thereof, interest expense, depreciation and amortization expense and provision for income taxes. Consolidated EBITDA for any four-quarter period will be
adjusted on a historical pro forma basis to reflect any Acquisition closed during such period as if such Acquisition had been closed on the first day of such period. 

        "Consolidated Net Income" for any period means the consolidated net income of the Borrower and its Consolidated Subsidiaries determined on
a consolidated basis for such period, excluding the effect of any Specified Non-Cash Charges occurring after January 31, 2002. 

        "Consolidated Net Worth" means at any date the consolidated stockholders' equity of the Borrower and its Consolidated Subsidiaries,
determined as of such date. 

        "Consolidated Subsidiary" means at any date any Subsidiary or other entity the accounts of which would be consolidated with those of the
Borrower in its consolidated financial statements if such statements were prepared as of such date. 

        "Co-Syndication Agents" means, collectively, BofA and LSB, each in its capacity as a Co-Syndication Agent under
the Loan Documents. 

        "Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default. 

        "Dollar Amount" means, at any time: 

	(i)
	with
respect to any Dollar-Denominated Loan, the principal amount thereof then outstanding;

	(ii)
	with
respect to any Letter of Credit Liabilities denominated in Dollars, the face amount thereof at such time; and

	(iii)
	with
respect to any Alternative Currency Loan or any Letter of Credit Liabilities denominated in an Alternative Currency, the principal or face amount
thereof then outstanding in the relevant Alternative Currency, converted to Dollars in accordance with Section 2.19. 

        "Dollar-Denominated Loan" means a Loan that is made in Dollars in accordance with the applicable Notice of Borrowing. 

        "Dollars" and the sign "$" mean lawful money of the United States. 

        "Domestic Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized by
law to close. 

        "Domestic Lending Office" means, as to each Bank, its office located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending Office) or such other office as such Bank may hereafter designate as its Domestic Lending Office by notice to the Borrower and
the Administrative Agent. 

4

 

        "Effective Date" means the date this Agreement becomes effective in accordance with Section 9.09. 

        "Environmental Laws" means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials
into the environment, including but not limited to those related to hazardous substances or wastes, air emissions and discharges to waste or public systems. 

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

        "ERISA Affiliate" means any trade or business (whether or not incorporated) that is treated as a single employer together with an Obligor
under section 414 of the Code. 

        "Euro" means the single currency of the Participating Member States. 

        "Euro-Currency Business Day" means a Euro-Dollar Business Day, unless such term is used in connection with an
Alternative Currency Borrowing or Alternative Currency Loan for which funds are to be paid or made available in such Alternative Currency on such day, in which case such day shall not be a
Euro-Currency Business Day unless commercial banks are open for international business (including dealings in deposits in such Alternative Currency) in both London and the place where such
funds are to be paid or made available. 

        "Euro-Currency Lending Office" means, as to each Bank, its office, branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative Questionnaire as its Euro-Currency Lending Office) or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Euro-Currency Lending Office by notice to the Administrative Agent; provided that any Bank may from time to time
by notice to the Borrower and the Administrative Agent designate separate Euro-Currency Lending Offices for its Loans in different currencies, in which case all references herein to the
Euro-Currency Lending Office of such Bank shall be deemed to refer to any or all of such offices, as the context may require. 

        "Euro-Currency Loan" means a Syndicated Loan which is either a Euro-Dollar Loan or an Alternative Currency Loan. 

        "Euro-Currency Margin" means the applicable rate per annum determined in accordance with the Pricing Schedule. 

        "Euro-Currency Rate" means a rate of interest determined pursuant to Section 2.07(b) on the basis of an Adjusted LIBO
Rate. 

        "Euro-Dolloar Business Day" means any Domestic Business Day on which commercial banks are open for international business
(including dealings in Dollar deposits) in London. 

        "Euro-Dollar Loan" means a Syndicated Loan denominated in Dollars which bears interest at a Euro-Currency Rate
pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election. 

        "Event of Default" has the meaning set forth in Section 6.01. 

        "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time. 

        "Existing Credit Facility" means the revolving credit agreement dated as of October 17, 1997, in the original amount of
$140,000,000, among the Borrower, the banks parties thereto, and the agents parties thereto, as amended to the Effective Date. 

        "Federal Funds Rate" means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal 

5

 

Reserve System arranged by Federal funds brokers, as published on the next succeeding Domestic Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day
that is a Domestic Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by it. 

        "Fiscal Quarter" means a consolidated fiscal quarter of the Borrower and its Subsidiaries ending on a Quarter Date, 

        "Fiscal Year" means the consolidated fiscal year of the Borrower and its Subsidiaries ending on January 31 of each calendar year. 

        "Fixed Rate Loans" means Euro-Currency Loans, Swingline Loans or Competitive Bid Loans (excluding Swingline Loans or
Competitive Bid LIBOR Loans bearing interest at the Base Rate) or any combination of the foregoing. 

        "Fleet" means Fleet National Bank, and its successors. 

        "Foreign Subsidiary" means any Subsidiary organized outside the United States and conducting substantially all its business outside the
United States. 

        "GAAP" means generally accepted accounting principles as in effect from time to time in the United States of America. 

        "Governmental Authority" means 

	(a)
	the
government of

	(i)
	the
United States of America or any State or other political subdivision thereof, or

	(ii)
	any
jurisdiction in which the Borrower or any of its Subsidiaries conducts all or any part of its business, or which asserts jurisdiction over any
properties of the Borrower or any of its Subsidiaries, or 

	(b)
	any
entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. 

        "Group of Loans" means at any time a group of Loans consisting of (i) all Loans which are Base Rate Loans at such time or
(ii) all Euro-Currency Loans denominated in the same currency and having the same Interest Period at such time, provided that, if a
Committed Loan of any particular Bank is converted to or made as a Base Rate Loan pursuant to Article 8, such Loan shall be included in the same Group or Groups of Loans from time to time as it
would have been if it had not been so converted or made. 

        "Guaranty" means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation of any other Person in any manner, whether directly or
indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by such Person: 

	(a)
	to
purchase such indebtedness or obligation or any property constituting security therefore;

	(b)
	to
advance or supply funds (i) for the purchase or payment of such indebtedness or obligation, or (ii) to maintain any working capital or other balance sheet condition
or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation; 

6

 

	(c)
	to
lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of any other Person to make
payment of the indebtedness or obligation; or

	(d)
	otherwise
to assure the owner of such indebtedness or obligation against loss in respect thereof 

In
any computation of the indebtedness or other liabilities of the obligor under any Guaranty, the indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct
obligations of such obligor. 

        "Hazardous Material" means any and all pollutants, toxic or hazardous wastes or any other substances that might pose a hazard to health or
safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release,
discharge, spillage, seepage, or filtration of which is or shall be restricted, prohibited or penalized by any applicable law (including, without limitation, asbestos, urea formaldehyde foam
insulation and polychlorinated biphenyls). 

        "Indebtedness" with respect to any Person means, at any time, without duplication, 

        (a)
its liabilities for borrowed money and its redemption obligations in respect of mandatorily redeemable Preferred Stock; 

        (b)
its liabilities for the deferred purchase price of property acquired by such Person (excluding (i) accounts payable arising in the ordinary course of business and
(ii) contingent purchase price obligations and other earnout obligations of the Borrower and/or its Subsidiaries to the extent such obligations are not required to be included as indebtedness
on the face of the Borrower's consolidated balance sheet in accordance with GAAP, but including all liabilities created or arising under any conditional sale or other title retention agreement with
respect to any such property), 

        (c)
all liabilities appearing on its balance sheet in accordance with GAAP in respect of Capital Leases; 

        (d)
all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such
liabilities); 

        (e)
all its liabilities in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or
not representing obligations for borrowed money); provided that for purposes of the definition of "Consolidated Debt", contingent liabilities in respect
of undrawn amounts under letters of credit shall be excluded; 

        (f)
Swaps of such Person, but excluding for purposes of Section 5.10, Swaps entered into the ordinary course of business for the purpose of managing interest expense or foreign
currency exposure; and 

        (g)
any Guaranty of such Person with respect to liabilities of a type described in any clauses (a) through (f) hereof 

Indebtedness
of any Person shall include all obligations of such Person of the character described in clauses (a) through (g) to the extent such Person remains legally liable in respect
thereof not withstanding that any such obligation is deemed to be extinguished under GAAP. 

        "Indemnitee" has the meaning set forth in Section 9.03(b). 

        "Insured Judgment Amounts" shall mean that part, if any, of any and all judgments rendered against the Borrower and/or any of its
Subsidiaries that are covered by insurance issued by a financially responsible insurer(s) who has not denied coverage. 

7

   
        "Interest Period" means: (1) with respect to each Euro-Currency Loan, the period commencing on the date of borrowing
specified in the applicable Notice of Borrowing or on the date specified in the applicable Notice of Interest Rate Election and ending one, two, three or six months thereafter, as the Borrower may
elect in the applicable notice, provided that: 

	(a)
	any
Interest Period (except an Interest Period determined pursuant to clause (c) below) which would otherwise end on a day which is not a Euro-Currency Business Day
for the relevant currency shall be extended to the next succeeding Euro-Currency Business Day for such currency unless such Euro-Currency Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding Euro-Currency Business Day for such currency;

	(b)
	any
Interest Period which begins on the last Euro-Currency Business Day for the relevant currency in 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, subject to clause (c) below, end on the last Euro-Currency Business Day for the relevant currency
in a calendar month; and

	(c)
	any
Interest Period which would otherwise end after the Termination Date for the relevant currency shall end on such Termination Date; 

        (2)
with respect to each Swingline Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such number of days thereafter (but not
more than 7 days) as the Borrower may elect in such notice; provided that: 

	(a)
	any
Interest Period (except an Interest Period determined pursuant to clause (b) below) which would otherwise end on a day which is not a Euro-Dollar Business Day
shall be extended to the next succeeding Euro-Dollar Business Day; and

	(b)
	any
Interest Period which would otherwise end after the Termination Date shall end on the Termination Date; 

        (3)
with respect to each Competitive Bid LIBOR Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such whole number of months
thereafter as the Borrower may elect in accordance with Section 2.03; provided that: 

	(a)
	any
Interest Period (except an Interest Period determined pursuant to clause (b) below) which would otherwise end on a day which is not a Euro-Currency Business Day
for the relevant currency shall be extended to the next succeeding Euro-Currency Business Day for such currency unless such Euro-Currency Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding Euro-Currency Business Day for such currency;

	(b)
	any
Interest Period which begins on the last Euro-Currency Business Day for the relevant currency in 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, subject to clause (c) below, end on the last Euro-Currency Business Day for such currency in a
calendar month; and

	(c)
	any
Interest Period which would otherwise end after the Termination Date for the relevant currency shall end on such Termination Date; and 

        (4)
with respect to each Competitive Bid Absolute Rate Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such number of days 

8

 

thereafter (but not less than 7 days) as the Borrower may elect in accordance with Section 2.03; provided that: 

	(a)
	any
Interest Period (except an Interest Period determined pursuant to clause (b) below) which would otherwise end on a day which is not a Euro-Currency Business Day
for the relevant currency shall be extended to the next succeeding Euro-Currency Business Day for such currency; and

	(b)
	any
Interest Period which would otherwise end after the Termination Date for the relevant currency shall end on such Termination Date. 

        "Investment" means (a) any direct or indirect purchase or other acquisition by the Borrower or any of its Subsidiaries of, or of a
beneficial interest in, any securities of any other Person (other than a Person that, prior to such purchase or acquisition, was a Subsidiary of the Borrower), (b) any direct or indirect
redemption, retirement, purchase or other acquisition for value, by any Subsidiary of the Borrower from any Person other than the Borrower or any of its Subsidiaries, of any equity securities of such
Subsidiary, or (c) any direct or indirect loan, advance (other than advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the
ordinary course of
business) or capital contribution by the Borrower or any of its Subsidiaries to any other Person other than a Subsidiary of the Borrower, including all indebtedness and accounts receivable from that
other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business. The amount of any Investment shall be the original cost of such Investment
plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investments. A
guaranty by the Borrower or any Subsidiary of Indebtedness of the Borrower or any Subsidiary shall not be deemed an Investment hereunder. 

        "ISP" has the meaning set forth in Section 2.16(h). 

        "Issuing Bank" means BofA and any other Bank that may agree to issue letters of credit hereunder, in each case as issuer of a Letter of
Credit hereunder. 

        "JPMCB" means JPMorgan Chase Bank, and its successors. 

        "Letter of Credit" means a letter of credit to be issued hereunder by the Issuing Bank in accordance with Section 2.16. 

        "Letter of Credit Liabilities" means, for any Bank and at any time, such Bank's ratable participation in the sum of (x) the amounts
then owing by the Borrower in respect of amounts drawn under Letters of Credit and (y) the aggregate amount then available for drawing under all Letters of Credit. 

        "Leverage Ratio" means, at any date, the ratio of (i) Consolidated Debt at such date to (ii) Consolidated EBITDA for the
period of four consecutive fiscal quarters most recently ended on or prior to such date. 

        "LIBOR Auction" means a solicitation of Competitive Bid Quotes setting forth Competitive Bid Margins based on the Adjusted LIBO Rate
pursuant to Section 2.03. 

        "LIBO Rate" means, with respect to any Euro-Currency Loan for any Interest Period, the rate appearing on the Screen at
approximately 11:00 a.m., London time, two Euro-Currency Business Days prior to the commencement of such Interest Period, as the rate for deposits in Dollars or the relevant
Alternate Currency with a maturity comparable to such Interest Period. In the event that such rate is not available for such currency at such time for any reason, then the  "LIBO Rate" with respect to
such Euro-Currency Loan for such Interest Period shall be the rate at which deposits of the relevant currency
with a maturity comparable to such Interest Period are offered by the principal London office 

9

 

of the Administrative Agent in immediately available funds in the London interbank market at approximately 11.00 a.m., London time, two Euro-Currency Business Days prior to the
commencement of such Interest Period. 

        "Lien" means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or
title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or
asset of such Person. 

        "Loan" means a Committed Loan or a Competitive Bid Loan and "Loans" means Committed Loans or Competitive Bid Loans or both. 

        "Loan Documents" means this Agreement and the Notes. 

        "LSB" means LaSalle Bank, National Association, and its successors. 

        "Material" means material in relation to the business, operations, affairs, financial condition, assets or properties of the Borrower and
its Subsidiaries taken as a whole. 

        "Material Adverse Effect" means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or
properties of the Borrower and its Subsidiaries taken as a whole, or (b) the ability of the Borrower to perform its obligations under the Loan Documents or (c) the validity or
enforceability of any Loan Document. 

        "Material Subsidiary" means, at any time, any Subsidiary of the Borrower having consolidated assets at such time in an amount equal to or
greater than 10% of Consolidated Net Worth at such time. 

        "Moody's" means Moody's Investors Service, Inc., or any successor to such corporation's business of rating debt securities. 

        "Multiemployer Plan" means any Plan that is a "multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA). 

        "New Acquisition Subsidiary" shall mean any Subsidiary formed by the Borrower (or by another Subsidiary of the Borrower) after the date of
this Agreement for the purpose of consummating an acquisition of assets or business(es) of another Person (such a Person, a "Related New Acquisition
Entity"). 

        "Notes" means promissory notes of the Borrower, substantially in the form of Exhibit A hereto, evidencing the obligation of the
Borrower to repay the Loans, and "Note" means any one of such promissory notes issued hereunder. 

        "Notice of Borrowing" means a Notice of Committed Borrowing or a Notice of Competitive Bid Borrowing. 

        "Notice of Committed Borrowing" has the meaning set forth in Section 2.02. 

        "Notice of Competitive Bid Borrowing" has the meaning set forth in Section 2.03(f). 

        "Notice of Interest Rate Election" has the meaning set forth in Section 2.10(a). 

        "Notice of Issuance" has the meaning set forth in Section 2.16(b). 

        "Officer's Certificate" means a certificate of a Senior Financial Officer or of any other officer of the Person delivering such
certificate whose responsibilities extend to the subject matter of such certificate. 

        "Other Liens" has the meaning set forth in Section 5.09(g). 

10

 

        "Parent" means, with respect to any Bank, any Person controlling such Bank. 

        "Participant" has the meaning set forth in Section 9.06(b). 

        "Participating Member States" means those members of the European Union from time to time which adopt a single, shared currency. 

        "PartyLite" means PartyLite Gifts, Inc., a Delaware corporation. 

        "PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto. 

        "Permitted Liens" means: 

        (a)
Liens for current taxes, assessments or governmental changes which are not delinquent or remain payable without penalty, or the validity of which is being contested in good faith by
appropriate proceedings and for which adequate reserves or other appropriate provisions are maintained on the books of the Borrower or any of its Subsidiaries in accordance with GAAP,  provided that any
right to seizure, levy, attachment, sequestration, foreclosure or garnishment with respect to such property by reason of such Lien has
not matured, or has been and continues to be effectively enjoined or stayed; 

        (b)
nonconsensual Liens, such as landlord liens and Liens of carriers, workmen, repairmen, warehousemen, mechanics and materialmen, imposed by operation of law, in each case incurred in
the ordinary course of business and securing obligations that are not overdue or securing obligations that are overdue that are being contested in good faith by appropriate proceedings and (with
respect to any such obligations that are overdue) for which adequate reserves or other appropriate provisions are maintained on the books of the Borrower or any of its Subsidiaries in accordance with
GAAP, provided that any right to seizure, levy, attachment, sequestration, foreclosure or garnishment with respect to such property by reason of such
Lien has not matured, or has been and continues to be effectively enjoined or stayed; 

        (c)
Liens incurred or deposits made in connection with workers' compensation, unemployment insurance and other types of social security, or securing liability to insurance carriers under
insurance and other types of social security, or securing liability to insurance carriers under insurance or selfinsurance arrangements, or obtaining utility service or to secure the performance of
tenders, statutory obligations, surety and appeal bonds (provided that no Liens securing any appeal or similar bond in connection with any litigation or
other legal proceeding (an "Appeal Bond Lien") shall constitute Permitted Liens to the extent the sum of (i) the aggregate amount secured thereby
(exclusive of Insured Judgment Amounts) plus without duplication (ii) the amount (exclusive of Insured Judgment Amounts) secured by Liens permitted by paragraph (e) below exceeds
$20,000,000 at any one time), bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money) in each case (except in the case of Appeal Bond Liens) incurred in the ordinary course of business and securing obligations that are not overdue or securing
obligations that are overdue that are being contested in good faith by
appropriate proceedings and (with respect to any such obligations that are overdue) for which adequate reserves or other appropriate provisions are maintained on the books of the Borrower or any of
its Subsidiaries in accordance with GAAP, provided that any right to seizure, levy, attachment, sequestration, foreclosure or garnishment with respect
to such property by reason of such Lien has not matured, or has been and continues to be effectively enjoined or stayed; 

        (d)
easements, rights-of-way, restrictions, minor defects, encroachments or irregularities in title and other similar charges or encumbrances not interfering in
any Material respect with the ordinary conduct of the business of the Borrower or any of its Subsidiaries-, and 

        (e)
Liens arising out of or in connection with any litigation or other legal proceeding, the time for the appeal or petition for rehearing of which shall not have expired or which is
being contested in good 

11

 

faith by appropriate proceedings and for which adequate reserves or other appropriate provisions are maintained on the books of the Borrower or any of its subsidiaries in accordance with GAAP,  provided
that any right to seizure, levy, attachment, sequestration, foreclosure or garnishment with respect to such property by reason of such Lien has
not matured, or has been and continues to be effectively enjoined or stayed; and provided further that no such Liens shall be Permitted Liens to the
extent that the sum of (i) the aggregate amount secured thereby (exclusive of Insured Judgment Amounts) plus without duplication (ii) the amount (exclusive of Insured Judgment Amounts)
secured by any Appeal Bond Liens exceeds $20,000,000 at any one time. 

        "Person" means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof 

        "Plan" means an "employee benefit plan" (as defined in section 3(3) of ERISA) that is or, within the proceeding five years, has
been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by the Borrower or any of its ERISA Affiliates or with respect
to which the Borrower or any of its ERISA Affiliates may have any liability. 

        "Preferred Stock' means any class of capital stock of a corporation that is preferred over any other class of capital stock of such
corporation as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such corporation, 

        "Pricing Schedule" means the Pricing Schedule attached hereto. 

        "Prime Rate" means the rate of interest per annum publicly announced from time to time by JPMCB as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. 

        "property" or "properties" means, unless otherwise specifically limited, real or personal
property of any kind, tangible or intangible, choate or inchoate. 

        "Quarterly Date" means each January 3 1, April 30, July 31 and October 31, commencing with October 31,
2002. 

        "Regulation D" means Regulation D of the Board, as in effect from time to time, and all official rulings and interpretations
thereunder or thereof. 

        "Regulation U" means Regulation U of the Board, as in effect from time to time, and all official rulings and interpretations
thereunder or thereof 

12

   
        "Regulation X" means Regulation X of the Board, as in effect from time to time, and all official rulings and interpretations
thereunder or thereof. 

        "Related New Acquisition Entity" has the meaning set forth in the definition of New Acquisition Subsidiary. 

        "Required Banks" means at any time Banks having more than 50% of the aggregate amount of the Commitments or, if the Commitments shall have
been terminated, holding more than 50% of the aggregate Dollar Amount of the Loans and the Letter of Credit Liabilities. 

        "Responsible Officer" means any Senior Financial Officer and any other executive officer of the Borrower with responsibility for the
administration of the relevant portion of this Agreement. 

        "Revolving Credit Period" means the period from and including the Effective Date to but excluding the Termination Date. 

        "Robert B. Goergen and Family" shall mean (i) Robert B. Goergen, (ii) any other member of the immediate family of Robert B.
Goergen and their spouses, (iii) any descendants (including by adoption) of any Person described in clauses (i) and (ii), (iii) any trusts for the primary benefit of, or
partnerships, limited liability companies or other entities primarily controlled by, any Persons described in clauses and/or (iv) charitable trusts and foundations whose direction is controlled
by Person(s) described in clauses (i)-(iii). 

        "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor
to its business of rating debt securities. 

        "Screen" means (a) with respect to Dollar-Denominated Loans, Telerate Page 3750 and (b) with respect to Alternative Currency
Loans, the Telerate Page selected by the Administrative Agent that displays rates for interbank deposits in the appropriate Alternative Currency or, in the case of either (a) or (b), any
successor or substitute Telerate Page or any successor to or substitute source for such rates,
providing rate quotations comparable to those currently provided on such Telerate Page, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest
rates applicable to deposits in the London interbank market. 

        "Senior Financial Officer" means as to any Person, the chief financial officer, principal accounting officer, treasurer or comptroller of
such Person. 

        "Specified Non-Cash Charges" means non-cash charges as a result of SFAS 141 or SFAS 142 issued by
the Financial Accounting Standards Board. 

        "Spot Rate" means, at any date, the Administrative Agent's spot buying rate for the relevant Alternative Currency against Dollars as of
approximately 11:00 A.M. (London time) on such date. 

        "Statutory Reserve Rate" means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which
is a number one minus the aggregate maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the
Administrative Agent is subject, with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D). Such reserve percentages
shall include those imposed pursuant to such Regulation D. Euro-Currency Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory
Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage. 

        "Sterling" means the lawful currency of the United Kingdom. 

13

 

        "Subsidiary" means, as to any Person, any corporation, association or other business entity in which such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a
majority of the directors (or Persons performing similar functions) of such entity, and any partnership or joint venture of more than 50% interest in the profits or capital thereof is owned by such
Person or one or more o fits Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership can and does ordinarily take major business actions without the prior approval of
such Person or one or more of its Subsidiaries). 

        "Swaps" means, with respect to any Person, payment obligations with respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the happening of a contingency. For the purposes of this Agreement, the amount of the obligation under any Swap shall be the
amount determined in respect thereof as of the end of the then most recently ended fiscal quarter of such Person, based on the assumptions that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such Swap provides for the netting of amounts payable by and to such Person thereunder or if any such agreement provides for the
simultaneous payment of amounts by and to such Person, then in each such case, the amount of such obligation shall be the net amount so determined. 

        "Swingline Bank" means JPMCB, and its successors. 

        "Swingline Lending Office" means, as to the Swingline Bank, its office located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its Swingline Lending Office) or such other office as such Bank may hereafter designate as its Swingline Lending Office by notice to
the Borrower and the Administrative Agent. 

        "Swingline Loan" means a loan made by the Swingline Bank pursuant to Section 2.01(b). 

        "Swingline Takeout Loan" means a Base Rate Loan made pursuant to Section 2.17. 

        "Swiss Francs" means the lawful currency of the Union of Switzerland. 

        "Syndicated Loan" means a Loan made by a Bank pursuant to Section 2.01(a); provided
that, if any such loan or loans (or portions thereof) are combined or subdivided pursuant to a Notice of Interest Rate Election, the term "Syndicated Loan" shall refer to the combined principal amount
resulting from such combination or to each of the separate principal amounts resulting from such subdivision, as the case may be. 

        "Termination Date" means August 5, 2005, or such later date to which the Termination Date may be extended pursuant to
Section 2.01(c), or if any such day is not a Euro-Currency Business Day for the relevant currency, the next preceding Euro-Currency Business Day for such currency.
Unless the context otherwise requires, references to the Termination Date are to the Termination Date determined with reference to Loans denominated in Dollars. 

        "UCP" has the meaning set forth in Section 2.16(h). 

        "United States" means the United States of America, including the States and the District of Columbia, but excluding its territories and
possessions. 

        "Unrefunded Swingline Loans" has the meaning set forth in Section 2.17(b). 

        "Wachovia" means Wachovia Bank, National Association, and its successors. 

        "Wholly-Owned Subsidiary" means, at any time, with respect to any Person, any Subsidiary of such Person one hundred percent (100%) of all
of the equity interests (except directors' qualifying shares) and voting interests of which are owned by any one or more of such Person and such Person's other Wholly Owned Subsidiaries at such time. 

        "Yen" means the lawful currency of Japan. 

14

  

        SECT10N 1.02.    Accounting Terms and Determinations.    Unless otherwise specified herein, all accounting terms
used
herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally
accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Borrower's independent public accountants) with the most recent
audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Banks; provided that, if the Borrower
notifies the Administrative Agent that the Borrower wishes to amend any covenant in Article 5 to eliminate the effect of any change in generally accepted accounting principles on the operation
of such covenant (or if the Administrative Agent notifies the Borrower that the Required Banks wish to amend Article 5 for such purpose), then the Borrower's compliance with such covenant shall
be determined on the basis of generally accepted accounting principles in effect immediately before the relevant change in generally accepted accounting principles became effective, until either such
notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Banks. 

        SECTION
1.03.    Types of Borrowings.    The term "Borrowing" denotes
the aggregation of Loans of one or more Banks to be made to the Borrower pursuant to Article 2 on the same date, all of which Loans are of the same type (subject to Article 8), are
denominated in the same currency and, except in the case of Base Rate Loans, have the same initial Interest Period. Borrowings are classified for purposes of this Agreement either by reference to the
pricing of Loans comprising such Borrowing (e.g., a "Fixed Rate Borrowing" is a Euro-Dollar
Borrowing, a Swingline Borrowing or a Competitive Bid Borrowing (excluding any such Borrowing consisting of Swingline Loans or Competitive Bid LEBOR Loans bearing interest at the Base Rate), and a  "Euro-Dollar
Borrowing" is a Borrowing comprised of Euro-Dollar Loans) or by reference to the provisions of Article 2
under which participation therein is determined (i.e., a "Syndicated Borrowing" is a Borrowing under
Section 2.01 (a) in which all Banks participate in proportion to their Commitments, while a "Competitive Bid Borrowing" is a Borrowing
under Section 2.03 in which the Bank participants are determined on the basis of their bids in accordance therewith). 

 
 

    ARTICLE 2    
    
    The Credits    
  

        SECTION
2.01.    Commitments to Lend.    (a) Syndicated Loans.
During the Revolving Credit Period each Bank severally agrees, on the terms and conditions set forth in this Agreement, to make Loans to the Borrower from time to time in amounts such that the
aggregate Dollar Amount of Committed Loans by such Bank, together with the Dollar Amount of its Letter of Credit Liabilities and its participating interests in any Unrefunded Swingline Loans, shall at
no time exceed the amount of its Commitment. The aggregate Dollar Amount of each Borrowing under this subsection (other than a Swingline Takeout Borrowing) shall be (i) in the case of a Base
Rate Borrowing, a minimum of $1,000,000 or any larger multiple of $500,000 (except that any such Borrowing may be in the aggregate amount available to the Borrower in accordance with
Section 3.02) or (ii) in the case of a Euro-Currency Borrowing, a minimum of $2,000,000 or, in the case of Dollar-Denominated Loans, any larger multiple of $500,000. Each
Borrowing under this subsection shall be made from the several Banks ratably in proportion to their respective Commitments. Within the foregoing limits, the Borrower may borrow under this Section,
repay, or to the extent permitted by Section 2.12, prepay Loans and reborrow at any time during the Revolving Credit Period under this Section. 

        (b)
Swingline Loans. From time to time prior to the Termination Date, the Swingline Bank agrees, on the terms and conditions set forth in
this Agreement, to make loans denominated in Dollars to the Borrower pursuant to this subsection from time to time in amounts such that (1) the aggregate Dollar Amount of its Committed Loans at
any one time outstanding together with its Letter of Credit 

15

 

Liabilities shall not exceed the amount of its Commitment, (ii) the aggregate Dollar Amount of Swingline Loans at any time outstanding shall not exceed $15,000,000 and (Ili) the number of
Swingline Loans outstanding at any time shall not be greater than five. Within the foregoing limits, the Borrower may borrow under this subsection, repay or, to the extent permitted by
Section 2.12, prepay Loans and reborrow at any time during the Revolving Credit Period under this subsection; provided that the proceeds of a
Swingline Borrowing may not be used, in whole or in part, to refund any prior Swingline Borrowing. Each Borrowing under this subsection 2. 01 (b) shall be in an aggregate principal amount of
$100,000 or any larger multiple thereof (except that any such Borrowing may be in the aggregate amount available in accordance with Section 3.02). 

        (c)
Extension. The Termination Date may be extended, in the manner set forth in this subsection 2.01(c), on August 5, 2003 and on
each anniversary of such date which falls not less than one year prior to the Termination Date as theretofore extended (an "Extension Date"), for a
period of one year after the date on which the Termination Date would otherwise have occurred. If the Borrower wishes to request an extension of the Termination Date to be effective on any Extension
Date, it shall give written notice to that effect to the Administrative Agent not less than 45 nor more than 90 days prior to such Extension Date, whereupon the Administrative Agent shall
notify each of the Banks of such notice. Each Bank will respond to such request, whether affirmatively or negatively, within 30 days. If all Banks shall have responded affirmatively to such a
request, then, subject to receipt by the Administrative Agent of counterparts of an Extension Agreement in substantially the form of Exhibit I duly completed and signed by all of the parties
hereto, the Termination Date shall be extended, effective on such Extension Date, for a period of one year to the date stated in such Extension Agreement. If Banks holding less than all but more than
75% of the aggregate Commitments shall have responded affirmatively to such a request, then the Borrower shall have the right prior to the Extension Date to replace all, but not less than all, of the
Banks that did not respond affirmatively with an Assignee or Assignees (which may be one or more of the other Banks) that will purchase the Loans
and assume the Commitment and Letter of Credit Liabilities of the Banks that did not respond affirmatively and extend the Termination Date as requested, and, upon consummation of the assignments
pursuant to Section 9.06 promptly followed by the receipt by the Administrative Agent of counterparts of an Extension Agreement substantially in the form of Exhibit I duly completed and
signed by all of the parties hereto, the Termination Date shall be extended, effective on such Extension Date, for a period of one year to the date stated in such Extension Agreement. 

        SECTION
2.02.    Method of Committed Borrowing.    The Borrower shall give the Administrative Agent telephonic notice
with the information required described in clauses (a)—(e) below, followed promptly by a written notice substantially in the form of Exhibit B (a "Notice of
Committed Borrowing") not later than 12:00 Noon (New York City time) on (x) the date of each Base Rate Borrowing or Swingline Borrowing, (y) the third
Euro-Dollar Business Day before each Euro-Dollar Borrowing and (z) the fourth Euro-Currency Business Day before each Euro-Currency Borrowing in
an Alternative Currency, specifying: 

        (a)
the date of such Borrowing, which shall be a Domestic Business Day in the case of a Base Rate Borrowing or a Swingline Borrowing or a Euro-Currency Business Day for the
relevant currency in the case of a Euro-Currency Borrowing; 

        (b)
the currency and aggregate amount (in such currency) of such Borrowing; 

        (c)
whether the Loans comprising such Borrowing are to be Swingline Loans or Syndicated Loans; 

        (d)
in the case of a Syndicated Borrowing, whether the Loans comprising such Borrowing are to bear interest initially at the Base Rate or a Euro-Currency Rate; and 

16

 

        (e)
in the case of a Fixed Rate Borrowing, the duration of the initial Interest Period applicable thereto, subject to the provisions of the definition of Interest Period. 

        SECTION
2.03.    Competitive Bid Borrowings.    (a) The Competitive Bid
Option. In addition to Committed Borrowings pursuant to Section 2.01, the Borrower may, as set forth in this Section, request
the Banks to make offers to make Competitive Bid Loans to the Borrower from time to time during the Revolving Credit Period. The Banks may, but shall have no obligation to, make such offers. and the
Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this Section. 

        (b)
Competitive Bid Quote Request. When the Borrower wishes to request offers to make Competitive Bid Loans under this Section, it shall
transmit to the Administrative Agent by telephone call followed promptly by facsimile transmission a Competitive Bid Quote Request substantially in the form of Exhibit C hereto so as to be
received by the Administrative Agent not later than 12:00 Noon (New York City time) on (x) the fifth Euro-Cuffency Business Day before the date of Borrowing proposed therein, in the
case of a LEIBR Auction in an Alternative Currency, (y) the fourth Euro-Currency Business Day before the date of Borrowing proposed therein, in the case of a LIBOR Auction in
Dollars or (z) the Domestic Business Day next preceding the date of Borrowing proposed therein, in the case of an Absolute Rate Auction, or, in any such case, such other time or date as the
Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Competitive Bid Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be effective. Each such Competitive Bid Quote Request shall specify: 

        (i)
the proposed date of Borrowing, which shall be (x) a Euro-Currency Business Day in the case of a LIBOR Auction or (y) a Domestic Business Day in the case of
an Absolute Rate Auction, 

        (ii)
the proposed currency and the aggregate amount (in such currency) of such Borrowing, which shall be $2,000,000 in aggregate Dollar Amount (or any larger multiple of $1,000,000), 

        (iii)
the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period, and 

        (iv)
whether the Competitive Bid Quotes requested are to set forth a Competitive Bid Margin or a Competitive Bid Absolute Rate. 

        The
Borrower may request offers to make Competitive Bid Loans for more than one Interest Period in a single Competitive Bid Quote Request. No more than two (2) Competitive Bid
Quote Requests shall be given within five Euro-Currency Business Days (or such other number of days as the Borrower and the Administrative Agent may agree) of any other Competitive Bid
Quote Request for a Borrowing in the same currency. 

        (c)
Invitation for Competitive Bid Quotes. Promptly after receiving a Competitive Bid Quote Request, the Administrative Agent shall send
to the Banks by telex or facsimile an Invitation for Competitive Bid Quotes substantially in the form of Exhibit D hereto, which shall constitute an invitation by the Borrower to each Bank to
submit Competitive Bid Quotes offering to make the Competitive Bid Loans to which such Competitive Bid Quote Request relates in accordance with this Section. 

        (d)
Submission and Contents of Competitive Bid Quotes. (i) Each Bank may submit a competitive bid quote (a  "Competitive Bid Quote") containing an offer or
offers to make Competitive Bid Loans in response to any Invitation for Competitive Bid Quotes. Each
Competitive Bid Quote must comply with the requirements of this subsection 2.03(d) and must be submitted to the Administrative Agent by telex or facsimile not later than (x) 10:30 A.M.
(New York City time) on the fourth Euro-Currency Business 

17

 

Day before the proposed date of Borrowing, in the case of a LIBOR Auction in an Alternative Currency, (y) 10:30 A.M. (New York City time) on the third Euro-Currency Business
Day before the proposed date of Borrowing, in the case of a LIBOR Auction in Dollars, or (z) 10:30 A.M. (New York City time) on the proposed date of Borrowing, in the case of an Absolute
Rate Auction, or, in any such case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the
Competitive Bid Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective; provided that Competitive
Bid Quotes submitted by the Administrative Agent (or any affiliate of the Administrative Agent) in the capacity of a Bank may be submitted, and may only be submitted, if the Administrative Agent or
such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than (x) one hour before the deadline for the other Banks, in the case of a LEBOR Auction or
(y) 15 minutes before the deadline for the other Banks, in the case of an Absolute Rate Auction. Subject to Articles 3 and 8, any Competitive Bid Quote so made shall not be revocable except
with the written consent of the Administrative Agent given on the instructions of the Borrower. 

        (ii)
Each Competitive Bid Quote shall be substantially in the form of Exhibit E hereto and shall in any case specify: 

        (A)
the proposed date of Borrowing, 

        (B)
the principal amount (in the relevant currency) of the Competitive Bid Loan for which each such offer is being made, which principal amount (w) may be greater than or less
than the Commitment of the quoting Bank, (x) must be in the Dollar Amount of $2,000,000 (or any larger multiple of $1,000,000), (y) may not exceed the principal amount of Competitive Bid
Loans for which offers were requested and (z) may be subject to an aggregate limitation as to the principal amount of Competitive Bid Loans for which offers being made by such quoting Bank may
be accepted, 

        (C)
in the case of a LIBOR Auction, the margin above or below the applicable Adjusted LEBO Rate (the "Competitive Bid Margin") offered for
each such Competitive Bid Loan, expressed as a percentage (specified to the nearest 1/1,000th of 1%) to be added to or subtracted from such base rate, 

        (D)
in the case of an Absolute Rate Auction, the rate of interest per annum (specified to the nearest 1/1,000th of 1%) (the "Competitive Bid Absolute
Rate") offered for each such Competitive Bid Loan, and 

        (E)
the identity of the quoting Bank. 

A
Competitive Bid Quote may set forth up to five separate offers by the quoting Bank with respect to each Interest Period specified in the related Invitation for Competitive Bid Quotes. 

        (iii)
Any Competitive Bid Quote shall be disregarded if it: 

        (A)
is not substantially in conformity with Exhibit E hereto or does not specify all of the information required by subsection 2.03(d)(ii) above; 

        (B)
contains qualifying, conditional or similar language; 

        (C)
proposes terms other than or in addition to those set forth in the applicable Invitation for Competitive Bid Quotes; or 

        (D)
arrives after the time set forth in subsection 2.03(d)(i). 

        (e)  Notice to Borrower. The Administrative Agent shall promptly notify the Borrower of the terms of (i) any Competitive Bid Quote
submitted by a Bank that is in accordance with subsection 2.03(d) and (11) any Competitive Bid Quote that amends, modifies or is otherwise inconsistent with a previous 

18

 

Competitive Bid Quote submitted by such Bank with respect to the same Competitive Bid Quote Request. Any such subsequent Competitive Bid Quote shall be disregarded by the Administrative Agent unless
such subsequent Competitive Bid Quote is submitted solely to correct a manifest error in such former Competitive Bid Quote. The Administrative Agent's notice to the Borrower shall specify
(A) the aggregate principal amount of Competitive Bid Loans for which offers have been received for- each Interest Period specified in the related Competitive Bid Quote Request,
(B) the respective principal amounts and Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be, so offered and (C) if applicable, limitations on the aggregate
principal amount of Competitive Bid Loans for which offers in any single Competitive Bid Quote may be accepted. 

        (f)
Acceptance and Notice by Borrower. The Borrower shall notify the Administrative Agent of its acceptance or non-acceptance
of the offers notified to it pursuant to subsection 2.03(e) not later than 12:00 Noon (New York City time) on (x) the fourth Euro-Currency Business Day before the proposed date of
Borrowing, in the case of a LIBOR Auction in an Alternative Currency, (y) the third
Euro-Dollar Business Day before the proposed date of Borrowing, in the case of a LIBOR Auction in Dollars or (z) the proposed date of Borrowing, in the case of an Absolute Rate
Auction, or, in any such case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the
Competitive Bid Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective. In the case of acceptance, such notice (a "Notice
of Competitive Bid Borrowing") shall specify the aggregate principal amount of offers for each Interest Period that are accepted. The Borrower may accept any Competitive Bid
Quote in whole or in part; provided that: 

        (i)
the aggregate principal amount of each Competitive Bid Borrowing may not exceed the applicable amount set forth in the related Competitive Bid Quote Request; 

        (ii)
the aggregate Dollar Amount of each Competitive Bid Borrowing must be in the amount of $2,000,000 (or any larger multiple of $1,000,000); 

        (iii)
acceptance of offers may only be made on the basis of ascending Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be-, and 

        (iv)
the Borrower may not accept any offer that is described in subsection 2.03(d)(iii) or that otherwise fails to comply with the requirements of this Agreement. 

        (g)
Allocation by Administrative Agent. If offers are made by two or more Banks with the same Competitive Bid Margins or Competitive Bid
Absolute Rates, as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of
Competitive Bid Loans in respect of which such offers are accepted shall be allocated by the Administrative Agent among such Banks as nearly as possible (in multiples of $1,000,000 or the equivalent
thereof in the relevant Alternative Currency, as the Administrative Agent may deem appropriate) in proportion to the aggregate principal amounts of such offers. Determinations by the Administrative
Agent of the amounts of Competitive Bid Loans shall be conclusive in the absence of manifest error. 

        SECTION
2.04.    Notice to Banks; Funding of Loans.    

        (a)
Upon receipt of a Notice of Borrowing, the Administrative Agent shall promptly notify each Bank of the contents thereof and of such Bank's ratable share (if any) of such Borrowing
and such Notice of Borrowing shall not thereafter be revocable by the Borrower. 

        (b)
On the date of each Borrowing, each Bank participating therein shall: 

        (i)
if such Borrowing is to be made in Dollars, make available its share of such Borrowing in Dollars not later than 2:00 P.M. (New York City time), in Federal or other funds
immediately available, to the Administrative Agent at its principal office in New York City; or 

19

 

        (ii)
if such Borrowing is to be made in an Alternative Currency, make available its share of such Borrowing in such Alternative Currency (in such funds as may then be customary for the
settlement of international transactions in such Alternative Currency) to the account of the Administrative Agent at such time and place as shall have been notified by the Administrative Agent to the
Banks by at least two Euro-Currency Business Days' notice. Unless the Administrative Agent determines that any applicable condition specified in Article 3 has not been satisfied,
the Administrative Agent will make the funds so received from the Banks available to the Borrower at the Administrative Agent's aforesaid address. 

        (c)
Unless the Administrative Agent shall have received notice from a Bank prior to the date of any Borrowing that such Bank will not make available to the Administrative Agent such
Bank's share of such Borrowing, the Administrative Agent may assume that such Bank has made such share available to the Administrative Agent on the date of such Borrowing in accordance with subsection
2.04(b) 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 Bank shall not have so
made such share available to the Administrative Agent, such Bank 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 the Federal Funds Rate (if such
Borrowing is in Dollars) or the applicable Adjusted LEBO Rate (if such Borrowing is in an Alternative Currency). If such Bank shall repay to the Administrative Agent such corresponding amount, such
amount so repaid shall constitute such Bank's Loan included in such Borrowing for purposes of this Agreement. 

        SECTION
2.05.    Notes.    (a) The Loans of each Bank shall be evidenced by a single Note payable to the order
of such Bank for the account of its Applicable Lending Office in an amount equal to the aggregate unpaid principal amount of such Bank's Loans. 

        (b)
Each Bank may, by notice to the Borrower and the Administrative Agent, request that its Loans of a particular type or currency be evidenced by a separate Note in an amount equal to
the aggregate unpaid principal amount of such Loans. Each such Note shall be in substantially the form of Exhibit A hereto with appropriate modifications to reflect the fact that it evidences
solely Loans of the relevant type or currency. Each reference in this Agreement to the "Note" of such Bank shall be deemed to refer to and include any or all of such Notes, as the context may require. 

        (c)
Upon receipt of each Bank's Note pursuant to Section 3.01(a), the Administrative Agent shall forward such Note to such Bank. Each Bank shall record the date, amount, type and
currency of each Loan made by it and the date and amount of each payment of principal made by the Borrower with respect thereto, and may, if such Bank so elects in connection with any transfer or
enforcement of its Note, endorse on the schedule forming a part thereof appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding;  provided that the
failure of any Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under
the Notes. Each Bank is hereby irrevocably authorized by the Borrower so to endorse its Note and to attach to and make a part of its Note a continuation of any such schedule as and when
required. 

        SECTION
2.06.    Maturity of Loans.    (a) Each Syndicated Loan shall mature, and the principal amount thereof
shall be due and payable, together with accrued interest thereon, on the Termination Date. 

        (b)
Each Swingline Loan included in any Swingline Borrowing and each Competitive Bid Loan included in any Competitive Bid Borrowing shall mature, and the principal amount thereof shall
be due and payable on the last day of the Interest Period applicable to such Borrowing. 

20

 

        SECTION
2.07.    Interest Rates.    (a) Each Base Rate Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the sum of the Base Rate Margin for such day plus the Base Rate for such day. Such
interest shall be payable in arrears at maturity and on each Quarterly Date prior to maturity. Any overdue principal of or overdue interest on any Base Rate Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the sum of 2% plus the rate otherwise applicable to Base Rate Loans for such day. 

        (b)
Each Euro-Currency Loan shall bear interest on the outstanding principal amount thereof, for each day during each Interest Period applicable thereto, at a rate per annum
equal to the sum of the Euro-Currency Margin for such day plus the Adjusted LIBO Rate applicable to such Interest Period. Such interest shall be payable for each Interest Period on the
last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof 

        (c)
Any overdue principal of or interest on any Euro-Currency Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the higher of
(i) the sum of 2% plus the Euro-Currency Margin for such day plus the Adjusted LEBO Rate applicable to such Loan at the date such
payment was due and (ii) the sum of 2% plus the Euro-Currency Margin for such day plus the quotient obtained (rounded upward, if necessary, to the next higher 1/100 of 1%) by
dividing (x) the rate per annum at which one day (or, if such amount due remains unpaid more than three Euro-Currency Business Days, then for such other period of time not longer
than three months as the
Administrative Agent may select) deposits in the relevant currency in an amount approximately equal to such overdue payment are offered by the Administrative Agent in the London interbank market for
the applicable period determined as provided above by (y) 1.00 minus the Statutory Reserve Rate. 

        (d)
Each Swingline Loan shall bear interest on the outstanding principal amount thereof, for each day during the Interest Period applicable thereto, at a rate per annum equal to the Base
Rate for such day or such other rate as may be from time to time determined by mutual agreement between the Swingline Bank and the Borrower. Any interest on any Swingline Loans shall be payable on
each Quarterly Date and on the Termination Date. Any overdue principal of or interest on any Swingline Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to
the sum of 2% plus the Base Rate for such day. 

        (e)
Subject to Section 8.01, the unpaid principal amount of each Competitive Bid LIBOR Loan shall bear interest on the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the sum of the Adjusted LIBO Rate for such Interest Period (determined in accordance with Section 2.07(b) as if the related Competitive
Bid LIBOR Borrowing were a Euro-Currency Borrowing) plus (or minus) the Competitive Bid Margin quoted by the Bank making such Loan. The unpaid principal amount of each Competitive Bid
Absolute Rate Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Competitive Bid Absolute Rate quoted by
the Bank making such Loan. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after
the first day thereof Any overdue principal of or interest on any Competitive Bid Loan shall bear interest, payable on demand, for each day until paid (1) in the case of Loans denominated in
Dollars, at a rate per annum equal to the sum of 2% plus the Base Rate for such day and (ii) in the case of Loans denominated in an Alternative Currency, at a rate per annum determined in
accordance with Section 2.07(c) as if such Loans were Euro-Currency Loans. 

        (f)
The Administrative Agent shall determine each interest rate applicable to the Loans hereunder. The Administrative Agent shall give prompt notice to the Borrower and the participating
Banks of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error. 

