Document:

EX-10.2

 

Exhibit 10.2

	 	 	 	 	 
	 

	 	 	 	September 13, 2007
	 
	 	 	 	 
	To:

	 	Tween Brands, Inc.	 	 
	 

	 	8323 Walton Parkway	 	 
	 

	 	New Albany, OH 43054	 	 
	 
	From:

	 	Bank of America, N.A.	 	 
	 

	 	c/o Banc of America Securities LLC	 	 
	 

	 	9 West 57th Street, 40th Floor	 	 
	 

	 	New York, NY 10019	 	 
	 

	 	Telephone: 212-583-8373	 	 
	 

	 	Facsimile: 212-230-8610	 	 

	 	 	 	 	 
	 

	 	Re:
	 	Enhanced Overnight Share Repurchase
	 

	 	 	 	(NY Reference No.: NY-31557)

Ladies and Gentlemen:

     SECTION 1. Initial Shares; Seller’s Initial Hedge.

     (a) Bank of America, N.A. (the “Seller”) will sell to Tween Brands, Inc., a Delaware
corporation (the “Company”), and the Company will purchase from the Seller for settlement on
September 14, 2007 (the “Purchase Date”), 5,200,000 shares (the “Initial Shares”) of common stock,
par value $0.01 per share, of the Company (the “Common Stock”) at a purchase price (the “Purchase
Price”) equal to the number of the Initial Shares multiplied by $27.55. Such sale shall be
effected in accordance with the Seller’s customary procedures.

     (b) Beginning on the first Trading Day immediately following the Purchase Date (the “Initial
Hedge Start Date”), the Seller shall establish the Seller’s initial hedge of the price and market
risk of the transactions contemplated hereby as a result of the Cap Price (the “Seller’s Initial
Hedge”) using commercially reasonable efforts to establish Seller’s Initial Hedge in no more than
10 Trading Days (it being understood that the Seller’s Initial Hedge shall not include the sale and
purchase of the Initial Shares pursuant to Section 1(a) above). Subject to Section 7(b) below, as
soon as reasonably practicable following the Initial Hedge Completion Date, the Seller shall
determine the Scheduled Final Averaging Date, the Earliest Acceleration Date, the Cap Price and the
Hedge Execution Price in the manner set forth below based on the Seller’s Initial Hedge, and shall
deliver to the Company a supplemental terms notice substantially in the form of Appendix C hereto
(the “Supplemental Terms Notice”), together with information detailing the data used in making such
determinations, within two Business Days following the Initial Hedge Completion Date.

 

 

     SECTION 2. Definitions.

     As used in this Letter Agreement, the following terms shall have the following meanings:

     “Announcement Date” means the date of first public announcement of any corporate event
involving the Company or the Common Stock that, in the determination of the Calculation Agent, is,
as of such date, or becomes at any date subsequent to such date but on or prior to the last day of
the Averaging Period, a Friendly Transaction, or the first date of public announcement by the
Company that the Company is engaged in discussions with another party concerning a potential
Friendly Transaction or is considering strategic alternatives that, if consummated, would be or
include a Friendly Transaction (as determined by the Calculation Agent in its reasonable
discretion).

     “Available Shares” has the meaning specified in Section 6(d).

     “Average Purchase Price” means the arithmetic average of the Daily Average Prices for all
Trading Days during the Averaging Period.

     “Averaging Period” means the period commencing on the Trading Day immediately following the
Initial Hedge Completion Date and ending on the Scheduled Final Averaging Date (which date may be
postponed by the Calculation Agent by a number of Trading Days not to exceed the number of
scheduled Trading Days during the Averaging Period on which a Disruption occurs); provided that the
Seller may, in its absolute discretion, accelerate the last day of the Averaging Period to any
Trading Day on or after the Earliest Acceleration Date upon written notice to the Company (it being
understood that such notice may be given on the same date that the Seller elects to be the last day
of the Averaging Period).

     “BAS” means Banc of America Securities LLC, which is registered as a broker and a dealer under
the Exchange Act.

     “Business Day” means any day, other than a Saturday or Sunday, that is neither a
legal holiday nor a day on which banking institutions are authorized or required by law or
regulation to close in The City of New York.

     “Calculation Agent” means BAS.