21

 

        SECTION
2.08.    Fees.    (a) The Borrower shall pay to the Administrative Agent for the account of the Banks a
facility fee in Dollars at the Facility Fee Rate (determined daily in accordance with the Pricing Schedule). Such facility fee shall accrue (i) from and including the Effective Date to but
excluding the date of termination of the Commitments in their entirety, on the daily aggregate amount of the Commitments (whether used or unused) and (ii) from and including such date of
termination to but excluding the date the Loans and Letter of Credit Liabilities shall be repaid in their entirety, on the daily aggregate Dollar Amount of Loans and Letter of Credit Liabilities. Such
facility fee shall be allocated among the Banks ratably in proportion to their Commitments; provided that any facility fee accruing after the
Commitments terminate in their entirety shall be allocated among the Banks ratably
in proportion to the outstanding Dollar Amounts of their respective Loans and Letter of Credit Liabilities. 

        (b)
The Borrower shall pay to the Administrative Agent for the account of the Banks ratably a letter of credit fee in Dollars accruing daily on the aggregate Dollar Amount then available
for drawing under all outstanding Letters of Credit at the LC Fee Rate (determined daily in accordance with the Pricing Schedule) and shall pay to each Issuing Bank fees in the amounts and at the
times as may be mutually agreed from time to time by the Borrower and such Issuing Bank. 

        (c)
Accrued fees under subsections 2.08(a) and 2.08(b) shall be payable quarterly in arrears on each Quarterly Date and on the date of termination of the Commitments in their entirety
(and, if later, the date the Loans and Letter of Credit Liabilities shall be repaid in their entirety). 

        SECTION
2.09.    Optional Termination or Reduction of Commitments.    During the Revolving Credit Period, the Borrower
may, upon at least three Domestic Business Days' notice to the Administrative Agent, (i) terminate the Commitments at any time, if no Loans or Letter of Credit Liabilities are outstanding at
such time or (ii) ratably reduce from time to time by an aggregate amount of $2,000,000 or a larger multiple of $1,000,000, the aggregate amount of the Commitments in excess of the aggregate
Dollar Amount of Loans and Letter of Credit Liabilities. 

        SECTION
2.10.    Method of Electing Interest Rates.    (a) The DollarDenominated Loans included in each
Syndicated Borrowing shall bear interest initially at the type of rate specified by the Borrower in the applicable Notice of Committed Borrowing. Thereafter, the Borrower may from time to time elect
to change or continue the type of interest rate borne by each Group of DollarDenominated Loans (subject in each case to the provisions of Article 8 and subsection 2.10(d)), as follows: 

        (i)
if such Loans are Base Rate Loans, the Borrower may elect to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day; and 

        (ii)
if such Loans are Euro-Dollar Loans, the Borrower may elect to convert such Loans to Base Rate Loans or elect to continue such Loans as Euro-Dollar Loans for
an additional Interest Period, subject to Section 2.14 in the case of any such conversion or continuation effective on any day other than the last day of the then current Interest Period
applicable to such Loans. 

Each
such election shall be made by delivering a notice (a "Notice of Interest Rate Election") to the Administrative Agent not later than 12:00 Noon
(New York City time) on the third Euro-Dollar Business Day before the conversion or continuation selected in such notice is to be effective. A Notice of Interest Rate Election may, if it
so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Loans, provided that (i) such portion is
allocated ratably among the
Loans comprising such Group and (ii) the portion to which such Notice applies, and the remaining portion to which it does not apply, are each $2,000,000 or any larger multiple of $500,000. 

        (b)
Each Notice of Interest Rate Election shall specify: 

        (i)
the Group of Loans (or portion thereof) to which such notice applies; 

22

 

        (ii) the
date on which the conversion or continuation selected in such notice is to be effective, which shall comply with the applicable clause of subsection 2. 1 0(a) above; 

        (iii) if
the Loans comprising such Group are to be converted, the new type of Loans and, if the Loans being converted are to be Euro-Dollar Loans, the duration of the
next succeeding Interest Period applicable thereto; and 

        (iv)
if such Loans are to be continued as Euro-Dollar Loans for an additional Interest Period, the duration of such additional Interest Period. 

Each
Interest Period specified in a Notice of Interest Rate Election shall comply with the provisions of the definition of the term "Interest Period".

        (c)
Upon receipt of a Notice of Interest Rate Election from the Borrower pursuant to subsection 2.10(a) above, the Administrative Agent shall promptly notify each Bank of the contents
thereof and such notice shall not thereafter be revocable by the Borrower. If no Notice of Interest Rate Election is timely received prior to the end of an Interest Period for any Group of
Euro-Dollar Loans, the Borrower shall be deemed to have elected that such Group be converted to Base Rate Loans as of the last day of such Interest Period. 

        (d)
The Borrower shall not be entitled to elect to convert any Syndicated Loans to, or continue any Syndicated Loans for an additional Interest Period as, Euro-Dollar Loans
if (i) the aggregate principal amount of any Group of Euro-Dollar Loans created or continued as a result of such election would be less than $2,000,000 or (ii) a Default shall have
occurred and be continuing when the Borrower delivers notice of such election to the Administrative Agent. 

        (e)
The initial Interest Period for each Group of Alternative Currency Loans shall be specified by the Borrower in the applicable Notice of Borrowing. The Borrower may specify the
duration of each subsequent Interest Period applicable to such Group of Loans by delivering to the Administrative Agent, not later than 12:00 Noon (New York City time) on the fourth
Euro-Currency Business Day before the end of the immediately preceding Interest Period, a notice specifying the Group of Loans to which such notice applies and the duration of such
subsequent Interest Period (which shall comply with the provisions of the definition of Interest Period). Such notice may, if it so specifies, apply to only a portion of the aggregate principal amount
of the relevant Group of Loans; provided that (i) such portion is allocated ratably among the Loans comprising such Group and (ii) the
Dollar Amounts of the portion to which such notice applies, and the remaining portion to which it does not apply, are each at least $2,000,000. If no such Notice of Interest Rate Election is timely
received by the Administrative Agent before the end of any applicable Interest Period, the Borrower shall be deemed to have elected that the subsequent Interest Period for such Group of Loans shall
have a duration of one month (subject to the provisions of the definition of Interest Period). 

        SECTION
2.11.    Scheduled Termination of Commitments.    The Commitments shall terminate on the Termination Date, and
any Loans then outstanding (together with accrued interest thereon) shall be due and payable on the Termination Date, 

        SECTION
2.12.    Optional Prepayments,    (a) Subject in the case of any Fixed Rate Loan to
Section 2.14, the Borrower may (i) with notice by 12:00 Noon (New York City time) on the date of such prepayment, prepay any Group of Base Rate Loans, any Swingline Borrowing or any
Competitive Bid Borrowing bearing interest at the Base Rate pursuant to Section 8.01, in each case in whole at any time, or from time to time in part in a minimum aggregate Dollar Amount of
$1,000,000 ($100, 000 in the case of a Swingline Borrowing) or any larger multiple of $500,000 ($100,000 in the case of a Swingline Borrowing), or (ii) upon at least three
Euro-Currency Business Days' notice to the Agent, prepay any Group of Euro-Currency Loans in whole at any time, or from time to time in part in a minimum aggregate Dollar
Amount of $2,000,000 or, in the case of Dollar-Denominated Loans, any larger multiple of $500,000, by paying the principal amount to be prepaid together with accrued interest 

23

 

thereon to the date of prepayment. Each such optional prepayment shall be applied to prepay ratably the Loans of the several Banks included in such Group or Borrowing. 

        (b)
Except as provided in subsection 2.12(a) above the Borrower may not prepay all or any portion of the principal amount of any Competitive Bid Loan prior to the maturity thereof. 

        (c)
Upon receipt of a notice of prepayment pursuant to this Section, the Administrative Agent shall promptly notify each Bank of the contents thereof and of such Bank's ratable share (if
any) of such prepayment and such notice shall not thereafter be revocable by the Borrower. 

        SECTION
2.13.    General Provisions as to Payments.    (a) The Borrower shall make each payment of principal
of, and interest on, the Dollar-Denominated Loans and of fees hereunder, not later than 2:00 P.M, (New York City time) on the date when due, in Federal or other funds immediately available, to the
Administrative Agent at its principal office in New York City. Each payment of principal of, and interest on, the Alternative Currency Loans shall be made in the relevant Alternative Currency in such
funds as may then be customary for the settlement of international transactions in such Alternative Currency, for the account of the Administrative Agent at such time and at such place as shall have
been notified by the Administrative Agent to the Borrower and the Banks by at least two Domestic Business Days' notice. Each such payment shall be made irrespective of any set-off,
counterclaim or defense to payment which might in the absence of this provision be asserted by the Borrower against the Administrative Agent or any Bank. The Administrative Agent will promptly
distribute to each Bank its ratable share of each such payment received by the Administrative Agent for the account of the Banks. Whenever any payment of principal of, or interest on, the Base Rate
Loans, Swingline Loans or Letter of Credit Liabilities or of fees shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the next succeeding
Domestic Business Day. Whenever any payment of principal of, or interest on, the Euro-Currency Loans shall be due on a day which is not a Euro-Currency Business Day, the date
for payment thereof shall be extended to the next succeeding Euro-Currency Business Day unless such Euro-Currency Business Day falls in another calendar month, in which case
the date for payment thereof shall be the next preceding Euro-Currency Business Day. Whenever any payment of principal of, or interest on, the Competitive Bid Loans shall be due on a day
which is not a Euro-Currency Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Currency Business Day. If the date for any payment of
principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time. The Borrower hereby authorizes and directs the Administrative Agent (upon receipt of
oral or written direction by the Borrower) to debit any account maintained by the Borrower with the Administrative Agent to pay when due any amounts required to be paid from time to time under this
Agreement. 

        (b)
Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Banks 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 Bank on such due date an amount equal to the amount then due such Bank. If and to the extent that the Borrower shall not have so made such payment, each
Bank shall repay to the Administrative Agent forthwith on demand such amount distributed to such Bank together with interest thereon, for each day from the date such amount is distributed to such Bank
until the date such Bank repays such amount to the Administrative Agent, at (i) the Federal Funds Rate (if such amount was distributed in Dollars) or (ii) the rate per annum at which one
day deposits in the relevant currency are offered to the Administrative Agent in the London interbank market for such day (if such amount was distributed in an Alternative Currency). 

        SECTION
2.14.    Funding Losses.    If the Borrower makes any payment of principal with respect to any Fixed Rate Loan
or any Euro-Dollar Loan is converted or continued (pursuant to Article 2, 6 or 8 or otherwise) on any day other than the last day of an Interest Period applicable thereto, or the
last 

24

 

day of an applicable period fixed pursuant to Section 2.07(c), or if the Borrower fails to borrow, prepay, convert or continue any Fixed Rate Loans after notice has been given to any Bank in
accordance with Section 2.04(a), 2.12(c) or 2.10(c), the Borrower shall reimburse each Bank within 15 days after demand for any resulting loss or expense incurred by it (or by an
existing or prospective Participant in the
related Loan), including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of margin for the period after any such payment
or conversion or failure to borrow, prepay, convert or continue, provided that such Bank shall have delivered to the Borrower and the Administrative
Agent a certificate as to the amount of such loss or expense, which certificate shall be conclusive in the absence of manifest error if prepared reasonably and in good faith. 

        SECTION
2.15.    Computation of Interest and Fees.    Interest based on the Prime Rate hereunder shall be computed on
the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). 

        SECTION
2.16.    Letters of Credit.    (a) Subject to the terms and conditions hereof, the Issuing Bank agrees
to issue Letters of Credit hereunder denominated in Dollars or in an Alternative Currency from time to time before the tenth day before the Termination Date upon the request of the Borrower;  provided
that, immediately after each Letter of Credit is issued (i) the aggregate Dollar Amount of Loans and Letter of Credit Liabilities shall
not exceed the aggregate amount of the Commitments and (ii) the aggregate Dollar Amount of Letter of Credit Liabilities shall not exceed $30,000,000. At Borrower's election the named account
party in the applicable Letter of Credit may be the Borrower and/or any of its Subsidiaries, provided, that, regardless of who is so named as account
party, the Borrower shall remain fully and solely liable for all obligations hereunder with respect to all Letters of Credit. Upon the date of issuance by the Issuing Bank of a Letter of Credit, the
Issuing Bank shall be deemed, without further action by any party hereto, to have sold and granted to each Banks and each Bank shall be deemed, without further action by any party hereto, to have
purchased and acquired from the Issuing Bank, a participation in such Letter of Credit and the related Letter of Credit Liabilities in the proportion their respective Commitments bear to the aggregate
Commitments. 

On
the Closing Date, if all of the conditions set forth in Article 3 (other than the receipt by the Issuing Bank of a Notice of Issuance) shall be satisfied, each of the letters of credit
outstanding under the Existing Credit Facility and identified on Schedule 2.16 (the "Existing Letters of Credit") shall be deemed to be Letters
of Credit for all purposes hereof, and the Issuing Bank shall be deemed, without further action by any party hereto, to have sold and granted to each Bank, and each Bank shall be deemed, without
further action by any party hereto, to have purchased and acquired from the Issuing Bank, a participation in each of the Existing Letters of Credit and the related Letter of Credit Liabilities in the
proportion their respective Commitments bear to the aggregate Commitments. 

        (b)
The Borrower shall give the Issuing Bank notice at least three Domestic Business Days prior to the requested issuance of a Letter of Credit specifying the date such Letter of Credit
is to be issued, and describing the terms of such Letter of Credit and the nature of the transactions to be supported thereby (such notice, including any such notice given in connection with the
extension of a Letter of Credit, a "Notice of Issuance"). Upon receipt of a Notice of Issuance, the Issuing Bank shall promptly notify the
Administrative Agent, and the Administrative Agent shall promptly notify each Bank of the contents thereof and of the amount of such Bank's participation in such Letter of Credit. The issuance by the
Issuing Bank of each Letter of Credit shall in addition to the conditions precedent set forth in Article 3, be subject to the conditions precedent that such Letter of Credit shall be in such
form and
contain such terms as shall be satisfactory to the Issuing Bank and that the Borrower shall have executed and delivered such other instruments and agreements relating to such Letter of Credit as the
Issuing Bank shall have reasonably requested. The Borrower shall also pay to the Issuing Bank for its 

25

 

own account issuance, drawing, amendment and extension charges in the amounts and at the times as agreed between the Borrower and the Issuing Bank. The extension or renewal of any Letter of Credit
shall be deemed to be an issuance of such Letter of Credit, and if any Letter of Credit contains a provision pursuant to which it is deemed to be extended unless notice of termination is given by the
Issuing Bank, the Issuing Bank shall timely give such notice of termination if either (i) the conditions to issuance of such Letter of Credit (other than receipt of a Notice of Issuance) are to
the knowledge of the Issuing Bank not met with respect to such extension or (ii) the term of the extended Letter of Credit is not permitted under Section 2.16(c). 

        (c)
No Letter of Credit shall have a term extending or be so extendible beyond the fifth Domestic Business Day preceding the Termination Date. If the extension of a Letter of Credit
would otherwise extend the term of such Letter of Credit beyond the fifth Domestic Business Day preceding the Termination Date, the Borrower and the Issuing Bank may nonetheless agree to so extend
such Letter of Credit on mutually acceptable terms; provided that the extended Letter of Credit shall thereupon cease to be a Letter of Credit hereunder
and the other Banks shall have no obligations hereunder with respect thereto. 

        (d)
Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the Issuing Bank shall notify the Administrative Agent and the
Administrative Agent shall promptly notify the Borrower and each other Bank as to the amount to be paid as a result of such demand or drawing and the payment date. The Borrower shall be irrevocably
and unconditionally obligated forthwith to reimburse the Issuing Bank for any amounts paid by the Issuing Bank upon any drawing under any Letter of Credit, without presentment, demand, protest or
other formalities of any kind. All such amounts paid by the Issuing Bank and remaining unpaid by the Borrower shall bear interest, payable on demand, for each day until paid at a rate per annum equal
to the sum of 2% plus (i) in the case of amounts denominated in Dollars, the Base Rate for such day and (ii) in the case of amounts denominated in an Alternative Currency, the sum of the
Euro-Currency Margin for such day plus the rate per annum at which one day deposits in the relevant currency in an amount approximately equal to such unpaid amount are offered by the
Issuing Bank in the London interbank market. In addition, each Bank will pay to the Administrative Agent, for the account of the Issuing Bank, immediately upon the Issuing Bank's demand at any time
during the period commencing after such drawing until reimbursement therefor in full by the Borrower, an amount equal to such Bank's ratable share of such drawing (in proportion to its participation
therein), together with interest on such amount for each day from the date of the Issuing Bank's demand for such payment (or, if such demand is made after 12:00 Noon (New York City time) on such date,
from the next succeeding Domestic Business Day) to the date of payment by such Bank of such amount at a rate of interest per annum equal to (i) in the case of amounts denominated in Dollars,
the Federal Funds Rate and (ii) in the case of amounts denominated in an Alternative Currency, the rate at which one day deposits in the relevant currency in an amount approximately equal to
such payment are offered by the Issuing Bank in the London interbank market. The Issuing Bank will pay to each Bank ratably all amounts received from the Borrower for application in payment of its
reimbursement obligations in respect of any Letter of Credit, but only to the extent such Bank has made payment to the Issuing Bank in respect of such Letter of Credit pursuant hereto. All payments in
respect of the principal amount of the reimbursement obligation of the Borrower in respect of any Letter of Credit and interest thereon shall
be made in the same currency as the related Letter of Credit was denominated, and shall be made in the funds specified in Section 2.13 for payments in such currency. Unless the Borrower gives
notice to the contrary not less than one Business Day prior to the date of such drawing, each notice by the Issuing Bank to the Administrative Agent of the Issuing Bank's receipt of a notice of a
drawing under a Letter of Credit denominated in Dollars shall be deemed to be a Notice of Committed Borrowing from the Borrower for a Base Rate Loan on the date of such drawing in the exact amount due
to the Issuing Bank hereunder (the requirement with respect to the aggregate Dollar Amount of Base Rate Borrowings shall not apply to such deemed Notice of Borrowing) on such date with respect
thereto, 

26

 

and the Administrative Agent shall apply the proceeds of any Base Rate Loan made pursuant to such deemed Notice of Borrowing to the payment of such amount. 

        (e)
The obligations of the Borrower and each Bank under subsection 2.16(d) above shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the
terms of this Agreement, under all circumstances whatsoever, including without limitation the following circumstances: 

        (i)
the use which may be made of the Letter of Credit by, or any acts or omission of, a beneficiary of a Letter of Credit (or any Person for whom the beneficiary may be acting); 

        (ii)
the existence of any claim, set-off, defense or other rights that the Borrower may have at any time against a beneficiary of a Letter of Credit (or any Person for whom
the beneficiary may be acting), the Banks (including the Issuing Bank) or any other Person, whether in connection with this Agreement or the Letter of Credit or any document related hereto or thereto
or any unrelated transaction; 

        (iii)
any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever; 

        (iv)
payment under a Letter of Credit to the beneficiary of such Letter of Credit against presentation to the Issuing Bank of a draft or certificate that does not comply with the terms
of the Letter of Credit; or 

        (v)
any other act or omission to act or delay of any kind by any Bank (including the Issuing Bank), the Administrative Agent or any other Person or any other event or circumstance
whatsoever that might, but for the provisions of this subsection 2.16(e)(v), constitute a legal or equitable discharge of the Borrower's or the Bank's obligations hereunder. 

        (f)
The Borrower hereby indemnities and holds harmless each Bank (including the Issuing Bank) and the Administrative Agent and their respective officers, directors, employees and agents
from and against any and all claims, damages, losses, liabilities, costs or expenses which such Bank or the Administrative Agent may incur (including, without limitation, any claims, damages, losses,
liabilities, costs or expenses which the Issuing Bank may incur by reason of or in connection with the failure of any other Bank to fulfill or comply with its obligations to such Issuing Bank
hereunder (but nothing herein contained shall affect any rights the Borrower may have against such defaulting Bank)), and none of the Banks (including the Issuing Bank) nor the Administrative Agent
nor any of their respective officers or directors or employees or agents shall be liable or responsible, by reason of or in connection with the execution and delivery or transfer of or payment or
failure to pay under any Letter of Credit, including without limitation any of the circumstances enumerated in subsection 2.16(d) above, as well as (1)
any error, omission, interruption or delay in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, (ii) any loss or delay in the transmission of any document
required in order to make a drawing under a Letter of Credit, and (iii) any consequences arising from causes beyond the control of the Issuing Bank, including without limitation any government
acts, or any other circumstances whatsoever in making or failing to make payment under such Letter of Credit; provided that the Borrower shall not be
required to indemnify the Issuing Bank for any claims, damages, losses, liabilities, costs or expenses, and the Borrower shall have a claim for direct (but not consequential or exemplary) damage
suffered by it, to the extent found by a court of competent jurisdiction to have been caused by (x) the failure of the Issuing Bank to comply in any material respect with the UCP or the ISP, as
applicable, (or, with respect to any Letter of Credit not governed by the UCP or the ISP, applicable law) in determining whether a request presented under any Letter of Credit complied with the terms
of such Letter of Credit or (y) the Issuing Bank's failure to pay under any Letter of Credit after the presentation to it of a request strictly complying with the 

27

 

terms and conditions of the Letter of Credit. Each Bank and the Borrower agree that, in paying any drawing under a Letter of Credit, the Issuing Bank shall not have any responsibility to obtain any
document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter
of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrower's pursuing such rights and remedies as it
may have against the beneficiary or transferee at law or under any other agreement. In furtherance and not in limitation of the foregoing, the Issuing Bank may accept documents that appear on their
face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the Issuing Bank shall not be responsible for the validity or
sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the fights or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason. Nothing in this subsection 2.16(f) is intended to limit the obligations of the Borrower under any other provision of this Agreement. To the extent
the Borrower does not indemnify the Issuing Bank as required by this subsection, the Banks agree to do so ratably in accordance with their Commitments. 

        (g)
None of the Issuing Bank, its affiliates and their respective directors, officers, employees and agents nor any of the respective correspondents, participants or assignees of the
Issuing Bank shall be liable to any Bank for (i) any action taken or omitted in connection herewith at the request or with the approval of the Banks or the Required Banks, as applicable;
(ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit. 

        (h)
Unless otherwise expressly agreed by the Issuing Bank and the Borrower when a Letter of Credit is issued, (i) the rules of the "International Standby Practices 1998" published
by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance) (the "ISP")
shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce
(the "ICC") at the time of issuance (including the ICC decision published by the Commission on Banking Technique and Practice on April 6, 1998
regarding the European single currency (euro)) (the "UCP") shall apply to each commercial Letter of Credit. 

        SECTION
2.17. Takeout of Swingline Loans. (a) In the event that any Swingline Borrowing shall not be repaid in full at or prior to
the maturity thereof, the Administrative Agent shall, on behalf of the Borrower (the Borrower hereby irrevocably directing and authorizing the Administrative Agent so to act on its behalf), give a
Notice of Borrowing requesting the Banks, including the Swingline Bank, to make a Base Rate Borrowing on the maturity date of such Swingline Borrowing in an amount equal to the unpaid principal amount
of such Swingline Borrowing. Each Bank will make the proceeds of its Base Rate Loan included in such Borrowing available to the Administrative Agent for the account of the Swingline Bank on such date
in accordance with Section 2.04. The proceeds of such Base Rate Borrowing shall be immediately applied to repay such Swingline Borrowing. 

        (b)
If, for any reason, a Base Rate Borrowing may not be (as determined by the Administrative Agent in its sole discretion), or is not, made pursuant to subsection 2.17(a) above to
refund Swingline Loans as required by said clause, then, effective on the date such Borrowing would otherwise have been made, each Bank severally, unconditionally and irrevocably agrees that it shall
purchase an undivided participating interest in such Swingline Loans ("Unrefunded Swingline Loans") in an amount equal to the amount of the Loan which
otherwise would have been made by such Bank pursuant to subsection 2.17(a), which purchase shall be funded by the time such Loan would have been required to be funded pursuant to Section 2.04
by transfer to the Administrative Agent, for the account of the Swingline Bank, in immediately available funds, of the amount of its participation. 

28

 

        (c)
Whenever, at any time after the Swingline Bank has received from any Bank payment in full for such Bank's participating interest in a Swingline Loan, the Swingline Bank (or the
Administrative Agent on its behalf) receives any payment on account thereof, the Swingline Bank (or the Administrative Agent, as the case may be) will promptly distribute to such Bank its
participating interest in such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Bank's participating interest was outstanding and
funded); provided, however, that in the event that such payment is subsequently required to be returned, such Bank will return to the Swingline Bank (or
the Administrative Agent, as the case may be) any portion thereof previously distributed by the Swingline Bank (or the Administrative Agent, as the case may be) to it. 

        (d)
Each Bank's obligation to purchase and fund participating interests pursuant to this Section shall be absolute and unconditional and shall not be affected by any circumstance,
including, without limitation: (i) any setoff, counterclaim, recoupment, defense or other right which such Bank or the Borrower may have against the Swingline Bank, or any other Person for any
reason whatsoever; (ii) the occurrence or continuance of a Default or the failure to satisfy any of the conditions specified in Article 3; (iii) any adverse change in the
condition (financial or otherwise) of the Borrower; (iv) any breach of this Agreement by the Borrower or any Bank; or (v) any other circumstance, happening or event whatsoever, whether
or not similar to any of the foregoing. 

        SECTION
2.18.    Increased Commitments, Additional Banks.    (a) From time to time, the Borrower may, upon at
least 15 days' notice (which may be written notice or telephonic notice promptly followed by written notice) to the Administrative Agent (which shall promptly provide a copy of such notice to
the Banks), propose to increase the aggregate amount of the Commitments by an amount not less than $10,000,000 (the amount of any such increase, the "Increased
Commitments"). Each Bank party to this Agreement at such time shall have the right (but no obligation), for a period of 10 days following receipt of such notice, to
elect by notice to the Borrower and the Administrative Agent to increase its Commitment by a principal amount which bears the same ratio to the Increased Commitments as its then Commitment bears to
the aggregate Commitments then existing. Any Bank not responding within 10 days of receipt of such notice shall be deemed to have declined to increase its Commitment. 

        (b)
If any Bank party to this Agreement shall not elect to increase its Commitment pursuant to subsection 2. 18(a) of this Section, the Borrower may, within 5 days of the Banks'
response, designate one or more of the existing Banks or other financial institutions acceptable to the Administrative Agent, the Issuing Banks, the Swingline Bank and the Borrower which at the time
agree to (i) in the case of any such lender that is an existing Bank, increase its Commitment and (ii) in the case of any other such lender (an "Additional
Bank"), become a party to this Agreement with a Commitment of not less than $10,000,000. The sum of the increases in the Commitments of the existing Banks pursuant to this
subsection 2.18(b) plus the Commitments of the Additional Banks shall not in the aggregate exceed the unsubscribed amount of the Increased Commitments. 

        (c)
Any increase in the Commitments pursuant to this Section 2.18 shall be subject to satisfaction of the following conditions: 

        (i)
before and after giving effect to such increase, all representations and warranties contained in Article 4 shall be true in all material respects; 

        (ii)
at the time of such increase, no Default shall have occurred and be continuing or would result from such increase-, and 

        (iii)
after giving effect to such increase, the aggregate amount of all increases in Commitments made pursuant to this Section 2.18 shall not exceed $50,000,000. 

        (d)
An increase in the aggregate amount of the Commitments pursuant to this Section 2.18 shall become effective upon the receipt by the Administrative Agent of (i) an
agreement in form and substance reasonably satisfactory to the Administrative Agent signed by the Borrower, by each 

29

 

Additional Bank and by each other Bank whose Commitment is to be increased, setting forth the new Commitments of such Banks and setting forth the agreement of each Additional Bank to become a party
to this Agreement and to be bound by all the terms and provisions hereof, (ii) such evidence of appropriate corporate authorization on the part of the Borrower with respect to the Increased
Commitments and such opinions of counsel for the Borrower with respect to the Increased Commitments as the Administrative Agent may reasonably request and (iii) such evidence of the
satisfaction of the conditions set forth in subsection 2.18(c) above as the Administrative Agent may reasonably request. 

        (e)
Upon any increase in the aggregate amount of the Commitments pursuant to this Section 2.18, within five Domestic Business Days, in the case of Base Rate Loans then
outstanding, and at the end of the then current Interest Period with respect thereto, in the case of Syndicated Fixed Rate Loans then outstanding, the Borrower shall prepay or repay such Loans in
their entirety and, to the extent the Borrower elects to do so and subject to the conditions specified in Article 3, the Borrower shall simultaneously reborrow Syndicated Loans from the Banks
in proportion to their respective Commitments after giving effect to such increase, until such time as all outstanding Syndicated Loans are held by the Banks in such proportion. 

        SECTION
2.19.    Currency Equivalents.    (a) The Administrative Agent shall determine the Dollar Amount of
each Alternative Currency Loan as of the first day of each Interest Period applicable thereto and, in the case of any such Interest Period of more than three months, at three-month intervals after the
first day thereof, and shall promptly notify the Borrower and the Banks of each Dollar Amount so determined by it. Each such determination shall be based on the Spot Rate (i) on the date of the
related Notice of Committed Borrowing (in the case of Syndicated Loans) or Competitive Bid Quote Request (in the case of Competitive Bid Loans) for purposes of the initial such determination for any
Alternative Currency Loan and (ii) the fourth Euro-Currency Business Day prior to the date as of which such Dollar Amount is to be determined, for purposes of any subsequent
determination. 

        (b)
The Administrative Agent shall determine the Dollar Amount of the Letter of Credit Liabilities related to each Letter of Credit denominated in an Alternative Currency as of the date
of issuance thereof, at three-month intervals after the date of issuance thereof and as of the funding date in respect of each drawing thereunder. Each such determination shall be based on the Spot
Rate on the date of determination. 

        (c)
If after giving effect to any such determination of a Dollar Amount, the aggregate Dollar Amount of all Loans and Letter of Credit Liabilities exceeds the aggregate amount of the
Commitments, the Borrower shall within five Euro- Business Days prepay outstanding Loans (as selected by the Borrower
and notified to the Banks through the Administrative Agent not less than three Euro-Currency Business Days prior to the date of prepayment) to the extent necessary to eliminate any such
excess. 

        SECTION
2.20.    Judgment Currency.    If for the purpose of obtaining judgment in any court it is necessary to
convert a sum due from the Borrower hereunder or under any of the Notes in the currency expressed to be payable herein (the "specified currency") 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 the specified currency with such other currency at the Administrative Agent's principal office in New York City on the Euro-Currency Business Day
preceding that on which final judgment is given. The obligations of the Borrower in respect of any sum due to any Bank or the Administrative Agent hereunder or under any Note shall, notwithstanding
any judgment in a currency other than the specified currency, be discharged only to the extent that on the Euro-Currency Business Day following receipt by such Bank or the Administrative
Agent (as the case may be) of any sum adjudged to be so 

30

 

due in such other currency such Bank or the Administrative Agent (as the case may be) may in accordance with normal banking procedures purchase the specified currency with such other currency. If the
amount of the specified currency so purchased is less than the sum originally due to such Bank or the Administrative Agent, as the case may be, in the specified currency, the Borrower agrees, to the
fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify such Bank or the Administrative Agent, as the case may be, against such loss,
and if the amount of the specified currency so purchased exceeds (a) the sum originally due to any Bank or the Administrative Agent, as the case may be, in the specified currency and
(b) any amounts shared with other Banks as a result of allocations of such excess as a disproportionate payment to such Bank under Section 9.04, such Bank or the Administrative Agent, as
the case may be, agrees to remit such excess to the Borrower. 

31

  

 
 

ARTICLE 3
  Conditions    
  

        SECTION
3.01.    Closing.    The closing hereunder shall occur upon receipt by the Administrative Agent of the
following documents, each dated the Closing Date unless otherwise indicated: 

        (a)
a duly executed Note for the account of each Bank dated on or before the Closing Date complying with the provisions of Section 2.05; 

        (b)
opinions of Finn Dixon & Herling LLP, special counsel to the Borrower, and Bruce D. Kreiger, the General Counsel of the Borrower, substantially in the forms of Exhibits
F-1 and F-2 hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; 

        (c)
an opinion of Davis Polk & Wardwell, special counsel for the Administrative Agent, substantially in the form of Exhibit G hereto and covering such additional matters
relating to the transactions contemplated hereby as the Required Banks may reasonably request; 

        (d)
all documents the Administrative Agent may reasonably request relating to the existence of the Borrower, the corporate authority for and the validity of the Loan Documents, and any
other matters relevant hereto, all in form and substance satisfactory to the Administrative Agent; and 

        (e)
evidence satisfactory to the Administrative Agent of the payment of all principal of and interest on any loans outstanding under, and all accrued commitment fees under, the Existing
Credit Facility, and the termination of the commitments thereunder. 

        The
Administrative Agent shall promptly notify the Borrower and the Banks of the Closing Date, and such notice shall be conclusive and binding on all parties hereto. 

        SECTION
3.02.    Borrowings and Issuances of Letters of Credit.    The obligation of any Bank to make a Loan on the
occasion of any Borrowing and the obligation of the Issuing Bank to issue (or renew or extend the term of) any Letter of Credit is subject to the satisfaction of the following conditions;  provided that
if such Borrowing is a Swingline Takeout Borrowing, only the conditions set forth in clauses 3.02(b) and 3.02(c) must be satisfied: 

        (a)
the fact that the Closing Date shall have occurred on or prior to August 8, 2002; 

        (b)
receipt (or deemed receipt) by the Administrative Agent of a Notice of Borrowing as required by Section 2.02 or Section 2.03 or receipt by the Issuing Bank of a Notice
of Issuance as required by Section 2.16(b), as the case may be; 

        (c)
the fact that, immediately after such Borrowing or issuance of such Letter of Credit (i) the sum of the aggregate Dollar Amount of Loans and Letter of Credit Liabilities will
not exceed the aggregate amount of the Commitments, (ii) the aggregate outstanding principal amount of Swingline Loans will not exceed $15,000,000 and (iii) the aggregate Dollar Amount
of Letter of Credit Liabilities will not exceed $30,000,000; 

        (d)
the fact that, immediately before and after such Borrowing or issuance of such Letter of Credit, no Default shall have occurred and be continuing; 

        (e)
the fact that the representations and warranties of the Borrower contained in this Agreement shall be true in all material respects on and as of the date of such Borrowing or
issuance of such Letter of Credit; and 

        (f)
the fact that, in the case of any Euro-Currency Borrowing in a currency other than Dollars, Euros, Sterling, Yen or Swiss Francs, no Bank shall have notified the
Administrative Agent (which 

32

 

shall promptly notify the Borrower and the other Banks) within two Euro-Currency Business Days of such Bank's receipt of the Notice of Committed Borrowing for such
Euro-Currency Borrowing that deposits in the relevant currency are not available to such Bank in the London interbank market for the relevant Interest Period. 

        Each
Borrowing and issuance of a Letter of Credit hereunder shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing or issuance of such Letter
of Credit as to the facts specified in clauses 3.02(c), 3.02(d) and 3.02(e) (unless such Borrowing is a Swingline Takeout Borrowing, in which case the Borrower shall be deemed to represent and warrant
as to the facts specified in clause 3.02(c)). 

 
 

ARTICLE 4
  Representations and Warranties    
  

        The
Borrower represents and warrants that: 

        SECTION
4.01.    Corporate Existence and Power.    The Borrower and each of its Subsidiaries is a corporation,
partnership, limited liability company or other entity duly organized, validly existing and, where applicable, in good standing under the laws of their respective jurisdictions of organization and
have all powers and all material governmental licenses, authorizations, consents and approvals required to carry on their business as now conducted. 

        SECTION
4.02.    Corporate and Governmental Authorization; No Contravention.    The execution, delivery and
performance by the Borrower of this Agreement and the Notes are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect
of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation
or by-laws of the Borrower or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Borrower or any of its Subsidiaries or result in the creation or
imposition of any Lien on any asset of the Borrower or any of its Subsidiaries. 

        SECTION
4.03.    Binding Effect.    This Agreement constitutes a valid and binding agreement of the Borrower and each
Note, when executed and delivered in accordance with this Agreement, will constitute a valid and binding obligation of the Borrower, in each case enforceable in accordance with its terms. 

        SECTION
4.04.    Financial Information.    

        (a)
The consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of January 31, 2002 the related consolidated statements of income, common stockholders'
equity and cash flows for
the fiscal year then ended, reported on by PricewaterhouseCoopers LLP and set forth in the Borrower's 2002 Form 10-K, a copy of which has been delivered to each of the Banks,
present fairly, in all material respects, in conformity with generally accepted accounting principles, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such
date and their consolidated results of operations and cash flows for such fiscal year. 

        (b)
The unaudited consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of April 30, 2002 and the related unaudited consolidated statements of income,
common stockholders' equity and cash flows for the three months then ended, set forth in the Borrower's Latest Form 10-Q, a copy of which has been delivered to each of the Banks,
present fairly, in all material respects, in conformity with generally accepted accounting principles applied on a basis consistent with the financial statements referred to in subsection 4.04(a), the
consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such date 

33

 

and their consolidated results of operations and cash flows for such three-month period (subject to normal year-end adjustments and the absence of footnotes). 

        (c)
Since April 30, 2002 there has been no material adverse change in the business, financial position or results of operations of the Borrower and its Consolidated Subsidiaries,
considered as a whole. 

        SECTION
4.05.    Litigation.    There is no action, suit or proceeding pending against, or to the knowledge of the
Borrower threatened against, the Borrower or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official which could reasonably be expected to have a Material
Adverse Effect or which in any manner draws into question the validity of the Loan Documents. 

        SECTION
4.06.    Compliance with ERISA.    Each of the Borrower and the ERISA Affiliates has fulfilled its obligations
under the minimum funding standards of ERISA and the Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Code with
respect to each Plan. Neither the Borrower nor any ERISA Affiliate has (i) sought a waiver of the minimum funding standard under Section 412 of the Code in respect of any Plan,
(ii) failed to make any contribution or payment to any Plan or Multiemployer Plan, or made any amendment to any Plan, which has resulted or could result in the imposition of a Lien or the
posting of a bond or other security under ERISA or the Code or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. 

        SECTION
4.07.    Environmental Matters.    In the ordinary course of its business, the Borrower reviews when and as it
determines to be appropriate the effect of Environmental Laws on the business, operations and properties of the Borrower and its Subsidiaries, in the course of which it identifies and evaluates
associated liabilities and costs (which may include capital or operating expenditures required for clean-up or closure of properties presently or previously owned, any capital or operating
expenditures required to achieve or maintain compliance with environmental protection standards imposed by law or as a condition of any license, permit or contract, any related constraints on
operating activities,
including any periodic or permanent shutdown of any facility or reduction in the level of or change in the nature of operations conducted thereat, any costs or liabilities in connection with
off-site disposal of wastes or Hazardous Materials, and any actual or potential liabilities to third parties, including employees, and any related costs and expenses). On the basis of this
review, the Borrower has reasonably concluded that such associated liabilities and costs, including the costs of compliance with Environmental Laws, are unlikely to have a Material Adverse Effect. 

        SECTION  4.08.    Taxes.    The Borrower and its Subsidiaries have filed all United States Federal
income tax returns
and all other material tax returns which are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Borrower or any Subsidiary,
to the extent required to be paid pursuant to Section 5.06. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of taxes or other governmental
charges are, in the opinion of the Borrower, adequate. 

        SECTION  4.09.    Not an Investment Company.    The Borrower is not an "investment company" within
the meaning of the
Investment Company Act of 1940, as amended. 

        SECTION
4.10.    Full Disclosure.    All information heretofore furnished by the Borrower to any Agent or Bank for
purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by the Borrower to any Agent or Bank will be, true and accurate
(taken as a whole) in all material respects on the date as of which such information is stated or certified. On the date hereof, the Borrower has disclosed to the Banks in writing any and all facts
which materially and adversely affect or could reasonably be expected to materially and adversely affect (to the extent the Borrower can now reasonably foresee), the business, operations or 

34

 

financial condition of the Borrower and its Consolidated Subsidiaries, taken as a whole, or the ability of the Borrower to perform its obligations under this Agreement. 

 
 

ARTICLE 5
  Covenants    
  

        The Borrower agrees that, so long as any Bank has any Commitment hereunder or any amount payable under any Note remains unpaid or any Letter of Credit Liabilities
remain outstanding: 

        SECTION
5.01. Information. The Borrower will deliver to each of the Banks: 

        (a)  as
soon as available and in any event within 90 days after the end of each Fiscal Year of the Borrower, a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end
of such Fiscal Year and the related consolidated statements of income and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all
reported on in a manner acceptable to the Securities and Exchange Commission by PricewaterhouseCoopers LLP or other independent public accountants of nationally recognized standing; 

        (b)  as
soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Borrower, a consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as of the end of such quarter and the related consolidated statements of income and cash flows for such quarter and for the portion of the
Borrower's fiscal year ended at the end of such quarter, setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of the Borrower's
previous fiscal year, all certified (subject to normal year-end adjustments and absence of footnotes) as to fairness of presentation in all material respects, generally accepted accounting
principles and consistency by a Senior Financial Officer; 

        (c)  simultaneously
with the delivery of each set of financial statements referred to in clauses 5.01(a) and 5.01(b) above, a certificate of a Senior Financial Officer, on
behalf of the Borrower, substantially in the form of Exhibit J setting forth (i) in reasonable detail the calculations required to establish whether the Borrower was in compliance with
the requirements of Sections 5.09 to 5.13, inclusive, on the date of such financial statements, (ii) the Leverage Ratio and Consolidated Net Worth as at the date of such financial statements
and (iii) stating whether any Default exists on the date of such certificate and, if any Default then exists, setting forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto; 

        (d)  simultaneously
with the delivery of each set of financial statements referred to in clause 5.01(a) above, a statement of the firm of independent public
accountants (subject to customary qualifications) which reported on such statements whether anything has come to their attention to cause them to believe that any Default existed on the date of such
statements; 

        (e)  within
five days after any Senior Financial Officer of the Borrower obtains knowledge of any Default, if such Default is then continuing, an Officer's Certificate
setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto; 

        (f)    promptly
upon the mailing thereof to the shareholders of the Borrower generally, copies of all financial statements, reports and proxy statements so mailed; 

        (g)  promptly
upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8
or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which the Borrower shall have filed with the Securities and Exchange Commission; 

        (h)  if
and when any member of the ERISA Group (i) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of
ERISA) with respect to any Plan which 

35

 

might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event,
a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that
any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate,
impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies for a waiver of the
minimum funding standard under Section 412 of the Code, a copy of such application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make
any payment or contribution to any Plan or Multiemployer Plan or makes any amendment to any Plan which has resulted or could result in the imposition of a Lien or the posting of a bond or other
security, a certificate of the chief financial officer or the chief accounting officer of the Borrower setting forth details as to such occurrence and action, if any, which the Borrower or applicable
member of the ERISA Group is required or proposes to take; and 

        (i)    from
time to time such additional information regarding the financial position or business of the Borrower and its Subsidiaries as the Administrative Agent, at the
request of any Bank, may reasonably request. 

Information
required to be delivered pursuant to clauses 5.01(a), 5.01(b), 5.01(f) or 5.01(g) above shall be deemed to have been delivered on the date on which the Borrower provides notice to
the Banks that such information has been posted on the Borrower's website on the Internet at the website address listed on the signature pages hereof, at sec.gov/edaux/searches.htm or at another
website identified in such notice and accessible by the Banks without charge; provided that (i) such notice may be included in a certificate
delivered pursuant to clause 5.01(c) and (ii) the Borrower shall deliver paper copies of the information referred to in clauses 5.01(a), 5.01(b), 5.01(f) or 5.01(g) to any
Bank which requests such delivery. 

        SECTION
5.02.    Compliance with Law.    The Borrower will and will cause each of its Subsidiaries to comply with all
laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation Environmental Laws, and will and will cause each of its Subsidiaries to obtain and
maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of its property or to the conduct of its business, in each case to
the extent necessary to ensure that noncompliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits,
franchises and other governmental authorizations would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 

        SECTION
5.03.    Insurance.    The Borrower will and will cause each of its Subsidiaries to maintain, with financially
sound and reputable insurers, insurance with respect to its property and business against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles,
coinsurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a
similar business and similarly situated. 

        SECTION
5.04.    Maintenance of Properties.    The Borrower will and will cause each of its Subsidiaries to maintain
and keep, or cause to be maintained and kept, its property in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may
be properly conducted at all times, provided that this Section shall not prevent the Borrower or any of its Subsidiaries from discontinuing the
operation and the maintenance of any of its property if such discontinuance is desirable in the conduct of its business and the 

36

 

Borrower has concluded that such discontinuance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 

        SECTION
5.05.    Maintenance of Records; Inspection.    The Borrower will and will cause each of its Subsidiaries to
maintain proper books of records and accounts in accordance with normal business practice in which full and appropriate entries shall be made of all dealings or transactions in relation to their
respective businesses and activities; and will permit, and will cause each Subsidiary to permit, representatives of any Bank at such Bank's expense, upon reasonable prior written notice (except such
notice shall not be required if an Event of Default then exists), to visit and inspect any of their respective properties, to examine and make abstracts from any of their respective books and records
and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants, all at such reasonable times and as often as may reasonably
be desired. 

37

   
        SECTION 5.06. Payment of Taxes and Claims. The Borrower will and will cause each of its
Subsidiaries to file all income and franchise tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before
they have become delinquent and all claims for which sums have become due and payable that have or might become a Lien on properties or assets of the Borrower or any of its Subsidiaries,  provided that
neither the Borrower nor any of its Subsidiaries need pay any such tax or assessment or claims if (i) the amount, applicability or
validity thereof is contested by the Borrower or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Borrower or a Subsidiary has established adequate reserves
therefor in accordance with GAAP on the books of the Borrower or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in the aggregate would not reasonably be expected to
have a Material Adverse Effect. 

        SECTION
5.07. Corporate Existence, Etc. The Borrower will at all times preserve and keep in full force and effect its corporate existence.
The Borrower will at all times preserve and keep in full force and effect the corporate existence of each of its Subsidiaries (unless merged into the Borrower or any Subsidiary) and all rights and
franchises of the Borrower and its Subsidiaries unless, in the good faith judgment of the Borrower, the termination of or failure to preserve and keep in full force and effect such corporate
existence, right or franchise could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 

        SECTION
5.08. Transactions with Affiliates. Except as set forth in Schedule 5.08, the Borrower will not and will not permit any of
its Subsidiaries to enter into directly or indirectly any Material transaction or Material group of related transactions (including without limitation the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service) with any Affiliate (other than the Borrower or another Subsidiary), except in the ordinary course and pursuant to the reasonable requirements of
the Borrower's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary than would be obtainable in a comparable arm's-length transaction
with a Person not an Affiliate. 