     “Cap Fair Market Value” means the fair market value on the Measurement Date, as determined by
the Calculation Agent, of a call option, written by the Seller, with a settlement amount equal to
the excess, if any, of (x) 2/3 multiplied by the Repurchase Cost (calculated without regard to the
proviso to the definition thereof) over (y) 2/3 multiplied by the Cap Price multiplied by the
number of Initial Shares, and a settlement date equal to the date that the Calculation Agent, in
its good faith reasonable discretion, as of the Measurement Date, expects will be the last day of
the Averaging Period.

     “Cap Price” means the price per share specified as such in the Supplemental Terms Notice,
which shall be equal to 116.5% of the Hedge Execution Price.

     “Common Stock” has the meaning specified in Section 1(a).

     “Company” has the meaning specified in Section 1(a).

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     “Daily Average Price” means (i) for any Trading Day in the Averaging Period, the Reported VWAP
for such Trading Day minus $0.00 or (ii) for any Trading Day in the Valuation Period, the dollar
volume weighted average price per share of Common Stock for that Trading Day based on transactions
executed by the Seller or its designated affiliate during that Trading Day in connection with the
settlement of this Letter Agreement.

     “Deficit Shares” has the meaning specified in Section 6(d).

     “Designee” has the meaning specified in Section 16.

     “Disruption” means (i) suspension of trading of any securities of the Company on any national
securities exchange, (ii) a material limitation in the trading of Common Stock, in the Calculation
Agent’s judgment, or (iii) the election by the Seller that a Disruption be deemed to occur pursuant
to Section 3(b).

     “Earliest Acceleration Date” means the date specified as such in the Supplemental Terms
Notice, which shall be the date 70 scheduled Trading Days following (but excluding) the Initial
Hedge Completion Date.

     “Exchange” means, at any time, the principal national securities exchange, if any, on which
the Common Stock is listed or quoted at such time.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Federal Funds Rate” means, for any day, the rate on such day for Federal Funds, as published
by Bloomberg and found by pressing the following letters “FEDSOPEN” followed by pressing the
<Index> key and pressing the following letters “HP” followed by pressing the <Go> key;
provided that if any such day is not a New York Banking Day, the Federal Funds Rate for such day
shall be the Federal Funds Rate for the immediately preceding New York Banking Day.

     “Friendly Transaction” means any Merger Event or Tender Offer that is approved, agreed to or
recommended by the Company or its board of directors, or negotiated by the Company or any
authorized representative of the Company, including without limitation (i) any transaction
involving the merger of the Company with or into any third party and (ii) any transaction in which
the Company or its board of directors has a legal obligation to make a recommendation to its
shareholders in respect of such transaction (whether pursuant to Rule 14e-2 under the Exchange Act
or otherwise) and does not recommend that its shareholders reject such transaction.

     “Hedge Execution Price” means the price per share specified as such in the Supplemental Terms
Notice, which shall be equal to the net volume weighted average price per share at which the Seller
executes the Seller’s Initial Hedge during the Initial Hedge Period, as determined by the
Calculation Agent.

     “Initial Hedge Completion Date” means the date on which the Seller completes Seller’s Initial
Hedge.

     “Initial Hedge Period” means the period beginning on (and including) the Initial Hedge Start
Date and ending on (and including) the Initial Hedge Completion Date.

     “Initial Hedge Start Date” has the meaning specified in Section 1(b).

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     “Initial Shares” has the meaning specified in Section 1(a).

     “ISDA Definitions” means the 2002 ISDA Equity Derivatives Definitions, as published by the
International Swaps and Derivatives Association, Inc.

     “Make-Whole Payment Shares” has the meaning specified in Section 5(c).

     “Maximum Deliverable Number” means, on any day, the lesser of (i) 5,100,000, as adjusted for
stock splits and similar pro-rata distributions of shares to all common shareholders without
consideration occurring on or prior to such day, and (ii) the
greater of (x) the number of shares of Common Stock authorized, unissued and not reserved for other transactions on such
day or (y) 5,100,000.

     “Measurement Date” means the tenth Business Day prior to the Announcement Date.

     “Merger Event” has the meaning specified in the ISDA Definitions. For purposes of the ISDA
Definitions, the Shares are shares of Common Stock, the Issuer is the Company, the Merger Date
shall be deemed to be the Announcement Date and the final Valuation Date shall be deemed to be the
last day of the Averaging Period.

     “New York Banking Day” means any day except for a Saturday, Sunday or a day on which the
Federal Reserve Bank of New York is closed.

     “Original Delivery Date” has the meaning specified in Section 12(s).

     “Payment Shares” means Restricted Payment Shares or Make-Whole Payment Shares.

     “Private Placement Agreement” has the meaning specified in Section 6(a)(iii).

     “Purchase Date” has the meaning specified in Section 1(a).

     “Purchase Price” has the meaning specified in Section 1(a).

     “Refund Shares” has the meaning specified in Section 5(a)(i)(A).

     “Regulation M” means Regulation M under the Exchange Act.

     “Reported VWAP” means, for any Trading Day, the Rule 10b-18 dollar volume weighted average
price per share of Common Stock for that Trading Day as reported on Bloomberg Page “TWB.N
<Equity> AQR SEC” (or any successor thereto), or, in the event such price is not so reported
on such Trading Day for any reason, as reasonably determined by the Calculation Agent.

     “Repurchase Cost” means the product of (i) the Average Purchase Price multiplied by (ii) the
number of Initial Shares; provided, that if such product is greater than the product of the Cap
Price and the number of the Initial Shares, then the Repurchase Cost shall be the sum of (x) 2/3
multiplied by the Cap Price multiplied by the number of the Initial Shares plus (y) the Repurchase
Cost calculated without regard to this proviso multiplied by 1/3.

     “Requirements” has the meaning specified in Section 3(b).

     “Restricted Payment Shares” has the meaning specified in Section 5(a)(ii)(A).

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     “Restricted Share Amount” means the quotient of (i) the absolute value of the Settlement
Amount divided by (ii) the Restricted Share Value of a Restricted Payment Share.

     “Restricted Share Value” means, with respect to any Restricted Payment Shares or Make-Whole
Payment Shares on any day, the reported closing price of the Common Stock on the Exchange on the
immediately preceding Trading Day, reduced by an amount (the “Fair Value Discount”) equal to the
difference in fair values between restricted and unrestricted shares of Common Stock, as determined
by the Calculation Agent using, with respect to unrestricted shares, such reported closing price
and, with respect to restricted shares, the Calculation Agent’s commercially reasonable estimate of
the proceeds per share that would be received by the Company in a customary private placement of
restricted shares of Common Stock on such day.

     “Rule 10b-18” means Rule 10b-18 under the Exchange Act.

     “Scheduled Final Averaging Date” means the date specified as such in the Supplemental Terms
Notice, which shall be the date 100 scheduled Trading Days following (but excluding) the Initial
Hedge Completion Date.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Seller” has the meaning specified in Section 1(a).

     “Seller’s Initial Hedge” has the meaning specified in Section 1(b).

     “Settlement Amount” means an amount equal to (i) the Purchase Price minus (ii) the Repurchase
Cost, subject to adjustment as provided in Section 7(b).

     “Settlement Balance” has the meaning specified in Section 5(c).

     “Settlement Day” means any day that is not a Saturday, a Sunday or a day on which banking
institutions or trust companies in The City of New York are authorized or obligated by law or
executive order to close. A Settlement Day “corresponds” to a Trading Day if it is the day for
settlement of regular way transactions for equity securities entered into on the Exchange on that
Trading Day.

     “Share Amount” means, for any Trading Day, the quotient of (i) the product of (A) the
Valuation Fraction multiplied by (B) the absolute value of the Settlement Amount, divided by (ii)
the Daily Average Price for that Trading Day.

     “Supplemental Terms Notice” has the meaning specified in Section 1(b).

     “Tender Offer” has the meaning specified in the ISDA Definitions. For purposes of the ISDA
Definitions, the Issuer is the Company.

     “Trading Day” means any day (i) other than a Saturday, a Sunday or a day on which the Exchange
is not open for business and (ii) during which no Disruption occurs; provided that, notwithstanding
anything to the contrary in this Letter Agreement, if a Disruption occurs on any day that would
otherwise have been a Trading Day during the Averaging Period or, if the Settlement Amount is
greater than zero, in the Valuation Period, the Calculation Agent shall, if appropriate in light of
the time or times during the regular trading day that such event occurred and was continuing,
determine that such date is a Trading Day only in part, in which case the Calculation Agent shall
determine the Daily Average Price for such Trading Day based on Rule

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10b-18 eligible transactions
in the shares of Common Stock before such Disruption occurred and/or after such Disruption ended,
and calculate the Average Purchase Price based on an appropriately weighted average instead of the
arithmetic average described in the definition thereof. Such determination will be based on, among
other factors, the duration of any such Disruption and the trading volume, historical trading
patterns and price of the Common Stock.