        SECTION
5.09. Prohibited Liens. The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (including any document or instrument in respect of goods or accounts receivable) of the Borrower or
any of its Subsidiaries, whether now owned or hereafter acquired, or any income profits therefrom, or file or permit the filing of, or permit to remain in effect, any charge,
mortgage, finance statement or other similar notice of any Lien with respect to any such property, asset, income or profits under the recording or notice statutes of any jurisdiction, except: 

        (a)
Permitted Liens; 

        (b)
(i) Liens ("Existing Liens") existing as of the date hereof and described in Schedule 5.09 annexed hereto and
(ii) Liens ("Replacement Existing Liens") on the same assets in replacement of Existing Liens or of other Replacement Existing Liens;  provided that to
the extent any Existing Lien or Replacement Existing Lien secures any greater amount of Indebtedness than the related respective amount
thereof set forth on Schedule 5.09, the amount of Indebtedness secured by such Lien in excess of such related respective amount set forth on Schedule 5.09 shall not be permitted by this
Section 5.09(d) but only by Section 5.09(g); 

        (c)
Liens created or incurred after the date hereof by the Borrower or any of its Subsidiaries on assets useful and intended to be used in carrying on the business of the Borrower and
its Subsidiaries, securing the purchase price, or cost of construction or improvement, thereof provided, however, that (i) the Liens shall attach
solely to assets purchased or constructed (and proceeds thereof), (ii) the Liens shall be created within twelve months of the date of the acquisition, 

38

 

purchase, construction or improvement of the assets to which the Liens attached, and (iii) at the time of acquisition, purchase, construction or improvement of such assets, the unpaid
principal amount of all Indebtedness secured by such Liens on such assets (whether or not assumed by the Borrower or a Subsidiary) shall not exceed an amount equal to the lesser of (A) the
purchase price, or the cost of construction or improvement, of such assets incurred by the Borrower or any of its Subsidiaries and (B) the fair market value of such assets at the time of
acquisition, purchase, construction or improvement of such assets (as determined in good faith by the Board of Directors of the Borrower); and any Lien arising out of the refinancing, extension,
renewal or refunding of any Indebtedness secured by any Lien permitted by this Section 5.09(c), provided that such Indebtedness is not secured by
any additional assets and provided further that to the extent that such Indebtedness is increased, the amount of the increase shall not be permitted
under this Section 5.09(c) and shall only be permitted under Section 5.09(g); 

        (d)
Liens ("Acquisition Liens") existing on property of a Related New Acquisition Entity immediately prior to its being consolidated with
or merged into any New Acquisition Subsidiary, immediately prior to such Related New Acquisition Entity becoming a Subsidiary of the Borrower or immediately prior to a New Acquisition Subsidiary
acquiring such property from the Related New Acquisition Entity and Liens on the same assets ("Replacement Acquisition Liens") in replacement of any
such Acquisition Liens or of other Replacement Acquisition Liens; provided that to the extent the Indebtedness or, in the case of a line of credit, the
amount of the credit facility secured by any Acquisition Lien is in an amount greater than the respective amount of such Indebtedness or such line of credit, as the case may be, in existence at the
time of such merger or consolidation, such Person becoming such a Subsidiary or such acquisition of such property, as the case may be, the excess amount shall not be permitted under this
Section 5.09(d) and shall only be permitted under Section 5.09(g); and provided, further, that in the case of any Replacement Acquisition
Lien, to the extent that the Indebtedness or, in the case of a line
of credit, the amount of the line of credit secured by such Replacement Lien is in an amount greater than the respective amount of Indebtedness or line of credit, as the case may be, secured by the
replaced Lien, the excess shall not be permitted under this Section 5.09(d) and shall only be permitted under Section 5.09(g); 

        (e)
Liens on assets leased by the Borrower or one of its Subsidiaries pursuant to a Capital Lease securing the obligations of the Borrower or such Subsidiary under such Capital Lease; 

        (f)
Liens on assets of a Foreign Subsidiary securing Indebtedness of such Foreign Subsidiary; and 

        (g)
Other Liens, provided that after giving effect to the creation, incurrence or assumption, or after accounting for the existence, of
all Other Liens, the sum (without duplication) of (i) the aggregate principal amount of all Indebtedness or other obligations secured by all Other Liens plus (ii) the aggregate principal
amount of all Indebtedness of Subsidiaries permitted solely under Section 5.10(f) does not exceed 10% of Consolidated Assets. "Other Liens" means
Liens securing Indebtedness or other obligations of the Borrower or any of its Subsidiaries that are incurred in reliance on this clause (g) of Section 5.09 and not on any other clause
of this Section. 

        SECTION
5.10. Subsidiary Indebtedness. The Borrower will not permit any of its Subsidiaries (including Candle America, CCW and PartyLite)
to directly or indirectly create, assume, incur or guaranty, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness for borrowed money except: 

        (a)
a Subsidiary may become and remain liable with respect to Indebtedness to the Borrower or a Wholly-Owned Subsidiary of the Borrower; 

39

 

        (b)
the Subsidiaries may (i) remain liable with respect to Indebtedness existing, and Indebtedness under lines of credit where such lines of credit are existing, as of the
Effective Date and described in Schedule 5.10 and (ii) may become liable with respect to Indebtedness in respect of a refinancing of such Indebtedness (or of any Indebtedness under this
clause (ii)) and Indebtedness under lines of credit in replacement of the lines of credit referred to in clause (i) or this clause (ii);  provided, that (A) if the principal amount of
such refinancing Indebtedness or the amount of any such replacement line of credit exceeds the
principal amount of Indebtedness refinanced or the amount of the replaced line of credit, then that excess (i.e., that portion of the refinancing or
replacement representing such increase) shall not be permitted under this Section 5.10(b) but only by Section 5.10(f) and (B) the maximum principal amount of Indebtedness
permitted under this Section 5.10(b) shall not exceed $30,000,000 at any one time outstanding (any amount in excess of such $30,000,000 shall only be permitted by Section 5.10(f)); 

        (e)
a Subsidiary (a "Target Subsidiary") may remain liable with respect to Indebtedness outstanding at the time such Target Subsidiary
becomes a Subsidiary and a New Acquisition Subsidiary may become liable with respect to Indebtedness of the Related New Acquisition Entity assumed by the New Acquisition Subsidiary in connection with
the acquisition (whether by merger or otherwise) of assets or business(es) of such Related New Acquisition Entity; provided that (i) such
Indebtedness shall not have been incurred in contemplation of such Target Subsidiary becoming a Subsidiary and (ii) immediately after such Target Subsidiary becomes a Subsidiary or the New
Acquisition Subsidiary so assumes such Indebtedness, as the case may be, no Default shall exist; 

        (d)
a Subsidiary may become and remain liable with respect to Indebtedness (i) incurred to refinance, in whole or in part, any outstanding Indebtedness permitted under
Section 5.10(c) or under this clause (i), or (ii) under any line of credit in replacement of any line of credit evidencing Indebtedness permitted under Section 5.10(c) or
this clause (ii); provided, however, that if the principal amount of such refinancing Indebtedness or the amount of any such replacement line of
credit exceeds the principal amount of Indebtedness refinanced or amount of the line of credit replaced, then such excess shall not be permitted under this Section 5.10(d) but only by
Section 5.10(f); 

        (e)
a Subsidiary may become and remain liable with respect to Indebtedness secured by Liens permitted by Section 5.09; provided  that the recourse of the holders of such Indebtedness in respect thereof
shall be limited to the assets subject to such Lien, and such holder shall have no recourse to any
other assets of such Subsidiary or to the Borrower or any other Subsidiary with respect thereto; and 

        (f)
a Subsidiary may become and remain liable after the date hereof with respect to Indebtedness for borrowed money not described in Sections 5.10(a) through 5.10(e) above,  provided that after giving effect
to such Subsidiary's creation, assumption, incurrence or guaranty of (or such Subsidiary's becoming liable with
respect to), or after accounting for the existence of, such other Indebtedness, the sum (without duplication) of (i) the aggregate principal amount of all such Indebtedness of Subsidiaries plus
(ii) the aggregate principal amount of all Indebtedness and other obligations secured by Other Liens does not exceed 10% of Consolidated Assets. 

        SECTION
5.11. Investments. The Borrower will not, and will not permit any of its Subsidiaries to, make directly or indirectly any
Investment in any Person, including any joint venture, except: 

        (a)
the Borrower and its Subsidiaries may continue to own the Investments owned by them as of the date hereof and described in Schedule 5.11; 

        (b)
the Borrower and its Subsidiaries may make and own Investments in any Person which is, or immediately after giving effect to such Investment will become, a Subsidiary of the
Borrower; 

40

 

        (c)
the Borrower and its Subsidiaries may make and own Investments in Cash Equivalents or in money market funds that comply with the criteria set forth in Securities and Exchange
Commission Rule 2a-7 under the Investment Company Act of 1940; and 

        (d)
the Borrower and its Subsidiaries may make and own Investments not described in Sections 5.11 (a) through (c) above, provided  that the aggregate amount of all such Investments does not exceed
10% of Consolidated Assets; provided, that, in the event that
an Investment is not initially permitted under Section 5.11 (b) and is permitted under this Section 5.11(d), and subsequently (whether due to subsequent Investment by the Borrower
or its Subsidiaries or otherwise) the Person in whom the Investment is made becomes a Subsidiary of the Borrower, then the full amount of the Investment in such Person shall qualify under
Section 5.11(b). 

        SECTION
5.12. Leverage Ratio. The Leverage Ratio will not, at any time exceed 2.25 to 1.00. 

        SECTION
5.13. Minimum Adjusted Consolidated Net Worth. Adjusted Consolidated Net Worth will at no time be less than $374,450,400 plus 50%
of Cumulative Positive Net Income plus 50% of Cumulative Equity Proceeds. For purposes of this Section, "Cumulative Positive Net Income" means, as of
any date, the sum of Consolidated Net Income for each Fiscal Quarter ending after January 31, 2002 and on or prior to such date for which such Consolidated Net Income is a positive amount,
disregarding any Fiscal Quarter for which Consolidated Net Income is a negative amount and "Cumulative Equity Proceeds" means, as of any date, the
aggregate amount by which Consolidated Net Worth shall have been increased by reason of the issuance of capital stock of the Borrower subsequent to January 31, 2002 and on or prior to such
date. 

        SECTION
5.14. Mergers and Sales of Assets. The Borrower will not consolidate or merge with or into any other Person;  provided that the Borrower may merge with
another Person if (x) the Borrower is the corporation surviving such merger and (y) after giving
effect to such merger, no Default shall have occurred and be continuing. The Borrower shall not permit the sale, lease or other transfer, directly or indirectly, to any Person or Persons (other than
the Borrower or a Subsidiary) of assets having an aggregate book value in excess of 20% of Consolidated Assets as reflected in the most recent consolidated balance sheet of the Borrower available at
the time of the most recent such transaction, provided that the foregoing shall not apply to (i) transfers of assets with an aggregate book value
of less than $70,000,000 in one or more related or unrelated transactions to one or more Persons in connection with the leasing of such assets from such Person or Persons, (ii) sales of
inventory in the ordinary course of business, (iii) dispositions of obsolete assets or assets no longer used in their respective businesses or assets replaced, in the ordinary course of
business, with assets or comparable or better value or (iv) dispositions of any assets within twelve months after the acquisition thereof. 

        SECTION
5.15. Use of Proceeds. The proceeds of the Loans made under this Agreement will be used by the Borrower for its general corporate
purposes (including, without limitation, acquisitions, but only with the approval of the boards of directors of the Persons to be acquired). None of such proceeds will be used, directly or indirectly,
for any purpose that entails a violation of, or is inconsistent with, Regulation U or Regulation X. 

41

  

 
 

ARTICLE 6    
    
    DEFAULTS    
  

        SECTION
6.01.    Events of Default.    

        If
one or more of the following events ("Events of Default") shall have occurred and be continuing: 

        (a)
the Borrower defaults in the payment of any principal on any Note or on any Letter of Credit Liabilities when the same becomes due and payable, whether at maturity or at a date fixed
for prepayment or by declaration or otherwise; or 

        (b)
the Borrower defaults in the payment of any interest, any fees or any other amount payable hereunder for more than five Domestic Business Days after the same becomes due and payable;
or 

        (c)
the Borrower defaults in the performance of or compliance with any term contained in Sections 5.01(e) or 5.08 through 5.15, inclusive; or 

        (d)
the Borrower defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs 6.01 (a), 6.01 (b) and 6.01 (c)) and such
default is not remedied within 3 0 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Borrower receiving notice of such default
from the Administrative Agent at the request of any Bank (any such notice to be identified as a "notice of default" and to refer specifically to this paragraph 6.01(d)); or 

        (e)
any representation or warranty made in writing by or on behalf of the Borrower or by any officer of the Borrower in the Loan Documents or in any writing furnished in connection with
the transactions contemplated thereby proves to have been false or incorrect in any material respect on the date as of which made; or 

        (f)
(i) the Borrower or any of its Material Subsidiaries is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Indebtedness owed to any other Person(s) that is outstanding in an aggregate principal amount of at least $20,000,000 beyond any period of grace
provided with respect thereto, or (ii) the Borrower or any of its Material Subsidiaries is in default in the performance of or compliance with any term of any evidence of any Indebtedness owed
to any other Person(s) in an aggregate outstanding principal amount of at least $20,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a
consequence of such default or condition such Indebtedness has become, or has been declared (or one or more Persons are entitled to declare such Indebtedness to be), due and payable before its stated
maturity or before its regularly scheduled dates of payment or (iii) as a consequence of the occurrence or continuation of any event or condition
(other than (A) the passage of time, (B) the right of the holder of Indebtedness to convert such Indebtedness into equity interests or (C) in the case of secured Indebtedness, the
occurrence of a casualty or condemnation event with respect to the principal collateral therefor without default on the part of the Borrower or any Material Subsidiary), (x) the Borrower or any
of its Material Subsidiaries has become obligated to purchase or repay Indebtedness owed to any other Person(s) before its regular maturity or before its regularly scheduled dates of payment in an
aggregate outstanding principal amount of at least $20,000,000, or (y) one or more Persons have the right to require the Borrower or any of its Material Subsidiaries so to purchase or repay
such Indebtedness, except to the extent that such obligation to purchase or repay or fight to require repayment arises solely through the passage of time (or, in the case of any such right, may be
exercised at any time) and not by the occurrence of any other event or the existence of any other condition; or 

42

 

        (g)
the Borrower or any of its Material Subsidiaries (i) is generally not paying, or admits in writing its inability to pay, its debts as the become due, (ii) files, or
consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or 

        (h)
a court or governmental authority of competent jurisdiction enters an order appointing, without consent by the Borrower or any of its Material Subsidiaries, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up
or liquidation of the Borrower or any of its Material
Subsidiaries, or any such petition shall be filed against the Borrower or any of its Material Subsidiaries and such petition shall not be dismissed within 60 days; or 

        (i)
a final judgment or judgments for the payment of money aggregating in excess of $20,000,000 (excluding Insured Judgment Amounts) are rendered against one or more of the Borrower and
its Material Subsidiaries and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 30 days after the
expiration of such stay; or 

        (j)
if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any
amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC
or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Borrower or any ERISA
Affiliate that a Plan may become a subject of any such proceedings, (iii) the aggregate "amount of unfunded benefit liabilities" (within the meaning of section 4001(a)(18) of ERISA)
under all Plans, determined in accordance with Title IV of ERISA, shall exceed $20,000,000, (iv) the Borrower or any ERISA Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV or ERISA or the penalty or exercise tax provisions of the Code relating to employee benefit plans (as defined in Section 3 of ERISA), (v) the Borrower
or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Borrower or any Subsidiary establishes or amends any employee welfare benefit plan (as defined in Section 3 of
ERISA) that provides post-employment welfare benefits in a manner that would increase the liability of the Borrower or any Subsidiary thereunder; and any such event or events described in
clauses 6.01(j)(i) through 6.01(j)(vi) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect;
or 

        (k)
any person or group of persons (within the meaning of Section 13 or 14 of the Exchange Act) (other than Robert B. Goergen and Family or a group including Robert B. Goergen and
Family) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission under the Exchange Act) of 30% or more of
the outstanding shares of voting common stock of the Borrower; or, during any period of 12 consecutive calendar months, individuals who were either (i) directors of the Borrower on the first
day of such period or (ii) elected to fill vacancies caused by the ordinary course resignation or retirement of any other director and whose nomination or election was approved by a vote of at 

43

 

least a majority of directors then still in office who were directors of the Borrower on the first day of such period, shall cease to constitute a majority of the board of directors of the Borrower; 

then,
and in every such event, the Administrative Agent shall (i) if requested by the Required Banks, by notice to the Borrower terminate the Commitments and they shall thereupon terminate,
(ii) if requested by Banks holding more than 50% of the aggregate Dollar Amount of the Loans, by notice to the Borrower declare the Notes (together with accrued interest thereon) to be, and the
Notes shall thereupon become, immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower; provided that in the case of any of the Events of Default specified in
clause 6.01(g) or 6.01(h) above with respect to the Borrower, without any notice to the Borrower or any other act by the Administrative Agent or the Banks, the Commitments shall thereupon
terminate and the Notes (together with accrued interest thereon) shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby
waived by the Borrower. 

        SECTION
6.02.    Notice of Default.    

        The
Administrative Agent shall give notice to the Borrower under Section 6.01(d) promptly upon being requested to do so by any Bank and shall thereupon notify all the Banks
thereof. 

        SECTION
6.03.    Cash Cover.    

        The
Borrower agrees, in addition to the remedies in the last paragraph of Section 6.01 hereof, that upon the occurrence and during the continuance of any Event of Default, it
shall, if requested by the Administrative Agent upon the instruction of the Banks having more than 50% in aggregate amount of the Commitments (or, if the Commitments shall have been terminated,
holding more than 50% of the Letter of Credit Liabilities), pay to the Administrative Agent an amount in immediately available funds (which funds shall be held as collateral pursuant to arrangements
satisfactory to the Administrative Agent) equal to the aggregate amount available for drawing under all Letters of Credit then outstanding at such time,  provided that, upon the occurrence of any Event
of Default specified in Section 6.01(g) or 6.01(h) with respect to the Borrower, the
Borrower shall pay such amount forthwith without any notice or demand or any other act by any Agent or Bank. 

44

  

 
 

ARTICLE 7    
    
    The Agents    
  

        SECTION 7.01. Appointment and Authorization. Each Bank irrevocably appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with all such powers
as are reasonably incidental thereto. 

        SECTION
7.02. Administrative Agent and Affiliates. The Administrative Agent shall have the same rights and powers under the Loan Documents
as any other Bank and may exercise or refrain from exercising the same as though it were not the Administrative Agent, and the Administrative Agent and its affiliates may accept deposits from, lend
money to, and generally engage in any kind of business with the Borrower or any Subsidiary or affiliate of the Borrower as if it were not the Administrative Agent hereunder. 

        SECTION
7.03. Action by Administrative Agent. The obligations of the Administrative Agent under the Loan Documents are only those
expressly set forth therein. Without limiting the generality of the foregoing, the Administrative Agent shall not be required to take any action with respect to any Default, except as expressly
provided in Article 6. 

        SECTION
7.04. Consultation with Experts. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower),
independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel,
accountants or experts. 

        SECTION
7.05. Liability of Agent. Neither the Administrative Agent nor any of its affiliates nor any of the respective directors,
officers, agents or employees of the foregoing shall be liable for any action taken or not taken by it in connection with the Loan Documents (i) with the consent or at the request of the
Required Banks (or such other number or percentage of the Banks as may be specified herein for the particular purpose) or (ii) in the absence of its own gross negligence or willful misconduct.
Neither the Administrative Agent nor any of its affiliates nor any of the respective directors, officers,
agents or employees of the foregoing shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with the
Loan Documents or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of the Borrower or any of its Subsidiaries; (iii) the satisfaction of
any condition specified in Article 3, except receipt of items required to be delivered to the Administrative Agent; or (iv) the validity, effectiveness or genuineness of the Loan
Documents or any other instrument or writing furnished in connection therewith. The Administrative Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex, facsimile transmission or similar writing) believed by it to be genuine or to be signed by the proper party or parties. Without limiting
the generality of the foregoing, the use of the term "agent" in this Agreement with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom and is intended to create or reflect only a contractual relationship
between independent contracting parties. 

        SECTION
7.06. Indemnification. Each Bank shall, ratably in accordance with its Commitment, indemnify the Administrative Agent, its
affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Borrower) against any cost, expense (including reasonable counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees' gross negligence or willful misconduct) that such indemnitees may suffer or incur in connection
with the Loan Documents or any action taken or omitted by such indemnitees thereunder. 

45

 

        SECTION
7.07. Credit Decision. Each Bank acknowledges that it has, independently and without reliance upon any Agent or any other Bank,
and on the basis of such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it has,
independently and without reliance upon any Agent or any other Bank, and on the basis of such documents and information as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking any action under the Loan Documents. 

        SECTION
7.08. Successor Administrative Agent. The Administrative Agent may resign at any time by giving notice thereof to the Banks and
the Borrower. Upon any such resignation, the Required Banks shall have the right to appoint a successor Administrative Agent with (so long as no Event of Default shall have occurred and be continuing)
the consent of the Borrower, which consent shall not be unreasonably withheld or delayed. If no successor Administrative Agent shall have been so appointed by the Required Banks with the Borrower's
consent (if applicable), and shall have accepted such appointment, within 60 days after the retiring Administrative Agent gives notice of resignation, then the retiring Administrative Agent
may, on behalf of the Banks, appoint a successor Administrative Agent, which shall be either a Bank or a commercial bank organized or licensed under the laws of the United States of America or of any
State thereof and having a combined capital and surplus of at least $250,000,000. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this
Article shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent. 

        SECTION
7.09. Agents' Fees; Arranger Fee. The Borrower shall pay to each Agent for its own account and to J.P. Morgan
Securities Inc. ("JPMSI"), in its capacity as arranger, for its own account, fees in the amounts and at the times previously agreed upon between
the Borrower and such Agent and JPMSI, respectively. 

        SECT10N
7.10. Co-Syndication Agent and Co-Documentation Agents. Nothing in this Agreement shall impose upon any of
the Co-Syndication Agents or the Co-Documentation Agents, in such capacity, any duty, responsibility or liability whatsoever. 

 
 

ARTICLE 8    
    
    Change in Circumstances    
  

        SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair. If on or prior to the first day of any
Interest Period for any Euro-Currency Loan or Competitive Bid LiBOR Loan: 

        (a)
the Administrative Agent determines that adequate and fair means do not exist for determining the Adjusted LIBO Rate for such Interest Period, or 

        (b)
in the case of Euro-Currency Loans, Banks having 50% or more of the aggregate amount of the Commitments advise the Administrative Agent that the Adjusted LEBO Rate as
determined by the Administrative Agent will not adequately and fairly reflect the cost to such Banks of funding their Euro-Currency Loans for such Interest Period, 

the
Administrative Agent shall forthwith give notice thereof to the Borrower and the Banks, whereupon until the Administrative Agent notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, (i) the obligations of the Banks to make Euro-Currency Loans, or to continue or convert outstanding Loans as or into Euro-Currency Loans, in
the affected currency shall be suspended and (ii) each outstanding Euro-Currency Loan in the affected currency shall be converted 

46

 

(in the case of an Alternative Currency Loan, at the Spot Rate) into a Base Rate Loan on the last day of the then current Interest Period applicable thereto. Unless the Borrower notifies the
Administrative Agent at least two Domestic Business Days before the date of any Fixed Rate Borrowing for which a Notice of Borrowing has previously been given that it elects not to borrow on such
date, (i) if such Fixed Rate Borrowing is a Syndicated Borrowing, such Borrowing shall instead be made in Dollars as a Base Rate Borrowing in the same aggregate Dollar Amount as the requested
Borrowing and (ii) if such affected Borrowing is a Competitive Bid LEBOR Borrowing, the Competitive Bid LIBOR Loans comprising such Borrowing shall be made in Dollars in the same aggregate
Dollar Amount as the requested Borrowing and shall bear interest for each day from and including the first day to but excluding the last day of the Interest Period applicable thereto at the Base Rate
for such day. 

        SECTION
8.02. Illegality. If, on or after the date of this Agreement, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its Euro-Currency Lending Office) with any request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or impossible for any Bank (or its Euro-Currency Lending Office) to make, maintain or fund any of its
Euro-Dollar Loans in any currency and such Bank shall so notify the Administrative Agent, the Administrative Agent shall forthwith give notice thereof to the other Banks and the Borrower,
whereupon until such Bank notifies the Borrower and the Administrative Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Bank to make
Euro-Currency Loans, or to convert outstanding Loans into Euro-Currency Loans, in such currency shall be suspended. Before giving any notice to the Administrative Agent
pursuant to this Section, such Bank shall designate a different Euro-Currency Lending Office if such designation will avoid the need for giving such notice and will not, in the judgment of
such Bank, be otherwise disadvantageous to such Bank. If such notice is given, each Euro-Currency Loan of such Bank in such currency then outstanding shall be converted (at the Spot Rate
on the date of conversion in the case of each Alternative Currency Loan) to a Base Rate Loan either (a) on the last day of the then current Interest Period applicable to such
Euro-Currency Loan if such Bank may lawfully continue to maintain and fund such Loan to such day or (b) immediately if such Bank shall determine that it may not lawfully continue to
maintain and fund such Loan to such day. 

        SECTION
8.03. Increased Cost and Reduced Return. (a) If on or after (x) the date hereof, in the case of any Committed Loan
or Letter of Credit or any obligation to make Committed Loans or issue or participate in any Letter of Credit or (y) the date of any related Competitive Bid Quote, in the case of any
Competitive Bid Loan, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Applicable Lending Office) with any request
or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall impose, modify or deem applicable any reserve (including, without limitations any
such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding with respect to any Euro-Currency Loan any such requirement reflected in an applicable
Adjusted LIBO Rate), special deposit, insurance assessment or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Bank (or its Applicable Lending
Office) or shall impose on any Bank (or its Applicable Lending Office) or on the London interbank market any other condition affecting its Fixed Rate Loans, its Note or its obligation to make Fixed
Rate Loans or its obligations hereunder in respect of Letters of Credit and the result of any of the foregoing is to increase the cost to such Bank (or its Applicable Lending Office) of making or
maintaining any Fixed
Rate Loan or of issuing or participating in any Letter of Credit, or to reduce the amount of any sum received or receivable by such Bank (or its Applicable Lending Office) under this Agreement or
under 

47

 

its Note with respect thereto, by an amount deemed by such Bank to be material, then, within 15 days after demand by such Bank (with a copy to the Administrative Agent), the Borrower shall pay
to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction. 

        (b)
If any Bank shall have determined that, after the date hereof, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change in any such law, rule
or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof,
or any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the
rate of return on capital of such Bank (or its Parent) as a consequence of such Bank's obligations hereunder to a level below that which such Bank (or its Parent) could have achieved but for such
adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within
15 days after demand by such Bank (with a copy to the Administrative Agent), the Borrower shall pay to such Bank such additional amount or amounts as will compensate such Bank (or its Parent)
for such reduction. 

        (c)
Each Bank will promptly notify the Borrower and the Administrative Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Bank to
compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in
the judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank claiming compensation under this Section and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of manifest error if made reasonably and in good faith. In determining such amount, such Bank may use any reasonable averaging and attribution
methods. Notwithstanding subsections (a) and (b) of this Section 8.03, the Borrower shall only be obligated to compensate any Bank for any amount arising or accruing during
(i) any time or period commencing not more than three months prior to the date on which such Bank notifies the Administrative Agent and the Borrower that it proposes to demand such compensation
and identifies to the Administrative Agent and the Borrower the statute, regulation or other basis upon which the claimed compensation is or will be based and (ii) any time or period during
which, because of the retroactive application of such statute, regulation or other basis, such Bank did not know that such amount would arise or accrue. 

        SECTION
8.04. Taxes. (a) For purposes of this Section 8.04, the following terms have the following meanings: 

        "Taxes" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings with respect to any
payment by the Borrower pursuant to any Loan Document, and all liabilities with respect thereto, excluding (i) in the case of each Bank and the
Administrative Agent, taxes imposed on its income, net worth or gross receipts and franchise or similar taxes imposed on it,
by a jurisdiction under the laws of which such Bank or the Administrative Agent (as the case may be) is organized or in which its principal executive office is located or, in the case of each Bank, in
which its Applicable Lending Office is located or by a jurisdiction as a result of a present, former or future connection with such Bank or the Administrative Agent (other than a connection resulting
from or attributable to such Person having executed, delivered or performed its obligations or received a payment under, or enforced, the Loan Documents) and (ii) in the case of each Bank, any
United States withholding tax imposed on such payments but only to the extent that such payments to such Bank are subject to United States withholding tax at the time such Bank first becomes a party
to this Agreement. 

        "Other Taxes" means any present or future stamp or documentary taxes and any other excise or property taxes, or similar charges or levies,
which arise from any payment made pursuant to any Loan Document or from the execution or delivery of, or otherwise with respect to, any Loan Document. 

48

 

	(b)
	Any
and all payments by the Borrower to or for the account of any Bank or the Administrative Agent under any Loan Document shall be made without deduction for any Taxes or Other
Taxes; provided that, if the Borrower shall be required by law to deduct any Taxes or Other Taxes from any such payments, (i) the sum payable
shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 8.04) such Bank 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, (ii) the Borrower shall make such deductions, (iii) the Borrower
shalt pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law and (iv) the Borrower shall furnish to the Administrative Agent the
original or a certified copy of a receipt evidencing payment thereof 

        (c)
The Borrower agrees to indemnify each Bank and the Administrative Agent for the full amount of Taxes or Other Taxes (including, without limitations any Taxes or Other Taxes imposed
or asserted by any jurisdiction on amounts payable under this Section 8.04) paid by such Bank or the Administrative Agent (as the case may be) and any liability (including penalties, interest
and expenses, except such as result from the gross negligence of willful misconduct of such Bank or the Administrative Agent, as the case may be) arising therefrom or with respect thereto. This
indemnification shall be paid within 15 days after such Bank or the Administrative Agent (as the case may be) makes demand therefor. 

        (d)
Each Bank organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Bank
listed on the signature pages hereof, on or prior to the date on which it becomes a Bank in the case of each other Bank, on or prior to the date on which it designates a new Applicable Lending Office
(if such Applicable Lending Office is a different legal entity or is located in a different taxing jurisdiction), in the case of each Bank, and from time to time thereafter if requested in writing by
the Borrower (but only so long as such Bank remains lawfully able to do so), shall provide the Borrower and the Administrative Agent with Internal Revenue Service W-8BEN or
W-8ECI, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Bank is entitled to benefits under an income tax treaty to which the United
States is a party which exempts the Bank from United States withholding
tax or reduces the rate of withholding tax on payments of interest for the account of such Bank or certifying that the income receivable pursuant to this Agreement is effectively connected with the
conduct of a trade or business in the United States. 

        (e)
For any period with respect to which a Bank has failed to provide the Borrower with the appropriate form pursuant to subsection 8.04(d) (unless such failure is due to a change in
treaty, law or regulation occurring subsequent to the date on which such form originally was required to be provided), such Bank shall not be entitled to indemnification under subsection 8.04(b) or
8.04(c) with respect to Taxes imposed by the United States; provided that if a Bank, which is otherwise exempt from or subject to a reduced rate of
withholding tax, becomessubject to Taxes because of its failure to deliver a form required hereunder, the Borrower shall take such steps as such Bank shall reasonably request to assist such Bank to
recover such Taxes. 

        (f)
If the Borrower is required to pay additional amounts to or for the account of any Bank pursuant to this Section 8.04, then such Bank will change the jurisdiction of its
Applicable Lending Office if, in the judgment of such Bank, such change (i) will eliminate or reduce any such additional payment which may thereafter accrue and (ii) is not otherwise
disadvantageous to such Bank. 

        (g)
If a Bank or the Administrative Agent (as the case may be) shall become aware that it is entitled to claim a refund (or refund in the form of a credit) (each a "Refund") from a
taxing authority (as a result of any error in the amount of Taxes or Other Taxes paid to such taxing authority) of such Taxes or Other Taxes for which it has been indemnified by the Borrower, or with
respect to which the 

49

 

Borrower has paid additional amounts, pursuant to this Section 8.04, it shall promptly notify the Borrower of the availability of such Refund and shall, within 30 days after receipt of
a written request by the Borrower, make a claim to such taxing authority for such Refund at the Borrower's expense if, in the judgment of such Bank or the Administrative Agent (as the case may be),
the making of such claim will not be other-wise disadvantageous to it; provided that nothing in this subsection (g) shall be
construed to require any Bank or the Administrative Agent to institute any administrative proceeding (other than the filing of a claim for any such Refund) or judicial proceeding to obtain any such
Refund. If a Bank or the Administrative Agent (as the case may be) receives a Refund from a taxing authority (as a result of any error in the amount of Taxes or Other Taxes paid to such taxing
authority) of any such Taxes or Other Taxes for which it has been indemnified by the Borrower, or with respect to which the Borrower has paid additional amounts, pursuant to this Section 8.04,
it shall promptly pay to the Borrower the amount so received (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 8.04 with respect
to the Taxes or Other Taxes giving rise to such Refund), net of all reasonable out-of-pocket expenses (including the net amount of taxes, if any, imposed on such Bank or the
Administrative Agent with respect to such Refund) of such Bank or Administrative Agent, and without interest (other than interest paid by the relevant taxing authority with respect to such Refund);  provided, however, that the Borrower upon the request of such Bank or the Administrative Agent, agrees to repay the amount paid over to the Borrower
(plus penalties, interest or other charges) to such Bank or the Administrative Agent in the event such Bank or the Administrative Agent is required to repay such Refund to such taxing authority.
Nothing contained in this Section 8.04 shall require any Bank or the Administrative Agent to make available any of its tax returns (or any other information that it deems to be confidential or
proprietary). 

        SECTION
8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans. If (i) the obligation of any Bank to make, or to continue
or convert outstanding Loans as or to, Euro-Currency Loans has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03 or
8.04 with respect to its Euro-Currency Loans, and in any such case the Borrower shall, by at least five Euro-Dollar Business Days' prior notice to such Bank through the
Administrative Agent, have elected that the provisions of this Section shall apply to such Bank, then, unless and until such Bank notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer exist, all Loans which would otherwise be made by such Bank as (or continued as or converted to) Euro-Currency Loans (in the affected
currency), shall instead be Base Rate Loans (in the case of Alternative Currency Loans, in the same Dollar Amount as the Euro-Currency Loan that such Bank would otherwise have made in the
Alternative Currency) (on which interest and principal shall be payable contemporaneously with the related Euro-Currency Loans of the other Banks). If such Bank notifies the Borrower that
the circumstances giving rise to such suspension or demand for compensation no longer exist, the principal amount of each such Base Rate Loan shall be converted into a Euro-Currency Loan
on the first day of the next succeeding Interest Period applicable to the related Euro-Currency Loans of the other Banks. If such Loan is converted into an Alternative Currency Loan, such
Bank, the Administrative Agent and the Borrower shall make such arrangements as shall be required (including increasing or decreasing the amount of such Alternative Currency Loan) so that such
Alternative Currency Loan shall be in the same amount as it would have been if the provisions of this Section had never been applied thereto. 

        SECTION
8.06. Substitution of Bank. If (i) the obligation of any Bank to make Euro-Currency Loans has been suspended
pursuant to Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03 or 8.04, and, in the case of either clause (i) or clause (ii), such suspension
is not generally applicable to or such compensation has not generally been demanded by the other Banks, then the Borrower shall have the right, with the assistance of the Agents, to replace such Bank
with an Assignee or Assignees (which may be one or more of the Banks) that will purchase the Loans and assume the Commitment and Letter of Credit Liabilities of such Bank. 

50

  

 
 

ARTICLE 9    
    
    MISCELLANEOUS    
  

        SECTION 9.01. Notices. (a) All notices, requests and other communications to any party hereunder shall be
in writing (including bank wire, telex, facsimile transmission or similar writing) and shall be given to such party (1) in the case of the Borrower, at its address, facsimile number or telex
number set forth on the signature pages hereof, (2) in the case of the Administrative Agent, at its address, facsimile number or telex number set forth on the signature pages hereof,
(3) in the case of any Bank, at its address, facsimile number or telex number set forth in its Administrative Questionnaire or (4) in the case of any party, such other address, facsimile
number or telex number as such party may hereafter specify for the purpose by notice to the Agents and the Borrower. Each such notice, request or other communication shall be effective (i) if
given by telex, when such telex is transmitted to the telex number specified in this Section and the appropriate answerback is received, (ii) if given by facsimile transmission, when
transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (iii) if given by mail, 72 hours after such communication is deposited in the mails
with first class postage prepaid, addressed as aforesaid or (iv) if given by any other means, when delivered at the address specified in this Section;  provided that notices to any Agent or Issuing
Bank under Article 2 or Article 8 shall not be effective until received. 

        (b)
Notices and other communications to the Banks hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent;  provided that the
foregoing shall not apply to notices pursuant to Article 2 unless otherwise agreed by the Administrative Agent and the
applicable Bank. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures
approved by it; provided that approval of such procedures may be limited to particular notices or communications. 

        SECTION
9.02. No Waivers. No failure or delay by any Agent or any Bank in exercising any right, power or privilege under the Loan
Documents shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies provided in the Loan Documents shall be cumulative and not exclusive of any rights or remedies provided by law. 

        SECTION
9.03. Expenses; Indemnification. (a) The Borrower shall pay (i) all out-of-pocket expenses
of the Administrative Agent, including reasonable fees and disbursements of special counsel for the Administrative Agent, in connection with the preparation of the Loan Documents, any waiver or
consent thereunder or any amendment thereof or any Default or alleged Default hereunder and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by
each Agent and Bank, including, without limitation and without duplication, the reasonable fees and disbursements of outside counsel and allocated cost of inside counsel, in connection with such Event
of Default and collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom. 

        (b)
The Borrower agrees to indemnify each Agent and Bank, their respective affiliates and the respective directors, officers, agents and employees of the foregoing (each an  "Indemnitee") and hold each
Indemnitee harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind, including,
without limitation and without duplication, the reasonable fees and disbursements of outside counsel and allocated cost of inside counsel, which may be incurred by such Indemnitee in connection with
any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) brought or threatened relating to or arising out of this Agreement or any
actual or proposed use of proceeds of Loans or Letter of Credit hereunder; provided that no Indemnitee shall have the right to be indemnified hereunder
for such Indemnitee's own gross negligence or willful misconduct as determined by a court of competent jurisdiction. 

51

 

        SECTION
9.04. Sharing of Set-Offs. Subject to Section 2.17, each Bank agrees that if it shall, by exercising any right
of set-off or counterclaim or otherwise, receive payment of a proportion of the aggregate amount then due with respect to the Loans and Letter of Credit Liabilities held by it which is
greater than the proportion received by any other Bank in respect of the aggregate amount then due and interest due with respect to the Loans and Letter of Credit Liabilities held by such other Bank,
the Bank receiving such proportionately greater payment shall purchase such participations in the Loans and Letter of Credit Liabilities held by the other Banks, and such other adjustments shall be
made, as may be required so that all such payments then due with respect to the Loans and Letter of Credit Liabilities held by the Banks shall be shared by the Banks pro rata;  provided that nothing in
this Section shall impair the right of any Bank to exercise any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of indebtedness other than indebtedness under the Loan Documents. The Borrower agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in the Loans and Letter of Credit Liabilities, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of
set-off or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of the Borrower in the amount of such
participation. 

        SECTION
9.05. Amendments and Waivers. Any provision of this Agreement or the Notes may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and the Required Banks or the Agent acting with the written consent of the Required Banks (and, if the rights or duties of any Agent,
the Swingline Bank or any Issuing Bank are affected thereby, by such Person); provided that no such amendment or waiver shall (a) unless signed
by each affected Bank, (i) increase or decrease the Commitment of any Bank (except for a ratable decrease in the Commitments of all Banks) or subject any Bank to any additional obligation,
(ii) reduce the principal of
or rate of interest on any Loan or the amount to be reimbursed in respect of any Letter of Credit or any interest thereon or any fees hereunder or (iii) postpone the date fixed for any payment
of principal of or interest on any Loan or for reimbursement in respect of any Letter of Credit or interest thereon or any fees hereunder or for termination of any Commitment or (b) unless
signed by all Banks, change the percentage of the Commitments or of the aggregate Dollar Amount of the Notes and Letter of Credit Liabilities, or the number of Banks, which shall be required for the
Banks or any of them to take any action under this Section or any other provision of this Agreement. 

        SECTION
9.06. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the Borrower may not assign or otherwise transfer any of its rights under this Agreement without the prior written consent of
all Banks. 

        (b)
Any Bank may at any time grant to one or more banks or other institutions (each a "Participant") participating interests in its
Commitment or any or all of its Loans and Letter of Credit Liabilities. In the event of any such grant by a Bank of a participating interest to a Participant, whether or not upon notice to the
Borrower and the Agents, such Bank shall remain responsible for the performance of its obligations hereunder, and the Borrower, the Issuing Banks, the Swingline Bank and the Agents shall continue to
deal solely and directly with such Bank in connection with such Bank's rights and obligations under the Loan Documents. Any agreement pursuant to which any Bank may grant such a participating interest
shall provide that such Bank shall retain the sole right and responsibility to enforce the obligations of the Borrower under the Loan Documents including, without limitation, the right to approve any
amendment, modification or waiver of any provision thereof, provided that such participation agreement may provide that such Bank will not agree to any
modification, amendment or waiver of this Agreement described in clause (i), (ii) or (iii) of Section 9.05 without the consent of the Participant. The Borrower agrees that
each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Article 8 with respect to its participating interest. An assignment or other
transfer which is not permitted by subsection 

52

 

9.06(c) or 9.06(d) below shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection 9.06(b). 

        (c)
Any Bank may at any time assign to one or more banks or other institutions (each an "Assignee") all, or a proportionate part
(equivalent to an initial Commitment of not less than $5,000,000) of all, of its rights and obligations under the Loan Documents, and such Assignee shall assume such rights and obligations, pursuant
to an Assignment and Assumption Agreement in substantially the form of Exhibit H hereto executed by such Assignee and such transferor Bank, with (and subject to) the written consent of the
Administrative Agent and, so long as no Event of Default then exists under Section 6.01(a), 6.01(b), 6.01(c) (with respect to Sections 5.12 and 5.13 only), 6.01(g), 6.01(h) or 6.01(k),
the Borrower, which consents shall not be unreasonably withheld or delayed; provided that if an Assignee is an affiliate of such transferor Bank or was
a Bank immediately prior to such assignment, no such consent shall be required. Upon execution and delivery of such instrument and payment by such Assignee to such transferor Bank of an amount equal
to the purchase price agreed between such transferor Bank and such Assignee, such Assignee shall be a Bank party to this Agreement and shall have all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of assumption, and the transferor Bank shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this subsection 9.06(c), the transferor Bank, the
Administrative Agent and the Borrower shall make appropriate arrangements so that, if required, a new Note is issued to the Assignee. In connection with any such assignment, the transferor Bank shall
pay to the Administrative Agent an administrative fee for processing such assignment in the amount of $2,500. If the Assignee is not incorporated under the laws of the United States of America or a
state thereof, it shall, prior to the first date on which interest or fees are payable hereunder for its account, deliver to the Borrower and the Administrative Agent certification as to exemption
from deduction or withholding of any United States federal income taxes in accordance with Section 8.04. 

        (d)
Any Bank may at any time assign all or any portion of its rights under the Loan Documents to a Federal Reserve Bank. No such assignment shall release the transferor Bank from its
obligations hereunder. 

        (e)
No Assignee, Participant or other transferee of any Bank's rights (including for this purpose a successor Applicable Lending Office) shall be entitled to receive any greater payment
under Section 8.03 or 8.04 than such Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is made with the Borrower's prior written consent or
by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring such Bank to designate a different Applicable Lending Office under certain circumstances or at a time when the circumstances
giving rise to such greater payment did not exist. 

        SECTION
9.07. Collateral. Each of the Banks represents to the Agents and each of the other Banks that it in good faith is not relying upon
any "margin stock" (as defined in Regulation U) as collateral in the extension or maintenance of the credit provided for in this Agreement. 

        SECTION
9.08. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT AND EACH NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. THE BORROWER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE
COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE
BORROWER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE 

53

 

VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. 

        SECTION
9.09. Counterparts; Integration; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement constitutes the entire agreement and understanding among the parties hereto and
supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof. This Agreement shall become effective upon receipt by the Administrative Agent of
counterparts hereof signed by each of the parties hereto (or, in the case of any party as to which an executed counterpart shall not have been received, receipt by the Agent in form satisfactory to it
of telegraphic, telex, facsimile or other written confirmation from such party of execution of a counterpart hereof by such party). 

        SECTION
9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENTS, THE BANKS, THE SWINGLINE BANK AND THE ISSUING BANK HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. 

        SECTION
9.11. Confidentiality. Each Agent and each Bank agrees to keep any information delivered or made available by the Borrower
pursuant to this Agreement confidential from anyone other than persons employed or retained by such Agent or such Bank who are engaged in evaluating, approving, structuring or administering the credit
facility contemplated hereby; provided that nothing herein shall prevent any Agent or Bank from disclosing such information (a) to any other Bank
or Agent, (b) to any other Person if reasonably incidental to the administration of the credit facility contemplated hereby, (c) upon the order of any court or administrative agency,
(d) upon the request or demand of any regulatory agency or authority, (e) which had been publicly disclosed other than as a result of a disclosure by an Agent or any Bank prohibited by
this Agreement, (f) in connection with any litigation to which an Agent, any Bank or its subsidiaries or Parent may be a party, (g) to the extent necessary in connection with the
exercise of any remedy hereunder, (h) to such Bank's or Agent's legal counsel and independent auditors and (i) subject to provisions substantially similar to those contained in this
Section, to any actual or proposed Participant or Assignee. 

54

 

        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. 

	 	 	BLYTH, INC.
	

 	
 	

By:	
 	

/s/  ERIC H. NIETSCH      
 Name: Eric H. Nietsch

Title: Vice President and Treasurer

Blyth, Inc.

1 E. Weaver Street

Greenwich, CT 06831

Facsimile number: (203) 861-7850

For notices pursuant to Article 6, a copy shall also be sent to:

Bruce D. Kreiger, General Counsel, at the above address or facsimile number.

Website: www.blythinc.com

55

  

	Commitments

	 	 
	 	 

	

 	
 	

 	
 	

 
	

$25,666,667.40	
 	

JPMORGAN CHASE BANK
	

 	
 	

By:	
 	

/s/  ALAN J. ARIA      
 Name: Alan J. Aria

Title: Vice President
	

$25,666,666.30	
 	

BANK OF AMERICA, N.A.
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$25,666,666.30	
 	

LASALLE BANK, NATIONAL ASSOCIATION
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$20,000,000.00	
 	

FLEET NATIONAL BANK
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$20,000,000.00	
 	

WACHOVIA BANK, NATIONAL ASSOCIATION
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:

56

 

	

$25,666,667.40	
 	

JPMORGAN CHASE BANK
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$25,666,666.30	
 	

BANK OF AMERICA, N.A.
	

 	
 	

By:	
 	

/s/  CASEY COSGROVE      
 Name: Casey Cosgrove

Title: Vice President
	

$25,666,666.30	
 	

LASALLE BANK, NATIONAL ASSOCIATION
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$20,000,000.00	
 	

FLEET NATIONAL BANK
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$20,000,000.00	
 	

WACHOVIA BANK, NATIONAL ASSOCIATION
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:

57

 

	

$25,666,667.40	
 	

JPMORGAN CHASE BANK
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$25,666,666.30	
 	

BANK OF AMERICA, N.A.
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$25,666,666.30	
 	

LASALLE BANK, NATIONAL ASSOCIATION
	

 	
 	

By:	
 	

/s/  MARY LOU BARTLETT      
 Name: Mary Lou Bartlett

Title: Senior Vice President
	

$20,000,000.00	
 	

FLEET NATIONAL BANK
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$20,000,000.00	
 	

WACHOVIA BANK, NATIONAL ASSOCIATION
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:

58

 

	

$25,666,667.40	
 	

JPMORGAN CHASE BANK
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$25,666,666.30	
 	

BANK OF AMERICA, N.A.
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$25,666,666.30	
 	

LASALLE BANK, NATIONAL ASSOCIATION
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$20,000,000.00	
 	

FLEET NATIONAL BANK
	

 	
 	

By:	
 	

/s/  W. LINCOLN SCHOFF, JR.       
 Name: W. Lincoln Schoff, Jr.

Title: Senior VP
	

$20,000,000.00	
 	

WACHOVIA BANK, NATIONAL ASSOCIATION
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:

59

 

	

$25,666,667.40	
 	

JPMORGAN CHASE BANK
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$25,666,666.30	
 	

BANK OF AMERICA, N.A.
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$25,666,666.30	
 	

LASALLE BANK, NATIONAL ASSOCIATION
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$20,000,000.00	
 	

FLEET NATIONAL BANK
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$20,000,000.00	
 	

WACHOVIA BANK, NATIONAL ASSOCIATION
	

 	
 	

By:	
 	

/s/  DAVID SILANDER      
 Name: David Silander

Title: Director

60

 

	

$20,000,000.00	
 	

BANK ONE, NA (Main Office Chicago)
	

 	
 	

By:	
 	

/s/  JOSEPH PINZONE      
 Name: Joseph Pinzone

Title: Director
	

$17,500,000.00	
 	

BARCLAYS BANK PLC
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$17,500,000.00	
 	

CITIZENS BANK OF MASSACHUSETTS
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Name:

Title:
	

$14,000,000.00	
 	

THE NORTHERN TRUST COMPANY
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Name:

Title:
	

$20,000,000.00	
 	

BANK ONE, NA
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Name:

Title:

61

 

	

$17,500,000.00	
 	

BARCLAYS BANK PLC
	

 	
 	

By:	
 	

/s/  NICHOLAS A. BELL      
 Name:  Nicholas A. Bell

Title:    Director Loan Transaction Management
	

$17,500,000.00	
 	

CITIZENS BANK OF MASSACHUSETTS
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$14,000,000.00	
 	

NORDEA BANK FINLAND PLC
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$14,000,000.00	
 	

THE NORTHERN TRUST COMPANY
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	Total Commitments	 	 	 	 
	

$200,000,000
	
 	

 	
 	

 

62

 

	

$20,000,000.00	
 	

BANK ONE, NA
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$17,500,000.00	
 	

BARCLAYS BANK PLC
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$17,500,000.00	
 	

CITIZENS BANK OF MASSACHUSETTS
	

 	
 	

By:	
 	

/s/  MARIE C. DUPREY      
 Name:  Marie C. Duprey

Title:    Vice President
	

$14,000,000.00	
 	

THE NORTHERN TRUST COMPANY
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$20,000,000.00	
 	

BANK ONE, NA
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:

63

 

	

$17,500,000.00	
 	

BARCLAYS BANK PLC
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$17,500,000.00	
 	

CITIZENS BANK OF MASSACHUSETTS
	

 	
 	

By:	
 	
 
	 	 	 	 	
 Name:

Title:
	

$14,000,000.00	
 	

THE NORTHERN TRUST COMPANY
	

 	
 	

By:	
 	

/s/  M. ALEJANDRA DUKES      
 Name:  M. Alejandra Dukes

Title:    Officer
	

$14,000,000.00	
 	

NORDEA BANK FINLAND PLC
	

 	
 	

By:	
 	

/s/  ULF FORSSTROM      
 Name:  Ulf Forsstrom

Title:    Vice President
	

 	
 	

By:	
 	

/s/  THOMAS P. HICKEY      
 Name:  Thomas P. Hickey

Title:    Vice President
	Total Commitments	 	 	 	 
	$200,000,000.00
	 	 	 	 

64

  

	

 	
 	

JPMORGAN CHASE BANK, as

        Administrative Agent
	

 	

 	

By:	

 	

 Name: Alan Aria

Title: Vice President

JPMorgan Chase Bank

999 Broad Street, 1st Floor

Bridgeport, CT 06604

Facsimile number: (202) 382-6314
	

 	
 	

BANK OF AMERICA, N.A., as

        Co-Syndication Agent
	

 	

 	

By:	

 	

 Name: Casey Cosgrove

Title: Vice President
	

 	
 	

LASALLE BANK, NATIONAL ASSOCIATION,

        as Co-Syndication Agent
	

 	

 	

By:	

 	

 Name: Mary Lou Bartlett

Title: Senior Vice President
	

 	
 	

FLEET NATIONAL BANK,

        as Co-Documentation Agent
	

 	

 	

By:	

 	

 Name: W. Lincoln Schoff, Jr.

Title: Senior Vice President
	

 	
 	

JPMORGAN CHASE BANK,

        as Administrative Agent
	

 	

 	

By:	

 	

 Name: Alan Aria

Title: Vice President

JPMorgan Chase Bank

999 Broad Street, 1st Floor

Bridgeport, CT 06604

Facsimile number: (202) 382-6314
	
 	
 	

 	
 	

 

65

 

	

 	
 	

BANK OF AMERICA, N.A.,

        as Co-Syndication Agent
	

 	

 	

By:	

 	

/s/  CASEY COSGROVE      
 Name: Casey Cosgrove

Title: Vice President
	

 	
 	

LASALLE BANK, NATIONAL ASSOCIATION,

        as Co-Syndication Agent
	

 	

 	

By:	

 	

 Name: Mary Lou Bartlett

Title: Senior Vice President
	

 	
 	

FLEET NATIONAL BANK, as Co-Documentation Agent
	

 	

 	

By:	

 	

 Name: W. Lincoln Schoff, Jr.

Title: Senior Vice President
	
 	
 	

 	
 	

 

66

 

	

 	
 	

JPMORGAN CHASE BANK, as Administrative Agent
	

 	
 	

By:	
 	

 Name: Alan Aria

Title: Vice President

JPMorgan Chase Bank

999 Broad Street, 1st Floor

Bridgeport, CT 06604

Facsimile number: (202) 382-6314
	

 	
 	

BANK OF AMERICA, N.A., as Co Syndication Agent
	

 	
 	

By:	
 	

 Name: Casey Cosgrove

Title: Vice President
	

 	
 	

LASALLE BANK, NATIONAL ASSOCIATION,

        as Co-Syndication Agent
	

 	
 	

By:	
 	

 Name: Mary Lou Bartlett

Title: Senior Vice President
	

 	
 	

FLEET NATIONAL BANK, as Co-Documentation Agent
	

 	
 	

By:	
 	

 Name: W. Lincoln Schoff, Jr.

Title: Senior Vice President

67

 

	

 	
 	

JPMORGAN CHASE BANK, as Administrative Agent
	

 	
 	

By:	
 	

/s/  ALAN ARIA      
 Name: Alan Aria

Title: Vice President

JPMorgan Chase Bank

999 Broad Street., 1st Floor

Bridgeport, CT 06604

Facsimile number: (202) 382-6314
	

 	
 	

BANK OF AMERICA, N.A., as Co Syndication Agent
	

 	
 	

By:	
 	

/s/  CASEY COSGROVE      
 Name: Casey Cosgrove

Title: Vice President
	

 	
 	

LASALLE BANK, NATIONAL ASSOCIATION,

          as Co-Syndication Agent
	

 	
 	

By:	
 	

/s/  MARY LOU BARTLETT      
 Name: Mary Lou Bartlett

Title: Senior Vice President
	

 	
 	

FLEET NATIONAL BANK, as Co-Documentation Agent
	

 	
 	

By:	
 	

/s/  W. LINCOLN SCHOFF, JR.      
 Name: W. Lincoln Schoff, Jr.

Title: Senior Vice President
	

 	
 	

WACHOVIA BANK, NATIONAL ASSOCIATION,

          as Co-Documentation Agent
	

 	
 	

By:	
 	

/s/  DAVID SILANDER      
 Name: David Silander

Title: Director

68

  

 
 

PRICING SCHEDULE    
  

        The "Euro-Currency Margin", "Facility Fee Rate", "Base Rate Margin" and "LC Fee Rate" for any day are
the respective percentages set forth below in the applicable row and column corresponding to the Status and Utilization that exist on such day: 

	Status
 
	 	Level I
	 	Level II
	 	level III
	 	Level IV
	 	Level V
	 	Level VI
	 
	Euro-Currency Margin:	 	 	 	 	 	 	 	 	 	 	 	 	 
	Utilization < 33.33	 	0.525	%	0.725	%	0.925	%	1.125	%	1.450	%	1.500	%
	Utilization > 33.33%	 	0.650	%	0.850	%	1.050	%	1.250	%	1.450	%	1.500	%
	

Facility Fee Rate	
 	

0.100	
%	

0.150	
%	

0.200	
%	

0.250	
%	

0.300	
%	

0.500	
%
	

Base Rate Margin	
 	

0.00	
%	

0.00	
%	

0.00	
%	

0.250	
%	

0.450	
%	

0.500	
%
	

LC Fee Rate:	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 
	Utilization < 33%	 	0.525	%	0.725	%	0.925	%	1.125	%	1.450	%	1.500	%
	Utilization > 33%	 	0.650	%	0.850	%	1.050	%	1.250	%	1.450	%	1.500	%

        For
purposes of this Schedule, the following terms have the following meanings, subject to the concluding paragraph of this Schedule: 

        "Level I Status" exists at any date if, at such date, the Borrower's senior unsecured long-term debt is rated A-
or higher by S&P or A3 or higher by Moody's. 

        "Level II Status" exists at any date if, at such date, (i) the Borrower's senior unsecured long-term debt is rated BBB+
or higher by S&P or Baal or higher by Moody's and (ii) Level I Status does not exist. 

        "Level III Status" exists at any date if, at such date, (i) the Borrower's senior unsecured long-term debt is rated BBB
or higher by S&P or Baa2 or higher by Moody's and (ii) neither Level I Status nor Level II Status exists. 

        "Level IV Status" exists at any date if, at such date, (i) the Borrower's senior unsecured long-term debt is rated
BBB- or higher by S&P or Baa3 or higher by Moody's and (ii) none of Level I Status, Level 11 Status or Level III Status exists, 

        "Level V Status" exists at any date if, at such date, (i) the Borrower's senior unsecured long-term debt is rated BB+
or higher by S&P or Bal or higher by Moody's and (ii) none of Level I Status, Level II Status, Level III Status or Level IV Status exists. 

        "Level VI Status" exists at any date if, at such date, no other Status exists. 

        "Status" refers to the determination of which of Level I Status, Level II Status, Level III Status, Level IV Status, Level V Status or
Level VI exists at any date. 

        "Utilization" means, at any date, the percentage equivalent of a fraction (i) the numerator of which is the aggregate outstanding
Dollar Amount of the Loans and the Letter of Credit Liabilities at such date and (ii) the denominator of which is the aggregate amount of the Commitments at such date. If for any reason any
Loans or Letter of Credit Liabilities remain outstanding following termination of the Commitments, Utilization shall be deemed to be 100%. 

        The
credit ratings to be utilized for purposes of this Schedule are those assigned to the senior unsecured long-term debt securities of the Borrower without third-party
credit enhancement, and any rating assigned to any other debt security of the Borrower shall be disregarded. The rating in effect at any date is that in effect at the close of business on such date.
If the Borrower is split-rated and the ratings differential is one notch, the higher of the two ratings will apply (e.g., BBB+/Baa2 results in Level II
Status). If the Borrower is split-rated and the ratings differential is more than one notch, the 

69

 

rating one notch higher than the lower of the two shall be used (e.g., BBB+/Baa3 results in Level III Status, as does A-/Baa3). 

70

  

 
 

Schedule 2.16    
  

        1.    Letter
of Credit No. 7409987 issued by Bank of America, N.A. in the amount of $2,352,035.00 for the benefit of UBS (Cayman Islands) Ltd. initially expiring
on March 1, 2003 and automatically renewed for successive one-year periods. 

        2.    Letter
of Credit No. 7409986 issued by Bank of America, N.A. in the amount of $770,000.00 for the benefit of the Economic Development Authority for the City of
Cannon Falls initially expiring on October 30, 2003 and automatically renewed for successive one-year periods until a final expiry of March 1, 2009. (00014339; 3;
0512-1) 

71

  

 
 

Schedule 5.08    
  

        The Borrower has entered into an employment agreement with Robert B. Goergen dated as of August 1, 2000. The agreement provides for Mr. Goergen's
employment for a term of eight years (subject to earlier termination at the election of either the Borrower or Mr. Goergen, as described below) from August 1, 2000. During the first five
years of Mr. Goergen's employment pursuant to the agreement (the "Initial Term"), he will serve as Chairman of the Board and President and Chief Executive Officer of the Borrower and will be
responsible for the general management of the affairs of the Borrower. During the remainder of the term of Mr. Goergen's employment pursuant to the agreement, he will serve as the
non-executive Chairman of the Board of the Borrower and will have such duties and responsibilities for the management of the Borrower as the Board of Directors may from time to time assign
to him, consistent with the duties and responsibilities that might reasonably be expected of a part-time senior executive of a major corporation. Mr. Goergen has agreed that during
the Initial Term he will devote his full business time and attention to the business and affairs of the Borrower while during the remainder of the term of the employment agreement he will devote one
half of his business time and attention to the business and affairs of the Borrower. 

        Mr. Goergen
will receive a base salary of at least $600,000 per year during the Initial Tenn. During the remainder of the term of the employment agreement, Mr. Goergen will
receive a base salary of at least one-half of the annualized base salary he was receiving on the last day of the fifth year of his employment pursuant to the agreement.
Mr. Goergen's base salary will be reviewed annually by the Board of Directors for increase, in the Board's discretion. In addition to his base salary, during the term of his employment pursuant
to the employment agreement, Mr. Goergen will participate in the Borrower's Annual Incentive Compensation Plan or any successor plan. Mr. Goergen will have a target bonus opportunity
each year equal to one hundred percent of his base salary, payable based upon meeting certain performance goals and subject to adjustment upward or downward if those performance goals are exceeded or
are not met, as the case may be. 

        Mr. Goergen's
employment agreement provides that, subject to vesting as described below, he will be entitled to receive, during his lifetime, a supplemental pension benefit,
commencing on August 1, 2008, equal to fifty percent of his "Final Average Compensation" but not to exceed $500,000 per annum. "Final Average Compensation" is defined in the employment
agreement to mean the sum of the base salary and annual incentive award payments paid in respect of the three calendar years of Mr. Goergen's employment by the Borrower, out of the five
calendar years of such employment ending on the last day of the Initial Term (or, if earlier, the last day of his employment by the Borrower), during which he received the highest level of such
payments, divided by three. Mr. Goergen's supplemental pension will vest daily, on a pro rata basis over the six year period commencing on
August 1, 2000 and will cease vesting if Mr. Goergen's employment is terminated for "Cause" (as
defined in the employment agreement) or if Mr. Goergen voluntarily terminates his employment prior to the end of the term of the employment agreement. To provide for the payment of such
supplemental pension benefit, the Borrower has purchased a single life annuity contract that insures the payment of such benefit. 

        Each
of the Borrower and Mr. Goergen has the right to terminate Mr. Goergen's employment at any time. In the event of a termination of Mr. Goergen's employment by
reason of Mr. Goergen's death, Mr. Goergen's estate will be entitled to continue to receive Mr. Goergen's then current base salary for a period of twenty-four months
and to receive the annual incentive award for the year in which Mr. Goergen's death occurs; Mr. Goergen's spouse will be entitled to continue to participate in certain Borrower benefit
plans; and upon the death of both Mr. Goergen and his spouse, the Borrower will, upon the demand of the estate of either Mr. Goergen or his spouse, buy back from such estate up to
7,500,000 shares of the Borrower's common stock within 90 days of such demand at the fair market value thereof (as defined in the employment agreement) or register the public offer and sale by
such estate of up to 7,500,000 shares of the Borrower's common stock. In the event of a termination of 

72

 

Mr. Goergen' s employment by reason of Mr. Goergen's disability, Mr. Goergen will be entitled to: receive disability benefits in accordance with the Borrower's then current
disability program; continued payment of Mr. Goergen's then current base salary (less disability benefit payments) through the end of the term of the agreement and for a period of
twenty-four months thereafter; payment of the annual incentive award for the year in which Mr. Goergen's disability occurs; continued participation by Mr. Goergen and his
spouse in certain benefit plans maintained by the Borrower; continuation of certain perquisites provided for in the employment agreement; full vesting of the supplemental pension benefit described
above; and the buyback or registration of up to 7,500,000 shares of the Borrower's common stock upon the death of both Mr. Goergen and his spouse, as described above. In the event of the
termination of Mr. Goergen's employment for "Cause" (as defined in the employment agreement), Mr. Goergen will be entitled to payment of his base salary through the date of such
termination and any unvested supplemental pension benefit will be forfeited. In the event of a termination of Mr. Goergen's employment without "Cause", or of a "Constructive Termination Without
Cause" (as defined in the employment agreement), Mr. Goergen will be entitled to: continued payment of Mr. Goergen's then current base salary through the end of the term of the
agreement; payment of the annual incentive award for the year in which Mr. Goergen is terminated; continued participation by Mr. Goergen and his spouse in certain benefit plans
maintained by the Borrower; continuation of certain perquisites provided for in the employment agreement; continued provision by the Borrower of office space and secretarial support; the repurchase by
the Borrower from Mr. Goergen of 100,000 shares of the Borrower's common stock at the end of each of the next four calendar quarters at fair market value (as defined in the employment
agreement); full vesting of the supplemental pension benefit described above; and the buyback or registration of up to 7,500,000 shares of the Borrower's common stock upon the death of both
Mr. Goergen and his spouse, as described above. In the event that Mr. Goergen voluntarily terminates his employment prior to the expiration of the employment agreement (other than
pursuant to a "Constructive Termination Without Cause") he will be entitled to payment of his base salary through the date of such voluntary termination and any unvested supplemental pension benefit
will be forfeited. In the event that Mr. Goergen retires after the expiration of the term of the employment agreement, Mr. Goergen will be entitled to: continued participation by
Mr. Goergen and his spouse in certain benefit plans maintained by the Borrower; continuation of certain perquisites provided for in the employment agreement; continued provision by the Borrower
of office space and secretarial support; and the buyback or registration of up to 7,500,000 shares of the Borrower's common stock upon the death of both Mr. Goergen and his spouse, as described
above. 

        In
connection with the employment agreement, the Borrower and Mr. Goergen entered into a registration rights agreement relating to the registration of up to 7,500,000 shares of
the Borrower's common stock as described above in the event that the Borrower chooses not to purchase such shares upon the death of both Mr. Goergen and his spouse. The Borrower will not be
obligated to purchase or register such shares, notwithstanding the death of both Mr. Goergen and his spouse, if the survivor's estate, or his or her beneficiaries, as the case may be, can then
sell all of the shares of the Borrower's common stock owned by them without registration. 

        The
inclusion of the above described employment agreement in this Schedule 5.08 is not an admission or suggestion that, and shall not be deemed or interpreted to imply that, such
employment agreement was not entered into in the ordinary course and pursuant to the reasonable requirements of the Borrower's business and upon fair and reasonable terms no less favorable to the
Borrower than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate. 

73

   SCHEDULE 5.09(1)  

	DEBTOR NAME
 
	 	JURISDICTION
	 	SECURED PARTY
	 	OBLIGATION

SECURED
	 	FILING NUMBER
	 	DATE

OF

FILING
	 	COLLATERAL

DESCRIPTION

	CBK, Ltd., LLC	 	TN — Sec'y of State	 	PNC Bank, National Association (assigned by National Canada Finance Corp. /National Bank of Canada)	 	Obligations of CBK, Ltd., LLC in connection with all Indebtedness of CBK Ltd., LLC described in Schedule 5.10 and obligations arising in connection with trade letters of credit extended from time, the current total amount
of such trade letters of credit being $2,153,953.50.	 	Orig: 920118170 Amend: 930255867 Amend: 940348056 Amend: 940348057 Amend: 950396230 Contin: 972062783 Amend: 992039716 Amend: 300047866 Amend: 301090190 Contin: 202022212 Assign: 202031283	 	9/2/92 11/24/93

9/2/94

9/2/94

2/6/95

8/8/97

8/17/99

8/31/00

8/7/01

4/3/02

5/20/02	 	All assets.

(Amendments to update max amt. of indebtedness, names of secured party and debtor)
	

CBK, Ltd., LLC (Wicker Gallery, a Division of)	
 	

TN — Sec'y of State	
 	

PNC Bank, National Association (assigned by National Canada Finance Corp./National Bank of Canada)	
 	

Obligations of CBK, Ltd., LLC in connection with all Indebtedness of CBK Ltd., LLC described in Schedule 5.10 and obligations arising in connection with trade letters of credit extended from time, the current total amount of such trade letters of
credit being $2,153,953.50.	
 	

Orig: 920118171 Amend: 940348060 Amend: 950396234 Contin: 972062781 Contin: 202022220 Assign: 202031279	
 	

9/2/92

9/2/94

2/6/95

8/8/97

4/3/02

5/20/02	
 	

Reflection of above# 920118170 to catch name of company division. All assets. (Amendments to update names of parties)
	

CBK, Ltd., LLC (Brass Original, a Division of)	
 	

TN — Sec'y of State	
 	

PNC Bank, National Association (assigned by National Canada Finance Corp./National Bank of Canada)	
 	

Obligations of CBK, Ltd., LLC in connection with all Indebtedness of CBK Ltd., LLC described in Schedule 5.10 and obligations arising in connection with trade letters of credit extended from time, the current total amount of such trade letters of
credit being $2,153,953.50.	
 	

Orig: 920118172 Amend: 940348058 Amend: 950396232 Contin: 972062780 Contin: 202022219 Assign: 202031278	
 	

9/2/92

9/2/94

2/6/95

8/8/97

4/3/02

5/20/02	
 	

Reflection of above# 920118170 to catch name of company division. All assets. (Amendments to update names of parties)
	

CBK, Ltd., LLC (Pinnacle Lamps, a Division of)	
 	

TN — Sec'y of State	
 	

PNC Bank, National Association (assigned by National Canada Finance Corp./National Bank of Canada)	
 	

Obligations of CBK, Ltd., LLC described in connection with all Indebtedness of CBK Ltd., LLC in Schedule 5.10 and obligations arising in connection with trade letters of credit extended from time, the current total amount of such trade letters of
credit being $2,153,953.50.	
 	

Orig: 920118173 Amend: 940348061 Amend: 950396233 Contin: 972062784 Contin: 202022218 Assign: 202031277	
 	

9/2/92

9/2/94

2/6/95

8/8/97

4/3/02

5/20/02	
 	

Reflection of above# 920118170 to catch name of company division. All assets. (Amendments to update names of parties)
	

CBK, Ltd., LLC (Frames Unlimited, a Division of)	
 	

TN — Sec'y of State	
 	

PNC Bank, National Association (assigned by National Canada Finance Corp./National Bank of Canada)	
 	

Obligations of CBK, Ltd., LLC in connection with all Indebtedness of CBK Ltd., LLC described in Schedule 5.10 and obligations arising in connection with trade letters of credit extended from time, the current total amount of such trade letters of
credit being $2,153,953.50.	
 	

Orig: 920118174 Amend: 940348063 Amend: 950396229 Contin: 972062785 Contin: 202022217 Assign: 202031276	
 	

9/2/92

9/2/94

2/6/95

8/8/97

4/3/02

5/20/02	
 	

Reflection of above# 920118170 to catch name of company division. All assets. (Amendments to update names of parties)
	

CBK, Ltd., LLC (Holidays, a Division of)	
 	

TN — Sec'y of State	
 	

PNC Bank, National Association (assigned by National Canada Finance Corp./National Bank of Canada)	
 	

Obligations of CBK, Ltd., LLC in connection with all Indebtedness of CBK Ltd., LLC described in Schedule 5.10 and obligations arising in connection with trade letters of credit extended from time, the current total amount of such trade letters of
credit being $2,153,953.50.	
 	

Orig: 920118175 Amend: 940348062 Amend: 950396231 Contin: 972062777 Contin: 202022216 Assign: 202031275	
 	

9/2/92

9/2/94

2/6/95

8/8/97

4/3/02

5/20/02	
 	

Reflection of above# 920118170 to catch name of company division. All assets. (Amendments to update names of parties)
	

CBK, Ltd., LLC (Company 2000, Division of)	
 	

TN — Sec'y of State	
 	

PNC Bank, National Association (assigned by National Canada Finance Corp./National Bank of Canada)	
 	

Obligations of CBK, Ltd., LLC in connection with all Indebtedness of CBK Ltd., LLC described in Schedule 5.10 and obligations arising inconnection with trade letters of credit extended from time, the current total amount of such trade letters of
credit being $2,153,953.50.	
 	

Orig: 920118176 Amend: 940348059 Amend: 950396226 Contin: 972062779 Contin: 202022215 Assign: 202031284	
 	

9/2/92

9/2/94

2/6/95

8/8/97

4/3/02

5/20/02	
 	

Reflection of above# 920118170 to catch name of company division. All assets. (Amendments to update names of parties)
	

CBK, Ltd., LLC	
 	

TN — Sec'y of State	
 	

PNC Bank, National Association (assigned by National Canada Finance Corp.)	
 	

Obligations of CBK, Ltd., LLC in connection with all Indebtedness of CBK Ltd., LLC described in Schedule 5.10 and obligations arising in connection with trade letters of credit extended from time, the current total amount of such trade letters of
credit being $2,153,953.50.	
 	

Orig: 920124630 Amend: 930232140 Amend: 950396228 Release: 950442108 Contin: 972062778 Contin: 202022214 Assign: 202031281	
 	

9/24/92

9/2/93

2/6/95

6/16/95

8/8/97

4/3/02

5/20/02	
 	

Fixtures to real estate ("Parcel 12") owned by Union City Industrial Development Bd.; Amends to debtor's name, legal descrip of RE; partial rel.
	

CBK, Ltd., LLC	
 	

TN—Sec'y of State	
 	

PNC Bank, National Association (assigned by National Canada Finance Corp.)	
 	

Obligations of CBK, Ltd., LLC in connection with all Indebtedness of CBK Ltd., LLC described in Schedule 5.10 and obligations arising in connection with trade letters of credit extended from time, the current total amount of such trade letters of
credit being $2,153,953.50.	
 	

Orig: 920124631 Amend: 930232143 Amend: 950396227 Partial Rel: 950442107 Contin: 972062786 Contin: 202022213 Assign: 202031282	
 	

9/24/92

9/8/93

2/6/95

6/16/95

8/8/97

4/3/02

5/20/02	
 	

Fixtures to real estate (other portion of "Parcel 12") owned by Union City Industrial Dev. Bd; Amends to debtor's name, legal descrip of RE; partial rel.
	

CBK, Ltd., LLC	
 	

TN—Sec'y of State	
 	

PNC Bank, National Association (assigned by National Canada Finance Corp/National Bank of Canada)	
 	

Obligations of CBK, Ltd., LLC in connection with all Indebtedness of CBK Ltd., LLC described in Schedule 5.10 and obligations arising in connection with trade letters of credit extended from time, the current total amount of such trade letters of
credit being $2,153,953.50.	
 	

Orig: 950396225 Contin: 992056854 Assign: 202021290	
 	

2/6/95 12/15/99 4/1/02	
 	

All assets, all as is more particularly described in Exhibit A (various)
	

CBK, Ltd., LLC	
 	

TN—Sec'y of State	
 	

PNC Bank, National Association (assigned by National Bank of Canada) and First Tennessee Bank National Association, as Trustee (now JP Morgan Trust Company)	
 	

Obligations of CBK, Ltd., LLC in connection with all Indebtedness of CBK Ltd., LLC described in Schedule 5.10 and obligations arising in connection with trade letters of credit extended from time, the current total amount of such trade letters of
credit being $2,153,953.50.	
 	

Orig: 950442114 Contin: 300024128 Assign: 202021328	
 	

6/16/95 4/24/00 4/1/02	
 	

Certain shipping center equipment.
	

CBK, Ltd., LLC	
 	

TN—Sec'y of State	
 	

PNC Bank, National Association (assigned by National Bank of Canada)	
 	

Obligations of CBK, Ltd., LLC inconnection with all Indebtedness of CBK Ltd., LLC described in Schedule 5.10 and obligations arising in connection with trade letters of credit extended from time, the current total amount of such trade letters of
credit being $2,153,953.50.	
 	

Orig: 950442115 Contin: 300012308 Assign: 202021330	
 	

6/16/95 2/29/00 4/1/02	
 	

Union City Series 1995 IDRBs totaling $5.38 million
	
 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 

74

 

	

CBK, Ltd., LLC	
 	

TN—Sec'y of State	
 	

PNC Bank, National Association (assigned by National Canada Finance Corp/National Bank of Canada)	
 	

Obligations of CBK, Ltd., LLC in connection with all Indebtedness of CBK Ltd., LLC described in Schedule 5.10 and obligations arising in connection with trade letters of credit extended from time, the current total amount of such trade letters of
credit being $2,153,953.50.	
 	

Orig: 950442117 Contin: 300012310 Assign: 202021329	
 	

6/16/95 2/29/00 4/1/02	
 	

Land and Improvements, Equipment, etc.
	

CBK LTD., LLC	
 	

TN — Sec'y of State	
 	

PNC Bank National Association (assigned by National Canada Finance Corp./National Bank of Canada)	
 	

Obligations of CBK, Ltd., LLC in connection with all Indebtedness of CBK Ltd., LLC described in Schedule 5.10 and obligations arising in connection with trade letters of credit extended from time, the current total amount of such trade letters of
credit being $2,153,953.50.	
 	

Orig: 302033780 Assign: 102036143	
 	

6/14/02

7/15/02	
 	

Incorporation by reference of Obion County, TN liens 5007 and 5148 (see below)
	

CBK, Ltd., LLC	
 	

TN — Obion County	
 	

PNC Bank, National Association (assigned by National Canada Finance Corp./National Bank of Canada;	
 	

Obligations of CBK, Ltd., LLC in connection with all Indebtedness of CBK Ltd., LLC described in Schedule 5.10 and obligations arising in connection with trade letters of credit extended from time, the current total amount of such trade letters of
credit being $2,153,953.50.	
 	

Orig: 79517 Assign: 4702 Assign: 5028 Amend: 8272 Amend: 12088 Release: 13337 Contin: 23047 Assign: 367	
 	

11/1/88

7/29/92

9/9/92

9/1/93

2/6/95

6/16/95

9/28/98

4/15/02	
 	

Fixtures to real estate ("Parcel 12") owned by Union City Industrial Development Bd., inventory and accounts receivable; Amends to debtor's name, legal descrip of RE; partial rel.
	

CBK, Ltd., LLC	
 	

TN — Obion County	
 	

National Canada Finance Corp./National Bank of Canada	
 	

Obligations of CBK, Ltd., LLC in connection with all	
 	

Orig: 5007 Amend: 01919 Amend: 12086 Release: 13336 Contin: 19522 Contin: 857	
 	

9/4/92

9/1/94

2/6/95

6/16/95

8/12/97

4/8/02	
 	

Inventory, Accounts Receivable, Equipment, Intangibles, etc. Indebtedness of CBK Ltd., LLC described in Schedule 5.10 and obligations arising in connection with trade letters of credit extended from time, the current total amount of such trade
letters of credit being $2,153,953.50.
	

CBK, Ltd., LLC	
 	

TN — Obion County	
 	

National Canada Finance Corp./National Bank of Canada	
 	

Obligations of CBK, Ltd., LLC in connection with all Indebtedness of CBK Ltd., LLC described in Schedule 5.10 and obligations arising in connection with trade letters of credit extended from time, the current total amount of such trade letters of
credit being $2,153,953.50.	
 	

Orig: 5148 (correct placement) Amend: 8279 Amend: 12087 Release: 13338 Contin: 19521	
 	

9/24/92

9/1/93

2/6/95

8/21/97

6/16/95	
 	

Fixtures, Accounts Receivable and Inventory

	1
	In
addition to the above listed Liens, various lessors have filed UCC "notification" financing statements in connection with operating teases entered into between such
lessors and one or more of the subsidiaries of the Borrower. Because such financing statements relate to operating leases, they are not Liens and, so, are not listed herein. 

Liens securing (1) Indebtedness of Foreign Subsidiaries described in Schedule 5.10 and (ii) capitalized leases are not listed herein as
such Liens are subject to the exceptions set forth in Sections 5.09(e) and 5.09(f) of the Credit Agreement to which this Schedule 5.09 is attached. 

75

  

 
 

Schedule 5.10    
  

	Borrower
 
	 	Financial

Institution
	 	Facility Type*
	 	Amount
	 	Maturity

	CBK, Ltd., LLC	 	PNC Bank	 	Revolving line of credit	 	$23,000,000	 	July 2003
	

CBK, Ltd., LLC	
 	

Industrial Development

Board of the City of

Union City, Tennessee;

J.P. Morgan Trust

Company (Trustee)	
 	

Industrial Revenue Bonds

(Note that there is a related letter of credit in the amount of $4,909,136.99 issued by National Bank of Canada for which CBK, Ltd., LLC is the obligor.)	
 	

$4,820,000	
 	

January 2025
	

Colony Gifts

Corporation, Ltd.	
 	

Barclays Bank	
 	

Revolving line of credit	
 	

GBP 15,000,000	
 	

June 2003
	

Colony Gifts

Corporation, Ltd.	
 	

Barclays Mercantile Business Finance Ltd.	
 	

Equipment financing facility	
 	

GBP 1,500,000	
 	

June 2003
	

Gies Kerzen GmbH	
 	

S&E Banken	
 	

Revolving line of credit	
 	

Eur 5,600,000	
 	

June 2003 (Renewed Annually)
	

Gies Kerzen GmbH	
 	

Hamburische Landesbank	
 	

Revolving line of credit	
 	

Eur 3,000,000	
 	

June 2003 (Renewed Annually)
	

Gies Kerzen GmbH	
 	

Landesbank Kiel	
 	

Revolving line of credit	
 	

Eur 3,000,000	
 	

June 2003 (Renewed Annually)
	

Gies Kerzen GmbH	
 	

Vereins Und Westbank	
 	

Revolving line of credit	
 	

Eur 3,000,000	
 	

June 2003 (Renewed Annually)
	

Liljeholmens

Stearinfabriks AB	
 	

Skandinaviska

Enskilda Banken	
 	

Revolving line of credit	
 	

SEK 60,000,000	
 	

December 2002
	

Promol SA	
 	

Caixa Geral De Depositos	
 	

Revolving line of credit	
 	

Eur 3,250,000	
 	

December 2002 (Renewed Semi-annually)
	

Promol SA	
 	

Banco Portugues

De Inestimento	
 	

Revolving line of credit	
 	

Eur 2,500,000	
 	

December 2002 (Renewed Semi-annually)
	

Promol SA	
 	

Banco Commercial Portugues	
 	

Revolving line of credit	
 	

Eur 3,750,000	
 	

December 2002 (Renewed Semi-annually)
	

Promol SA	
 	

Banco Santander	
 	

Revolving line of credit	
 	

Eur 1,250,000	
 	

December 2002 (Renewed Semi-annually)
	

J. Becker & Co. AG	
 	

Thurgauer

Kantonalbank	
 	

Revolving line of credit	
 	

CHF 1,555,000	
 	

December 2002
	
 	
 	

 	
 	

 	
 	

 	
 	

 

76

 

	

J. Becker & Co. AG	
 	

UBS	
 	

Revolving line of credit	
 	

CHF 3,000,000	
 	

December 2002
	

ASP-Homblad A/S	
 	

Den Danske Bank	
 	

Revolving line of credit	
 	

DKK 32,000,000	
 	

December 2002

	*
	One or more of the listed facilities may be guaranteed by other subsidiaries of the Borrower.  

77

  

 
 

Schedule 5.11    
    
    Investments    
  

        Blyth, Inc.
holds a 50% interest in Auschar Polyco Ltd., an Australian Corporation. 

78

 
 

EXHIBIT A    
  

 
 

NOTE    
  

New
York, New York                           

, 2002                            

        For
value received, Blyth, Inc., a Delaware corporation (the "Borrower"), promises to pay to the order
of                                    (the
"Bank"), for the account of its Applicable Lending Office, the unpaid principal amount of each Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the maturity date provided for in the Credit Agreement. The Borrower promises to pay interest on the unpaid principal amount of each such Loan on the dates and at
the rate or rates provided for in the Credit Agreement. All such payments of principal and interest shall be made (i) if in Dollars, in lawful money of the United States in Federal or other
immediately available funds at the office of JPMorgan Chase Bank, 270 Park Avenue, New York, New York 10017 or (ii) if in an Alternative Currency, in such funds as may then be customary
for the settlement of international transactions in such Alternative Currency at the place specified for payment thereof pursuant to the Credit Agreement. 

        All
Loans made by the Bank, the respective types thereof and, in the case of Alternative Currency Loans, the currency thereof, and all repayments of the principal thereof shall be
recorded by the Bank and, if the Bank so elects in connection with any transfer or enforcement hereof, appropriate notations to evidence the foregoing information with respect to each such Loan then
outstanding may be endorsed by the Bank on the schedule attached hereto, or on a continuation of such schedule attached to and made a part hereof,  provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement. 

        This
note is one of the Notes referred to in the Credit Agreement dated as of August 5, 2002 among the Borrower, the banks listed on the signature pages thereof, JPMorgan Chase
Bank, as Administrative Agent, Bank of America, N.A. and LaSalle Bank, National Association, as Co-Syndication Agents, and Fleet National Bank and Wachovia Bank, National Association, as
Co-Documentation Agents (as the same may be amended from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement are
used herein with the same meaning 

        Reference
is made to the Credit Agreement for provisions for the prepayment hereof and the acceleration of the maturity hereof. 

	 	 	BLYTH, INC.
	

 	
 	

By:	

 Name:

Title:

Note
(cont'd) 

 
 

LOANS AND PAYMENTS OF PRINCIPAL    
  

	Date
	 	Currency of Loan
	 	Amount of Loan
	 	Type of Loan
	 	Principal Repaid
	 	Notation Made By

	

	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	 	 
	

  

 
 

EXHIBIT B    
  

 
 

FORM OF NOTICE OF COMMITTED BORROWING    
  

        [Date] 

To:    JPMorgan
Chase Bank, as Administrative Agent 

From:    Blyth, Inc.
(the "Borrower") 

	Re:	 	Credit Agreement (as the same may be amended from time to time, the "Credit Agreement") dated as
of                            , 2002 among the Borrower, the Banks party thereto, JPMorgan Chase Bank, as
Administrative Agent, Bank of America, N.A. and LaSalle Bank, National Association, as Co-Syndication Agents, and Fleet National Bank and Wachovia Bank, National Association, as Co-Documentation Agents

        We
hereby give irrevocably give notice pursuant to Section 2.02 of the Credit Agreement of the Committed Borrowing specified below: 

        1.    The
[Domestic Business Day][Euro-Currency Business Day] of the proposed Borrowing is
[Date]. 

        2.    The
aggregate amount of the proposed Borrowing is [specify currency and amount in such currency]. 

        3.    The
Loans comprising such Borrowing are to be [Swingline Loans] [Syndicated Loans]. 

        [4.
The Loans comprising such Borrowing are to bear interest initially at [the Base Rate][a Euro-Currency
Rate][other mutually agreed rate for Swingline Loan].] 

        [5.
The duration of the initial Interest Period applicable thereto is [specify duration].] 

        Terms
used herein have the meanings assigned to them in the Credit Agreement. 

	 	 	BLYTH, INC.	 
	

 	
 	
By:	

 	

 
	 	 	 	
 Name:

Title:    	 

B-1

  

 
 

EXHIBIT C    
  

 
 

FORM OF COMPETITIVE BID QUOTE REQUEST    
  

        [Date]

	

To:	
 	

JPMorgan Chase Bank, as Administrative Agent
	

From:	
 	

Blyth, Inc. (the "Borrower")
	

Re:	
 	

Credit Agreement (as the same may be amended from time to time, the "Credit Agreement") dated as
of                            , 2002 among the Borrower, the Banks party thereto, JPMorgan Chase Bank, as
Administrative Agent, Bank of America, N.A. and LaSalle Bank, National Association, as Co-Syndication Agents, and Fleet National Bank and Wachovia Bank, National Association, as Co-Documentation Agents

        We hereby give notice pursuant to Section 2.03 of the Credit Agreement that we request Competitive Bid Quotes for the following proposed Competitive Bid
Borrowing(s): 

Date
of Borrowing: 

	Currency
	 	Principal Amount*
	 	Interest Period**

	

	
 	

 	
 	

 
	

	
 	

 	
 	

 
	

	
 	

 	
 	

 

        Such
Competitive Bid Quotes should offer a Competitive Bid [Margin] [Absolute Rate]. [The applicable base rate is the Adjusted
LIBO Rate.] 

	*
	Dollar
Amount must be not less than $2,000,000.

	**
	Not
less than one month (LIBOR Auction) or not less than 7 days (Absolute Rate Auction), subject to the provisions of the definition of Interest Period. 

C-1

 

        Terms
used herein have the meanings assigned to them in the Credit Agreement. 

	 	 	BLYTH, INC.
	

 	
 	

By:	

 
	 	 	 	
 Name:

Title:

C-2

  

 
 

EXHIBIT D    
  

 
  FORM OF INVITATION FOR COMPETITIVE BED QUOTES    
  

To:    [Name
of Bank] 

	Re:	 	Invitation for Competitive Bid Quotes to Blyth, Inc. (the "Borrower")

        Pursuant
to Section 2.03 of the Credit Agreement dated as of                    , 2002 (as amended through the date hereof, the "Credit
Agreement") among the Borrower, the Banks party thereto, JPMorgan Chase Bank, as Administrative Agent, Bank of America, N.A. and LaSalle Bank, National Association, as
Co-Syndication Agents, and Fleet National Bank and Wachovia Bank, National Association, as Co-Documentation Agents, we are pleased on behalf of the Borrower to invite you to
submit Quotes to the Borrower for the following proposed Competitive Bid Borrowing(s): 

        Date
of Borrowing: 

	Currency
	 	Principal Amount*
	 	Interest Period**

	

 	
 	

 	
 	

 
	

 	
 	

 	
 	

 
	

 	
 	

 	
 	

 
	

 	
 	

 	
 	

 

        Such
Competitive Quotes should offer a Competitive Bid [Margin] [Absolute Rate]. [The applicable base rate is the Adjusted
LIBO Rate.] 

        Please
respond to this invitation by no later than 10:30 A.M. (New York City time) on [date]. 

	*
	Dollar
Amount must be not less than $2,000,000.

	**
	Not
less than one month (LIBOR Auction) or not less than 7 days (Absolute Rate Auction), subject to the provisions of the definition of Interest Period. 

        Terms
used herein have the meanings assigned to them in the Credit Agreement. 

	 	 	JPMORGAN CHASE BANK, as Administrative Agent
	

 	
 	

By:	

 
	 	 	 	
 Authorized Officer

D-1

  

 
 

EXHIBIT E    
  

 
  FORM OF COMPETITIVE BID QUOTE    
  

To:    JPMorgan
Chase Bank, as Administrative Agent 

Re:    Competitive
Bid Quote to Blyth, Inc. (the "Borrower") 

        In
response to your invitation on behalf of the Borrower dated                            ,
              , we hereby make the following Competitive Bid Quote on the following terms:
 

	1.
	Quoting
Bank:

	2.
	Person
to contact at Quoting Bank: 

                                      

	3.
	Date
of Borrowing:

	4.
	We
 hereby offer to make Competitive Bid Loan(s) in the following principal amounts, for the following Interest Periods and at the following rates: 

	Currency
	 	Principal

Amount**
	 	Interest

Period***
	 	[Margin****]
	 	Competitive Bid

Absolute Rate*****]

	

	
 	

 	
 	

 	
 	

 	
 	

 
	

	
 	

 	
 	

 	
 	

 	
 	

 
	

	
 	

 	
 	

 	
 	

 	
 	

 

[provided, that the aggregate principal amount of Competitive Bid Loans for which the above offers may be accepted shall not exceed
                    .]2 

        *      As
specified in the related Invitation. 

        **    Principal
amount bid for each Interest Period may not exceed principal amount requested. Specify aggregate limitation if the sum of the individual offers exceeds the
amount the Bank is willing to lend. Each bid must be made for a Dollar Amount not less than $2,000,000. 

        ***  Not
less than one month or not less than 7 days, as specified in the related Invitation. No more than five bids are permitted for each Interest Period. 

        ****Margin
over or under the Adjusted LIBO Rate determined for the applicable Interest Period. Specify percentage (to the nearest 1/1,000th of 1%) and specify whether
"PLUS" or "MINUS". 

        *****Specify
rate of interest per annum (to the nearest 1/1,000th of 1%). 

        We
understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in the Credit Agreement dated as
of                            , 2002
(as amended through the date hereof, the "Credit Agreement") among Blyth, Inc., the Banks party thereto, JPMorgan Chase Bank, as Administrative
Agent, Bank of America, N.A. and LaSalle Bank, National Association, as Co-Syndication Agents, and Fleet National Bank and Wachovia Bank, National Association, as
Co-Documentation Agents, irrevocably obligate(s) us to make the Competitive Bid 

E-1

 

Loan(s) for which any offer(s) are accepted, in whole or in part. Terms used herein have the meanings assigned to them in the Credit Agreement. 

	 	 	Very truly yours,
	

 	
 	

[NAME OF BANK]
	

Dated:	
 	

By:	

 
	 	 	 	
 Authorized Officer

E-2

  

 
 

EXHIBIT F-1    
  

 
  OPINION OF COUNSEL FOR THE BORROWER    
  

              , 2002 

To
the Banks and Agents

Referred to below

c/o JPMorgan Chase Bank,

as Administrative Agent

270 Park Avenue

New York, New York 10017 

	Re:	 	Credit Agreement dated as of August 5, 2002, (the "Credit Agreement") among Blyth, Inc. (the "Borrower"), the banks named therein (the "Banks"), JPMorgan Chase Bank, as Administrative Agent, Bank of America,
N.A. and LaSalle Bank, National Association, as Co-Syndication Agents, and Fleet National Bank and Wachovia Bank, National Association, as Co-Documentation Agents (such Administrative Agent, Co-Syndication Agents, and Documentation Agents are
sometimes collectively referred to below as the "Agents")

Ladies
and Gentlemen: 

        This
opinion is furnished to you pursuant to Section 3.01(b) of the Credit Agreement referred to above. Capitalized terms used herein which are defined in the Credit Agreement
shall have the respective meanings given such terms in the Credit Agreement unless otherwise defined herein. 

        We
have represented the Borrower in connection with the preparation, execution and delivery of the Credit Agreement and the Notes (as defined below). 

        In
rendering the opinions set forth herein, we have examined executed copies or photocopies of (i) the Credit Agreement and (ii) the Notes executed and delivered by the
Borrower pursuant to Section 3.01 (a) of the Credit Agreement (such Notes are referred to herein as the "Notes" and the Notes and the Credit Agreement are collectively referred to herein
as the "Loan Documents"). In addition, we have examined and are familiar with originals, or copies certified or otherwise identified to our satisfaction, of (i) the Certificate of Incorporation
and By-laws of the Borrower, as in effect on the date hereof and (ii) such other records, documents, certificates and other instruments as in our judgment are necessary or
appropriate as a basis for the opinions expressed below. 

        In
our examination, we have assumed the genuineness of all signatures (other than those of the officer(s) of the Borrower signed in our presence), the legal capacity of natural persons,
the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, photostatic, conformed, electronic or telecopied
copies, and the authenticity of the originals of such copies. As to any facts material to this opinion which we did not independently establish or verify, we have relied upon (i) statements and
representations of officers and/or other representatives of the Borrower and (ii) as to the matters addressed therein, certificates or correspondence of public officials. As to matters of fact
(as opposed to legal conclusions), we have assumed the accuracy of all representations and warranties of the Borrower in the Loan Documents. We also have assumed (i) the valid authorization,
execution and delivery of the Credit Agreement by each party thereto other than the Borrower and that each such party has the power and authority to execute, deliver and perform the Credit Agreement
and has obtained all necessary licenses, approvals, authorizations and the like in connection with same, (ii) that the execution, delivery and performance of the Credit Agreement by any such
party do not violate the constitutive documents of any such party or any law, rule, regulation, order, judgment, decree or ruling applicable to any such party or any 

F-1-1

 

agreement or instrument to which any such party is a party or otherwise bound, (iii) that the Credit Agreement is the legal, valid and binding obligation of all such parties, enforceable
against each such party in accordance with its terms, and (iv) the Borrower is duly organized, validly existing and in good standing under the laws of the State of Delaware. The phrases "best
of our knowledge" or "to our knowledge" (or similar phrases) as used herein mean to the actual knowledge of the individual attorneys in the firm who have participated directly in the negotiation of
the Loan Documents. We have made no special or independent investigation or review of any such matters. 

        Based
upon the foregoing, and in reliance thereon, and subject to the qualifications, assumptions and exceptions set forth in this opinion letter, we are of the opinion that: 

        1.    The
Borrower has the requisite corporate power and authority to authorize borrowing under the Credit Agreement and to authorize its execution, delivery and performance of
the Credit Agreement and the Notes. Each of the Credit Agreement and the Notes has been duly executed and delivered by the Borrower. 

        2.    The
Borrower has taken all necessary corporate action to execute, deliver and perform the Loan Documents and to borrow under the Credit Agreement. Each of the Loan
Documents has been duly executed and delivered by the Borrower. 

        3.    Each
of the Loan Documents (assuming, in the case of the Notes, execution and delivery thereof for value) constitutes a legal, valid and binding obligation of the
Borrower enforceable against the Borrower, in accordance with its terms. 

        4.    No
license, approval or authorization of, exemption by, or registration or declaration (collectively, "Filings") with, any New York, United States Federal or Delaware
governmental body is required to be made or obtained by the Borrower in connection with the execution, delivery or performance by the Borrower, or the validity or enforceability against the Borrower,
of the Loan Documents. 

        5.    The
execution, delivery and performance by the Borrower of the Loan Documents (a) will not violate (i) any provision of any existing New York, United States
Federal or Delaware law or regulation, (ii) the Certificate of Incorporation or By-laws of the Borrower or (iii) to our knowledge, any judgment, order, decree or award of any
court, arbitrator or governmental body binding on the Borrower or, to our knowledge, any mortgage, indenture, security agreement, contract or other agreement or instrument to which the Borrower is a
party or that is binding upon it or any of its properties or assets, and (b) to our knowledge, will not result in the imposition or creation of any Lien on any properties or assets of the
Borrower pursuant to the provisions of any such mortgage, indenture, security agreement, contract or other agreement or instrument. 