     “Valuation Fraction” means a fraction, the numerator of which is one and the denominator of
which is the number of Trading Days in the Valuation Period.

     “Valuation Period” means (i), if the Settlement Amount is greater than zero, the period
commencing on the first Trading Day immediately following the later to occur of (A) the final day
of the Averaging Period and (B) the day on which the Seller receives the Company’s notice pursuant
to Section 5(a), and ending after such number of Trading Days determined by the Seller in its
reasonable determination and notified to the Company by the Seller prior to the
commencement of the Valuation Period, and (ii), if the Settlement Amount is less than zero and
the Company delivers Restricted Payment Shares and Make-Whole Payment Shares, the period commencing
on the first Trading Day immediately following the final day of the Averaging Period and ending on
the date on which either the Settlement Balance is reduced to zero or the aggregate number of
Restricted Payment Shares and Make-Whole Payment Shares equals the Maximum Deliverable Number.
Without limiting the generality of Section 3(b), in the case of settlement pursuant to Section
5(a)(i)(A), the number of Trading Days in the Valuation Period shall be a number of Trading Days
that the Seller reasonably expects, based on information provided to the Seller by the Company and
readily available market information, will result in Share Amounts for each Trading Day during the
Valuation Period that will be less than or equal to the maximum number of shares of Common Stock
that the Company could have purchased on such Trading Day in compliance with the conditions set
forth in Rule 10b-18, and may be increased by the Calculation Agent by a number of Trading Days not
to exceed the number of scheduled Trading Days during the Valuation Period on which a Disruption
occurs. For the avoidance of doubt, if the Company elects either to receive a cash payment
pursuant to Section 5(a)(i)(B) or make a cash payment pursuant to Section 5(a)(ii)(B), there will
be no Valuation Period.

     SECTION 3. Seller Purchases.

     (a) The Initial Shares may be sold short to the Company. It is understood that during the
Averaging Period the Seller may purchase shares of Common Stock in connection with this Letter
Agreement, which shares may be used to cover all or a portion of such short sale and, if the
Settlement Amount is greater than zero, during the Valuation Period the Seller will purchase shares
of Common Stock to fulfill its obligations to deliver Refund Shares to the Company pursuant to
Section 5. Such purchases will be conducted independently of the Company. The timing of such
purchases by the Seller, the number of shares purchased by the Seller on any day, the price paid
per share of Common Stock pursuant to such purchases and the manner in which such purchases are
made, including without limitation whether such purchases are made on any securities exchange or
privately, shall be within the absolute discretion of the Seller. It is the intent of the parties
that this transaction comply with the requirements of Rule 10b5-1(c)(1)(i)(B) of the Exchange Act,
and the parties agree that this Letter Agreement shall be interpreted to comply with the
requirements of Rule 10b5-1(c), and the Company shall take no action that results in this
transaction not so complying with such requirements. Without limiting the generality of the
preceding sentence, the Company acknowledges and agrees that (A) the Company does not have, and
shall not attempt to exercise, any influence over how, when or whether the Seller effects any
purchases of Common Stock in connection with this Letter Agreement, (B) during the period beginning
on (but excluding) the date of this Letter Agreement and ending on the last day of the

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Averaging
Period or of the Valuation Period, if any, neither the Company nor its officers or employees shall,
directly or indirectly, communicate any information regarding the Company or the Common Stock to
any employee of the Seller or its affiliates responsible for trading the Common Stock in connection
with the transactions contemplated hereby, (C) the Company is entering into this Letter Agreement
in good faith and not as part of a plan or scheme to evade compliance with federal securities laws
including, without limitation, Rule 10b-5 promulgated under the Exchange Act and (D) the Company
will not alter or deviate from this Letter Agreement or enter into or alter a corresponding hedging
transaction with respect to the Common Stock. The Company also acknowledges and agrees that any
amendment, modification, waiver or termination of this Letter Agreement must be effected in
accordance with the requirements for the amendment or termination of a “plan” as defined in Rule
10b5-1(c) under the Exchange Act. Without limiting the generality of the foregoing, any such
amendment, modification, waiver or termination shall be made in good faith and not as part of a
plan or scheme to evade the prohibitions of Rule 10b-5 under the Exchange Act, and no such
amendment, modification, waiver or termination shall be made at any time at which the Company or
any officer or director of the Company is aware of any material nonpublic information regarding the
Company or the Common Stock.