        6.    The
Borrower is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations thereunder. 

        Our
opinions set forth in paragraph 3 above are (in addition to any other applicable limitations set forth herein) limited by the matters referred to in the following clauses
(1) through (3): 

        (1)  Applicable
bankruptcy, receivership, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws affecting the enforcement of the rights and
remedies of creditors and/or parties to contracts generally (including, without limitation, such as may deny giving effect to waivers of rights of debtors and imposition of penalties); and such duties
and standards as are or may be imposed on creditors and/or parties to contracts generally including, without limitation, good faith, materiality, reasonableness and fair dealing. 

        (2)  General
principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and the exercise of equitable powers by a
court of competent 

F-1-2

 

jurisdiction. In addition, no opinion is given herein as to any specific or equitable relief of any kind or as to the availability of equitable remedies. 

        (3)  Law
and public policy governing provisions of any of the Loan Documents with respect to contribution, reimbursement, indemnification or the like or prospectively
releasing a party with respect to any liability or claim. 

        In
addition, we express no opinion hereunder with respect to: (1) provisions of any of the Loan Documents which (a) purport to confer subject matter jurisdiction on any
court; (b) the last sentence of Section 9.04 of the Credit Agreement (or any other provisions of the Credit Agreement which grants participants rights of set-off,
counterclaims or other applicable rights); (c) provide for a higher rate of interest after the occurrence of a default or for a prepayment premium to the extent such premium or higher rate of
interest is held to be a penalty or otherwise unreasonable; (d) waive objections to venue or service of process or waive any claims of forum non-conveniens or the right to bring
counterclaim or cross-claim; (e) provide that the delay in exercising or the failure to exercise rights or remedies will not operate as a waiver of any such right or remedy;
(f) indemnify a Person against liability for (or release a party for liability for) its own wrongful or negligent acts or omissions where such indemnification (or release) is against public
policy or contrary to applicable laws (g) require that amendments, waivers or other modifications only be in writing; or (h) purport to establish (or may be construed to establish)
evidentiary standards or grant the right to a Person to determine the amount of compensation (or the like) another party owes under the Credit Agreement; (2) the validity, binding nature or
enforceability of remedies, and/or of so called "make-whole", funding loss or indemnification payments, to the extent such remedies, and/or payments, would have the effect of compensating
the party entitled to the benefits thereof in amounts in excess of actual loss suffered by such party and/or in excess of a reasonable amount determined by any court or other tribunal; (3) the
enforceability of any provision requiring the payment of attorneys' fees, except to the extent that a court determines such fees to be reasonable; and (4) the validity, binding nature or
enforceability of any waivers or consents relating to the rights or defenses of any party or duties owing to it which exist as a matter of law to the extent such waivers or consents may be held to be
contrary to public policy or otherwise ineffective pursuant to applicable law. 

        We
also call to your attention that effective enforcement of a claim denominated in a foreign currency may be limited by requirements that the claim (or judgment in respect of such
claim) be converted into United States Dollars at a rate of exchange prevailing on a specified date. We express no opinion as to
whether a federal or state court would award a judgment in currency other than United States Dollars and we express no opinion as to the validity, binding nature or enforceability of
Section 2.20 of the Credit Agreement to the extent it requires the Borrower to indemnify any other party against loss in obtaining the currency due under the Credit Agreement for a court
judgment in another currency. 

        We
do not express, or purport to express, any opinion with respect to the laws of any jurisdiction other than the laws of the State of New York, the Federal laws of the United States of
America (but including only those laws which, in our experience, are normally applicable to transactions of the type provided for in the Loan Documents) and the Delaware General Corporation Law (and
our opinion in paragraph no. 4 above with respect to Filings with Delaware governmental bodies covers only Filings required under the Delaware General Corporation Law). 

        The
opinions set forth herein are limited to those expressly set forth herein and no other opinions shall be implied. The opinions given herein are provided pursuant to
Section 3.01(b) of the Credit Agreement and in connection with the transactions contemplated thereby, and this letter and the opinions given herein should not and may not, unless otherwise
specifically agreed to in writing by a member of this firm, be relied upon for any other purpose or by any Person other than the addressees hereof and their permitted assigns. Except with our prior
written consent, this opinion is not to be 

F-1-3

 

used, circulated, quoted or otherwise referred to in connection with any transaction other than those contemplated by the Loan Documents. This opinion is given as of the date hereof. We assume no
obligation to update or supplement this opinion to reflect any facts or circumstances which may hereafter occur or come to our attention or any changes in law which may hereafter occur. 

	 	 	 	 	Very truly yours,
	

 	
 	

 	
 	

FINN DIXON & HERLING LLP

F-1-4

  

 
 

EXHIBIT F-2    
  

                            ,
2002 

To
the Banks and the Agents

Referred to Below

c/o JPMorgan Chase Bank, as Administrative Agent

270 Park Avenue

New York, New York 10017 

	

Re:	
 	
Credit Agreement dated as of August 5, 2002, among Blyth, Inc., the banks named therein (the "Banks"), JPMorgan Chase Bank, as Administrative Agent, Bank of America, N.A. and LaSalle Bank, National
Association, as Co-Syndication Agents, and Fleet National Bank and Wachovia Bank, National Administration, as Co-Documentation Agents (such Administrative Agent, Co-Syndication Agents and Documentation Agents are sometimes collectively referred to
below as the "Agents")

Ladies and Gentlemen: 

        I
am the Vice President and General Counsel of Blyth, Inc. (the "Borrower") and am rendering the opinions contained herein in connection with the Credit Agreement (the "Credit
Agreement"), dated as of the date hereof among the Borrower, the Banks, and the Agents. Terms defined in the Credit Agreement are used herein as defined therein. 

        In
rendering the opinions expressed below, I have examined the originals or copies of such corporate and stockholder records, agreements and instruments of the Borrower, certificates of
public officials and of officers of the Borrower and such other documents and papers I have deemed necessary as a basis for the opinions hereinafter expressed. In such examination, as I have assumed
the genuineness of all signatures, the authenticity of documents submitted to me as originals and the conformity to the original documents of all documents submitted to me as copies. 

F-2-1

 

        Based
upon the foregoing and subject to the qualifications set forth below, and having due regard for such legal consideration as I have deemed relevant, I am of the opinion that: 

        1.    The
Borrower is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. 

        2.    The
Borrower has all corporate power required to own its properties and conduct its business as now conducted. 

        3.    To
the best of my knowledge after due inquiry, except as set forth in the Borrower's Form 10-K for the fiscal year ended January 31, 2002 and/or
the Borrower's Form 10-Q for the fiscal quarter ended April 3 0, 2002, there are no actions, suits or proceedings pending or threatened against or affecting the Borrower or
any Subsidiary or any of their respective properties in any court or before any arbitrator
of any kind or before or by any governmental body, except actions, suits or proceedings of the character normally incident to the kind of business conducted by the Borrower and its Subsidiaries that
(a) would not materially impair the right or ability of the Borrower or any Subsidiary to carry on its business substantially as now conducted and (b) would not have a material adverse
effect on the consolidated financial condition of the Borrower and its Subsidiaries, and there are no actions, suits or proceedings pending or threatened that relate to or which in any manner draw
into question the validity of any of the transactions contemplated by the Credit Agreement. 

        This
opinion is limited in all respects to the facts and law existing on the date hereof and, by rendering my opinion, I do not undertake to advise you of any changes in such facts or
law which may occur after the date hereof This opinion has been rendered solely to you for your use in connection with the Credit Agreement. No other person or entity shall be entitled to rely hereon
without my prior written consent. 

Very
truly yours, 

F-2-2

  

 
 

EXHIBIT G    
  

 
 

OPINION OF DAVIS POLK & WARDWELL,
  SPECIAL COUNSEL FOR THE ADMINISTRATIVE AGENT    
  

        August 5,
2002 

To
the Banks and Agents

    Referred to Below

c/o JPMorgan Chase Bank,

    as Administrative Agent

    270 Park Avenue

    New York, New York 10017 

Dear
Sirs: 

        We
have participated in the preparation of the Credit Agreement dated as of August 5, 2002 (the "Credit Agreement") among
Blyth, Inc., a Delaware corporation (the "Borrower"), the Banks party thereto, Bank of America, N.A. and LaSalle Bank, National Association, as
Co-Syndication Agents, Fleet National Bank and Wachovia Bank, National Association, as Co-Documentation Agents and JPMorgan Chase Bank, as Administrative Agent (the
"Administrative Agent"), and have acted as special counsel for the Administrative Agent for the purpose of rendering this opinion pursuant to
Section 3.01(c) of the Credit Agreement. Terms defined in the Credit Agreement are used herein as therein defined. 

        We
have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments
and have conducted such other investigations of fact and law as we have deemed necessary or advisable for purposes of this opinion. 

        Upon
the basis of the foregoing, we are of the opinion that: 

        1.    The
execution, delivery and performance by the Borrower of the Credit Agreement and the Notes are within the Borrower's corporate powers and have been duly authorized by
all necessary corporate action. 

        2.    The
Credit Agreement constitutes a valid and binding agreement of the Borrower and each Note issued thereunder today constitutes a valid and binding obligation of the
Borrower, in each case enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights generally and general
principles of equity. 

        We
are members of the Bar of the State of New York and the foregoing opinion is limited to the laws of the State of New York, the federal laws of the United States of America and the
General Corporation Law of the State of Delaware. In giving the foregoing opinion, we express no opinion as to the effect (if any) of any law of any jurisdiction (except the State of New York) in
which any Bank is located which limits the rate of interest that such Bank may charge or collect. 

G-1

 

        This
opinion is rendered solely to you in connection with the above matter. This opinion may not be relied upon by you for any other purpose or relied upon by any other Person without
our prior written consent. 

Very
truly yours, 

G-2

  

 
 

EXHIBIT H    
  

 
 

ASSIGNMENT AND ASSUMPTION AGREEMENT    
  

        AGREEMENT dated as
of                            , 20    among [ASSIGNOR] (the "Assignor"),
[ASSIGNEE] (the "Assignee"), [BLYTH, INC. (the "Borrower")
and JPMORGAN CHASE BANK, as Administrative Agent under the Credit Agreement (as defined below).] 

W I T N E S S E T H  

        WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates to the Credit Agreement dated as of
                        2002 among the Borrower, the Assignor and the other Banks party thereto, as Banks, and the Agents party
thereto (as amended through the date hereof, the "Credit
Agreement"); 

        WHEREAS,
as provided under the Credit Agreement, the Assignor has a Commitment to make Loans to the Borrower and participate in Letters of Credit in an aggregate Dollar Amount at any
time outstanding not to exceed $        000,000; 

        WHEREAS,
Syndicated Loans made to the Borrower by the Assignor under the Credit Agreement in the aggregate Dollar Amount of $                  are outstanding at the
date hereof; 

        WHEREAS,
Letters of Credit with a total amount available for drawing thereunder of $                  are outstanding at the date hereof; and 

        WHEREAS,
the Assignor proposes to assign to the Assignee all of the rights of the Assignor under the Credit Agreement and the other Loan Documents in respect of
[all] [a portion] of its Commitment thereunder in an amount equal to $                  (the "Assigned
Amount"), together with a corresponding portion of its outstanding Syndicated Loans and Letter of Credit Liabilities, and the Assignee proposes to accept assignment of such
rights and assume the corresponding obligations from the Assignor on such terms; 

        NOW,
THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows: 

        Section
1.    Definitions.    All capitalized terms not otherwise defined herein shall have the respective meanings
set forth in the Credit Agreement. 

        Section
2.    Assignment.    The Assignor hereby assigns and sells to the Assignee all of the rights of the Assignor
under the Credit Agreement and the other Loan Documents to the extent of the Assigned Amount, and the Assignee hereby accepts such assignment from the Assignor and assumes all of the obligations of
the Assignor under the Credit Agreement to the extent of the Assigned Amount, including the purchase from the Assignor of the corresponding portion of the principal amount of the Syndicated Loans made
by, and Letter of Credit Liabilities of, the Assignor outstanding at the date hereof. Upon the execution and delivery hereof by the Assignor, the Assignee, [the Borrower and the
Administrative Agent] and the payment of the amounts specified in Section 3 required to be paid on the date hereof (i) the Assignee shall, as of the date hereof, succeed to
the rights and be obligated to perform the obligations of a Bank under the Credit Agreement with a Commitment in an amount equal to the Assigned Amount, and (ii) the Commitment of the Assignor
shall, as of the date hereof, be reduced by a like amount and the Assignor released from its obligations under the Credit Agreement to the extent such obligations have been assumed by the Assignee.
The assignment provided for herein shall be without recourse to the Assignor. 

        Section
3.    Payments.    As consideration for the assignment and sale contemplated in Section 2 hereof, the
Assignee shall pay to the Assignor on the date hereof in Federal funds the amount heretofore agreed between them.* It is understood that facility and Letter of Credit fees accrued to the 

H-1

 

date hereof in respect of the Assigned Amount are for the account of the Assignor and such fees accruing from and including the date hereof are for the account of the Assignee. Each of the Assignor
and the Assignee hereby agrees that if it receives any amount under the Credit Agreement which is for the account of the other party hereto, it shall receive the same for the account of such other
party to the extent of such other party's interest therein and shall promptly pay the same to such other party. 

        [Section
4.    Consents.    This Agreement is conditioned upon the consent of the Borrower and the
Administrative Agent pursuant to Section 9.06(c)) of the Credit Agreement. The execution of this Agreement by the Borrower and the Administrative Agent is evidence of this consent. Pursuant to
Section 9.06(c) the Borrower agrees to execute and deliver a Note payable to the order of the Assignee to evidence the assignment and assumption provided for herein.] 

        Section
5.    Non-reliance on Assignor.    The Assignor makes no representation or warranty in connection
with, and shall have no responsibility with respect to, the solvency, financial condition or statements of the Borrower or any of its Subsidiaries, or the validity and enforceability of the
obligations of the Borrower or any of its Subsidiaries in respect of any Loan Document. The Assignee acknowledges that it has, independently and without reliance on the Assignor, and based on such
documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the Borrower and its Subsidiaries. 

        Section
6.    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the
State of New York. 

        Section
7.    Counterparts.    This Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 

        * Amount
should combine principal together with accrued interest and breakage compensation, if any, to be paid by the Assignee, net of any portion of any upfront fee to be
paid by the Assignor to the Assignee. It may be preferable in an appropriate case to specify these amounts generically or by formula rather than as a fixed sum 

H-2

 

        IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written. 

	 	 	[ASSIGNOR]
	 	 	 	 	 
	 	 	By:	 	
 Name:

Title:
	 	 	 	 	 
	 	 	[ASSIGNEE]
	 	 	 	 	 
	 	 	By:	 	
 Name:

Title:
	 	 	 	 	 
	 	 	[BLYTH, INC.]*
	 	 	 	 	 
	 	 	By:	 	
 Name:

Title:
	 	 	 	 	 
	 	 	[JPMORGAN CHASE BANK, as Administrative Agent]*
	 	 	 	 	 
	 	 	By:	 	
 Name:

Title:

	*
	Only
if consent is required under Section 9,06(c) of the Credit Agreement. 

H-3

 
 

EXHIBIT I    
  

 
  EXTENSION AGREEMENT    
  

JPMorgan
Chase Bank,

    as Administrative Agent

    under the Credit Agreement

    referred to below

[Address] 

Gentlemen:

        The
undersigned hereby agree to extend, effective [Extension Date], the Termination Date under the Credit Agreement dated as
of                        2002 among
Blyth, Inc., the Banks parties thereto and JPMorgan Chase Bank, as Administrative Agent, Bank of America, N.A. and LaSalle Bank, National Association, as Co-Syndication Agents, and
Fleet National Bank and Wachovia Bank, National Association, as Co-Documentation Agents (as amended through the date hereof, the "Credit
Agreement") for one year to [date to which the Termination Date is extended]. Terms defined in the Credit Agreement are used herein as therein defined. 

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

	 	 	[NAME OF BANK]
	 	 	 	 	 
	 	 	By:	 	
 Name:

Title:

	Agreed and accepted:	 	 	 	 
	 	 	 	 	 	 	 
	BLYTH, INC.	 	 	 	 
	 	 	 	 	 	 	 
	By:	 	
 Name:

Title:	 	 	 	 
	 	 	 	 	 	 	 
	JPMORGAN CHASE BANK, as Administrative Agent	 	 	 	 
	 	 	 	 	 	 	 
	By:	 	
 Name:

Title:	 	 	 	 

  

 
 

EXHIBIT J    
  

 
  FORM OF COMPLIANCE CERTIFICATE    
  

        [Date] 

To:    The
Banks 

From:    Blyth, Inc.
(the "Borrower")

	Re:	 	Credit Agreement (as the same may be amended from time to time, the "Credit Agreement") dated as
of                        , 2002 among the Borrower, the Banks party thereto, JPMorgan Chase Bank, as Administrative Agent, Bank
of America, N.A. and LaSalle Bank, National Association, as Co-Syndication Agents, and Fleet National Bank and Wachovia Bank, National Association, as Co-Documentation Agents

        I, [Name], am a Senior Financial Officer of the Borrower and hereby certify, on behalf of the Borrower, pursuant to Section 5.01(c)
of the Credit Agreement in connection with the delivery of the [describe financial statements, including date of financial statements] as follows: 

        1.    Set
forth on Schedule I hereto is information and calculations establishing that the Borrower was in compliance with the requirements of Sections 5.09 to 5.13,
inclusive, on [Date of financial statements], together with the Leverage Ratio and the Adjusted Consolidated Net Worth as of [Date of financial
statements]. 

        2.    [No
Default exists on the date hereof.] [The following are the only Default(s) existing on the date hereof: [set forth
details of Default(s)]. The Borrower proposes to [describe actions proposed to be taken with respect to Default(s)].] 

        Terms
used herein have the meanings assigned to them in the Credit Agreement. 

	 	 	BLYTH, INC.
	 	 	 	 	 
	 	 	By:	 	
 Name:

Title:

J-1

QuickLinks

Exhibit 10.8

TABLE OF CONTENTS

CREDIT AGREEMENT

ARTICLE I Definitions

ARTICLE 2 The Credits

ARTICLE 3 Conditions

ARTICLE 4 Representations and Warranties

ARTICLE 5 Covenants

ARTICLE 6 DEFAULTS

ARTICLE 7 The Agents

ARTICLE 8 Change in Circumstances

ARTICLE 9 MISCELLANEOUS

PRICING SCHEDULE

Schedule 2.16

Schedule 5.08

Schedule 5.10

Schedule 5.11 Investments

EXHIBIT A

NOTE

LOANS AND PAYMENTS OF PRINCIPAL

EXHIBIT B

FORM OF NOTICE OF COMMITTED BORROWING

EXHIBIT C

FORM OF COMPETITIVE BID QUOTE REQUEST

EXHIBIT D

FORM OF INVITATION FOR COMPETITIVE BED QUOTES

EXHIBIT E

FORM OF COMPETITIVE BID QUOTE

EXHIBIT F-1

OPINION OF COUNSEL FOR THE BORROWER

EXHIBIT F-2

EXHIBIT G

OPINION OF DAVIS POLK & WARDWELL, SPECIAL COUNSEL FOR THE ADMINISTRATIVE AGENT

EXHIBIT H

ASSIGNMENT AND ASSUMPTION AGREEMENT

EXHIBIT I

EXTENSION AGREEMENT

EXHIBIT J

FORM OF COMPLIANCE CERTIFICATE<Page>

                                  EXHIBIT 10.31

                    THE CHILDREN'S PLACE RETAIL STORES, INC.

             THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

                BETWEEN THE CHILDREN'S PLACE RETAIL STORES, INC.,

                   THE FINANCIAL INSTITUTIONS NAMED HEREIN AND

              WELLS FARGO RETAIL FINANCE LLC, DATED APRIL 25, 2003
<Page>

                                                                   EXHIBIT 10.31

================================================================================

                           THIRD AMENDED AND RESTATED

                           LOAN AND SECURITY AGREEMENT

                                      AMONG

                    THE CHILDREN'S PLACE RETAIL STORES, INC.,

                                  AS BORROWER,

                    THE FINANCIAL INSTITUTIONS NAMED HEREIN,

                                   AS LENDERS,

                                       AND

                         WELLS FARGO RETAIL FINANCE LLC,

                                    AS AGENT

================================================================================

<Page>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                            PAGE(s)
<S>                                                                                              <C>
1.   DEFINITIONS AND CONSTRUCTION.................................................................1
     1.1    Definitions...........................................................................1
     1.2    Accounting Terms.....................................................................16
     1.3    Code.................................................................................16
     1.4    Construction.........................................................................16
     1.5    Schedules and Exhibits...............................................................16

2.   LOAN AND TERMS OF PAYMENT...................................................................16

     2.1    Revolving Advances...................................................................16
     2.2    Letters of Credit....................................................................24
     2.3    Intentionally Omitted................................................................27
     2.4    Intentionally Omitted................................................................27
     2.5    Payments.............................................................................27
     2.6    Overadvances.........................................................................28
     2.7    Interest and Letter of Credit Fees:  Rates, Payments, and Calculations...............28
     2.8    Collection of Accounts...............................................................30
     2.9    Crediting Payments; Application of Collections.......................................30
     2.10   Designated Account...................................................................30
     2.11   Maintenance of Loan Account; Statements of Obligations...............................31
     2.12   Fees.................................................................................31
     2.13   Eurodollar Rate Loans................................................................31
     2.14   Illegality...........................................................................33
     2.15   Requirements of Law..................................................................33
     2.16   Indemnity............................................................................35

3.   CONDITIONS; TERM OF AGREEMENT...............................................................35

     3.1    Conditions Precedent to the Initial Advance and the Initial Letter of Credit.........35
     3.2    Conditions Precedent to all Advances and all Letters of Credit.......................36
     3.3    Intentionally Omitted................................................................36
     3.4    Term; Automatic Renewal..............................................................36
     3.5    Effect of Termination................................................................37
     3.6    Early Termination by Borrower........................................................37

4.   CREATION OF SECURITY INTEREST...............................................................38

     4.1    Grant of Security Interest...........................................................38
     4.2    Negotiable Collateral................................................................38
     4.3    Collection of Accounts, General Intangibles, and Negotiable Collateral...............38
     4.4    Delivery of Additional Documentation Required........................................38
     4.5    Power of Attorney....................................................................38
     4.6    Right to Inspect.....................................................................39
</Table>

                                        i
<Page>

<Table>
<S>                                                                                              <C>
5.   REPRESENTATIONS AND WARRANTIES..............................................................39

     5.1    No Encumbrances......................................................................39
     5.2    Eligible Accounts....................................................................39
     5.3    Eligible Inventory...................................................................40
     5.4    Equipment............................................................................40
     5.5    Location of Inventory and Equipment..................................................40
     5.6    Inventory Records....................................................................40
     5.7    Location of Chief Executive Office; FEIN.............................................40
     5.8    Due Organization and Qualification; Subsidiaries.....................................40
     5.9    Due Authorization; No Conflict.......................................................40
     5.10   Litigation...........................................................................41
     5.11   No Material Adverse Change...........................................................41
     5.12   Solvency.  Borrower is Solvent.......................................................41
     5.13   Employee Benefits....................................................................41
     5.14   Environmental Condition..............................................................41

6.   AFFIRMATIVE COVENANTS.......................................................................42

     6.1    Accounting System and Schedules......................................................42
     6.2    Financial Statements, Reports, Certificates..........................................42
     6.3    Tax Returns..........................................................................43
     6.4    Designation of Inventory.............................................................43
     6.5    Store Openings and Closings and Rents Reports........................................44
     6.6    Title to Equipment...................................................................44
     6.7    Maintenance of Equipment.............................................................44
     6.8    Taxes................................................................................44
     6.9    Insurance............................................................................44
     6.10   No Setoffs or Counterclaims..........................................................45
     6.11   Location of Inventory and Equipment..................................................45
     6.12   Compliance with Laws.................................................................45
     6.13   Employee Benefits....................................................................45
     6.14   Leases...............................................................................46

7.   NEGATIVE COVENANTS..........................................................................46

     7.1    Indebtedness.........................................................................46
     7.2    Liens................................................................................47
     7.3    Restrictions on Fundamental Changes..................................................47
     7.4    Disposal of Assets...................................................................47
     7.5    Change Name..........................................................................47
     7.6    Guarantee............................................................................47
     7.7    Nature of Business...................................................................47
     7.8    Prepayments and Amendments...........................................................47
     7.9    Change of Control....................................................................48
     7.10   Consignments.........................................................................48
     7.11   Distributions........................................................................48
     7.12   Accounting Methods...................................................................48
     7.13   Advances, Investments and Loans......................................................48
</Table>

                                       ii
<Page>

<Table>
<S>                                                                                              <C>
     7.14   Transactions with Affiliates.........................................................49
     7.15   Suspension...........................................................................49
     7.16   Use of Proceeds......................................................................49
     7.17   Change in Location of Chief Executive Office; Inventory and Equipment
            with Bailees.........................................................................49
     7.18   No Prohibited Transactions Under ERISA...............................................49
     7.19   Financial Covenant...................................................................50
     7.20   Capital Expenditures.................................................................50

8.   EVENTS OF DEFAULT...........................................................................50

9.   THE LENDER GROUP'S RIGHTS AND REMEDIES......................................................52

     9.1    Rights and Remedies..................................................................52
     9.2    Remedies Cumulative..................................................................54

10.  TAXES AND EXPENSES..........................................................................54

11.  WAIVERS; INDEMNIFICATION....................................................................55

     11.1   Demand; Protest; etc.................................................................55
     11.2   The Lender Group's Liability for Collateral..........................................55
     11.3   Indemnification......................................................................55

12.  NOTICES.....................................................................................55

13.  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER..................................................56

14.  DESTRUCTION OF BORROWER'S DOCUMENTS.........................................................57

15.  ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS..................................................57

     15.1   Assignments and Participations.......................................................57
     15.2   Successors...........................................................................60

16.  AMENDMENTS; WAIVERS.........................................................................60

     16.1   Amendments and Waivers...............................................................60
     16.2   No Waivers; Cumulative Remedies......................................................61

17.  AGENT; THE LENDER GROUP.....................................................................61

     17.1   Appointment and Authorization of Agent...............................................61
     17.2   Delegation of Duties.................................................................62
     17.3   Liability of Agent-Related Persons...................................................62
     17.4   Reliance by Agent....................................................................63
     17.5   Notice of Default or Event of Default................................................63
     17.6   Credit Decision......................................................................64
     17.7   Costs and Expenses; Indemnification..................................................64
     17.8   Agent in Individual Capacity.........................................................65
     17.9   Successor Agent......................................................................65
     17.10  Withholding Tax......................................................................65
     17.11  Collateral Matters...................................................................67
</Table>

                                       iii
<Page>

<Table>
<S>                                                                                              <C>
     17.12  Restrictions on Actions by Lenders; Sharing of Payments..............................68
     17.13  Agency for Perfection................................................................68
     17.14  Payments by Agent to the Lenders.....................................................68
     17.15  Concerning the Collateral and Related Loan Documents.................................69
     17.16  Field Audits and Examination Reports; Confidentiality; Disclaimers by
            Lenders; Other Reports and Information...............................................69
     17.17  Several Obligations; No Liability....................................................70

18.  GENERAL PROVISIONS..........................................................................70

     18.1   Effectiveness........................................................................70
     18.2   Section Headings.....................................................................70
     18.3   Interpretation.......................................................................71
     18.4   Severability of Provisions...........................................................71
     18.5   Counterparts; Telefacsimile Execution................................................71
     18.6   Revival and Reinstatement of Obligations.............................................71
     18.7   Integration..........................................................................71
</Table>

                                       iv
<Page>

                             SCHEDULES AND EXHIBITS

Schedule C-1        Commitments on Closing Date
Schedule E-1        Eligible Inventory Locations
Schedule P-1        Permitted Liens
Schedule 5.8        Subsidiaries
Schedule 5.13       ERISA Benefit Plans
Schedule 5.14       Environmental Condition
Schedule 6.11       Location of Inventory and Equipment
Schedule 7.1        Indebtedness

Exhibit A-1         Form of Assignment and Acceptance
Exhibit B-1         Business Plan for Fiscal Year Ending on or about
                    January 31, 2004
Exhibit C-1         Form of Compliance Certificate
Exhibit D-1         Form of Collateral Certificate

                                        v
<Page>

                           THIRD AMENDED AND RESTATED
                           LOAN AND SECURITY AGREEMENT

     THIS THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (THIS
"AGREEMENT"), is entered into as of April 25, 2003, among THE CHILDREN'S PLACE
RETAIL STORES, INC., a Delaware corporation ("Borrower"), with its chief
executive office located at 915 Secaucus Road, Secaucus, New Jersey 07094, on
the one hand, and the financial institutions listed on the signature pages
hereof (such financial institutions, together with their respective successors
and 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 Agent, on the other hand.

                                    RECITALS

     A.   Borrower and Foothill Capital Corporation are parties to that certain
Second Amended and Restated Loan and Security Agreement dated as of July 31,
1997 (as amended, the "Existing Loan Agreement").

     B.   Wells Fargo Retail is the assignee of Foothill Capital Corporation as
a Lender and the Agent under this Agreement.

     C.   Borrower, Agent and Lenders desire to amend and restate in its
entirety the Existing Loan Agreement.

     The parties agree that the Existing Loan Agreement is amended and restated
     as follows:

     1.   DEFINITIONS AND CONSTRUCTION.

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

                 "ACCOUNT DEBTOR" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account.

                 "ACCOUNTS" means all currently existing and hereafter arising
accounts, contract rights, Revolving Accounts, and all other forms of
obligations owing to Borrower arising out of the sale or lease of goods or the
rendition of services by Borrower, irrespective of whether earned by
performance, and any and all credit insurance, guaranties, or security therefor.

                 "ADJUSTED EURODOLLAR RATE" means, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next whole multiple of 1/16 of 1% per annum) determined by
dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage
equal to (i) 100% minus (ii) the Reserve Percentage. The Adjusted Eurodollar
Rate shall be adjusted on and as of the effective day of any change in the
Reserve Percentage.

                                        1
<Page>

                 "ADDITIONAL FINANCING" means any increase in the Maximum Amount
from $100,000,000 to an amount not to exceed $120,000,000.

                 "ADVANCES" has the meaning set forth in SECTION 2.1(a).

                 "AFFILIATE" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For purposes of this definition, "control" as applied to any Person
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person, whether through the
ownership of voting securities, by contract, or otherwise.

                 "AGENT" means Wells Fargo Retail, solely in its capacity as
agent for the Lenders, and shall include any successor agent.

                 "AGENT ADVANCE" has the meaning set forth in SECTION 2.1(h).

                 "AGENT LOAN" has the meaning set forth in SECTION 2.1(g).

                 "AGENT-RELATED PERSONS" means Agent, together with its
Affiliates, and the officers, directors, employees, counsel, agents, and
attorneys-in-fact of Agent and such Affiliates.

                 "AGENT'S ACCOUNT" has the meaning set forth in SECTION 2.8.

                 "AGREEMENT" has the meaning set forth in the preamble hereto.

                 "APPLICABLE PREPAYMENT PREMIUM" means, as of any date of
determination, an amount equal to (a) during the period of time from and after
the date of the execution and delivery of this Agreement up to the date that is
the second anniversary of the Closing Date, 0.25% times the sum of the Maximum
Amount, and (b) at all times on or after the second anniversary of the date of
this Agreement there shall not be any prepayment premium.

                 "ASSIGNEE" has the meaning set forth in SECTION 15.1.

                 "ASSIGNMENT AND ACCEPTANCE" has the meaning set forth in
SECTION 15.1(a) and shall be in the form of EXHIBIT A-1.

                 "AUTHORIZED PERSON" means any officer or other authorized
employee of Borrower.

                 "AVAILABILITY" means, as of the date of determination, the
result (so long as such result is a positive number) of (a) the lesser of the
Borrowing Base or the Maximum Amount, LESS (b) the Revolving Facility Usage.

                 "AVERAGE UNUSED PORTION OF MAXIMUM AMOUNT" means, as of any
date of determination, (a) an amount equal to the Maximum Amount, LESS (b) the
average Daily Balance of Obligations that were outstanding during the
immediately preceding month.

                                        2
<Page>

                 "BANKRUPTCY CODE" means the United States Bankruptcy Code (11
U.S.C. Section 101 ET SEQ.), as amended, and any successor statute.

                 "BENEFIT PLAN" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which Borrower, any Subsidiary of Borrower, or any
ERISA Affiliate has been an "employer" (as defined in Section 3(5) of ERISA)
within the past six years.

                 "BORROWER" has the meaning set forth in the preamble to this
Agreement.

                 "BORROWER'S BOOKS" means all of Borrower's books and records
including: ledgers; records indicating, summarizing, or evidencing Borrower's
properties or assets (including the Collateral) or liabilities; all information
relating to Borrower's business operations or financial condition; and all
computer programs, disk or tape files, printouts, runs, or other computer
prepared information.

                 "BORROWING" means a borrowing hereunder consisting of Advances
made on the same day by the Lenders, or by Agent in the case of an Agent Loan or
an Agent Advance.

                 "BORROWING BASE" has the meaning set forth in SECTION 2.1(a).

                 "BUSINESS DAY" means (a) any day that is not a Saturday,
Sunday, or a day on which banks in Los Angeles, California, are required or
permitted to be closed, and (b) with respect to all notices, determinations,
fundings and payments in connection with the Eurodollar Rate or Eurodollar Rate
Loans, any day that is a Business Day pursuant to clause (a) above and that is
also a day on which trading in Dollars is carried on by and between banks in the
London interbank market.

                 "BUSINESS PLAN" means Borrower's and its Subsidiaries' business
plans attached hereto as Exhibit B-1, together with any amendment, modification,
or revision to such business plan approved by Agent.

                 "CHANGE OF CONTROL" shall be deemed to have occurred at such
time as Borrower's existing shareholders cease to be the "beneficial owners" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or
indirectly, of more than 40% of the total voting power of all classes of stock
then outstanding of Borrower normally entitled to vote in the election of
directors.

                 "CHILDREN'S PLACE CANADA" means The Children's Place (Canada),
LP, an Ontario limited partnership.

                 "CLOSING DATE" means the date of the first to occur of the
making of the initial Advance or the issuance of the initial Letter of Credit.

                 "CODE" means the California Uniform Commercial Code.

                 "COLLATERAL" means each of the following:

                                        3
<Page>

                 (a)   the Accounts,

                 (b)   Borrower's Books,

                 (c)   the Equipment,

                 (d)   the General Intangibles,

                 (e)   the Inventory,

                 (f)   the Investment Property,

                 (g)   the Negotiable Collateral,

                 (h)   any money, or other assets of Borrower that now or
hereafter come into the possession, custody, or control of the Lender Group, and

                 (i)   the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the Collateral, and any and all Accounts, Borrower's Books,
Equipment, General Intangibles, Inventory, Investment Property, Negotiable
Collateral, money, deposit accounts, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.

                 "COLLATERAL ACCESS AGREEMENT" means a landlord waiver,
mortgagee waiver, bailee letter, or acknowledgment agreement of any
warehouseman, processor, lessor, consignee, or other Person in possession of,
having a Lien upon, or having rights or interests in the Equipment or Inventory,
in each case, in form and substance satisfactory to Agent.

                 "COLLECTIONS" means all cash, checks, notes, instruments, and
other items of payment (including, insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds).

                 "COMMITMENT" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"Commitment" on SCHEDULE C-1 or on the signature page of the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder in accordance
with the provisions of SECTION 15.1, as such Commitment may be adjusted from
time to time in accordance with the provisions of SECTION 15.1 and "Commitments"
means, collectively, the aggregate amount of the commitments of all of the
Lenders.

                 "COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of EXHIBIT C-1 and delivered by the chief accounting officer of
Borrower to Agent.

                 "DAILY BALANCE" means, with respect to each day during the term
of this Agreement, the amount of an Obligation owed at the end of such day.

                                        4
<Page>

                 "DEEMS ITSELF INSECURE" means that the Person deems itself
insecure in accordance with the provisions of Section 1208 of the Code.

                 "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" has the meaning set forth in SECTION
2.1(f)(ii).

                 "DEFAULTING LENDERS RATE" means the Reference Rate for the
first three days from and after the date the relevant payment is due and
thereafter at the interest rate then applicable to Advances.

                 "DESIGNATED ACCOUNT" means account number 20-3024941126-6 of
Borrower maintained with Borrower's Designated Account Bank, or such other
deposit account of Borrower (located within the United States) which has been
designated, in writing and from time to time, by Borrower to Agent.

                 "DESIGNATED ACCOUNT BANK" means First Union National Bank,
whose office is located at 100 Fidelity Plaza, North Brunswick, New Jersey 08905
and whose ABA number is 021200025.

                 "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 shall be satisfactory to
Agent.

                 "DOLLARS OR $" means United States dollars.

                 "ELIGIBLE ACCOUNTS" means those Accounts created by Borrower in
the ordinary course of business, that arise out of Borrower's sale of goods or
rendition of services, that strictly comply with each and all of the
representations and warranties respecting Accounts made by Borrower to the
Lender Group in the Loan Documents, and that are and at all times continue to be
reasonably acceptable to Agent in all respects; PROVIDED, HOWEVER, that
standards of eligibility may be fixed and revised from time to time by Agent in
Agent's reasonable credit judgment. Eligible Accounts shall not include the
following:

                 (a)   Accounts that the Account Debtor has failed to pay within
90 days of invoice 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 with respect to which the Account Debtor is an
employee, Affiliate, or agent of Borrower;

                                        5
<Page>

                 (d)   Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, bill and hold,
or other terms by reason of which the payment by the Account Debtor may be
conditional;

                 (e)   Accounts that are not payable in Dollars or with respect
to which the Account Debtor: (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 (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 and
amount, and by an insurer, satisfactory to Agent;

                 (f)   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 satisfaction of Agent, with the Assignment of
Claims Act, 31 U.S.C. Section 3727), or (ii) any State of the United States
(exclusive, however, of Accounts owed by any State that does not have a
statutory counterpart to the Assignment of Claims Act);

                 (g)   Accounts with respect to which the Account Debtor is a
creditor of Borrower, has or has asserted a right of setoff, has disputed its
liability, or has made any claim with respect to the Account;

                 (h)   Accounts with respect to which the Account Debtor is
subject to any Insolvency Proceeding, or becomes insolvent, or goes out of
business; and

                 (i)   Accounts the collection of which Agent, in its reasonable
credit judgment, believes to be doubtful by reason of the Account Debtor's
financial condition.

                 "ELIGIBLE INVENTORY" means Inventory consisting of first
quality finished goods held for sale in the ordinary course of Borrower's
business (other than inventory of Children's Place Canada), that is reasonably
acceptable to Agent in all respects, that is located at Borrower's premises
identified on Schedule E-1 or that is in transit to Borrower if: (a) title to
such Inventory has been transferred to Borrower, (b) the Inventory is insured to
Agent's reasonable satisfaction and (c) documentation regarding such Inventory
is reasonably acceptable to Agent, and such Inventory strictly complies with all
of Borrower's representations and warranties to the Lender Group. If Eligible
Inventory is in transit to Borrower and has been acquired pursuant to a Letter
of Credit, the Letter of Credit must have been drawn upon. Eligible Inventory
shall not include slow moving Inventory (as determined in Agent's reasonable
business judgment based upon industry practices), or obsolete items, restrictive
or custom items, raw materials, work-in-process, components that are not part of
finished goods, spare parts, packaging and shipping materials, supplies used or
consumed in Borrower's business, Inventory subject to a security interest or

                                        6
<Page>

lien in favor of any third Person, bill and hold goods, Inventory that is not
subject to Agent's perfected security interests, defective goods (except for
minor defects that do not affect saleability), "seconds," and Inventory acquired
on consignment.

                 "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 $5,000,000,000, or the asset based lending Affiliate of such
bank, (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 having total assets in excess of
$5,000,000,000, or the asset based lending Affiliate of such bank; provided that
such bank is acting through a branch or agency located in the United States, (c)
a finance company, insurance 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 total assets in excess of
$500,000,000, (d) any Affiliate (other than individuals) of an existing Lender,
and (e) any other Person approved by Agent and Borrower.

                 "EQUIPMENT" means all of Borrower's present and hereafter
acquired machinery, machine tools, motors, equipment, furniture, furnishings,
fixtures, vehicles (including motor vehicles and trailers), tools, parts, goods
(other than consumer goods, farm products, or Inventory), wherever located,
including, (a) any assets acquired by Borrower with the proceeds of a Capital
Expenditure Loan, (b) any interest of Borrower in any of the foregoing, and (c)
all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.

                 "ERISA" means the Employee Retirement Income Security Act of
1974, 29 U.S.C. Sections 1000 et seq., amendments thereto, successor statutes,
and regulations or guidance promulgated thereunder.

                 "ERISA AFFILIATE" means any trade or business (whether or not
incorporated) which, within the meaning of Section 414 of the IRC, is: (i) under
common control with Borrower; (ii) treated, together with Borrower, as a single
employer; (iii) treated as a member of an affiliated service group of which
Borrower is also treated as a member; or (iv) is otherwise aggregated with the
Borrower for purposes of the employee benefits requirements listed in IRC
Section 414(m)(4).

                 "ERISA EVENT" means (a) a Reportable Event with respect to any
Benefit Plan or Multiemployer Plan, (b) the withdrawal of Borrower, any of its
Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan year in which
it was a "substantial employer" (as defined in Section 4001(a)(2) of ERISA), (c)
the providing of notice of intent to terminate a Benefit Plan in a distress
termination (as described in Section 4041(c) of ERISA), (d) the institution by
the PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan, (e)
any event or condition (i) that provides a basis under Section 4042(a)(1), (2),
or (3) of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan or Multiemployer Plan, or (ii) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the
partial or complete withdrawal within the meaning of Sections 4203 and 4205 of
ERISA, of Borrower, any of its Subsidiaries or ERISA Affiliates from a

                                        7
<Page>

Multiemployer Plan, or (g) providing any security to any Plan under Section
401(a)(29) of the IRC by Borrower or its Subsidiaries or any of their ERISA
Affiliates.

                 "EURODOLLAR RATE" means, with respect to the Interest Period
for a Eurodollar Rate Loan, the interest rate per annum (rounded upwards, if
necessary, to the next whole multiple of 1/16 of 1% per annum) at which United
States dollar deposits are offered to Wells Fargo (or its Affiliates) by major
banks in the London interbank market (or other Eurodollar Rate market selected
by Agent) on or about 11:00 a.m. (California time) two Business Days prior to
the commencement of such Interest Period in amounts comparable to the amount of
the Eurodollar Rate Loans requested by and available to Borrower in accordance
with this Agreement.

                 "EURODOLLAR RATE LOANS" means any Advance (or any portion
thereof) made or outstanding hereunder during any period when interest on such
Advance (or portion thereof) is payable based on the Adjusted Eurodollar Rate.

                 "EURODOLLAR RATE MARGIN" means 1.50% initially and shall be
subject to review on June 1, 2003, and at the end of each Fiscal Month
thereafter to the following levels corresponding to the following amount of
Availability:

<Table>
<Caption>
               AMOUNT OF AVAILABILITY              EURODOLLAR RATE MARGIN
          <S>                                     <C>
          Greater than $40,000,000                           1.50%

          Equal to or less than $40,000,000 and              1.75%
          greater than $30,000,000

          Equal to or less than $30,000,00 and               2.25%
          greater than $20,000,000

          Equal to or less than $20,000,000 and              2.75%
          greater than $10,000,000

          Less than $10,000,000                    3.00% (subject, however, to
                                                  waiver by the Required Lenders)
</Table>

                 "EVENT OF DEFAULT" has the meaning set forth in SECTION 8.

                 "FEIN" means Federal Employer Identification Number.

                 "FISCAL MONTH" means months computed on the retail basis of
four weeks, five weeks and four weeks per fiscal quarter.

                 "FISCAL YEAR" means a retail year ending on the Saturday
closest to January 31.

                 "FUNDING DATE" means the date on which a Borrowing occurs.

                                        8
<Page>

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

                 "GENERAL INTANGIBLES" means all of Borrower's present and
future general intangibles and other personal property (including contract
rights, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, copyrights, blueprints,
drawings, purchase orders, customer lists, monies due or recoverable from
pension funds, route lists, rights to payment and other rights under any royalty
or licensing agreements, infringement claims, computer programs, information
contained on computer disks or tapes, literature, reports, catalogs, deposit
accounts, insurance premium rebates, tax refunds, and tax refund claims), other
than goods, Accounts, and Negotiable Collateral.

                 "GOVERNING DOCUMENTS" means the certificate or articles of
incorporation, by-laws, or other organizational or governing documents of any
Person.

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

                 "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.

                 "INDEBTEDNESS" means: (a) all obligations of Borrower for
borrowed money, (b) all obligations of Borrower evidenced by bonds, debentures,
notes, or other similar instruments and all reimbursement or other obligations
of Borrower in respect of letters of credit, bankers acceptances, interest rate
swaps, or other financial products, (c) all obligations of Borrower under
capital leases, (d) all obligations or liabilities of others secured by a Lien
on any property or asset of Borrower, irrespective of whether such obligation or
liability is assumed, and (e) any obligation of Borrower guaranteeing or
intended to guarantee (whether guaranteed, endorsed, co-made, discounted, or
sold with recourse to Borrower) any indebtedness, lease, dividend, letter of
credit, or other obligation of any other Person.

                 "INDEMNIFIED LIABILITIES" has the meaning set forth in SECTION
11.3.

                 "INSOLVENCY PROCEEDING" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria,

                                        9
<Page>

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.

                 "INTEREST PERIOD" means, for any Eurodollar Rate Loan, the
period commencing on the Business Day such Eurodollar Rate Loan is disbursed or
continued, or on the Business Day on which a Reference Rate Loan is converted to
such Eurodollar Rate Loan, and ending on the date that is one, three or six
months thereafter, as selected by Borrower and notified to Agent as provided in
SECTIONS 2.13(a) AND (b).

                 "INVENTORY" means all present and future inventory (other than
inventory of Children's Place Canada) in which Borrower has any interest,
including goods held for sale or lease or to be furnished under a contract of
service and all of Borrower's present and future raw materials, work in process,
finished goods, and packing and shipping materials, wherever located.

                 "INVENTORY RESERVES" means reserves (determined from time to
time by Agent in its discretion) for (a) the estimated costs relating to unpaid
freight charges, warehousing or storage charges, taxes, duties, and other
similar unpaid costs associated with the acquisition of Eligible In-Transit
Inventory by Borrower, plus (b) the estimated reclamation claims of unpaid
sellers of Inventory sold to Borrower.

                 "INVESTMENT PROPERTY" means all of Borrower's presently
existing and hereafter acquired or arising investment property (as that term is
defined in Section 9115 of the Code).

                 "IRC" means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder.

                 "L/C" has the meaning set forth in SECTION 2.2(a).

                 "L/C GUARANTY" has the meaning set forth in SECTION 2.2(a).

                 "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 15.1.

                 "LENDER GROUP" means, individually and collectively, each of
the individual Lenders and Agent.

                 "LENDER GROUP EXPENSES" means all: reasonable costs or expenses
(including taxes, and insurance premiums) required to be paid by Borrower under
any of the Loan Documents that are paid or incurred by the Lender Group;
reasonable fees or charges paid or incurred by the Lender Group in connection
with the Lender Group's transactions with Borrower, including, fees or charges
for photocopying, notarization, couriers and messengers,

                                       10
<Page>

telecommunication, public record searches (including tax lien, litigation, and
UCC searches and including searches with the patent and trademark office, the
copyright office, or the department of motor vehicles), filing, recording,
publication, appraisal (including periodic Collateral appraisals); environmental
audits; costs and expenses incurred by Agent in the disbursement of funds to
Borrower (by wire transfer or otherwise); charges paid or incurred by Agent
resulting from the dishonor of checks; costs and expenses paid or incurred by
Agent 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; reasonable costs
and expenses paid or incurred by the Lender Group in examining Borrower's Books;
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 Borrower or any guarantor; and the Lender Group's reasonable
attorneys fees and expenses incurred in advising, structuring, drafting,
reviewing, administering, amending, terminating, enforcing, defending, or
concerning the Loan Documents (including attorneys fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning Borrower or any guarantor of the Obligations), irrespective of
whether suit is brought. Notwithstanding anything to the contrary set forth
herein, the foregoing shall be subject to the limitations set forth in SECTION
2.12(e).

                 "LETTER OF CREDIT" means an L/C or an L/C Guaranty, as the
context requires.

                 "LETTER OF CREDIT AMOUNT" means 0.75% per annum.

                 "LIEN" means any interest in property securing an obligation
owed to, or a claim by, any Person other than the owner of the property, whether
such interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, adverse
claim or charge, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also including reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting Real
Property.

                 "LOAN ACCOUNT" has the meaning set forth in SECTION 2.11.

                 "LOAN DOCUMENTS" means this Agreement, the Disbursement Letter,
the Letters of Credit, the Lockbox Agreements, the Stock Pledge, any note or
notes executed by Borrower and payable to the Lender Group, and any other
agreement entered into, now or in the future, in connection with this Agreement.

                 "LOCKBOX ACCOUNT" shall mean a depositary account established
pursuant to one of the Lockbox Agreements.

                                       11
<Page>

                 "LOCKBOX AGREEMENTS" means those certain Lockbox Operating
Procedural Agreements and those certain Depository Account Agreements, in form
and substance satisfactory to Agent, each of which is among Borrower, Agent, and
one of the Lockbox Banks.

                 "LOCKBOX BANKS" means First Union National Bank, or any
replacement bank chosen by Borrower and acceptable to Agent.

                 "LOCKBOXES" has the meaning set forth in SECTION 2.8.

                 "MATERIAL ADVERSE CHANGE" means (a) a material adverse change
in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Borrower, (b) the material
impairment of Borrower's ability to perform its obligations under the Loan
Documents to which it is a party or of the Lender Group to enforce the
Obligations or realize upon the Collateral, (c) a material adverse effect on the
value of the Collateral or the amount that the Lender Group would be likely to
receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral, or (d) a material impairment
of the priority of the Lender Group's Liens with respect to the Collateral.

                 "MAXIMUM AMOUNT" means $75,000,000, initially and $100,000,000
once one or more Lenders have additional Commitments in the aggregate of
$25,000,000 PLUS the amount of the Additional Financing if it is provided by the
Lenders.

                 "MULTIEMPLOYER PLAN" means a "multiemployer plan" (as defined
in SECTION 4001(a)(3) of ERISA) to which Borrower, any of its Subsidiaries, or
any ERISA Affiliate has contributed, or was obligated to contribute, within the
past six years.

                 "NEGOTIABLE COLLATERAL" means all of Borrower's present and
future letters of credit, notes, drafts, instruments, certificated and
uncertificated securities (including the shares of stock of subsidiaries of
Borrower, but limited to 66% of the outstanding shares of each class of stock of
any foreign Subsidiary), investment property, security entitlements, documents,
personal property leases (wherein Borrower is the lessor), chattel paper, and
Borrower's Books relating to any of the foregoing.

                 "NRLV" means at any time of determination thereof, the ratio,
expressed as a percentage, of the net retail liquidation value of Borrower's
Inventory divided by the retail value of such Inventory, all as set forth in the
most recent appraisal delivered to, and approved by Agent.

                 "OBLIGATIONS" means all loans, Advances, debts, principal,
interest (including any interest that, but for the provisions of the Bankruptcy
Code, would have accrued), contingent reimbursement obligations under any
outstanding Letters of Credit, liabilities (including all amounts charged to
Borrower's Loan Account pursuant hereto), obligations, fees, charges, costs, or
Lender Group Expenses (including any fees or expenses that, but for the
provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties owing by Borrower to the Lender Group of any
kind and description (whether

                                       12
<Page>

pursuant to or evidenced by the Loan Documents or pursuant to any other
agreement between the Lender Group and Borrower, 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 any debt,
liability, or obligation owing from Borrower to others that the Lender Group may
have obtained by assignment or otherwise, and further including all interest not
paid when due and all Lender Group Expenses that Borrower is required to pay or
reimburse by the Loan Documents, by law, or otherwise.

                 "ORIGINATING LENDER" has the meaning set forth in SECTION
15.1(e).

                 "OVERADVANCE" has the meaning set forth in SECTION 2.6.

                 "PARTICIPANT" has the meaning set forth in SECTION 15.1(c).

                 "PBGC" means the Pension Benefit Guaranty Corporation as
defined in Title IV of ERISA, or any successor thereto.

                 "PERMITTED LIENS" means (a) Liens held by the Lender Group, (b)
Liens for unpaid taxes that either (i) are not yet due and payable or (ii) are
the subject of Permitted Protests, (c) Liens set forth on SCHEDULE P-1, (d) the
interests of lessors under operating leases and purchase money security
interests and Liens of lessors under capital leases to the extent that the
acquisition or lease of the underlying asset is permitted under SECTION 7.21 and
so long as the Lien only attaches to the asset purchased or acquired and only
secures the purchase price of the asset, (e) Liens arising by operation of law
in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers,
or suppliers, incurred in the ordinary course of business of Borrower and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet due and payable, or (ii) are the subject of Permitted Protests, (f)
Liens arising from deposits made in connection with obtaining worker's
compensation or other unemployment insurance, (g) Liens or deposits to secure
performance of bids, tenders, or leases (to the extent permitted under this
Agreement), incurred in the ordinary course of business of Borrower and not in
connection with the borrowing of money, (h) Liens arising by reason of security
for surety or appeal bonds in the ordinary course of business of Borrower, (i)
Liens of or resulting from any judgment or award that would not cause a Material
Adverse Change and as to which the time for the appeal or petition for rehearing
of which has not yet expired, or in respect of which Borrower is in good faith
prosecuting an appeal or proceeding for a review, and in respect of which a stay
of execution pending such appeal or proceeding for review has been secured, and
(j) with respect to any Real Property, easements, rights of way, zoning and
similar covenants and restrictions, and similar encumbrances that customarily
exist on properties of Persons engaged in similar activities and similarly
situated and that in any event do not materially interfere with or impair the
use or operation of the Collateral by Borrower or the value of the Lender
Group's Lien thereon or therein, or materially interfere with the ordinary
conduct of the business of Borrower.

                 "PERMITTED PROTEST" means the right of Borrower to protest any
Lien (other than any such Lien that secures the Obligations), tax (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 of Borrower in an amount that is

                                       13
<Page>

reasonably satisfactory to Agent, (b) any such protest is instituted and
diligently prosecuted by Borrower 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 Liens of the Lender Group in
and to the Collateral.

                 "PERSON" means and includes 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.

                 "PLAN" means any employee benefit plan, program, or arrangement
maintained or contributed to by Borrower or with respect to which it may incur
liability.

                 "PRO-RATA SHARE" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the aggregate amount of the
Commitments.

                 "REAL PROPERTY" means any estates or interests in real property
now owned or hereafter acquired by Borrower.

                 "REFERENCE RATE" the rate of interest announced 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 publication or publications as Wells Fargo may designate.

                 "REFERENCE RATE LOANS" means any advance (or portion thereof)
made or outstanding hereunder during any period when interest on such Advance is
payable based on the Reference Rate.

                 "RENEWAL DATE" has the meaning set forth in SECTION 3.4.

                 "REPORTABLE EVENT" means any of the events described in SECTION
4043(c) of ERISA or the regulations thereunder other than a Reportable Event as
to which the provision of 30 days notice to the PBGC is waived under applicable
regulations.

                 "REQUIRED LENDERS" means, at any time, Agent together with such
other Lenders whose Pro Rata Shares together with Agent aggregate 50.1% or more
of the Commitments; PROVIDED, HOWEVER, that in all circumstances in which there
are two or more Lenders, Required Lenders shall include at least one Lender that
is not the Agent or an Affiliate of Agent.

                 "REQUIREMENT OF LAW" means, as to any Person: (a) (i) all
statutes and regulations and (ii) court orders and injunctions, arbitrators'
decisions, and/or similar rulings, in each instance by any Governmental
Authority or arbitrator applicable to or binding upon such Person or any of such
Person's property or to which such Person or any of such Person's property

                                       14
<Page>

is subject; and (b) that Person's organizational documents, by-laws and/or other
instruments which deal with corporate or similar governance, as applicable.

                 "RESERVE PERCENTAGE" for any Interest Period means, as of the
date of determination thereof, the maximum percentage (rounded upward, if
necessary to the nearest 1/100th of 1%), as determined by Agent (or its
Affiliates) in accordance with its (or their) usual procedures (which
determination shall be conclusive in the absence of manifest error), that is in
effect on such date as prescribed by the Board of Governors of the Federal
Reserve System for determining the reserve requirements (including supplemental,
marginal, and emergency reserve requirements) with respect to eurocurrency
funding (currently referred to as "eurocurrency liabilities") having a term
equal to such Interest Period by Agent or its Affiliates.

                 "RETIREE HEALTH PLAN" means an "employee welfare benefit plan"
within the meaning of SECTION 3(1) of ERISA that provides benefits to
individuals after termination of their employment, other than as required by
Section 601 of ERISA.

                 "REVOLVING ACCOUNTS" means any Account arising from an
agreement to extend credit on an ongoing basis through the use of a device such
as a credit card or the like, whether or not subject to regulation under Federal
Reserve Board Regulation Z, or any state statute or regulation on
truth-in-lending.

                 "REVOLVING FACILITY USAGE" means, as of any date of
determination, the aggregate amount of Advances and undrawn or unreimbursed
Letters of Credit outstanding.

                 "SETTLEMENT" has the meaning set forth in SECTION 2.1(h)(i).

                 "SETTLEMENT DATE" has the meaning set forth in SECTION
2.1(h)(i).

                 "SOLVENT" means, with respect to any Person on a particular
date, that on such date (a) at fair valuations, all of the properties and assets
of such Person are greater than the sum of the debts, including contingent
liabilities, of such Person, (b) the present fair salable value of the
properties and assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person is able to realize upon its
properties and assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it will,
incur debts beyond such Person's ability to pay as such debts mature, and (e)
such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's properties and
assets would constitute unreasonably small capital after giving due
consideration to the prevailing practices in the industry in which such Person
is engaged. In computing the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount that, in light of
all the facts and circumstances existing at such time, represents the amount
that reasonably can be expected to become an actual or matured liability.

                 "STOCK PLEDGE" means that certain Security Agreement-Stock
Pledge, dated as of January 31, 1999, between Borrower and Agent.

                                       15
<Page>

                 "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 or other ownership interests
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.

                 "VOIDABLE TRANSFER" has the meaning set forth in SECTION 15.8.

                 "WELLS FARGO" means Wells Fargo Bank, National Association.

                 "WELLS FARGO RETAIL" means Wells Fargo Retail Finance LLC, a
Delaware limited liability company.

          1.2    ACCOUNTING TERMS. 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 on a consolidated basis
unless the context clearly requires otherwise.

          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 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 refer to this Agreement as a
whole and not to any particular provision of this Agreement. An Event of Default
shall "continue" or be "continuing" until such Event of Default has been waived
in writing by the requisite members of the Lender Group. Section, subsection,
clause, schedule, and exhibit references are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the Loan Documents to this
Agreement or any of the Loan Documents shall include all alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, and supplements, thereto and thereof, as applicable.

          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    REVOLVING ADVANCES.

                 (a)   AMOUNTS. Subject to the terms and conditions of this
Agreement, each Lender agrees 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 Amount LESS the aggregate
amount of all undrawn or unreimbursed Letters of Credit, or (ii) the Borrowing
Base LESS the aggregate amount of all undrawn or unreimbursed Letters of

                                       16
<Page>

Credit. For purposes of this Agreement, "Borrowing Base", as of any date of
determination, shall mean the result of:

                       (w)    90% of Eligible Accounts, PLUS

                       (x)    30% of the retail value of Borrower's Eligible
     Inventory, NOT TO EXCEED 90% of the NRLV of Borrower's gross Inventory for
     months other than June through November of each year and 95% of the NRLV of
     Borrower's gross Inventory for the months of June through November of each
     year; PLUS

                       (y)    an amount equal to 70% of the Borrower's cost of
     Inventory to be acquired pursuant to outstanding commercial Letters of
     Credit (except that inventory acquired by Letters of Credit for Children's
     Place Canada shall not be included in this Section). Such Letters of Credit
     must not allow partial draws unless such draws are for finished goods
     Inventory concurrently transferred to Borrower, and draws thereunder must
     require documentation reflecting the transfer of title to Borrower (in form
     and substance satisfactory to Agent) of first quality finished goods
     Inventory conforming to Borrower's contract with the seller; LESS

                       (z)    the aggregate amount of reserves, if any,
     established by Agent under SECTIONS 2.1(b), 6.14 AND 10.

                 (b)   RESERVES. Anything to the contrary in this SECTION 2.1
notwithstanding, Agent may (i) reduce the advance rates based upon Eligible
Accounts and Eligible Inventory without declaring an Event of Default if it
determines in its reasonable business judgment that there has occurred a
Material Adverse Change; and (ii) establish reserves against the Borrowing Base
in such amounts as Agent in its reasonable judgment (from the perspective of an
asset-based lender) shall deem necessary or appropriate, including reserves on
account of (y) sums that Borrower 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 and (z) without duplication of the
foregoing, amounts owing by Borrower to any Person to the extent secured by a
Lien on, or trust over, any of the Collateral, which Lien or trust, in the
reasonable determination of Agent (from the perspective of an asset-based
lender), would be likely to have a priority superior to the Liens of Agent (such
as landlord liens, ad valorem taxes, or sales taxes where given priority under
applicable law) in and to such item of the Collateral.

                 (c)   REVOLVING NATURE. 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.

                 (d)   PROCEDURE FOR BORROWING. Each Borrowing shall be made
upon Borrower's irrevocable request therefor delivered to Agent (which notice
must be received by Agent no later than 10:00 a.m. (California time) on the
Funding Date if such advance is for $8,000,000 or less or no later than 10:00
a.m. (California time) on the Business Day immediately preceding the requested
Funding Date if such advance is for more than $8,000,000) specifying (i)

                                       17
<Page>

the amount of the Borrowing; and (ii) the requested Funding Date, which shall be
a Business Day.

                 (e)   AGENT'S ELECTION. Promptly after receipt of a request for
a Borrowing pursuant to SECTION 2.1(d) in excess of $8,000,000, the Agent shall
elect, in its discretion, (i) to have the terms of SECTION 2.1(f) apply to such
requested Borrowing, or (ii) to make an Agent Loan pursuant to the terms of
SECTION 2.1(g) in the amount of the requested Borrowing. Any requested Borrowing
of $8,000,000 or less shall be made as an Agent Loan pursuant to the terms of
SECTION 2.1(g).

                 (f)   MAKING OF ADVANCES.

                       (i)    In the event that the Agent shall elect to have
the terms of this SECTION 2.1(f) apply to a requested Borrowing in excess of
$8,000,000 as described in SECTION 2.1(e), then promptly after receipt of a
request for a Borrowing pursuant to SECTION 2.1(d), the Agent shall notify the
Lenders, not later than 1:00 p.m. (California time) on the Business Day
immediately preceding the Funding Date applicable thereto, by telephone and
promptly followed by telecopy, 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 the Agent in same day funds, to
such account of the Agent as the Agent may designate, not later than 11:00 a.m.
(California time) on the Funding Date applicable thereto. After the Agent's
receipt of the proceeds of such Advances, upon satisfaction of the applicable
conditions precedent set forth in SECTIONS 3.1 and 3.2, the Agent shall make the
proceeds of such Advances available to Borrower on the applicable Funding Date
by transferring same day funds equal to the proceeds of such Advances received
by the Agent to the Designated Deposit Account; PROVIDED, HOWEVER, that, subject
to the provisions of SECTION 2.1(l), the Agent shall not request any Lender to
make, and no Lender shall have the obligation to make, any Advance if the Agent
shall have received written notice from any Lender, or otherwise has actual
knowledge, that (A) one or more of the applicable conditions precedent set forth
in SECTIONS 3.1 or 3.2 will not be satisfied on the requested Funding Date for
the applicable Borrowing, or (B) 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, at least one Business Day prior to 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 Lender shall on the Business Day following such Funding Date make
such amount available to Agent, together with interest at the Defaulting Lenders
Rate for each day during such period. A notice from Agent submitted to any
Lender with respect to amounts owing under this subsection shall be conclusive,
absent manifest error. If such amount is paid to Agent such payment to Agent
shall constitute such Lender's Advance

                                       18
<Page>

on the date of Borrowing for all purposes of this Agreement. If such amount is
not paid 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. Any Lender that fails to make any Advance that it is
required to make hereunder on any Funding Date and that has not cured such
failure by making such Advance within one Business Day after written demand upon
it by Agent to do so, shall constitute a "Defaulting Lender" for purposes of
this Agreement until such Advance is made.

                       (iii)  Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrower to Agent for the Defaulting
Lender's benefit; nor shall a Defaulting Lender be entitled to the sharing of
any payments hereunder. Amounts payable to a Defaulting Lender shall instead be
paid to or retained by Agent. Agent may hold and, in its discretion, re-lend to
Borrower the amount of all such payments received or retained by it for the
account of such Defaulting Lender. Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents and determining Pro
Rata Shares, such Defaulting Lender shall be deemed not to be a "Lender" and
such Defaulting Lender's Commitment shall be deemed to be zero. This section
shall remain effective with respect to such Defaulting Lender until (A) the
Obligations under this Agreement shall have been declared or shall have become
immediately due and payable or (B) the requisite non-Defaulting Lenders, Agent,
and Borrower shall have waived such Defaulting Lender's default in writing. The
operation of this section shall not be construed to increase or otherwise affect
the Commitment of any non-Defaulting Lender, or relieve or excuse the
performance by Borrower of their duties and obligations hereunder.

                 (g)   MAKING OF AGENT LOANS.

                       (i)    In the event the Agent shall elect to have the
terms of this SECTION 2.1(g) apply to a requested Borrowing in excess of
$8,000,000 as described in SECTION 2.1(e) or in the event of any requested
Borrowing of $8,000,000 or less, Agent shall make an Advance in the amount of
such Borrowing (any such Advance made solely by Agent pursuant to this SECTION
2.1(g) being referred to as an "Agent Loan" and such Advances being referred to
collectively as "Agent Loans") available to Borrower on the Funding Date
applicable thereto by transferring same day funds to Borrower's Designated
Deposit Account. Each Agent Loan is an Advance hereunder and shall be subject to
all the terms and conditions applicable to other Advances, except that all
payments thereon shall be payable to Agent solely for its own account (and for
the account of the holder of any participation interest with respect to such
Advance). Subject to the provisions of SECTION 2.1(l), the Agent shall not make
any Agent Loan if the Agent shall have received written notice from any Lender,
or otherwise has actual knowledge, that (i) one or more of the applicable
conditions precedent set forth in SECTIONS 3.1 or 3.2 will not be satisfied on
the requested Funding Date for the applicable Borrowing, or (ii) the requested
Borrowing would exceed the Availability on such Funding Date. Agent shall not

                                       19
<Page>

otherwise be required to determine whether the applicable conditions precedent
set forth in SECTIONS 3.1 or 3.2 have been satisfied on the Funding Date
applicable thereto prior to making, in its sole discretion, any Agent Loan.

                       (ii)   The Agent Loans shall be secured by the Collateral
and shall constitute Advances and Obligations hereunder, and shall bear interest
at the rate applicable from time to time to Obligations pursuant to SECTION 2.7.

                 (h)   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
of a Default or an Event of Default (but without constituting a waiver of such
Default or Event of Default), or (2) at any time that any of the other
applicable conditions precedent set forth in SECTION 3.1 or 3.2 have not been
satisfied, to make Advances to Borrower on behalf of the Lenders which Agent, in
its reasonable business judgment, deems necessary or desirable (A) to preserve
or protect the Collateral, or any portion thereof, (B) to enhance the likelihood
of, or maximize the amount of, repayment of the Obligations, or (C) to pay any
other amount chargeable to Borrower 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 2.1(h) being
hereinafter referred to as "Agent Advances"); PROVIDED, that Agent shall not
make any Agent Advances to Borrower without the consent of the Required Lenders
if the amount thereof would exceed $8,000,000 in the aggregate at any one time.

                       (ii)   Agent Advances shall be repayable on demand and
secured by the Collateral, shall constitute Advances and Obligations hereunder,
and shall bear interest at the rate applicable from time to time to the
Obligations pursuant to SECTION 2.7.

                 (i)   SETTLEMENT. It is agreed that each Lender's funded
portion of the Advances is intended by the Lenders to be equal at all times to
such Lender's Pro Rata Share of the outstanding Advances. Such agreement
notwithstanding, the Agent and the 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 Agent Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:

                       (i)    The Agent shall request settlement ("Settlement")
with the Lenders on a weekly basis, or on a more frequent basis if so determined
by the Agent, (1) for itself, with respect to each Agent Loan and Agent Advance,
and (2) with respect to Collections received, as to each by notifying the
Lenders by telephone and promptly followed by telecopy, or other similar form of
transmission, of such requested Settlement, no later than 1:00 p.m. (California
time) on the Business Date immediately preceding the date of such requested
Settlement (the "Settlement Date"). Such notice of a Settlement Date shall
include a summary statement of the amount of outstanding Advances, Agent Loans,
and Agent Advances for the period since the prior Settlement Date, the amount of
repayments received in such period, and the amounts allocated to each Lender of
the principal, interest, fees, and other charges for such

                                       20
<Page>

period. Subject to the terms and conditions contained herein: (y) if a Lender's
balance of the Advances, Agent Loans, and Agent Advances exceeds such Lender's
Pro Rata Share of the Advances, Agent Loans, and Agent Advances as of a
Settlement Date, then Agent shall by no later than 1:00 p.m. (California time)
on the Settlement Date transfer in same day funds to the account of such Lender
as 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, Agent Loans, and Agent Advances; and (z) if a Lender's balance of
the Advances, Agent Loans, and Agent Advances is less than such Lender's Pro
Rata Share of the Advances, Agent Loans, and Agent Advances as of a Settlement
Date, such Lender shall no later than 1:00 p.m. (California time) on the
Settlement Date transfer in same day funds to such account of the Agent as the
Agent may designate, 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, Agent Loans, and Agent Advances. Such amounts made available to the
Agent under clause (z) of the immediately preceding sentence shall be applied
against the amounts of the applicable Agent Loan or Agent Advance and, together
with the portion of such Agent Loan or Agent Advance representing each Lender's
Pro Rata Share thereof, shall constitute Advances of such Lenders. If any such
amount is not made available to the Agent by any Lender on the Settlement Date
applicable thereto to the extent required by the terms hereof, the Agent shall
be entitled to recover for its account such amount on demand from such Lender
together with interest thereon at the Defaulting Lenders Rate.

                       (ii)   In determining whether a Lender's balance of the
Advances, Agent Loans, and Agent Advances is less than, equal to, or greater
than such Lender's Pro Rata Share of the Advances, Agent 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 by
Agent with respect to principal, interest, fees payable by Borrower and
allocable to the Lenders hereunder, and proceeds of 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 Settlement;
PROVIDED, HOWEVER, that the closing fee payable by Borrower under Section
2.12(b) shall be distributed to the Lenders within three Business Days following
the Closing Date without regard to the netting of amounts owing to or owed by
any Lender as part of a Settlement.

                       (iii)  Between Settlement Dates, the Agent, to the extent
no Agent Advances or Agent Loans are outstanding, may pay over to Lenders any
payments received by the Agent, which in accordance with the terms of the
Agreement would be applied to the reduction of the Advances, for application to
Lenders' Pro Rata Share of the Advances. If, as of any Settlement Date,
Collections received since the then immediately preceding Settlement Date have
been applied to Lenders' Pro Rata Share of the Advances other than to Agent
Loans or Agent Advances, as provided for in the previous sentence, Lenders shall
pay to the 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, the Agent with respect to Agent Loans and Agent Advances, and
each Lender with respect to the Advances other than Agent Loans and Agent
Advances, shall be entitled to

                                       21
<Page>

interest at the applicable rate or rates payable under this Agreement on the
daily amount of funds employed by the Agent or the Lenders, as applicable.

                 (j)   NOTATION. The Agent shall record on its books the
principal amount of the Advances owing to each Lender, including the Agent Loans
and Agent Advances owing to the Agent, and the interests therein of each Lender,
from time to time. 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,
such books and records constituting rebuttably presumptive evidence, absent
manifest error, of the accuracy of the information contained therein.

                 (k)   LENDERS' FAILURE TO PERFORM. All Advances (other than
Agent Loans and Agent Advances) shall be made by the Lenders simultaneously 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 Advances 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 obligation to make any Advances hereunder, and (ii) no failure by
any Lender to perform its obligation to make any Advances hereunder shall excuse
any other Lender from its obligation to make any Advances hereunder.

                 (l)   OVERADVANCES. Agent may make voluntary Overadvances
without the written consent of the Required Lenders for amounts charged to the
applicable Loan Account for interest, fees or Lender Group Expenses pursuant to
SECTION 2.1(h)(i)(2)(C). If the conditions for borrowing under SECTION 3.2(d)
cannot be fulfilled, the Agent may, but is not obligated to, knowingly and
intentionally continue to make Advances (including Agent Loans) to Borrower such
failure of condition notwithstanding, so long as, at any time, (i) either (A)
the outstanding Revolving Facility Usage would not exceed the Borrowing Base for
more than 60 consecutive days or more than once in any 180 day period, and the
maximum outstanding overadvance amount shall not exceed $2,000,000 or (B) (y)
the outstanding Revolving Facility Usage would not exceed the Borrowing Base by
more than the amount proposed by Agent and agreed to by the Required Lenders,
and (z) such Advances are made pursuant to a plan (proposed by Agent and agreed
to by the Required Lenders) for the elimination of the outstanding Revolving
Facility Usage in excess of the Borrowing Base, and (ii) the outstanding
Revolving Facility Usage (except for and excluding amounts charged to the
applicable Loan Account for interest, fees, or Lender Group Expenses) does not
exceed the Maximum Amount. The foregoing provisions are for the sole and
exclusive benefit of the Agent and the Lenders and are not intended to benefit
Borrower in any way. The Advances and Agent Loans, as applicable, that are made
pursuant to this SECTION 2.1(l) shall be subject to the same terms and
conditions as any other Agent Advance or Agent Loan, as applicable, except that
the rate of interest applicable thereto shall be the rates set forth in SECTION
2.7(c)(i) without regard to the presence or absence of a Default or Event of
Default; PROVIDED, that the Required Lenders may, at any time, revoke Agent's
authorization contained in this SECTION 2.1(l) to make Overadvances (except for
and excluding amounts charged to the applicable Loan Account for interest, fees,
or Lender Group Expenses), any such revocation to be in writing and to become
effective upon Agent's receipt thereof; PROVIDED FURTHER, HOWEVER, that the
making of such Overadvances shall not constitute a waiver of such Event of
Default arising therefrom.

                                       22
<Page>

                       In the event Agent obtains actual knowledge that
Revolving Facility Usage exceeds the amount permitted by the preceding
paragraph, regardless of the amount of or reason for such excess, Agent shall
notify Lenders as soon as practicable (and prior to making any (or any further)
intentional Overadvances (except for and excluding amounts charged to the
applicable Loan Account for interest, fees, or Lender Group Expenses) unless
Agent determines that prior notice would result in imminent harm to the
Collateral or its value), and Lenders thereupon shall, together with Agent,
jointly determine the terms of arrangements that shall be implemented with
Borrower intended to reduce, within a reasonable time, the outstanding principal
amount of the Advances to Borrower to an amount permitted by the preceding
paragraph. In the event any Lender disagrees over the terms of reduction and/or
repayment of any Overadvance, the terms of reduction and/or repayment thereof
shall be implemented according to the determination of the Required Lenders.

                       Each Lender shall be obligated to settle with Agent as
provided in SECTION 2.1(i) for the amount of such Lender's Pro Rata Share of any
unintentional Overadvances by Agent reported to such Lender, any intentional
Overadvances made as permitted under this SECTION 2.1(l), and any Overadvances
resulting from the charging to the applicable Loan Account of interest, fees, or
Lender Group Expenses.

                 (m)   EFFECT OF BANKRUPTCY. If a case is commenced by or
against any Borrower under the Bankruptcy Code, or other statute providing for
debtor relief, then, without the approval of Required Lenders the Lender Group
shall not make additional loans or provide additional financial accommodations
under the Loan Documents to such Borrower as debtor or debtor-in-possession, or
to any trustee for such Borrower, nor consent to the use of cash collateral
(provided that the applicable Loan Account shall continue to be charged, to the
fullest extent permitted by law, for accruing interest, fees, and Lender Group
Expenses).

                 (n)   ADDITIONAL FINANCING. At Borrower's request, subject to
each of the following conditions, Agent and Lenders may provide the Additional
Financing:

                       (i)    no Event of Default or prospective Event of
Default shall exist;

                       (ii)   any increases in the Maximum Amount (and any
concurrent increases in the maximum amount of the Letter of Credit facility)
will be in a minimum amount of $5,000,000 and $5,000,000 increases thereto
(provided that the Maximum Amount will not in any event exceed $120,000,000 and
the maximum Letter of Credit facility will not exceed $100,000,000), and at the
effective date thereof, Borrower shall pay to Agent for the ratable benefit of
Lenders, an amendment fee in the amount of 0.125% of the amount of any increase
in the Maximum Amount;

                       (iii)  Agent and Lenders shall have received and approved
Borrower's updated Business Plan;

                                       23
<Page>

                       (iv)   Borrower shall have Borrowing Base Availability
(without being limited by the Maximum Amount) as of the end of each of the three
months prior to such increase of at least $10,000,000;

                       (v)    Borrower shall have given Agent and Lenders not
less than 90 days advance written notice of its desire for the Additional
Financing during which time Agent shall use its best efforts to obtain
additional binding commitments of new Lenders or from existing Lenders; and

                       (vi)   Agent shall have received binding commitments of
new Lenders (or from existing Lenders) for the increase in the Maximum Amount.

          2.2    LETTERS OF CREDIT.

                 (a)   AGREEMENT TO CAUSE ISSUANCE; AMOUNTS; OUTSIDE EXPIRATION
DATE. Subject to the terms and conditions of this Agreement, Agent agrees to
issue letters of credit for the account of Borrower (each, an "L/C") or to issue
guarantees of payment (each such guaranty, an "L/C Guaranty") with respect to
letters of credit issued by an issuing bank for the account of Borrower;
PROVIDED, HOWEVER, Borrower shall have the right to cause Letters of Credit for
the purchase of inventory by Children's Place Canada. For purposes of
clarification, the inventory referred to herein is not part of Inventory as that
term is defined in this Agreement. Agent shall have no obligation to issue a
Letter of Credit if any of the following would result:

                       (i)    100% of the aggregate amount of all undrawn and
unreimbursed Letters of Credit, would exceed the Borrowing Base less the amount
of outstanding Advances (including any Agent Advances and Agent Loans); or

                       (ii)   the aggregate amount of all undrawn or
unreimbursed Letters of Credit would exceed the lower of: (x) the Maximum Amount
less the amount of outstanding Advances (including any Agent Advances and Agent
Loans); or (y) $80,000,000 or up to $100,000,000 in accordance with SECTION
2.1(n) relating to Additional Financing.

Borrower expressly understands and agrees that Agent shall have no obligation to
arrange for the issuance by issuing banks of the letters of credit that are to
be the subject of L/C Guarantees. Borrower and the Lender Group acknowledge and
agree that certain of the letters of credit that are to be the subject of L/C
Guarantees may be on the Closing Date. Each Letter of Credit shall have an
expiry date no later than the date on which this Agreement is scheduled to
terminate under SECTION 3.4 (without regard to any potential renewal term) and
all such Letters of Credit shall be in form and substance acceptable to Agent in
its sole discretion. If the Lender Group is obligated to advance funds under a
Letter of Credit, Borrower immediately shall reimburse such amount to Agent and,
in the absence of such reimbursement, the amount so advanced immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances under SECTION 2.7.

                 (b)   INDEMNIFICATION. Borrower hereby agrees to indemnify,
save, defend, and hold the Lender Group harmless from any loss, cost, expense,
or liability, including payments made by the Lender Group, expenses, and
reasonable attorneys fees incurred by the

                                       24
<Page>

Lender Group arising out of or in connection with any Letter of Credit. Borrower
agrees to be bound by the issuing bank's regulations and interpretations of any
letters of credit guarantied by the Lender Group and opened to or for Borrower's
account or by Agent's interpretations of any Letter of Credit issued by Agent to
or for Borrower's account, even though this interpretation may be different from
Borrower's own, and Borrower understands and agrees that the Lender Group shall
not be liable for any error, negligence, or mistake, whether of omission or
commission, 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 Guarantees may require the Lender Group to
indemnify the issuing bank for certain costs or liabilities arising out of
claims by Borrower against such issuing bank. 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 Guaranty as a result of the Lender Group's
indemnification of any such issuing bank.

                 (c)   SUPPORTING MATERIALS. Borrower hereby authorizes and
directs any bank that issues a letter of credit guaranteed by an L/C Guaranty to
deliver to Agent all instruments, documents, and other writings and property
received by the issuing bank pursuant to such letter of credit, and to accept
and rely upon Agent's instructions and agreements with respect to all matters
arising in connection with such letter of credit and the related application.
Borrower may or may not be the "applicant" or "account party" with respect to
such letter of credit.

                 (d)   COSTS OF LETTERS OF CREDIT. Notwithstanding anything to
the contrary contained in this Agreement, Borrower shall not be responsible for
any and all charges, commissions, fees (other than the Letter of Credit fee set
forth in SECTION 2.7(b)), and costs relating to any L/C or to the letters of
credit guaranteed by an L/C Guaranty.

                 (e)   INDEMNIFICATION. Immediately upon the termination of this
Agreement, Borrower agrees to either (i) provide cash collateral to be held by
Agent in an amount equal to 105% of the maximum amount of the Lender Group's
obligations under outstanding Letters of Credit, or (ii) cause to be delivered
to Agent releases of all of the Lender Group's obligations under outstanding
Letters of Credit. At Agent's discretion, any proceeds of Collateral received by
Agent after the occurrence and during the continuation of an Event of Default
may be held as the cash collateral required by this SECTION 2.2(e).

                 (f)   INCREASED COSTS. If by reason of (i) any change in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application by any governmental authority of any such applicable law, treaty,
rule, or regulation, or (ii) compliance by the issuing bank 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,
without limitation, Regulation D of the Board of Governors of the Federal
Reserve System 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 Letters of Credit issued
hereunder, or

                                       25
<Page>

                       (ii)   there shall be imposed on the issuing bank or the
Lender Group any other condition regarding any letter of credit, or Letter of
Credit, as applicable, issued pursuant hereto;

and the result of the foregoing is to increase, directly or indirectly, the cost
to the issuing bank or the Lender Group of issuing, making, guaranteeing, or
maintaining any letter of credit, or Letter of Credit, as applicable, or to
reduce the amount receivable in respect thereof by such issuing bank or 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
the issuing bank or Agent may specify to be necessary to compensate the issuing
bank or Agent 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 set forth in SECTION 2.7(a) or (c)(i), as applicable. The
determination by the issuing bank or Agent, as the case may be, of any amount
due pursuant to this SECTION 2.2(f), 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.

                 (g)   PARTICIPATIONS.

                       (i)    PURCHASE OF PARTICIPATIONS. Immediately upon
issuance of any Letter of Credit in accordance with this SECTION 2.2, each
Lender shall be deemed to have irrevocably and unconditionally purchased and
received without recourse or warranty, an undivided interest and participation
in the credit support or enhancement provided through the Agent to such issuer
in connection with the issuance of such Letter of Credit, equal to such Lender's
Pro Rata Share of the face amount of such Letter of Credit (including, without
limitation, all obligations of Borrower with respect thereto, and any security
therefor or guaranty pertaining thereto).

                       (ii)   DOCUMENTATION. Upon the request of any Lender, the
Agent shall furnish to such Lender copies of any Letter of Credit, reimbursement
agreements executed in connection therewith, application for any Letter of
Credit and credit support or enhancement provided through the Agent in
connection with the issuance of any Letter of Credit, and such other
documentation as may reasonably by requested by such Lender.

                       (iii)  OBLIGATIONS IRREVOCABLE. The obligations of each
Lender to make payments to the Agent with respect to any Letter of Credit or
with respect to any credit support or enhancement provided through the Agent
with respect to a Letter of Credit, and the obligations of Borrower to make
payments to the Agent, for the account of the Lenders, shall be irrevocable, not
subject to any qualification or exception whatsoever, including, without
limitation, any of the following circumstances:

                              (A)    any lack of validity or enforceability of
this Agreement or any of the other Loan Documents;

                                       26
<Page>

                              (B)    the existence of any claim, setoff,
defense, or other right which any Borrower may have at any time against a
beneficiary named in a Letter of Credit or any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), any Lender,
the Agent, the issuer of such Letter of Credit, or any other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any underlying
transactions between such Borrower or any other Person and the beneficiary named
in any Letter of Credit);

                              (C)    any draft, certificate, or any other
document presented under the Letter of Credit proving to be forged, fraudulent,
invalid, or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;

                              (D)    the surrender or impairment of any security
for the performance or observance of any of the terms of any of the Loan
Documents; or

                              (E)    the occurrence of any Default or Event of
Default.

          2.3    INTENTIONALLY OMITTED.

          2.4    INTENTIONALLY OMITTED.

          2.5    PAYMENTS.

                 (a)   PAYMENTS BY BORROWER.

                       (i)    All payments to be made by Borrower shall be made
without set-off, recoupment, deduction, or counterclaim, except as otherwise
required by law. Except as otherwise expressly provided herein, all payments by
Borrower shall be made to Agent for the account of the Lenders or Agent, as the
case may be, at Agent's address set forth in SECTION 12, and shall be made in
immediately available funds, no later than 11:00 a.m. (California time) on the
date specified herein. Any payment received by Agent later than 11:00 a.m.
(California time), at the option of Agent, 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)   Whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.

                       (iii)  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 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 has not made such
payment in full to Agent, each Lender shall repay to Agent on demand such amount
distributed to such

                                       27
<Page>

Lender, together with interest thereon at the Reference Rate for each day from
the date such amount is distributed to such Lender until the date repaid.

                 (b)   APPORTIONMENT AND APPLICATION OF PAYMENTS. Except as
otherwise provided with respect to Defaulting Lenders, aggregate principal and
interest payments shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Advances to which such payments relate held
by each Lender) and payments of the fees (other than fees designated for Agent's
separate account) shall, as applicable, be apportioned ratably among the
Lenders. All payments shall be remitted to Agent and all such payments not
relating to specific Advances, and not constituting payment of specific fees and
all proceeds of Collateral received by Agent, shall be applied, first, to pay
any fees or expense reimbursements then due to Agent from Borrower; second, to
pay any fees or expense reimbursements then due to the Lenders from Borrower;
third, to pay interest due in respect of all Advances, including Agent Loans and
Agent Advances; fourth, to pay or prepay principal of Agent Loans and Agent
Advances; fifth, ratably to pay principal of the Advances (other than Agent
Loans and Agent Advances) and unreimbursed obligations in respect of Letters of
Credit; and sixth, ratably to pay any other Obligations due to Agent or any
Lender by Borrower. Agent shall promptly distribute to each Lender, pursuant to
the applicable wire transfer instructions received from each Lender in writing,
such funds as it may be entitled to receive, subject to a Settlement delay as
provided for in SECTION 2.1(h).

          2.6    OVERADVANCES. If, at any time or for any reason, the amount of
Obligations owed by Borrower to the Lender Group pursuant to SECTIONS 2.1 and
2.2 is greater than either the Dollar or percentage limitations set forth in
SECTIONS 2.1 and 2.2 (an "Overadvance"), Borrower immediately shall pay to
Agent, in cash, the amount of such excess to be used by Agent to reduce the
Obligations pursuant to the terms of SECTION 2.5(b).

          2.7    INTEREST AND LETTER OF CREDIT FEES: RATES, PAYMENTS, AND
CALCULATIONS.

                 (a)   INTEREST RATE. Except as provided in SECTION 2.7(c),
below, all Obligations shall bear interest on the Daily Balance as follows:

                       (i)    each Eurodollar Rate Loan shall bear interest at a
     per annum rate equal to the Adjusted Eurodollar Rate plus the Eurodollar
     Rate Margin; and

                       (ii)   all other Obligations (except for undrawn Letters
     of Credit) shall bear interest at a per annum rate equal to the Reference
     Rate.

                 (b)   LETTER OF CREDIT FEE. Borrower shall pay Agent, for the
benefit of the Lender Group, a fee equal to 0.75% per annum times the aggregate
undrawn amount of all Letters of Credit outstanding as of the end of the day.

                 (c)   DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default, (i) all Obligations (except for undrawn
Letters of Credit) shall bear interest on the Daily Balance at a per annum rate
equal to 3.00% above the Reference Rate, and (ii) the

                                       28
<Page>

Letter of Credit fee provided in SECTION 2.6(b) shall be increased to 3.75% per
annum times the aggregate undrawn amount of all outstanding Letters of Credit;
provided, HOWEVER, the foregoing adjustments are subject to waiver by the
Required Lenders.

                 (d)   INTENTIONALLY OMITTED.

                 (e)   PAYMENTS. Interest in respect of Reference Rate Loans and
Letter of Credit fees payable hereunder shall be due and payable, in arrears, on
the first day of each month during the term hereof. Interest in respect of each
Eurodollar Rate Loan shall be due and payable, in arrears, on (i) the last day
of the applicable Interest Period, and (ii) the first day of each month
occurring during the term thereof. Borrower hereby authorizes Agent, at its
option, without prior notice to Borrower, to charge such interest and Letter of
Credit fees, the fees and charges provided for in SECTION 2.12 (as and when
accrued or incurred), and all installments or other payments due under any Loan
Document to Borrower's Loan Account, which amounts thereafter shall accrue
interest at the rate then applicable to Advances hereunder. Any interest not
paid when due shall be compounded and shall thereafter accrue interest at the
rate then applicable to Advances hereunder.

                 (f)   COMPUTATION. In the event the Reference Rate is changed
from time to time hereafter, the applicable rate of interest hereunder
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Reference Rate. 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.

                 (g)   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.

          2.8    COLLECTION OF ACCOUNTS. Borrower shall at all times maintain
lockboxes (the "Lockboxes") and, immediately after the Closing Date, shall
instruct all Account Debtors with respect to the Accounts, General Intangibles,
and Negotiable Collateral of Borrower to remit all Collections in respect
thereof to such Lockboxes. Borrower, Agent, and the Lockbox Banks shall enter
into the Lockbox Agreements, which among other things shall provide for the
opening of a Lockbox Account for the deposit of Collections at a Lockbox Bank.
Borrower agrees that all Collections and other amounts received by Borrower from
any Account Debtor or any other source immediately upon receipt shall be
deposited into a Lockbox Account. No Lockbox Agreement or arrangement
contemplated thereby shall be modified by Borrower without the prior written
consent of Agent. Upon the terms and subject to the conditions set

                                       29
<Page>

forth in the Lockbox Agreements, all amounts received in each Lockbox Account
shall be wired each Business Day into an account (the "Agent's Account")
maintained by Agent at a depositary selected by Agent.

          2.9    CREDITING PAYMENTS; APPLICATION OF COLLECTIONS. The receipt of
any Collections by Agent (whether from transfers to Agent by the Lockbox Banks
pursuant to the Lockbox Agreements or otherwise) immediately shall be applied
provisionally to reduce the Obligations outstanding under SECTION 2.1, but shall
not be considered a payment on account unless such Collection item is a wire
transfer of immediately available federal funds and is made to the Agent's
Account or unless and until such Collection item is honored when presented for
payment. Should any Collection item not be honored when presented for payment,
then Borrower shall be deemed not to have made such payment, and interest shall
be recalculated accordingly. Anything to the contrary contained herein
notwithstanding, any Collection item shall be deemed received by Agent only if
it is received into the Agent's Account on a Business Day on or before 11:00
a.m. California time. If any Collection item is received into the Agent's
Account on a non-Business Day or after 11:00 a.m. California 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. Prior to the occurrence of
an Event of Default or Agent reasonably deeming itself insecure, and so long as
Availability is $25,000,000 or more, at Borrower's option, monies shall be
transferred from the Lock Box to Agent or to Borrower's operating account on a
daily basis, and if transferred to Borrower's operating account such monies will
not be applied to the Obligations.

          2.10   DESIGNATED ACCOUNT. Agent and the Lender Group are authorized
to make the Advances and 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 2.7(e).
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 the Lender Group hereunder. Unless
otherwise agreed by Agent and Borrower, any Advance requested by Borrower and
made by the Lender Group hereunder shall be made to the Designated Account.

          2.11   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 made by the Lender
Group to Borrower or for Borrower's account, including, accrued interest, Lender
Group Expenses, and any other payment Obligations of Borrower. In accordance
with SECTION 2.9, 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 Lockbox 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 the Lender
Group Expenses owing, and such statements 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.

                                       30
<Page>

          2.12   FEES. Borrower shall pay to Agent for the ratable benefit of
the Lender Group (except where otherwise indicated) the following fees:

                 (a)   CLOSING FEE. A closing fee in the amount of $150,000,
payable on the Closing Date.

                 (b)   ANNIVERSARY FEE. An anniversary fee equal to 0.125% of
the Maximum Amount, which fee shall be due and payable in full on each of the
first anniversary and second anniversary of the Closing Date; PROVIDED, HOWEVER,
the Agreement has not previously been terminated.

                 (c)   UNUSED LINE FEE. On the first day of each month
commencing June 1, 2003, whenever the average Daily Balance of Obligations is
less than the Maximum Amount then in effect, an unused line fee in an amount
equal to 0.375% per annum times the Average Unused Portion of the Maximum
Amount.

                 (d)   SERVICING FEE. On the first day of each month during the
term of this Agreement, and thereafter so long as any Obligations are
outstanding, a servicing fee solely for the Agent in an amount equal to $2,000.

                 (e)   APPRAISALS; FINANCIAL EXAMINATION AND APPRAISAL FEES. The
Agent or its designee, at the sole expense of Borrower, shall conduct periodic
appraisals of Borrower's Inventory. So long as no Event of Default has occurred
and is continuing, Borrower shall not be liable to pay more than $30,000 per
year (exclusive of out of pocket expenses) for financial analyses and
examinations and periodic appraisals of Inventory in the aggregate.

          2.13   EURODOLLAR RATE LOANS. Any other provisions herein to the
contrary notwithstanding, the following provisions shall govern with respect to
Eurodollar Rate Loans as to the matters covered:

                 (a)   BORROWING; CONVERSION; CONTINUATION. Borrower may from
time to time, on or after the Closing Date (and subject to the satisfaction of
the requirements of SECTIONS 3.1 AND 3.2), request in a written or telephonic
communication with Agent: (i) Advances to constitute Eurodollar Rate Loans; (ii)
that Reference Rate Loans be converted into Eurodollar Rate Loans; or (iii) that
existing Eurodollar Rate Loans continue for an additional Interest Period. Any
such request shall specify the aggregate amount of the requested Eurodollar Rate
Loans, the proposed funding date therefor (which shall be a Business Day, and
with respect to continued Eurodollar Rate Loans shall be the last day of the
Interest Period of the existing Eurodollar Rate Loans being continued), and the
proposed Interest Period (in each case subject to the limitations set forth
below). Eurodollar Rate Loans may only be made, continued, or extended if, as of
the proposed funding date therefor, each of the following conditions is
satisfied:

                       (v)    no Event of Default exists;

                       (w)    no more than five Interest Periods may be in
     effect at any one time;

                                       31
<Page>

                       (x)    the amount of each Eurodollar Rate Loan borrowed,
     converted, or continued must be in an amount not less than $5,000,000 and
     integral multiples of $1,000,000 in excess thereof;

                       (y)    Agent shall have determined that the Interest
     Period or Adjusted Eurodollar Rate is available to it and can be readily
     determined as of the date of the request for such Eurodollar Rate Loan by
     Borrower; and

                       (z)    Agent shall have received such request at least
     two Business Days prior to the proposed funding date therefor.

                       Any request by Borrower to borrow Eurodollar Rate Loans,
to convert Reference Rate Loans to Eurodollar Rate Loans, or to continue any
existing Eurodollar Rate Loans shall be irrevocable, except to the extent that
any Lender shall determine under SECTIONS 2.13(a), 2.14 OR 2.15 that such
Eurodollar Rate Loans cannot be made or continued.

                 (b)   DETERMINATION OF INTEREST PERIOD. By giving notice as set
forth in SECTION 2.12(a), Borrower shall select an Interest Period for such
Eurodollar Rate Loan. The determination of the Interest Period shall be subject
to the following provisions:

                       (i)    in the case of immediately successive Interest
     Periods, each successive Interest Period shall commence on the day on which
     the next preceding Interest Period expires;

                       (ii)   if any Interest Period would otherwise expire on a
     day which is not a Business Day, the Interest Period shall be extended to
     expire on the next succeeding Business Day; provided, however, that if the
     next succeeding Business Day occurs in the following calendar month, then
     such Interest Period shall expire on the immediately preceding Business
     Day;

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

                       (iv)   Borrower may not select an Interest Period which
     expires later than the Maturity Date.