     (b) In the event that the Seller, in its reasonable discretion, determines that it is
appropriate with regard to any legal, regulatory or self-regulatory requirements or related
policies and procedures (whether or not such requirements, policies or procedures are imposed by
law, and including without limitation Rule 10b-18, Rule 10b-5, Regulation 13D-G and Regulation 14E
under the Exchange Act, “Requirements”), for the Seller to refrain from purchasing Common Stock or
to purchase fewer than the number of shares of Common Stock that the Seller would otherwise
purchase on any day during the Averaging Period or, if the Settlement Amount is greater than zero,
the Valuation Period, then the Seller may, in its discretion, elect that a Disruption be deemed to
occur on such day, as appropriate with regard to any Requirements. The Seller shall notify the
Company upon the exercise of the Seller’s rights pursuant to this Section 3(b) and shall
subsequently notify the Company on the day the Seller believes that the circumstances giving rise
to such exercise have changed.

     (c) The Company agrees that neither the Company nor any of its affiliates or agents shall take
any action that would cause Regulation M to be applicable to any purchases of Common Stock, or any
security for which the Common Stock is a reference security (as defined in Regulation M), by the
Company or any of its affiliated purchasers (as defined in Regulation M) during the Averaging
Period or, if the Settlement Amount is greater than zero, the Valuation Period, unless the Company
has provided written notice to Seller of a planned “distribution” (as defined in Regulation M) of
shares of Common Stock or any security for which the Common Stock is a reference security not later
than the Trading Day immediately preceding the first day of the relevant “restricted period” (as
defined in Regulation M); the Company acknowledges that any such notice is likely to cause a
suspension of the Initial Averaging Period or Averaging Period, as the case may be, pursuant to
Section 3(b); accordingly, the Company acknowledges that its delivery of such notice must be made
in accordance with Section 3(a). The parties acknowledge that under Rule 102 of Regulation M, as in
effect on the date hereof, the Company may make distributions (as defined in Regulation M) of
shares of Common Stock pursuant to a plan (as defined in Regulation M) without breaching this
covenant if such distribution complies with the requirements set forth in paragraph (c) of Rule 102
of Regulation M.

     (d) The Company shall, at least one day prior to the first day of the Averaging Period, notify
the Seller of the total number of shares of Common Stock purchased in Rule 10b-18 purchases of
blocks pursuant to the once-a-week block exception contained in Rule 10b-18(b)(4) by or for the
Company or any of its affiliated purchasers during each of the four calendar weeks preceding the
first day of the Averaging Period and during the calendar week in which the first

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day of the
Averaging Period occurs (“Rule 10b-18 purchase”, “blocks” and “affiliated purchaser” each being
used as defined in Rule 10b-18), which notice shall be substantially in the form set forth as
Appendix B hereto.

     (e) From the date hereof through the last day of the Averaging Period or, if the Settlement
Amount is greater than zero, through the last day of the Valuation Period, the Company shall (i)
notify the Seller prior to the opening of trading in the Common Stock on any day on which the
Company makes, or expects to be made, any public announcement (as defined in Rule 165(f) under the
Securities Act) of any merger, acquisition, or similar transaction involving a recapitalization
relating to the Company (other than any such transaction in which the consideration consists solely
of cash and there is no valuation period), (ii) promptly notify the Seller following any such
announcement that such announcement has been made, and (iii) promptly deliver to the Seller
following the making of any such announcement a certificate indicating (A) the Company’s average
daily Rule 10b-18 purchases (as defined in Rule 10b-18) during the three full calendar months
preceding the date of the announcement of such transaction and (B) the Company’s block purchases
(as defined in Rule 10b-18) effected pursuant to paragraph (b)(4) of Rule 10b-18 during the three
full calendar months preceding the date of the announcement of such transaction. In addition, the
Company shall promptly notify the Seller of the earlier to occur of the completion of such
transaction and the completion of the vote by target shareholders. The Company acknowledges that
any such public announcement may cause a
Disruption to be deemed to have occurred pursuant to Section 3(b). Accordingly, the Company
acknowledges that its actions in relation to any such announcement or transaction must comply with
the standards set forth in Section 3(a).