                 (c)   AUTOMATIC CONVERSION: OPTIONAL CONVERSION BY AGENT. Any
Eurodollar Rate Loan shall automatically convert to a Reference Rate Loan upon
the last day of the applicable Interest Period, unless Agent has received a
request to continue such Eurodollar Rate Loan at least two Business Days prior
to the end of such Interest Period in accordance with the terms of SECTION
2.13(a). Any Eurodollar Rate Loan shall, at Agent's option, upon notice to
Borrower, immediately convert to a Reference Rate Loan in the event that (i) an
Event of Default shall have occurred and be continuing or (ii) this Agreement
shall terminate, and Borrower shall

                                       32
<Page>

pay to Agent, for the benefit of the Lenders, any amounts required by SECTION
2.16 as a result thereof.

          2.14   ILLEGALITY. Any other provision herein to the contrary
notwithstanding, if the adoption of or any change in any Requirement of Law or
in the interpretation or application thereof by a Governmental Authority made
subsequent to the Closing Date shall make it unlawful for any Lender to make or
maintain Eurodollar Rate Loans as contemplated by this Agreement, (a) the
obligation of such Lender hereunder to make Eurodollar Rate Loans, continue
Eurodollar Rate Loans as such, and convert Reference Rate Loans to Eurodollar
Rate Loans shall forthwith be suspended and (b) such Lender's then outstanding
Eurodollar Rate Loans, if any, shall be converted automatically to Reference
Rate Loans on the respective last days of the then current Interest Periods with
respect thereto or within such earlier period as required by law; PROVIDED,
HOWEVER, that before making any such demand, each Lender agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions and so long as such efforts would not be disadvantageous to it, in
its reasonable discretion, in any legal, economic, or regulatory manner) to
designate a different lending office if the making of such a designation would
allow such Lender or its lending office to continue to perform its obligations
to make Eurodollar Rate Loans. If any such conversion of a Eurodollar Rate Loan
occurs on a day which is not the last day of the then current Interest Period
with respect thereto, Borrower shall pay to such Lender such amounts, if any, as
may be required pursuant to SECTION 2.15. If circumstances subsequently change
so that such Lender shall determine that it is no longer so affected, such
Lender will promptly notify Agent and Borrower, and upon receipt of such notice,
the obligations of such Lender to make or continue Eurodollar Rate Loans or to
convert Reference Rate Loans into Eurodollar Rate Loans shall be reinstated.

          2.15   REQUIREMENTS OF LAW.

                 (a)   If the adoption of or any change in any Requirement of
Law or in the interpretation or application thereof by a Governmental Authority
made subsequent to the Closing Date or compliance by any Lender with any request
or directive (whether or not having the force of law) from any central bank or
other Governmental Authority made subsequent to the Closing Date

                       (i)    shall subject such Lender to any tax, levy,
     charge, fee, reduction, or withholding of any kind whatsoever with respect
     to Eurodollar Rate Loans, or change the basis of taxation of payments to
     such Lender in respect thereof (except for the establishment of a tax based
     on the net income of the Lender or changes in the rate of tax on the net
     income of such Lender);

                       (ii)   shall in respect of Eurodollar Rate Loans impose,
     modify or hold applicable any reserve, special deposit, compulsory loan, or
     similar requirement against assets held by, deposits or other liabilities
     in or for the account of, Advances or other extensions of credit by, or any
     other acquisition of funds by, any office of such Lender; or

                                       33
<Page>

                       (iii)  shall impose on such Lender any other condition
     with respect to Eurodollar Rate Loans;

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing, or maintaining Eurodollar Rate Loans or to increase the cost to such
Lender in respect of Eurodollar Rate Loans, by an amount which such Lender deems
to be material, or to reduce any amount receivable hereunder in respect of
Eurodollar Rate Loans, or to forego any other sum payable thereunder or make any
payment on account thereof in respect of Eurodollar Rate Loans, then, in any
such case, Borrower shall promptly pay to Agent (for the benefit of such
Lender), upon such Lender's demand, any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable;
PROVIDED, HOWEVER, that before making any such demand, each Lender agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions and so long as such efforts would not be disadvantageous to it, in
its reasonable discretion, in any legal, economic, or regulatory manner) to
designate a different Eurodollar lending office if the making of such
designation would allow such Lender or its Eurodollar lending office to continue
to perform its obligations to make Eurodollar Rate Loans or to continue to fund
or maintain Eurodollar Rate Loans and avoid the need for, or materially reduce
the amount of, such increased cost. If a Lender becomes entitled to claim any
additional amounts pursuant to this SECTION 2.15, such Lender shall promptly
notify Agent and Borrower of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to this
SECTION 2.15 submitted in reasonable detail by such Lender to Agent and Borrower
shall be conclusive in the absence of manifest error. Within five Business Days
after a Lender notifies Agent and Borrower of any increased cost pursuant to the
foregoing provisions of this Section 2.15, Borrower may convert all Eurodollar
Rate Loans then outstanding into Reference Rate Loans in accordance with SECTION
2.13 and, additionally, reimburse such Lender for any cost in accordance with
SECTION 2.16. This covenant shall survive the termination of this Agreement and
the payment of the Advances and all other amounts payable hereunder for nine
months following such termination and repayment.

                 (b)   If a Lender shall have determined that the adoption of or
any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof by a Governmental Authority made
subsequent to the Closing Date or compliance by such Lender or any Person
controlling such Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) from any Governmental Authority made
subsequent to the Closing Date does or shall have the effect of increasing the
amount of capital required to be maintained or reducing the rate of return on
such Lender's or such Person's capital as a consequence of its obligations
hereunder to a level below that which such Lender or such Person could have
achieved but for such change or compliance (taking into consideration such
Lender's or such Person's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to Agent and Borrower of a prompt written request
therefor, Borrower shall pay to Agent (for the benefit of such Lender) such
additional amount or amounts as will compensate such Lender or such Person for
such reduction. This covenant shall survive the termination of this Agreement
and the payment of the Advances and all other amounts payable hereunder for nine
months following such termination and repayment.

                                       34
<Page>

          2.16   INDEMNITY. Borrower agrees to indemnify Agent and each Lender
and to hold Agent and each Lender harmless from any loss or expense which Agent
and each Lender may sustain or incur as a consequence of (a) default by Borrower
in payment when due of the principal amount of or interest on any Eurodollar
Rate Loan, (b) default by Borrower in making a Borrowing of, conversion into, or
continuation of Eurodollar Rate Loans after Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (c)
default by Borrower in making any prepayment of a Eurodollar Rate Loan after
Borrower has given a notice thereof in accordance with the provisions of this
Agreement, or (d) the making of a prepayment of Eurodollar Rate Loans on a day
which is not the last day of an Interest Period with respect thereto (whether
due to the termination of this Agreement, upon an Event of Default, or
otherwise), including, in each case, any such loss or expense (but excluding
loss of margin or anticipated profits) arising from the reemployment of funds
obtained by it or from fees payable to terminate the deposits from which such
funds were obtained; PROVIDED, HOWEVER, that Agent or any Lender, if requesting
indemnification, shall have delivered to the Borrower a certificate as to the
amount of such loss or expense, which certificate shall be conclusive in the
absence of manifest error. Calculation of all amounts payable to Agent or any
such Lender under this SECTION 2.16 shall be made as though such Lender had
actually funded the relevant Eurodollar Rate Loan through the purchase of a
deposit bearing interest at the Eurodollar Rate in an amount equal to the amount
of such Eurodollar Rate Loan and having a maturity comparable to the relevant
Interest Period; PROVIDED, HOWEVER, that each Lender may fund each of the
Eurodollar Rate Loans in any manner it sees fit, and the foregoing assumption
shall be utilized only for the calculation of amounts payable under this Section
2.16. This covenant shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder for a period of
nine months thereafter.

     3.   CONDITIONS; TERM OF AGREEMENT.

          3.1    CONDITIONS PRECEDENT TO THE INITIAL ADVANCE AND THE INITIAL
LETTER OF CREDIT. The obligation of the Lender Group to make the initial Advance
and to issue the initial Letter of Credit is subject to the fulfillment, to the
satisfaction of Agent and its counsel, of each of the following conditions on or
before the Closing Date:

                 (a)   the Closing Date shall occur on or before April 28, 2003;

                 (b)   Agent shall have received and filed amendments to its
financing statements;

                 (c)   Agent shall have received each of the following
documents, duly executed, and each such document shall be in full force and
effect:

                       (1)    the Disbursement Letter; and

                       (2)    an amendment to the Stock Pledge;

                 (d)   Agent shall have received a certificate from the
Secretary of Borrower attesting to the resolutions of Borrower's Board of
Directors authorizing its execution,

                                       35
<Page>

delivery, and performance of this Agreement and the other Loan Documents to
which Borrower is a party and authorizing specific officers of Borrower to
execute the same;

                 (e)   Agent shall have received copies of Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Borrower;

                 (f)   Agent shall have received a certificate of status with
respect to Borrower, dated within 10 days of the Closing Date, such certificate
to be issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;

                 (g)   Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by SECTION 6.10, the
form and substance of which shall be satisfactory to Agent and its counsel;

                 (h)   Agent shall have received an opinion of Borrower's
counsel in form and substance satisfactory to Agent in its sole discretion;

                 (i)   all other documents and legal matters 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
and its counsel.

          3.2    CONDITIONS PRECEDENT TO ALL ADVANCES AND ALL LETTERS OF CREDIT.
The following shall be conditions precedent to all Advances and all Letters of
Credit hereunder:

                 (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);

                 (b)   except for good faith disputes between Borrower and
landlords, no Default or 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 prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any governmental authority against
Borrower, the Lender Group or any of their Affiliates; and

                 (d)   the amount of any requested Advance or Letter of Credit
shall not exceed Availability at such time.

          3.3    INTENTIONALLY OMITTED.

          3.4    TERM; AUTOMATIC RENEWAL. This Agreement shall become effective
upon the execution and delivery hereof by Borrower and the Lender Group and
shall continue in

                                       36
<Page>

full force and effect for a term ending on April 25, 2006 (the "Renewal Date")
and automatically shall be renewed for successive one year periods thereafter,
unless sooner terminated pursuant to the terms hereof. Either Borrower or Agent
(on behalf of the Lender Group) may terminate this Agreement effective on the
Renewal Date or on any year anniversary of the Renewal Date by giving the other
party at least 90 days prior written notice. The foregoing notwithstanding,
Agent (on behalf of the Lender Group) shall have the right to terminate the
Lender Group's 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 any outstanding Letters of Credit) immediately shall
become due and payable without notice or demand. No termination of this
Agreement, however, shall relieve or discharge Borrower of Borrower's duties,
Obligations, or covenants hereunder, and the Lender Group's continuing security
interests in the Collateral shall remain in effect until all Obligations have
been fully and finally discharged and the Lender Group's obligation to provide
additional credit hereunder is terminated.

          3.6    EARLY TERMINATION BY BORROWER. Borrower has the option, at any
time upon 90 days prior written notice to Agent, to terminate this Agreement by
paying to Agent, for the benefit of the Lender Group, in cash, the Obligations
(including either (a) 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 outstanding Letter of Credit Usage, or (b) causing the outstanding
original Letters of Credit to be returned to the Issuing Lender, in full,
together with the Applicable Prepayment Premium (to be allocated based upon
letter agreements between Agent and individual Lenders). 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 outstanding Letter of Credit Usage, or (ii) causing the
original Letters of Credit to be returned to the Issuing Lender, in full,
together with the Applicable Prepayment Premium, on the date set forth as the
date of termination of this Agreement in such notice. In the event of the
termination of this Agreement and repayment of the Obligations at any time prior
to the Maturity Date, for any other reason, including (a) foreclosure and sale
of Collateral, (b) sale of the Collateral in any Insolvency Proceeding, or (c)
restructure, reorganization, or compromise of the Obligations by the
confirmation of a plan of reorganization or any other plan of compromise,
restructure, or arrangement in any Insolvency Proceeding, then, in view of the
impracticability and extreme difficulty of ascertaining the actual amount of
damages to the Lender Group or profits lost by the Lender Group as a result of
such early termination, and by mutual agreement of the parties as to a
reasonable estimation and calculation of the lost profits or damages of the
Lender Group, Borrower shall pay the Applicable Prepayment Premium to Agent (to
be allocated based upon letter agreements between Agent and individual Lenders),
measured as of the date of such termination.

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<Page>

     4.   CREATION OF SECURITY INTEREST.

          4.1    GRANT OF SECURITY INTEREST. Borrower hereby grants to Agent for
the benefit of the Lender Group a continuing security interest in all currently
existing and hereafter acquired or arising Collateral in order to secure prompt
repayment of any and all Obligations and in order to secure prompt performance
by Borrower of each of its covenants and duties under the Loan Documents. The
security interests of Agent for the benefit of the Lender Group in the
Collateral shall attach to all Collateral without further act on the part of the
Lender Group or Borrower. Anything contained in this Agreement or any other Loan
Document to the contrary notwithstanding, and other than: (a) sales of Inventory
to buyers in the ordinary course of business, (b) sales of Equipment in any 12
month period having an aggregate net book value of $500,000 with the proceeds
being applied to the Obligations, and (c) sale or disposal of Collateral (other
than Inventory) in connection with the closing of Borrower's stores, Borrower
has no authority, express or implied, to dispose of any item or portion of the
Collateral.

          4.2    NEGOTIABLE COLLATERAL. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral,
Borrower, immediately upon the request of Agent, shall endorse and deliver
physical possession of such Negotiable Collateral to Agent.

          4.3    COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time, Agent or Agent's designee may (a) notify customers or
Account Debtors of Borrower that the Accounts, General Intangibles, or
Negotiable Collateral have been assigned to Agent for the benefit of the Lender
Group or that Agent for the benefit of the Lender Group has a security interest
therein, and (b) collect the Accounts, General Intangibles, and Negotiable
Collateral directly and charge the collection costs and expenses to the Loan
Account. Borrower agrees that it will hold in trust for the Lender Group, as the
Lender Group's trustee, any Collections that it receives and immediately will
deliver said Collections to Agent in their original form as received by
Borrower.

          4.4    DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time upon
the request of Agent, Borrower shall execute and deliver to Agent all financing
statements, continuation financing statements, fixture filings, security
agreements, pledges, assignments, control agreements, endorsements of
certificates of title, applications for title, affidavits, reports, notices,
schedules of accounts, letters of authority, and all other documents that Agent
reasonably may request, in form satisfactory to Agent, to perfect and continue
perfected the Liens of the Lender Group in the Collateral, and in order to fully
consummate all of the transactions contemplated hereby and under the other the
Loan Documents.

          4.5    POWER OF ATTORNEY. Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as Borrower's true and lawful attorney, with power
to (a) if Borrower refuses to, or fails timely to execute and deliver any of the
documents described in SECTION 4.4, sign the name of Borrower on any of the
documents described in SECTION 4.4, (b) at any time that an Event of Default has
occurred and is continuing or the Lender Group deems itself insecure, sign
Borrower's name on any invoice or bill of lading relating to any Account, drafts
against Account Debtors, schedules

                                       38
<Page>

and assignments of Accounts, verifications of Accounts, and notices to Account
Debtors, (c) send requests for verification of Accounts, (d) endorse Borrower's
name on any Collection item that may come into the Lender Group's possession,
(e) at any time that an Event of Default has occurred and is continuing or the
Lender Group deems itself insecure, notify the post office authorities to change
the address for delivery of Borrower's mail to an address designated by Agent,
to receive and open all mail addressed to Borrower, and to retain all mail
relating to the Collateral and forward all other mail to Borrower, (f) at any
time that an Event of Default has occurred and is continuing or the Lender Group
deems itself insecure, make, settle, and adjust all claims under Borrower's
policies of insurance and make all determinations and decisions with respect to
such policies of insurance, and (g) at any time that an Event of Default has
occurred and is continuing or Agent deems itself insecure, settle and adjust
disputes and claims respecting the Accounts directly with Account Debtors, for
amounts and upon terms that Agent determines to be reasonable, and Agent may
cause to be executed and delivered any documents and releases that Agent
determines to be necessary. The appointment of Agent as Borrower's attorney, and
each and every one of Agent's rights and powers, being coupled with an interest,
is irrevocable until all of the Obligations have been fully and finally repaid
and performed and the Lender Group's obligation to extend credit hereunder is
terminated.

          4.6    RIGHT TO INSPECT. Agent (through any of its officers,
employees, or agents), shall have the right, from time to time hereafter to
inspect Borrower's Books and to check, test, and appraise the Collateral in
order to verify Borrower's financial condition or the amount, quality, value,
condition of, or any other matter relating to, the Collateral.

     5.   REPRESENTATIONS AND WARRANTIES.

          In order to induce the Lender Group to enter into this Agreement,
Borrower makes the following representations and warranties which shall be true,
correct, and complete in all respects as of the date hereof, and shall be true,
correct, and complete in all respects as of the Closing Date, and at and as of
the date of the making of each Advance and Letter of Credit made thereafter, as
though made on and as of the date of such Advance and Letter 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. Borrower has good and indefeasible title to
the Collateral, free and clear of Liens except for Permitted Liens.

          5.2    ELIGIBLE ACCOUNTS. The Eligible Accounts are, at the time of
the creation thereof and as of each date on which Borrower includes them in a
Borrowing Base calculation or certification, bona fide existing obligations
created by the sale and delivery of Inventory or the rendition of services to
Account Debtors in the ordinary course of Borrower's business, unconditionally
owed to Borrower without defenses, disputes, offsets, counterclaims, or rights
of return or cancellation other than normal returns or disputes in the normal
course of business. The property giving rise to such Eligible Accounts has been
delivered to the Account Debtor, or to the Account Debtor's agent for immediate
shipment to and unconditional acceptance by the Account Debtor. At the time of
the creation of an Eligible Account and as of each date on which Borrower
includes an Eligible Account in a Borrowing Base calculation or certification,

                                       39
<Page>

Borrower has not received notice of actual or imminent bankruptcy, insolvency,
or material impairment of the financial condition of any applicable Account
Debtor regarding such Eligible Account.

          5.3    ELIGIBLE INVENTORY. All Eligible Inventory is now and at all
times hereafter shall be of good and merchantable quality, free from defects,
except for minor defects arising in the ordinary course of business.

          5.4    EQUIPMENT. All of the Equipment is used or held for use in
Borrower's business and is fit for such purposes.

          5.5    LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and
Equipment are not stored with a bailee, warehouseman, or similar party (without
Agent's prior written consent) and are located only at the locations identified
on SCHEDULE 6.11 or otherwise permitted by SECTION 6.11.

          5.6    INVENTORY RECORDS. Borrower keeps correct and accurate records
itemizing and describing the kind, type, quality and quantity of its Inventory
and Borrower's cost therefor in accordance with the retail method of accounting.

          5.7    LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive
office of Borrower is located at the address indicated in the preamble to this
Agreement and Borrower's FEIN is 31-1241495.

          5.8    DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.

                 (a)   Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its incorporation and qualified
and licensed to do business in, and in good standing in, any state where the
failure to be so licensed or qualified reasonably could be expected to cause a
Material Adverse Change.

                 (b)   Set forth on SCHEDULE 5.8, is a complete and accurate
list of Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their incorporation; (ii) the number of shares of each class of
common and preferred stock authorized for each of such Subsidiaries; and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by Borrower. All of the outstanding capital stock of each
such Subsidiary has been validly issued and is fully paid and non-assessable.

                 (c)   Except as set forth on SCHEDULE 5.8, no capital stock (or
any securities, instruments, warrants, options, purchase rights, conversion or
exchange rights, calls, commitments or claims of any character convertible into
or exercisable for capital stock) of any direct or indirect Subsidiary of
Borrower is subject to the issuance of any security, instrument, warrant,
option, purchase right, conversion or exchange right, call, commitment or claim
of any right, title, or interest therein or thereto.

          5.9    DUE AUTHORIZATION; NO CONFLICT. Borrower is duly organized and
existing and in good standing under the laws of the state of its incorporation
and qualified and

                                       40
<Page>

licensed to do business in, and in good standing in, any state where the failure
to be so licensed or qualified could reasonably be expected to have a material
adverse effect on the business, operations, condition (financial or otherwise),
finances, or prospects of Borrower or on the value of the Collateral to Agent.

          5.10   LITIGATION. There are no actions or proceedings pending by or
against Borrower before any court or administrative agency and Borrower does not
have knowledge or belief of any pending, threatened, or imminent litigation,
governmental investigations, or claims, complaints, actions, or prosecutions
involving Borrower or any guarantor of the Obligations, except for: (a) ongoing
collection matters in which Borrower is the plaintiff; and (b) current matters
that, if decided adversely to Borrower, would not materially impair the prospect
of repayment of the Obligations or materially impair the value or priority of
the Lender Group's security interests in the Collateral.

          5.11   NO MATERIAL ADVERSE CHANGE. All financial statements relating
to Borrower or any guarantor of the Obligations 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 fairly present Borrower's (or
such guarantor's, as applicable) financial condition as of the date thereof and
Borrower's results of operations for the period then ended. There has not been a
Material Adverse Change with respect to Borrower (or such guarantor, as
applicable) since the date of the latest financial statements submitted to the
Lender Group on or before the Closing Date.

          5.12   SOLVENCY. BORROWER IS SOLVENT. No transfer of property is being
made by Borrower and no obligation is being incurred by Borrower 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 Borrower.

          5.13   EMPLOYEE BENEFITS. None of Borrower, any of its Subsidiaries,
or any of their ERISA Affiliates maintains or contributes to any Benefit Plan,
other than those listed on SCHEDULE 5.13. Borrower, each of its Subsidiaries and
each ERISA Affiliate have satisfied the minimum funding standards of ERISA and
the IRC with respect to each Benefit Plan to which it is obligated to
contribute. No ERISA Event has occurred nor has any other event occurred that
may result in an ERISA Event that reasonably could be expected to result in a
Material Adverse Change. None of Borrower or its Subsidiaries, any ERISA
Affiliate, or any fiduciary of any Plan is subject to any direct or indirect
liability with respect to any Plan under any applicable law, treaty, rule,
regulation, or agreement. None of Borrower or its Subsidiaries or any ERISA
Affiliate is required to provide security to any Plan under Section 401(a)(29)
of the IRC.

          5.14   ENVIRONMENTAL CONDITION. Except as set forth on SCHEDULE 5.14,
none of Borrower's properties or assets has ever been used by Borrower or, to
the best of Borrower's knowledge, by previous owners or operators in the
disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials. None of Borrower's properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, or a candidate for closure
pursuant to any environmental

                                       41
<Page>

protection statute. No lien arising under any environmental protection statute
has attached to any revenues or to any real or personal property owned or
operated by Borrower. Borrower has not received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by Borrower resulting in
the releasing or disposing of Hazardous Materials into the environment.

     6.   AFFIRMATIVE COVENANTS.

          Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations, Borrower
shall do all of the following:

          6.1    ACCOUNTING SYSTEM AND SCHEDULES.

                 (a)   Borrower shall maintain a standard and modern system of
accounting in accordance with GAAP with ledger and account cards or computer
tapes, discs, printouts, and records pertaining to the Collateral which contain
information as from time to time may be requested by Agent. Borrower also shall
keep proper books of account showing all sales, claims, and allowances on its
Inventory.

                 (b)   Schedules of Accounts. With such regularity as Agent
shall require, Borrower shall provide Agent with schedules describing all
Accounts. Agent's failure to request such schedules or Borrower's failure to
execute and deliver such schedules shall not affect or limit the Lender Group's
security interests or other rights in and to the Accounts.

          6.2    FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Borrower agrees to
deliver to Agent: (a) as soon as available, but in any event within 30 days
after the end of each month (or 45 days after the end of fiscal quarter) during
each of Borrower's fiscal years, a company prepared balance sheet, income
statement, and cash flow statement covering Borrower's operations during such
period; and (b) as soon as available, but in any event within 90 days after the
end of each of Borrower's Fiscal Years, financial statements of Borrower for
each such Fiscal Year, audited by independent certified public accountants
reasonably acceptable to Agent and certified, without any going concern or other
material qualifications, by such accountants to have been prepared in accordance
with GAAP, together with a certificate of such accountants addressed to Agent
stating that such accountants do not have knowledge of the existence of any
failure of Borrower to comply with SECTION 7.20. Such audited financial
statements shall include a balance sheet, profit and loss statement, and cash
flow statement, and, if prepared, such accountants' letter to management. If
Borrower is a parent company of one or more Subsidiaries, or Affiliates, or is a
Subsidiary or Affiliate of another company, then, in addition to the financial
statements referred to above, Borrower agrees to deliver financial statements
prepared on a consolidating basis so as to present Borrower and each such
related entity separately, and on a consolidated basis.

                 Together with the above, Borrower also shall deliver to Lenders
Borrower's Form 10-Q Quarterly Reports, Form 10-K Annual Reports, and Form 8-K
Current Reports, and any other filings made by Borrower with the Securities and
Exchange Commission,

                                       42
<Page>

if any, as soon as the same are filed, or any other information that is provided
by Borrower to its public shareholders, and any other report reasonably
requested by Agent relating to the Collateral and financial condition of
Borrower.

                 Each month, together with the financial statements provided
pursuant to SECTION 6.2(a), Borrower shall deliver to Agent a certificate signed
by its chief financial officer to the effect that: (i) all reports, statements,
or computer prepared information of any kind or nature delivered or caused to be
delivered to Agent hereunder have been prepared in accordance with GAAP and
fairly present the financial condition of Borrower; (ii) Borrower is in timely
compliance with all of its covenants and agreements hereunder; (iii) the
representations and warranties of Borrower 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); and (iv) on the date of delivery of such certificate to Agent there does
not exist any condition or event that constitutes an Event of Default (or, in
each case, to the extent of any non-compliance, describing such non-compliance
as to which he or she may have knowledge and what action Borrower has taken, is
taking, or proposes to take with respect thereto).

                 Borrower shall deliver to Agent its Business Plan for the
fiscal year commencing on or about February 1, 2004 on or before March 31, 2004,
and for the fiscal year commencing on or about February 1, 2005 on or before
March 31, 2005.

                 Borrower shall have issued written instructions to its
independent certified public accountants authorizing them to communicate with
Agent and to release to Agent whatever financial information concerning Borrower
that Agent may request. Borrower hereby irrevocably authorizes and directs all
auditors, accountants, or other third parties to deliver to Agent, at Borrower's
expense, copies of Borrower's financial statements, papers related thereto, and
other accounting records of any nature in their possession, and to disclose to
Agent any information they may have regarding the Collateral or the financial
condition of Borrower.

          6.3    TAX RETURNS. Deliver to Agent copies of each of Borrower's
future federal income tax returns, and any amendments thereto, concurrently with
the filing thereof with the Internal Revenue Service.

          6.4    DESIGNATION OF INVENTORY. Borrower shall now and from time to
time hereafter, but not less frequently than weekly (or monthly so long as
Borrower has maintained at least $25,000,000 of Availability without being
limited by the Maximum Amount) (to be delivered each Monday based upon the close
of business on the preceding Saturday), execute and deliver to Agent a
designation of Inventory specifying the retail selling price of Borrower's
Inventory, and not less frequently than monthly, execute and deliver to Agent a
designation of Inventory specifying Borrower's Cost, and further specifying such
other information as Agent may reasonably request. Such designation shall
separately report Inventory that is subject to a letter of credit issued by any
Person other than Agent. Borrower will not include Inventory in transit in its
Inventory reports until such Inventory has been paid for by draws under
applicable letters of credit or has been acquired by Borrower without letter of
credit financing.

                                       43
<Page>

          6.5    STORE OPENINGS AND CLOSINGS AND RENTS REPORTS. Borrower shall
give Agent reasonable prior notice of new store openings and closing of its
stores. Borrower shall make timely payment of all rents on real property leases
where Borrower is the lessee within applicable grace periods, and shall provide
Agent with a monthly report specifying the status of such payments. In the event
that Borrower becomes delinquent in its rent payments, then Agent can establish
reserves against the Borrowing Base for the amount of any landlord liens arising
from such delinquency.

          6.6    TITLE TO EQUIPMENT. Upon Agent's request, Borrower shall within
30 days of such request deliver to Agent, properly endorsed, any and all
evidences of ownership of, certificates of title, or applications for title to
any items of Equipment with a market value of $100,000 or more other than
Equipment leased or to be leased.

          6.7    MAINTENANCE OF EQUIPMENT. Maintain the Equipment in good
operating condition and repair (ordinary wear and tear excepted), and make all
necessary replacements thereto so that the value and operating efficiency
thereof shall at all times be maintained and preserved. Other than those items
of Equipment that constitute fixtures on the Closing Date, Borrower shall not
permit any item of Equipment to become a fixture to real estate or an accession
to other property, and such Equipment shall at all times remain personal
property.

          6.8    TAXES. Cause all assessments and taxes, whether real, personal,
or otherwise, due or payable by, or imposed, levied, or assessed against
Borrower or any of its property to be paid in full, before delinquency or before
the expiration of any extension period, except to the extent that the validity
of such assessment or tax shall be the subject of a Permitted Protest. Borrower
shall make due and timely payment or deposit of all such federal, state, and
local taxes, assessments, or contributions required of it by law, and will
execute and deliver to Agent, on demand, appropriate certificates attesting to
the payment thereof or deposit with respect thereto. Borrower will make timely
payment or deposit of all tax payments and withholding taxes required of it by
applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish Agent with proof satisfactory to Agent indicating that Borrower has made
such payments or deposits.

          6.9    INSURANCE.

                 (a)   Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as are ordinarily insured against
by other owners in similar businesses. Borrower also shall maintain business
interruption, public liability, product liability, and property damage insurance
relating to Borrower's ownership and use of the Collateral, as well as insurance
against larceny, embezzlement, and criminal misappropriation.

                 (b)   All such policies of insurance shall be in such form,
with such companies, and in such amounts as may be reasonably satisfactory to
Agent. All such policies of insurance (except those of public liability and
property damage) shall contain a 438BFU lender's loss payable endorsement, or an
equivalent endorsement in a form satisfactory to Agent, showing

                                       44
<Page>

Agent as sole loss payee thereof, and shall contain a waiver of warranties, and
shall specify that the insurer must give at least 10 days prior written notice
to Agent before canceling its policy for any reason. Borrower shall deliver to
Agent certified copies of such policies of insurance and evidence of the payment
of all premiums therefor. All proceeds payable under any such policy shall be
payable to Agent to be applied on account of the Obligations.

          6.10   NO SETOFFS OR COUNTERCLAIMS. Make payments hereunder and under
the other Loan Documents by or on behalf of Borrower without setoff or
counterclaim and free and clear of, and without deduction or withholding for or
on account of, any federal, state, or local taxes.

          6.11   LOCATION OF INVENTORY AND EQUIPMENT. Keep the Inventory and
Equipment only at the locations identified on SCHEDULE 6.11; PROVIDED, HOWEVER,
that Borrower may amend SCHEDULE 6.11 so long as such amendment occurs by
written notice to Agent not less than 30 days prior to the date on which the
Inventory or Equipment is moved to such new location, so long as such new
location is within the continental United States, Alaska, Hawaii or Puerto Rico,
and so long as, at the time of such written notification, Borrower provides any
financing statements necessary to perfect and continue perfected the Lien of
Agent for the benefit of the Lender Group in such assets, and Borrower will use
its best efforts to obtain a Collateral Access Agreement if requested by Agent.

          6.12   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 have and could not reasonably be
expected to cause a Material Adverse Change.

          6.13   EMPLOYEE BENEFITS.

                 (a)   Deliver to Agent: (i) promptly, and in any event within
10 Business Days after Borrower or any of its Subsidiaries knows or has reason
to know that an ERISA Event has occurred that reasonably could be expected to
result in a Material Adverse Change, a written statement of the chief financial
officer of Borrower describing such ERISA Event and any action that is being
taking with respect thereto by Borrower, any such Subsidiary or ERISA Affiliate,
and any action taken or threatened by the IRS, Department of Labor, or PBGC.
Borrower or such Subsidiary, as applicable, shall be deemed to know all facts
known by the administrator of any Benefit Plan of which it is the plan sponsor,
(ii) promptly, and in any event within three Business Days after the filing
thereof with the IRS, a copy of each funding waiver request filed with respect
to any Benefit Plan and all communications received by Borrower, any of its
Subsidiaries or, to the knowledge of Borrower, any ERISA Affiliate with respect
to such request, and (iii) promptly, and in any event within three Business Days
after receipt by Borrower, any of its Subsidiaries or, to the knowledge of
Borrower, any ERISA Affiliate, of the PBGC's intention to terminate a Benefit
Plan or to have a trustee appointed to administer a Benefit Plan, copies of each
such notice.

                                       45
<Page>

                 (b)   Cause to be delivered to Agent, upon Agent's request,
each of the following: (i) a copy of each Plan (or, where any such plan is not
in writing, complete description thereof) (and if applicable, related trust
agreements or other funding instruments) and all amendments thereto, all written
interpretations thereof and written descriptions thereof that have been
distributed to employees or former employees of Borrower or its Subsidiaries;
(ii) the most recent determination letter issued by the IRS with respect to each
Benefit Plan; (iii) for the three most recent plan years, annual reports on Form
5500 Series required to be filed with any governmental agency for each Benefit
Plan; (iv) all actuarial reports prepared for the last three plan years for each
Benefit Plan; (v) a listing of all Multiemployer Plans, with the aggregate
amount of the most recent annual contributions required to be made by Borrower
or any ERISA Affiliate to each such plan and copies of the collective bargaining
agreements requiring such contributions; (vi) any information that has been
provided to Borrower or any ERISA Affiliate regarding withdrawal liability under
any Multiemployer Plan; and (vii) the aggregate amount of the most recent annual
payments made to former employees of Borrower or its Subsidiaries under any
Retiree Health Plan.

          6.14   LEASES. Pay when due all rents and other amounts payable under
any leases to which Borrower is a party or by which Borrower's properties and
assets are bound, unless such payments are the subject of a Permitted Protest.
To the extent that Borrower fails timely to make payment of such rents and other
amounts payable when due under its leases, Agent shall be entitled, in its
discretion, to reserve an amount equal to such unpaid amounts against the
Borrowing Base.

     7.   NEGATIVE COVENANTS.

          Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations, Borrower
will not do any of the following:

          7.1    INDEBTEDNESS. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:

                 (a)   Indebtedness evidenced by this Agreement, together with
Indebtedness to issuers of letters of credit that is the subject of L/C
Guarantees;

                 (b)   Indebtedness set forth in SCHEDULE 7.1;

                 (c)   Indebtedness secured by Permitted Liens;

                 (d)   refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b) and (c) 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 materially
impair the prospects of repayment of the Obligations by Borrower, (ii) the net
cash proceeds of such refinancings, renewals, or extensions do not result in an
increase in the aggregate principal amount of the Indebtedness so refinanced,
renewed, or extended, (iii) such refinancings, renewals, refundings, or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, and

                                       46
<Page>

(iv) to the extent that Indebtedness that is refinanced was subordinated in
right of payment to the Obligations, then the subordination terms and conditions
of the refinancing Indebtedness must be at least as favorable to the Lender
Group as those applicable to the refinanced Indebtedness;

                 (e)   leases, whether operating leases or capital leases of
existing or after acquired Equipment; and

                 (f)   Indebtedness subordinated to the Obligations on terms and
conditions satisfactory to Agent.

          7.2    LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its property or assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced under
SECTION 7.1(d) and so long as the replacement Liens only encumber those assets
or property that secured the original Indebtedness).

          7.3    RESTRICTIONS ON FUNDAMENTAL CHANGES. Without Lender's prior
written consent, enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its capital stock, or liquidate, wind up, or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
assign, lease, transfer, or otherwise dispose of, in one transaction or a series
of transactions, all or any substantial part of its property or assets.

          7.4    DISPOSAL OF ASSETS. Sell, lease, assign, transfer, or otherwise
dispose of any material portion of Borrower's properties or assets other than
sales of (a) Inventory to buyers in the ordinary course of Borrower's business
as currently conducted and (b) Equipment having a fair market value, in the
aggregate, of up to $500,000 in any Fiscal Year.

          7.5    CHANGE NAME. Change Borrower's name, FEIN, corporate structure
(within the meaning of SECTION 9402(7) of the Code), or identity, or add any new
fictitious name.

          7.6    GUARANTEE. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrower or which
are transmitted or turned over to Agent.

          7.7    NATURE OF BUSINESS. Make any change in the principal nature of
Borrower's business.

          7.8    PREPAYMENTS AND AMENDMENTS.

                 (a)   Except in connection with a refinancing permitted by
SECTION 7.1(d), prepay, redeem, retire, defease, purchase, or otherwise acquire
any Indebtedness owing to any third Person, other than the Obligations in
accordance with this Agreement, and

                 (b)   Directly or indirectly, amend, modify, alter, increase,
or change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under SECTIONS 7.1(b), (c), or (d).

                                       47
<Page>

          7.9    CHANGE OF CONTROL. Except for transfers of shares by Borrower's
existing shareholders to members of their immediate family, cause, permit, or
suffer, directly or indirectly, any Change of Control.

          7.10   CONSIGNMENTS. Consign any Inventory or sell any Inventory on
bill and hold, sale or return, sale on approval, or other conditional terms of
sale.

          7.11   DISTRIBUTIONS. Make any distribution or declare or pay any
dividends (in cash or other property, other than capital stock) on, or purchase,
acquire, redeem, or retire any of Borrower's capital stock, of any class,
whether now or hereafter outstanding; PROVIDED, HOWEVER, Borrower may buy back
certain of its capital stock so long as (i) no Event of Default or Default
exists and (ii) there has been at least $10,000,000 of borrowing Availability
under Section 2.1 (without being limited by the Maximum Amount) as of the end of
each of the three months preceding such payment or purchase, and on such date,
after taking into account the payment or purchase of such stock.

          7.12   ACCOUNTING METHODS. Modify or change its method of accounting
or enter into, modify, or terminate any agreement currently existing, or at any
time hereafter entered into with any third party accounting firm or service
bureau for the preparation or storage of Borrower's accounting records without
said accounting firm or service bureau agreeing to provide Agent information
regarding the Collateral or Borrower's financial condition. Borrower waives the
right to assert a confidential relationship, if any, it may have with any
accounting firm or service bureau in connection with any information requested
by Agent pursuant to or in accordance with this Agreement, and agrees that Agent
may contact directly any such accounting firm or service bureau in order to
obtain such information.

          7.13   ADVANCES, INVESTMENTS AND LOANS. Make any investment except:

                 (a)   investments in cash and cash equivalents and equity
investments in Subsidiaries in an amount not to exceed $1,000,000 in the
aggregate in any Fiscal Year;

                 (b)   so long as no Event of Default shall have occurred and be
continuing, or would occur as a consequence thereof, Borrower and its
Subsidiaries may (i) make loans and advances to employees for moving and travel
expenses and other similar expenses, in each case incurred in the ordinary
course of business, and (ii) make other loans and advances to directors,
officers, employees and vendors, including without limitation Pada Industrial
(Far East) Co., Ltd. so long as (A) there has been at least $10,000,000 of
borrowing Availability pursuant to SECTION 2.1 (without being limited by the
Maximum Amount) as of the end of each of the three months preceding such loan or
advance and on such date after taking into account the particular loan or
advance and (B) such loans and advances in the aggregate shall not exceed
$6,000,000 outstanding at any one time;

                 (c)   investments in existence on the date hereof and so long
as no Event of Default shall have occurred and be continuing, or would occur as
a consequence thereof, extensions, renewals, modifications, restatements or
replacements thereof so long as the aggregate dollar amount of all such
extensions, renewals, modifications, restatements, or

                                       48
<Page>

replacements does not exceed the amount of such investments in existence on the
date hereof; and

                 (d)   so long as no Event of Default shall have occurred and be
continuing, or would occur as a consequence thereof, Borrower may make loans and
advances to its Subsidiaries in the aggregate amount of $5,000,000 outstanding
at any one time.

          7.14   TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into
or permit to exist any material transaction with any Affiliate of Borrower
except for: (a) transactions that are in the ordinary course of Borrower's
business, upon fair and reasonable terms, that are fully disclosed to Agent, and
that are no less favorable to Borrower than would be obtained in arm's length
transaction with a non-Affiliate, (b) the employment agreement between Borrower
and Ezra Dabah, and (c) the advisory agreement between Borrower and SKM
Investors.

          7.15   SUSPENSION. Suspend or go out of a substantial portion of its
business.

          7.16   USE OF PROCEEDS. Use (a) the proceeds of the Advances for any
purpose other than (i) on the Closing Date, to pay transactional costs and
expenses incurred in connection with this Agreement, (ii) assuming the
Obligations under the Existing Loan Agreement, and (iii) thereafter, consistent
with the terms and conditions hereof, for its lawful and permitted corporate
purposes.

          7.17   CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES. Relocate its chief executive office to a new location
without providing 30 days prior written notification thereof to Agent and so
long as, at the time of such written notification, Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Lien of Agent (for the benefit of the Lender Group) and also
provides to Agent a Collateral Access Agreement with respect to such new
location. The Inventory and Equipment shall not at any time now or hereafter be
stored with a bailee, warehouseman, or similar party without Agent's prior
written consent.

          7.18   NO PROHIBITED TRANSACTIONS UNDER ERISA. Directly or indirectly:

                 (a)   engage, or permit any Subsidiary of Borrower to engage,
in any prohibited transaction which is reasonably likely to result in a civil
penalty or excise tax described in SECTIONS 406 of ERISA or 4975 of the IRC for
which a statutory or class exemption is not available or a private exemption has
not been previously obtained from the Department of Labor;

                 (b)   permit to exist with respect to any Benefit Plan any
accumulated funding deficiency (as defined in SECTIONS 302 of ERISA and 412 of
the IRC), whether or not waived;

                 (c)   fail, or permit any Subsidiary of Borrower to fail, to
pay timely required contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;

                                       49
<Page>

                 (d)   terminate, or permit any Subsidiary of Borrower to
terminate, any Benefit Plan where such event would result in any liability of
Borrower, any of its Subsidiaries or any ERISA Affiliate under Title IV of
ERISA;

                 (e)   fail, or permit any Subsidiary of Borrower to fail, to
make any required contribution or payment to any Multiemployer Plan;

                 (f)   fail, or permit any Subsidiary of Borrower to fail, to
pay any required installment or any other payment required under SECTION 412 of
the IRC on or before the due date for such installment or other payment;

                 (g)   amend, or permit any Subsidiary of Borrower to amend, a
Plan resulting in an increase in current liability for the plan year such that
either of Borrower, any Subsidiary of Borrower or any ERISA Affiliate is
required to provide security to such Plan under SECTION 401(a)(29) of the IRC;
or

                 (h)   withdraw, or permit any Subsidiary of Borrower to
withdraw, from any Multiemployer Plan where such withdrawal is reasonably likely
to result in any liability of any such entity under Title IV of ERISA; which,
individually or in the aggregate, results in or reasonably would be expected to
result in a claim against or liability of Borrower, any of its Subsidiaries or
any ERISA Affiliate in excess of $100,000.

          7.19   FINANCIAL COVENANT. Fail to maintain Availability at all times
of not less than $10,000,000.

          7.20   CAPITAL EXPENDITURES. Make capital expenditures (based upon
Borrower's Statement of Cash Flows for Investing Activities, exclusive of
non-capital items) in each of the following Fiscal Years in excess of the
applicable amount set forth below:

<Table>
<Caption>
          FISCAL YEAR ENDING ON OR ABOUT    MAXIMUM CAPITAL EXPENDITURES
                 <S>                                    <C>
                 January 31, 2004                       $ 35,000,000
</Table>

Agent and Borrower shall reasonably agree upon the maximum capital expenditures
for the Fiscal Years ending on or about January 31, 2005 and January 31, 2006
based upon Borrower's Business Plan for each such Fiscal Year.

     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 when due and payable or when declared
due and payable, any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts),

                                       50
<Page>

fees and charges due the Lender Group, reimbursement of Lender Group Expenses,
or other amounts constituting Obligations);

          8.2    If Borrower fails or neglects to perform, keep, or observe any
term, provision, condition, covenant, or agreement contained in this Agreement,
in any of the Loan Documents, or in any other present or future agreement
between Borrower and the Lender Group; PROVIDED, HOWEVER, that Borrower's
failure or neglect to comply with SECTIONS 6.1(b), 6.2, 6.3, 6.4, 6.5, 6.6, 6.8,
6.11 and 6.13 shall not constitute an Event of Default hereunder unless such
failure or neglect continues for five days or more;

          8.3    If there is a material impairment of the prospect of repayment
of any portion of the Obligations owing to the Lender Group or a material
impairment of the value or priority of the Lender Group's security interests in
the Collateral;

          8.4    If any material portion of Borrower's properties or assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any third Person;

          8.5    If an Insolvency Proceeding is commenced by Borrower;

          8.6    If an Insolvency Proceeding is commenced against Borrower and
any of the following events occur: (a) Borrower consents to the institution of
the Insolvency Proceeding against it; (b) the petition commencing the Insolvency
Proceeding is not timely controverted; (c) the petition commencing the
Insolvency Proceeding is not dismissed within 45 calendar days of the date of
the filing thereof; provided, however, that, during the pendency of such period,
the Lender Group shall be relieved of its obligation to extend credit hereunder;
(d) an interim trustee is appointed to take possession of all or a substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, Borrower; or (e) an order for relief shall have been
issued or entered therein;

          8.7    If Borrower is enjoined, restrained, or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs;

          8.8    If a notice of Lien, levy, or assessment is filed of record
with respect to any of Borrower's properties or assets by the United States
Government, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, or if any taxes or debts owing
at any time hereafter to any one or more of such entities becomes a Lien,
whether choate or otherwise, upon any of Borrower's properties or assets and the
same is not paid on the payment date thereof;

          8.9    If (a) an action or proceeding is brought against Borrower
which is reasonably likely to be decided adversely to Borrower, and such adverse
decision would materially impair the prospect of repayment of the Obligations or
materially impair the value or priority of the Lender Group's security interests
in the Collateral, or (b) if a judgment or other claim in excess of $500,000
becomes a lien or encumbrance upon any material portion of Borrower's properties
or assets and shall remain outstanding 30 days or longer;

                                       51
<Page>

          8.10   If there is a default in an agreement involving Indebtedness of
$500,000, or more, or any material agreement to which Borrower is a party with
one or more third Persons resulting in a right by such third Persons,
irrespective of whether exercised, to accelerate the maturity of Borrower's
obligations thereunder;

          8.11   If Borrower makes any payment on account of Indebtedness that
has been contractually subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness;

          8.12   If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or report made to the
Lender Group by Borrower or any officer, employee, agent, or director of
Borrower, or if any such warranty or representation is withdrawn; or

          8.13   If the obligation of any guarantor under its guaranty or other
third Person under any Loan Document is limited or terminated by operation of
law or by the guarantor or other third Person thereunder, or any such guarantor
or other third Person becomes the subject of an Insolvency Proceeding.

     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 Agent may, pursuant to SECTIONS 17.4 and
17.5, without notice of its election and without demand, do any one or more of
the following, all of which are authorized by Borrower:

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

                 (b)   Cease 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)   Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting the Lender Group's rights and security interests in the
Collateral and without affecting the Obligations;

                 (d)   Settle or adjust disputes and claims directly with
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 Borrower to hold all returned Inventory in trust
for the Lender Group, segregate all returned Inventory from all other property
of Borrower or in

                                       52
<Page>

Borrower's possession and conspicuously label said returned Inventory as the
property of the Lender Group;

                 (f)   Without notice to or demand upon Borrower or any
guarantor, make such payments and do such acts as Agent considers necessary or
reasonable to protect its security interests in the Collateral. Borrower agrees
to assemble the Collateral if Agent so requires, and to make the Collateral
available to Agent as Agent may designate. Borrower 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 encumbrance, charge, or Lien that in Agent's determination appears to
conflict with the Liens of Agent (for the benefit of the Lender Group) in the
Collateral and to pay all expenses incurred in connection therewith. With
respect to any of Borrower's owned or leased premises, Borrower hereby grants
Agent a license to enter into possession of such premises and to occupy the
same, without charge, for up to 120 days in order to exercise any of the Lender
Group's rights or remedies provided herein, at law, in equity, or otherwise;

                 (g)   Without notice to Borrower (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of Section 9505 of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of Borrower held
by the Lender Group (including any amounts received in the Lockbox Accounts), or
(ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by the Lender Group;

                 (h)   Hold, as cash collateral, any and all balances and
deposits of Borrower held by the Lender Group, and any amounts received in the
Lockbox 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. Agent is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks, service marks, and advertising
matter, 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 Borrower'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 Borrower'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:

                       (A)    Agent shall give Borrower and each holder of a
security interest in the Collateral who has filed with Agent a written request
for notice, 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

                                       53
<Page>

than a public sale is to be made of the Collateral, then the time on or after
which the private sale or other disposition is to be made;

                       (B)    The notice shall be personally delivered or
mailed, postage prepaid, to Borrower as provided in SECTION 12, at least five
days before the date fixed for the sale, or at least five days before the date
on or after which the private sale or other disposition is to be made; 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. Notice to Persons other than Borrower
claiming an interest in the Collateral shall be sent to such addresses as they
have furnished to Agent;

                       (C)    If the sale is to be a public sale, Agent also
shall give notice of the time and place by publishing a notice one time at least
five days before the date of the sale in a newspaper of general circulation in
the county in which the sale is to be held;

                 (l)   Agent may credit bid and purchase at any public sale; and

                 (m)   Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower. Any excess
will be returned, without interest and subject to the rights of third Persons,
by Agent to Borrower.

          9.2    REMEDIES CUMULATIVE. The Lender Group's rights and remedies
under this Agreement, the 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.

     10.  TAXES AND EXPENSES.

          If Borrower 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, to the extent that Agent
determines that such failure by Borrower could result in a Material Adverse
Change, in its discretion and without prior notice to Borrower, Agent 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)
obtain and maintain insurance policies of the type described in SECTION 6.9, and
take any action with respect to such policies as Agent deems prudent. Any such
amounts paid by Agent shall constitute Lender Group Expenses. Any such payments
made by Agent 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

                                       54
<Page>

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. Borrower 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 accounts, documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which Borrower may in any way be liable.

          11.2   THE LENDER GROUP'S LIABILITY FOR COLLATERAL. So long as the
Lender Group complies with its obligations, if any, under Section 9207 of the
Code, the Lender Group shall not in any way or manner be liable or responsible
for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto
occurring or arising in any manner or fashion from any cause; (c) any diminution
in the value thereof; or (d) any act or default of any carrier, warehouseman,
bailee, forwarding agency, or other Person. All risk of loss, damage, or
destruction of the Collateral shall be borne by Borrower.

          11.3   INDEMNIFICATION. Borrower shall pay, indemnify, defend, and
hold each Agent-Related Person, each Lender, each Participant, and each of their
respective officers, directors, employees, counsel, agents, and
attorneys-in-fact (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 in connection with or as a result of or related to the execution,
delivery, enforcement, performance, and administration of this Agreement and any
other Loan Documents or the transactions contemplated herein, and 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"). Borrower shall have no
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 or willful misconduct of such
Indemnified Person. This provision shall survive the termination of this
Agreement and the repayment of the Obligations.

     12.  NOTICES.

          Unless otherwise provided in this Agreement, all notices or demands by
any party 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, or telefacsimile to Borrower or to Agent,
as the case may be, at its address set forth below:

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          IF TO BORROWER:       THE CHILDREN'S PLACE RETAIL STORES, INC.
                                915 Secaucus Road
                                Secaucus, New Jersey  07094
                                Attn:     Chief Financial Officer
                                Fax No. 201.558.2837

                                THE CHILDREN'S PLACE RETAIL STORES, INC.
                                915 Secaucus Road
                                Secaucus, New Jersey  07094
                                Attn:     General Counsel
                                Fax No. 201.558.2840

          WITH COPIES TO:       STROOCK & STROOCK & LAVAN LLP
                                180 Maiden Lane
                                New York, New York 10038
                                Attn:     Jeffrey S. Lowenthal, Esq.
                                Fax No. 212.806.6006

          IF TO AGENT OR THE    WELLS FARGO RETAIL FINANCE LLC
          LENDER GROUP IN CASE  One Boston Place
          OF AGENT:             Suite 1800
                                Boston, Massachusetts  02108
                                Attn:     Tom Morgan, Vice President
                                Fax No. 617.523.4027

          WITH COPIES TO:       BUCHALTER, NEMER, FIELDS & YOUNGER
                                601 So. Figueroa Street
                                Suite 2400
                                Los Angeles, California  90017
                                Attn:     Robert C. Colton, Esq.
                                Fax No. 213.896.0400

          The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other. All notices or demands sent in accordance with this SECTION 12, other
than notices by Agent in connection with Sections 9504 or 9505 of the Code,
shall be deemed received on the earlier of the date of actual receipt or three
days after the deposit thereof in the mail. Borrower acknowledges and agrees
that notices sent by Agent in connection with Sections 9504 or 9505 of the Code
shall be deemed sent when deposited in the mail or personally delivered, or,
where permitted by law, transmitted by telefacsimile or other similar method set
forth above.

     13.  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

          THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE

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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 CALIFORNIA. 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 THE COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA OR, AT THE SOLE OPTION OF THE LENDER GROUP, IN ANY OTHER COURT IN
WHICH THE LENDER GROUP SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH
HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. BORROWER AND
EACH MEMBER OF THE LENDER GROUP WAIVES, 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. BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVES
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. BORROWER AND EACH MEMBER
OF THE LENDER GROUP REPRESENTS THAT IT 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.  DESTRUCTION OF BORROWER'S DOCUMENTS.

          All documents, schedules, invoices, agings, or other papers delivered
to Agent may be destroyed or otherwise disposed of by Agent four months after
they are delivered to or received by Agent, unless Borrower requests, in
writing, the return of said documents, schedules, or other papers and makes
arrangements, at Borrower's expense, for their return.

     15.  ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

          15.1   ASSIGNMENTS AND PARTICIPATIONS.

                 (a)   Any Lender may, with the written consent of Agent, assign
and delegate to one or more Eligible Transferees (each an "Assignee") all, or
any ratable part, 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, shall have been given to Borrower and Agent by such
Lender and the Assignee; (ii) such Lender and its Assignee shall have delivered
to Borrower and Agent a fully executed

                                       57
<Page>

Assignment and Acceptance ("Assignment and Acceptance") in the form of EXHIBIT
A-1; and (iii) the assignor Lender or Assignee has paid to Agent for Agent's
sole and separate account a processing fee in the amount of $5,000. Anything
contained herein to the contrary notwithstanding, the consent of Agent shall not
be required (and payment of any fees shall not be required) 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 such Lender.

                 (b)   From and after the date that Agent notifies the assignor
Lender that it has received a fully 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 and be released from its
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.

                 (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 any guarantor or the performance or observance by Borrower or any
guarantor 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 action as agent on its behalf 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 in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.

                 (d)   Immediately upon each Assignee's making its processing
fee payment under the 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 of the
Assignor and Assignee arising therefrom. The

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<Page>

Commitment allocated to each Assignee shall reduce such Commitment of the
assigning Lender pro tanto.

                 (e)   Any Lender may at any time, with the written consent of
Agent, which consent shall not be unreasonably withheld, sell to one or more
Persons (a "Participant") participating interests in the Obligations, the
Commitment, and the other rights and interests of that Lender (the "Originating
Lender") hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that
(i) 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 and Agent 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 Originating Lender shall transfer or grant any
participating interest under which the Participant has the sole and exclusive
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 a material portion of the Collateral (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
hereunder in which such Participant is participating; or (E) change the amount
or due dates of scheduled principal repayments or prepayments or premiums in
respect of the Obligations hereunder in which such Participant is participating;
and (v) all amounts payable by Borrower hereunder shall be determined as if such
Originating 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; PROVIDED, HOWEVER, that no Participant may exercise
any such right of setoff without the notice to and consent of Agent. The rights
of any Participant shall only be derivative through the Originating Lender with
whom such Participant participates and no Participant shall have any direct
rights as to the other Lenders, Agent, Borrower, the Collections, the
Collateral, or otherwise in respect of the Advances or the Letters of Credit. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves. The provisions of this SECTION
15.1(e) are solely for the benefit of the Lender Group, and Borrower shall have
no rights as a third party beneficiary of any of such provisions.

                 (f)   In connection with any such assignment or participation
or proposed assignment or participation, a Lender may disclose to a third party
all documents and information which it now or hereafter may have relating to
Borrower or Borrower's business.

                 (g)   Notwithstanding any other provision in this Agreement,
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 in favor of any
Federal Reserve Bank in accordance with

                                       59
<Page>

Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and
such Federal Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.

          15.2   SUCCESSORS. This Agreement shall bind and inure to the benefit
of the respective successors and assigns of each of the parties; PROVIDED,
HOWEVER, that Borrower may not assign this Agreement or any rights or duties
hereunder without the Lenders' prior written consent and any prohibited
assignment shall be absolutely void. No consent to assignment by the Lenders
shall release Borrower from its Obligations. A Lender may assign this Agreement
and its rights and duties hereunder pursuant to SECTION 15.1 and, except as
expressly required pursuant to SECTION 15.1, no consent or approval by Borrower
is required in connection with any such assignment.

     16.  AMENDMENTS; WAIVERS.

          16.1   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 Borrower 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 Borrower 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 the Lenders and Borrower and
acknowledged by Agent, do any of the following:

                 (a)   increase or extend the 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 to the Lenders (or any of them) hereunder or under any other Loan
Document;

                 (c)   reduce the principal of, or the rate of interest
specified herein on, any Loan, or any fees or other amounts payable hereunder or
under any other Loan Document;

                 (d)   change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Advances, which is required for the
Lenders or any of them to take any action hereunder;

                 (e)   increase the advance rate with respect to Advances
(except for the restoration of an advance rate after the prior reduction
thereof), or change SECTION 2.1(b);

                 (f)   amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders;

                 (g)   release Collateral other than as permitted by SECTION
17.11;

                 (h)   change the definition of "Required Lenders";

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<Page>

                 (i)   release Borrower from any Obligation for the payment of
money; or

                 (j)   amend any of the provisions of ARTICLE 17.

and, PROVIDED FURTHER, that no amendment, waiver or consent shall, unless in
writing and signed by Agent, affect the rights or duties of Agent under this
Agreement or any other Loan Document; and, PROVIDED FURTHER, that the limitation
contained in clause (e) above shall not be deemed to limit the ability of Agent
to make Advances or Agent Loans, as applicable, in accordance with the
provisions of SECTIONS 2.1(g), (h), or (l). 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 Borrower, shall not require consent
by or the agreement of Borrower.

          16.2   NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any
Lender to exercise any right, remedy, or option under this Agreement, any other
Loan Document, or any present or future supplement hereto or thereto, or in any
other agreement between or among Borrower and Agent and/or any Lender, 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 the Lenders
on any occasion shall affect or diminish Agent's and each Lender's rights
thereafter to require strict performance by Borrower 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
which Agent or any Lender may have.

     17.  AGENT; THE LENDER GROUP.

          17.1   APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
designates and appoints Wells Fargo Retail as its Agent under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
take such 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 it 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 ARTICLE 17.
The provisions of this ARTICLE 17 are solely for the benefit of Agent and the
Lenders, and Borrower shall not have any rights as a third party beneficiary of
any of the provisions contained herein; provided, however, that the provisions
of SECTIONS 17.10, 17.11, and 17.16(d) also shall be for the benefit of
Borrowers. 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. 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

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<Page>

actions which Agent is expressly entitled to take or assert under or pursuant to
this Agreement and the other Loan Documents, including making the determinations
contemplated by SECTION 2.1(b). 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 Advances, the Collateral, the Collections, and
related matters; (b) execute and/or file any and all financing or similar
statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim for Lenders, 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 as provided in the Loan Documents; (e) open and
maintain such bank accounts and lock boxes as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections; (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrower, the Advances, the Collateral, the Collections, 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.

          17.2   DELEGATION OF DUTIES. Except as otherwise provided in this
Section, 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 in
compliance with this Section and without gross negligence or willful misconduct.
The foregoing notwithstanding, Agent shall not make any material delegation of
duties to subagents or non-employee delegees without the prior written consent
of Required Lenders (it being understood that routine delegation of such
administrative matters as filing financing statements, or conducting appraisals
or audits, is not viewed as a material delegation that requires prior Required
Lender approval).

          17.3   LIABILITY OF AGENT-RELATED PERSONS. 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 Borrower, or any
Subsidiary or Affiliate of Borrower, 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 Borrower 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

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in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books, or records of Borrower, or any of Borrower's Subsidiaries
or Affiliates.

          17.4   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 Borrower 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 it
shall first receive such advice or concurrence of the Required Lenders or all
Lenders, as applicable, and until such instructions are received, Agent shall
act, or refrain from acting, as it deems advisable so long as it is not grossly
negligent or guilty of willful misconduct. If Agent so requests, it shall first
be indemnified to its reasonable satisfaction by Lenders against any and all
liability and expense which 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 Required Lenders or all
Lenders, as applicable, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.

          17.5   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 Agent or the
Lenders, except with respect to actual knowledge of the existence of an
Overadvance, and except with respect to Defaults and 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, or is deemed to have, 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 17.4, Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Required Lenders;
PROVIDED, HOWEVER, that:

                 (a)   At all times, Agent may propose and, with the consent of
Required Lenders (which shall not be unreasonably withheld and which shall be
deemed to have been given by a Lender unless such Lender has notified Agent to
the contrary in writing within three days of notification of such proposed
actions by Agent) exercise, any remedies on behalf of the Lender Group; and

                 (b)   At all times, once Required Lenders or all Lenders, as
the case may be, have approved the exercise of a particular remedy or pursuit of
a course of action, Agent may, but shall not be obligated to, make all
administrative decisions in connection therewith or take all other actions
reasonably incidental thereto (for example, if the Required Lenders approve

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the foreclosure of certain Collateral, Agent shall not be required to seek
consent for the administrative aspects of conducting such sale or handling of
such Collateral).

          17.6   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 Borrower
and its Subsidiaries or 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 Borrower and any other Person (other than the Lender Group)
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 Borrower, and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, 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 Borrower, and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.

          17.7   COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay
Lender Group Expenses to the extent Agent deems reasonably necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including without limiting the
generality of the foregoing, but subject to any requirements of the Loan
Documents that it obtain any applicable consents or engage in any required
consultation, court costs, reasonable attorneys fees and expenses, costs of
collection by outside collection agencies and auctioneer fees and costs of
security guards or insurance premiums paid to maintain the Collateral, whether
or not Borrower 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 Collections 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 Collections, 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 Borrower and without limiting the obligation
of Borrower 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 the Agent-Related Persons of any portion of such
Indemnified Liabilities resulting solely from such

                                       64
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Person's gross negligence, bad faith, or willful misconduct. Without limitation
of the foregoing, each Lender shall reimburse Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including attorney 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 Borrower. The
undertaking in this SECTION 17.7 shall survive the payment of all Obligations
hereunder and the resignation or replacement of Agent.

          17.8   AGENT IN INDIVIDUAL CAPACITY. Wells Fargo Retail 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
Borrower and its Subsidiaries and Affiliates and any other Person party to any
Loan Documents as though Wells Fargo Retail were not Agent hereunder without
notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to
such activities, Wells Fargo Retail and its Affiliates may receive information
regarding Borrower or their Affiliates and any other Person party to any Loan
Documents that is subject to confidentiality obligations in favor of Borrower 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 be under no obligation
to provide such information to them. With respect to the Agent Loans and Agent
Advances, Wells Fargo Retail shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
Agent, and the terms "Lender" and "Lenders" include Wells Fargo Retail in its
individual capacity.

          17.9   SUCCESSOR AGENT. Agent may resign as Agent following notice of
such resignation ("Notice") to the Lenders and Borrower, and effective upon the
appointment of and acceptance of such appointment by, a successor Agent. If
Agent resigns under this Agreement, the Required Lenders shall appoint any
Lender or Eligible Transferee as successor Agent for the Lenders. If no
successor Agent is appointed within 30 days of such retiring Agent's Notice,
Agent may appoint a successor Agent, after consulting with the Lenders and
Borrower. In any such event, 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 17 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.

          17.10  WITHHOLDING TAX.

                 (a)   If any Lender is a "foreign corporation, partnership or
trust" 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:

                                       65
<Page>

                       (i)    if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W-8 before the payment of any interest in the first
calendar year and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this Agreement;

                       (ii)   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 4224 before the payment of
any interest is due in the first taxable year of such Lender and in each
succeeding taxable year of such Lender during which interest may be paid under
this Agreement, and IRS Form W-9; and

                       (iii)  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.

Such Lender agrees to promptly 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 1001 and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of Borrower, such Lender agrees to notify Agent
and Borrower 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 and Borrower will treat such Lender's IRS Form 1001 as
no longer valid.

                 (c)   If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
Borrower to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the IRC.

                 (d)   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.

                 (e)   If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent or Borrower 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 and Borrower of a change in
circumstances which rendered the exemption from, or reduction of,

                                       66
<Page>

withholding tax ineffective, or for any other reason) such Lender shall
indemnify Agent and Borrower fully for all amounts paid, directly or indirectly,
by Agent or Borrower as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
or Borrower 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 of
Agent.

          17.11  COLLATERAL MATTERS.

                 (a)   The Lenders hereby irrevocably authorize Agent, 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; and upon
such termination and payment Agent shall deliver to Borrower, at Borrower's sole
cost and expense, all UCC termination statements and any other documents
necessary to terminate the Loan Documents and release the Liens with respect to
the Collateral; (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 7.4
of this Agreement or the other Loan Documents (and Agent may rely conclusively
on any such certificate, without further inquiry); (iii) constituting property
in which Borrower owned no interest at the time the Lien was granted or at any
time thereafter; or (iv) constituting property leased to Borrower under a lease
that has expired or been terminated in a transaction permitted under this
Agreement. Except as provided above, Agent will not release any Lien on any
Collateral without the prior written authorization of the 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 17.11; PROVIDED, HOWEVER, that (i) 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 (ii) 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 Borrower in respect of)
all interests retained by Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.

                 (b)   Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Borrower, is cared
for, protected, or insured or has been encumbered, or that the Liens of the
Agent (for the benefit of the Lender Group) 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.

                                       67
<Page>

          17.12  RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.

                 (a)   Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations
any amounts owing by such Lender to Borrower or any accounts of Borrower now or
hereafter maintained with such Lender. Each of the Lenders further agrees that
it shall not, unless specifically requested to do so 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 the purpose of which is, or could be, to give
such Lender any preference or priority against the other Lenders with respect to
the Collateral.

                 (b)   Subject to SECTION 17.8, if, at any time or times any
Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any
proceeds of Collateral or any payments with respect to the Obligations of
Borrower to such Lender arising under, or relating to, this Agreement or the
other Loan Documents, 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 Pro Rata Share of all such distributions by
Agent, such Lender shall promptly (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
same day 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 if all or part of
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.

          17.13  AGENCY FOR PERFECTION. Agent and each Lender hereby appoints
each other Lender as agent for the purpose of perfecting the Liens of the Lender
Group in assets which, in accordance with Division 9 of the UCC can be perfected
only by possession. Should any Lender obtain possession of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent's request
therefor shall deliver such Collateral to Agent or in accordance with Agent's
instructions.

          17.14  PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to the instructions set forth on SCHEDULE
C-1, or pursuant to such other 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 on revolving advances or otherwise.

                                       68
<Page>

          17.15  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 relating to the Collateral, for the
ratable benefit (subject to SECTION 4.1) of the Lender Group. Each member of the
Lender Group agrees that any action taken by Agent, Required Lenders, or all
Lenders, as applicable, in accordance with the terms of this Agreement or the
other Loan Documents relating to the Collateral and the exercise by Agent,
Required Lenders, or all Lenders, as applicable, of their respective powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.

          17.16  FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By signing 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 Agent (i) does 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;

                 (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
Borrower and will rely significantly upon Borrower's books and records, as well
as on representations of Borrower's personnel;

                 (d)   agrees to keep all Reports and other material information
obtained by it pursuant to the requirements of this Agreement in accordance with
its reasonable customary procedures for handling confidential information; it
being understood and agreed by Borrower that in any event such Lender may make
disclosures (i) reasonably required by any bona fide potential or actual
Assignee, transferee, or Participant in connection with any contemplated or
actual assignment or transfer by such Lender of an interest herein or any
participation interest in such Lender's rights hereunder, (ii) of information
that has become public by disclosures made by Persons other than such Lender,
its Affiliates, assignees, transferees, or participants, or (iii) as required or
requested by any court, governmental or administrative agency, pursuant to any
subpoena or other legal process, or by any law, statute, regulation, or court
order; PROVIDED, HOWEVER, that, unless prohibited by applicable law, statute,
regulation, or court order, such Lender shall notify Borrower of any request by
any court, governmental or administrative agency, or pursuant to any subpoena or
other legal process for disclosure of any such non-public material information
concurrent with, or where practicable, prior to the disclosure thereof; and

                 (e)   without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or

                                       69
<Page>

other credit accommodations that the indemnifying Lender has made or may make to
Borrower, or the indemnifying Lender's participation in, or the indemnifying
Lender's purchase of, a loan or loans of Borrower; 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, attorney 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.

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 Borrower to Agent, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender promptly upon receipt thereof; (y)
to the extent that Agent is entitled, under any provision of the Loan Documents,
to request additional reports or information from Borrower, 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
Borrower the additional reports or information specified by such Lender, and,
upon receipt thereof, Agent promptly shall provide a copy of same to such
Lender; and (z) any time that Agent renders to Borrower a statement regarding
the Loan Account, Agent shall send a copy of such statement to each Lender.

          17.17  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
Advances 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 Advances 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 17.7, 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 Borrower or any other Person for any failure by any other
Lender to fulfill its obligations to make Advances, 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.

     18.  GENERAL PROVISIONS.

          18.1   EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrower and the Lender Group.

          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.

                                       70
<Page>

          18.3   INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group or
Borrower, 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 fairly
accomplish 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   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.

          18.6   REVIVAL AND REINSTATEMENT OF OBLIGATIONS.

                 (a)   If the incurrence or payment of the Obligations by
Borrower or any guarantor of the Obligations or the transfer by any or all of
such parties to the Lender Group of any property of either or both of such
parties 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, and 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 Borrower or
such guarantor automatically shall be revived, reinstated, and restored and
shall exist as though such Voidable Transfer had never been made.

          18.7   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.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       71
<Page>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date set forth in the first paragraph of this Agreement.

                              THE CHILDREN'S PLACE RETAIL STORES, INC.,
                              a Delaware corporation

                              By:    /s/ SETH L. UDASIN
                                 --------------------------------------
                              Title: VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

                              WELLS FARGO RETAIL FINANCE LLC,
                              a Delaware limited liability company,
                              as Agent and as a Lender

                              By:    /s/ THOMAS F. MORGAN
                                 --------------------------------------
                              Title: VICE PRESIDENT

                                       S-1
                           Third Amended and Restated
                           Loan and Security Agreement
<Page>

                           COMMITMENTS ON CLOSING DATE

<Table>
<S>                                        <C>
Wells Fargo Retail Finance LLC             $ 75,000,000

Total                                      $ 75,000,000*
</Table>

* $100,000,000 if syndication has been completed by the Closing Date.

                                  Schedule C-1
                           COMMITMENT ON CLOSING DATE

<Page>

                                  SCHEDULE E-1

                               Eligible Inventory

                                See Schedule 6.11

                                  Schedule C-1
                           COMMITMENT ON CLOSING DATE

<Page>

                                  SCHEDULE P-1

                                 Permitted Liens

1.   Security Interest filed April 19, 1999 of Raymond Leasing Corporation in
     leased forklift machines securing the lease obligation.

2.   Security Interest filed August 27, 1997 of International Leasing
     Corporation in five traffic counting machines securing a lease obligation.

3.   Security Interest filed July 13, 1999 of Newcourt Communications Finance
     Corporation in telecommunications equipment securing a lease obligation.

4.   Security Interest filed May 7, 1999 of Forsythe/McArthur Associate Inc. in
     computer communications equipment securing a lease obligation.

5.   Security Interest filed January 22, 1996 of General Electric Capital Corp.
     in pattern making equipment securing a lease obligation.

6.   Security Interest filed June __, 2001 of TCF Leasing, Inc. in an electronic
     conveyor system securing a lease obligation.

7.   Security Interest filed June __, 2001 of Manufacturers Bank in an
     electronic conveyor system securing a lease obligation.

                                  Schedule C-1
                           COMMITMENT ON CLOSING DATE

<Page>

                                  SCHEDULE 5.8

            Subsidiaries of The Children's Place Retail Stores, Inc.

-    The Children's Place (Hong Kong) Limited, a Hong Kong corporation
        Number of Shares of Stock of Subsidiary:      10,000
        Number (and Percentage) Owned by Parent:      9,999 (99.99%)

-    TCPIP, Inc., a Delaware corporation
        Number of Shares of Stock of Subsidiary:      1,000
        Number (and Percentage) Owned by Parent:      1,000 (100%)

-    thechildrensplace.com, inc., a Delaware corporation
        Number of Shares of Stock of Subsidiary:      10,000
        Number (and Percentage) Owned by Parent:      10,000 (100%)

-    The Children's Place (Australia) Pty. Ltd., an Australian corporation
        Number of Shares of Stock of Subsidiary:      1
        Number (and Percentage) Owned by Parent:      1 (100%)

-    TCP Canada, Inc., a Nova Scotia limited liability corporation
        Number of Shares of Stock of Subsidiary:      1
        Number (and Percentage) Owned by Parent:      1 (100%)

-    TCP Resources, LLC, a Delaware limited liability company
        Parent is Sole Member owning 100% interest

-    The Children's Place (Virginia), Inc., a Virginia corporation
        Number of Shares of Stock of Subsidiary:      100
        Number (and Percentage) Owned by Parent:      100 (100%)

-    The Children's Place Canada Holdings, Inc., a Delaware corporation
        Number of Shares of Stock of Subsidiary:      1,500
        Number (and Percentage) Owned by Parent:      1,500 (100%)

-    TCP Investment Canada I Corp., a Nova Scotia unlimited liability
      corporation
        Number of Shares of Stock of Subsidiary:      1
        Number (and Percentage) Owned by Parent:      1 (100%)*

-    TCP Investment Canada II Corp., a Nova Scotia unlimited liability
      corporation
        Number of Shares of Stock of Subsidiary:      1
        Number (and Percentage) Owned by Parent:      1 (100%)**

-    The Children's Place (Canada), LP, an Ontario limited partnership
        TCP Investment Canada II Corp. owns 1% interest, and is General Partner

                                  Schedule C-1
                           COMMITMENT ON CLOSING DATE

<Page>

        TCP Investment Canada I Corp. owns 99% interest

* - Shares are owned by The Children's Place Canada Holdings, Inc., which is a
wholly-owned subsidiary of Parent

** - Shares are owned by TCP Investment Canada I Corp., which is a wholly-owned
subsidiary of The Children's Place Canada Holdings, Inc., a wholly-owned
subsidiary of Parent

                                  Schedule C-1
                           COMMITMENT ON CLOSING DATE

<Page>

                                  SCHEDULE 5.13

                               ERISA Benefit Plans

                        The Children's Place 401(k) Plan

                                  Schedule C-1
                           COMMITMENT ON CLOSING DATE

<Page>

                                  SCHEDULE 5.14

                             Environmental Condition

In connection with Schedule 5.14, the only exception involves the purchase of
certain children's pearl necklaces from The Children's Place's agent, March
Development of Taiwan, in or about October 1991. The Children's Place sold the
pearl necklaces to Leonard Howard who distributed the necklaces to Name Brand
Stores. The United States Testing Company, Inc. determined that the necklaces
contained straight chain hydrocarbon (oil) that was within each pearl. A sample
of the liquid filled necklace indicated that it is free from bacterial
contamination and did not have detectable viable bacteria. Accordingly, The
Children's Place took measures to properly dispose of all of the necklaces which
had been sold and/or distributed. The oil in the remaining necklaces has been
drained into a drum. Safety-Kleen, an environmental substance cleanup company,
has disposed of this drum.

                                  Schedule C-1
                           COMMITMENT ON CLOSING DATE

<Page>

                                  SCHEDULE 6.11

                      Locations of Inventory and Equipment

                     915 Secaucus Road, Secaucus, New Jersey
                     900 Secaucus Road, Secaucus, New Jersey
                   45 Enterprise Avenue, Secaucus, New Jersey
                3800 E. Philadelphia Street, Ontario, California
              300 Delaware Avenue, Suite 1262, Wilmington, Delaware
            1 Hung-To Road, 30th Floor, Kwun Tong, Kowloon, Hong Kong
         3519 Citic Square, 1168 Nanjing Road West, Shanghai, P.R. China
                             See Attached Store List

                                  Schedule C-1
                           COMMITMENT ON CLOSING DATE

<Page>

                                  SCHEDULE 7.1

                                  Indebtedness

                                      None

                                  Schedule C-1
                           COMMITMENT ON CLOSING DATE

<Page>

                                   EXHIBIT A-1

                        FORM OF ASSIGNMENT AND ACCEPTANCE

          This ASSIGNMENT AND ACCEPTANCE (this "ASSIGNMENT AND ACCEPTANCE")
dated as of ____________, 200__ is made between _________________ (the
"ASSIGNOR") and _________________ (the "ASSIGNEE").

                                    RECITALS

          A.     The Assignor is party to that certain Third Amended and
Restated Loan and Security Agreement, dated as of April 25, 2003 (as amended,
amended and restated, modified, supplemented or renewed from time to time, the
"LOAN AGREEMENT"), among The Children's Place Retail Stores, Inc. ("Borrower"),
the several financial institutions from time to time party thereto (including
the Assignor, collectively, the "LENDERS"), and Wells Fargo Retail Finance LLC,
a Delaware corporation, as agent for the Lenders (the "AGENT"). Any terms
defined in the Loan Agreement and not defined in this Assignment and Acceptance
are used herein as defined in the Loan Agreement;

          B.     As provided under the Loan Agreement, the Assignor has
committed to making Loans (the "COMMITTED LOANS") to the Borrower in an
aggregate amount not to exceed $ (the "COMMITMENT");

          C.     [The Assignor has made Committed Loans in the aggregate
principal amount of $__________ to the Borrower] [No Committed Loans are
outstanding under the Loan Agreement];

          D.     [The Assignor has acquired a participation in the Agent's
liability under Letters of Credit in an aggregate outstanding principal amount
of $____________ (the "L/C OBLIGATIONS")] [No Letters of Credit are outstanding
under the Loan Agreement]; and

          E.     The Assignor wishes to assign to the Assignee [part of the]
[all] rights and obligations of the Assignor under the Loan Agreement in respect
of its Commitment, [together with a corresponding portion of each of its
outstanding Committed Loans and L/C Obligations,] in an amount equal to
$_________ (the "ASSIGNED AMOUNT") on the terms and subject to the conditions
set forth herein and the Assignee wishes to accept assignment of such rights and
to assume such obligations from the Assignor on such terms and subject to such
conditions.

          NOW THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:

          1.     ASSIGNMENT AND ACCEPTANCE.

                 (a)   Subject to the terms and conditions of this Assignment
and Acceptance, (i) the Assignor hereby sells, transfers, delegates, and assigns
to the Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes
from the Assignor, without recourse

                               EXHIBIT A-1, PAGE 1
<Page>

and without representation or warranty (except as provided in this Assignment
and Acceptance) __% (the "ASSIGNEE'S PERCENTAGE SHARE") of (A) the Commitment
[and the Committed Loans and the L/C Obligations] of the Assignor and (B) all
related rights, benefits, obligations, liabilities and indemnities of the
Assignor under and in connection with the Loan Agreement and the other Loan
Documents.

                 [If appropriate, add paragraph specifying payment to Assignor
by Assignee of outstanding principal of, accrued interest on, and fees with
respect to, Committed Loans and L/C Obligations assigned.]

                 (b)   With effect on and after the Effective Date (as defined
in Section 5 hereof), the Assignee shall be a party to the Loan Agreement and
succeed to all of the rights and be obligated to perform all of the obligations
of a Lender under the Loan Agreement, including the requirements concerning
confidentiality (if any) and the payment of indemnification to the Agent, with a
Commitment in an amount equal to the Assigned Amount. The Assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Loan Agreement are required to be performed by it as a Lender.
It is the intent of the parties hereto that the Commitment of the Assignor
shall, as of the Effective Date, be reduced by an amount equal to the Assigned
Amount and the Assignor shall relinquish its rights and be released from its
obligations under the Loan Agreement to the extent such obligations have been
assumed by the Assignee; PROVIDED, HOWEVER, the Assignor shall not relinquish
the rights under the Loan Agreement to the extent such rights relate to the time
prior to the Effective Date.

                 (c)   After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignee's Commitment will be $        .

                 (d)   After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignor's Commitment will be $        .

          2.     PAYMENTS.

                 (a)   As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in immediately available funds an amount equal to $_______,
representing the Assignee's Percentage Share of the principal amount of all
Committed Loans.

                 (b)   The [Assignor] [Assignee] further agrees to pay to the
Agent a processing fee in the amount of ___________________ ($_______), as
specified in Section 15.1(a) of the Loan Agreement.

          3.     REALLOCATION OF PAYMENTS.

                 Any interest, fees and other payments accrued to the Effective
Date with respect to the Commitment [,] [and] Committed Loans [and L/C
Obligations] shall be for the account of the Assignor. Any interest, fees and
other payments accrued on and after the Effective Date with respect to the
Assigned Amount shall be for the account of the Assignee. Each of the Assignor
and the Assignee agrees that it will hold in trust for the other party any

                               EXHIBIT A-1, PAGE 2
<Page>

interest, fees and other amounts which it may receive to which the other party
is entitled pursuant to the preceding sentence and pay to the other party any
such amounts which it may receive promptly upon receipt.

          4.     INDEPENDENT CREDIT DECISION.

                 The Assignee (a) acknowledges that it has received a copy of
the Loan Agreement and the Schedules and Exhibits thereto, together with copies
of the most recent financial statements referred to in SECTION 6.3 of the Loan
Agreement, and such other documents and information as it has deemed appropriate
to make its own credit and legal analysis and decision to enter into this
Assignment and Acceptance; and (b) agrees that it will, independently and
without reliance upon the Assignor, the 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 and legal decisions in taking or not taking
action under the Loan Agreement.

          5.     EFFECTIVE DATE; NOTICES.

                 (a)   As between the Assignor and the Assignee, the effective
date for this Assignment and Acceptance (the "Effective Date") shall be the
later of: (i) ____________, 199_; and (ii) the first day on which the following
conditions precedent have been satisfied:

                       (i)    Assignment and Acceptance shall be executed and
delivered by the Assignor and the Assignee;

                       (ii)   the consent of the Agent required for an effective
assignment of the Assigned Amount by the Assignor to the Assignee under SECTION
15.1(a) of the Loan Agreement shall have been duly obtained and shall be in full
force and effect as of the Effective Date;

                       (iii)  the Assignee shall pay to the Assignor all amounts
due to the Assignor under this Assignment and Acceptance;

                       (iv)   the processing fee referred to in Section 2(b)
hereof and in SECTION 15.1 of the Loan Agreement in the amount of
_______________________ ($______), shall have been paid to the Agent; and

                       (v)    the Assignor shall have assigned and the Assignee
shall have assumed a percentage equal to the Assignee's Percentage Share of the
rights and obligations of the Assignor under the Loan Agreement.

                 (b)   Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Borrower and the Agent for
acknowledgement by the Agent, a Notice of Assignment [substantially] in the form
attached hereto as SCHEDULE 1.

                               EXHIBIT A-1, PAGE 3
<Page>

          6.     AGENT.

                 [(a)] The Assignee hereby appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under the
Loan Agreement as are delegated to the Agent by the Lenders pursuant to the
terms of the Loan Agreement.

                 [INCLUDE ONLY IF ASSIGNOR IS AGENT] [(b) The Assignee shall
assume no duties or obligations held by the Assignor in its capacity as Agent
under the Loan Agreement.]

          7.     WITHHOLDING TAX.

                 The Assignee (a) represents and warrants to the Lenders, the
Agent and the Borrower that under applicable law and treaties no tax will be
required to be withheld by the Lenders with respect to any payments to be made
to the Assignee hereunder, (b) agrees to furnish (if it is organized under the
laws of any jurisdiction other than the United States or any State thereof) to
the Agent and the Borrower prior to the time that the Agent or the Borrower is
required to make any payment of principal, interest or fees hereunder, duplicate
executed originals of either U.S. Internal Revenue service Form 4224 or U.S.
Internal Revenue Service Form 1001 (wherein the Assignee claims entitlement to
the benefits of a tax treaty that provides for a complete exemption from U.S.
federal income withholding tax on all payments hereunder) and agrees to provide
new Forms 4224 or 1001 upon the expiration of any previously delivered form or
comparable statements in accordance with all applicable U.S. laws and
regulations and amendments thereto, duly executed and completed by the Assignee,
and (c) agrees to comply with all applicable U.S. laws and regulations with
regard to such withholding tax exemption.

          8.     REPRESENTATIONS AND WARRANTIES.

                 (a)   The Assignor represents and warrants that (i) it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any lien or other adverse claim; (ii) it
is duly organized and existing and it has the full power and authority to take,
and has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Loan Agreement, no further action by, or notice to, or filing with, any
person is required of it for such execution, delivery or performance; and (iv)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.

                 (b)   The Assignor makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in

                               EXHIBIT A-1, PAGE 4
<Page>

connection with the Loan Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Agreement or any
other instrument or document furnished pursuant thereto. The Assignor makes no
representation or warranty in connection with, and assumes no responsibility
with respect to, the financial condition of the Borrower, or the performance or
observance by the Borrower, of any of its obligations under the Loan Agreement
or any other instrument or document furnished in connection therewith.

                 (c)   The Assignee represents and warrants that (i) it is duly
organized and existing and is an Eligible Transferee and it has full power and
authority to take, and has taken, all action necessary to execute and deliver
this Assignment and Acceptance and any other documents required or permitted to
be executed or delivered by it in connection with this Assignment and
Acceptance, and to fulfill its obligations hereunder; (ii) no notices to, or
consents, authorizations or approvals of, any person are required (other than
any already given or obtained) for its due execution, delivery and performance
of this Assignment and Acceptance; and apart from any agreements or undertakings
or filings required by the Loan Agreement, no further action by, or notice to,
or filing with any person is required of it for such execution, delivery or
performance; (iii) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignee, enforceable against the Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.

          9.     FURTHER ASSURANCES.

                 The Assignor and the Assignee each hereby agrees to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Borrower or the Agent, which may be required in
connection with the assignment and assumption contemplated hereby.

          10.    MISCELLANEOUS.

                 (a)   Any amendment or waiver of any provision of this
Assignment and Acceptance shall be in writing and signed by the parties hereto.
No failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any
breach of the provisions of this Assignment and Acceptance shall be without
prejudice to any rights with respect to any other or further breach thereof.

                 (b)   All payments made hereunder shall be made without any
set-off or counterclaim.

                 (c)   The Assignor and the Assignee shall each pay its own
costs and expenses incurred in connection with the negotiation, preparation,
execution and performance of this Assignment and Acceptance.

                               EXHIBIT A-1, PAGE 5
<Page>

                 (d)   This Assignment and Acceptance may be executed in any
number of counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement.

                 (e)   THIS ASSIGNMENT AND ACCEPTANCE SHALL BE DEEMED TO HAVE
BEEN MADE IN THE STATE OF CALIFORNIA AND SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF SUCH STATE, EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW
SHALL BE USED TO APPLY THE LAWS OF ANY OTHER STATE OR JURISDICTION. The Assignor
and Assignee each agrees that, in addition to any other courts that may have
jurisdiction under applicable laws or rules, any action or proceeding to enforce
or arising out of this Assignment and Acceptance may be commenced in the
Superior Court of the State of California for Los Angeles County, or in the
United States District Court for the Central District of California, and the
Assignor and Assignee each consents and submits in advance to such jurisdiction
and agrees that venue will be proper in such courts on any such matter. Each
party to this Assignment and Acceptance hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding.

                 (f)   THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY WAIVES TRIAL BY
JURY, RIGHTS OF SETOFF, AND THE RIGHT TO IMPOSE COUNTERCLAIMS IN ANY LITIGATION
IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS
ASSIGNMENT AND ACCEPTANCE, THE LOAN AGREEMENT, ANY RELATED DOCUMENTS AND
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER
ORAL OR WRITTEN) DELIVERED PURSUANT HERETO OR THERETO, OR ANY OTHER CLAIM OR
DISPUTE HOWSOEVER ARISING, BETWEEN THE ASSIGNOR AND THE ASSIGNEE. THE ASSIGNOR
AND THE ASSIGNEE EACH CONFIRMS THAT THE FOREGOING WAIVERS ARE INFORMED AND
FREELY MADE.

                               EXHIBIT A-1, PAGE 6
<Page>

          [Other provisions to be added as may be negotiated between the
Assignor and the Assignee, provided that such provisions are not inconsistent
with the Loan Agreement.]

          IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.

                                             [ASSIGNOR]

                                 By:
                                    -------------------------------------------

                                 Title:
                                       ----------------------------------------

                                 By:
                                    -------------------------------------------

                                 Title:
                                       ----------------------------------------

                                 Address:
                                             ----------------------------------
                                             ----------------------------------

                                             [ASSIGNEE]

                                 By:
                                    -------------------------------------------

                                 Title:
                                       ----------------------------------------

                                 By:
                                    -------------------------------------------

                                 Title:
                                       ----------------------------------------

                                 Address:
                                             ----------------------------------
                                             ----------------------------------
                                             ----------------------------------

                               EXHIBIT A-1, PAGE 7
<Page>

                                   SCHEDULE 1
                       NOTICE OF ASSIGNMENT AND ACCEPTANCE

                                                             ___________, 200___

Wells Fargo Retail Finance LLC
One Boston Place
Suite 1800
Boston, Massachusetts  02108
Attn:  Tom Morgan, Vice President

[Name and Address of Borrower]

Ladies and Gentlemen:

          We refer to the Third Amended and Restated Loan and Security
Agreement, dated as of April 25, 2003 (as amended, amended and restated,
modified, supplemented or renewed from time to time, the "Loan Agreement"),
among The Children's Place Retail Stores, Inc. ("Borrower"), the several
financial institutions from time to time party thereto (collectively, the
"Lenders"), and Wells Fargo Retail Finance LLC, as agent for the Lenders (the
"Agent"). Terms defined in the Loan Agreement are used herein as therein
defined.

          1.     We hereby give you notice of, and request your consent to, the
assignment by ______ (the "Assignor") to ________________ (the "ASSIGNEE") of
_____% of the right, title and interest of the Assignor in and to the Loan
Agreement (including, without limitation, the right, title and interest of the
Assignor in and to the Commitments of the Assignor[,] [and] all outstanding
loans made by the Assignor [and the Assignor's participation in the Letters of
Credit]) pursuant to the Assignment and Acceptance Agreement attached hereto
(the "ASSIGNMENT AND ACCEPTANCE"). Before giving effect to such assignment, the
Assignor's Commitment is $_________[,] [and] the aggregate amount of its
outstanding loans is $_______[, and its participation in L/C Obligations is
$___________].

          2.     The Assignee agrees that, upon receiving the consent of the
Agent to such assignment, the Assignee will be bound by the terms of the Loan
Agreement as fully and to the same extent as if the Assignee were the Lender
originally holding such interest in the Loan Agreement.

          3.     The following administrative details apply to the Assignee:

                 (A)   Notice Address:

                       Assignee name:
                                      -----------------------------------------
                       Address:
                                      -----------------------------------------
                                      -----------------------------------------

                               EXHIBIT A-1, PAGE 8
<Page>

                 (B)   Payment Instructions:

                       Account No.:
                                      -----------------------------------------
                                At:
                                      -----------------------------------------
                                      -----------------------------------------
                                      -----------------------------------------
                       Reference:
                                      -----------------------------------------
                       Attention:
                                      -----------------------------------------

          4.     You are entitled to rely upon the representations, warranties
and covenants of each of the Assignor and Assignee contained in the Assignment
and Acceptance.

          IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.

Very truly yours,

                                 [NAME OF ASSIGNOR]

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

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

                                 [NAME OF ASSIGNEE]

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

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

                               EXHIBIT A-1, PAGE 9
<Page>

ACKNOWLEDGED:

THE CHILDREN'S PLACE RETAIL
STORES, INC., a Delaware corporation,
as Borrower

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

ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:

WELLS FARGO RETAIL FINANCE LLC,
a Delaware limited liability company, as Agent

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

                              EXHIBIT A-1, PAGE 10

<Page>

                                   EXHIBIT C-1

                       COMPLIANCE CERTIFICATE SAMPLE COPY

Date _______________, 200___

WELLS FARGO RETAIL FINANCE LLC
One Boston Place
Suite 1800
Boston, Massachusetts  02108
Attn:  Tom Morgan, Vice President

     RE:  THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, DATED AS OF
          APRIL 25, 2003 (THE "AGREEMENT") BY AND AMONG WELLS FARGO RETAIL
          FINANCE LLC, AS AGENT ("AGENT") FOR CERTAIN FINANCIAL INSTITUTIONS ,
          THE FINANCIAL INSTITUTIONS AND THE CHILDREN'S PLACE RETAIL STORES,
          INC. ("BORROWER").

Dear _______________:

In accordance with Section 6.2 of the Agreement, this letter shall serve as
certification to Agent that to the best of my knowledge: (i) all financial
statements have been prepared in accordance with GAAP and fairly represent the
financial condition of Borrower, (ii) the representations and warranties of
Borrower set forth in the Agreement and other Loan Documents are true and
correct in all material respects on and as of the date of this certification,
(iii) Borrower is in compliance with each of its financial covenants set forth
in Sections 7.19 and 7.20 of the Agreement as of the date of this certification,
and (iv) there does not exist any condition or event that constitutes a Default
or Event of Default. Such certification is made as of the fiscal month ending
______________, 200__.

Sincerely,

Chief Financial Officer

                                  SCHEDULE C-1

<Page>

            AMENDMENT NUMBER ONE TO SECURITY AGREEMENT -
                        STOCK PLEDGE

         This AMENDMENT NUMBER ONE TO SECURITY AGREEMENT - STOCK PLEDGE
("Amendment") is entered into as of April 25, 2003 between The Children's Place
Retail Stores, Inc., a Delaware corporation ("Pledgor") and Wells Fargo Retail
Finance LLC, a Delaware corporation ("Wells Fargo Retail"), as Agent, on the
other hand.

                                    RECITALS

     A.   Wells Fargo Retail is the successor of Foothill Capital Corporation,
a California corporation with respect to the Security Agreement - Stock Pledge
dated as of January 31, 1999 (the "Pledge Agreement");

     B.   Pledgor is the record owner of 1,000 shares of the Common Stock of
TCPIP, Inc., a Delaware corporation (formerly known as TCPIP Holding Company,
Inc.).

     C.   Pledgor and Wells Fargo Retail in its capacity as Agent, hereby
amend and supplement the Pledge Agreement as follows:

         1. All references to Foothill in the Pledge Agreement shall mean Wells
Fargo Retail as a lender and as the Agent.

         2. All references to Company shall now mean TCPIP, Inc., a Delaware
corporation.

         3. Recitals A and C of the Pledge Agreement are amended to read as
follows:

         "A. Pledgor and Wells Fargo Retail, in its capacity as a Lender and
    Agent, are parties to that certain Third Amended and Restated Loan and
    Security Agreement, dated as of April 25, 2003 (as may hereafter be
    amended, supplemented or restated from time to time in accordance with
    the terms thereof, the "Loan Agreement")."

         "C. Pursuant to the terms of the Loan Agreement, Pledgor and Wells
    Fargo Retail, as Agent for the benefit of the Lenders, have entered into
    this Agreement as additional security for the Obligations (as defined in the
    Loan Agreement)."

                                            1

<Page>

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
date first set forth above.

                                    THE CHILDREN'S PLACE RETAIL
                                    STORES, INC., a Delaware corporation

                                    By:      /S/  SETH L. UDASIN
                                    -------------------------------------------
                                    Title:   Vice President and CFO

                                    WELLS FARGO RETAIL FINANCE LLC,
                                    a Delaware corporation, as Agent and Lender

                                    By:      /S/  THOMAS F. MORGAN
                                    -------------------------------------------
                                    Title:   Vice President

                                            2

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