     SECTION 4. Company Purchases.

     Without the prior written consent of the Seller, the Company shall not, and shall cause its
affiliates and affiliated purchasers (each as defined in Rule 10b-18) not to, directly or
indirectly (including, without limitation, by means of a cash-settled or other derivative
instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase
of, or commence any tender offer relating to, any shares of Common Stock (or an equivalent
interest, including a unit of beneficial interest in a trust or limited partnership or a depository
share) or any security convertible into or exchangeable for shares of Common Stock during the
period beginning on, and including, the Purchase Date and ending on, and including, the date all
payments or deliveries of shares pursuant to Section 5 below have been made. During such time, any
purchases of Common Stock (or any security convertible into or exchangeable for shares of Common
Stock) by the Company shall be made through BAS, which is an affiliate of the Seller, pursuant to a
letter substantially in the form of Appendix A hereto and subject to such conditions as the Seller
shall impose, and shall be in compliance with Rule 10b-18 or otherwise in a manner that the Company
and the Seller believe is in compliance with applicable requirements (including, without
limitation, Rule 10b-5, Regulation 13D-G and Regulation 14E under the Exchange Act). For the
avoidance of doubt, this Section 4 shall not restrict an officer or director of the Company from
exercising any option issued pursuant to any employee benefit or incentive plan of the Company.

     SECTION 5. Purchase Price Adjustment and Settlement.

     (a) After the expiration of the Averaging Period,

     (i) if the Settlement Amount is greater than zero, as an adjustment to the Purchase
Price, the Company shall elect either for

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     (A) the Seller to transfer to the Company, for no additional consideration,
a number of shares of Common Stock equal to the sum of the Share Amounts for
each of the Trading Days in the Valuation Period (the “Refund Shares”) in the
manner provided in Section 5(b), or

     (B) the Seller to make a cash payment to the Company in immediately
available funds in an amount equal to the Settlement Amount on the Settlement
Day corresponding to the last Trading Day of the Averaging Period, and

     (ii) if the Settlement Amount is less than zero, as an adjustment to the Purchase
Price, the Company shall elect to

     (A)
transfer to the Seller, for no additional consideration, a number of shares of Common Stock, which will not be registered for resale, equal to the
Restricted Share Amount (the “Restricted Payment Shares”) on the Settlement Day
corresponding to the last Trading Day of the Averaging Period in the manner
provided in Section 5(b), and any Make-Whole Payment Shares as provided in
Section 5(c), or

     (B) make a cash payment to the Seller in immediately available funds in an
amount equal to the absolute value of the Settlement Amount on the Settlement
Day corresponding to the last Trading Day of the Averaging Period.

The Company shall give written notice to the Seller not later than the later of (i) 4:00
PM New York time on the last Trading Day of the Averaging Period or (ii) the first Trading
Day after receiving notice of acceleration of the Averaging Period from the Seller, of the
Company’s election, if the Settlement Amount is greater than zero, for the Seller to
deliver Refund Shares or make a cash payment or, if the Settlement Amount is less than
zero, for the Company to deliver Restricted Payment Shares and, if applicable, Make-Whole
Payment Shares, or to make a cash payment. Once made, such election will be irrevocable.
If the Company fails to make such an election by the election deadline, the Company shall
have been deemed to have elected to receive or deliver, as the case may be, a cash
payment.

     (b) Delivery of Refund Shares or Restricted Payment Shares shall be made as follows:

     (i) if Refund Shares are to be transferred to the Company, the Seller shall deliver
the shares to the Company on the Settlement Day corresponding to the last Trading Day of
the Valuation Period, and

     (ii) if Restricted Payment Shares are to be transferred to the Seller, on the
Settlement Day corresponding to the last Trading Day in the Averaging Period, the Company
shall deliver to the Seller a number of Restricted Payment Shares equal to the Restricted
Share Amount, and the Company shall deliver any additional Make-Whole Payment Shares as
provided in Section 5(c).

     (c) If Restricted Payment Shares are delivered in accordance with Section 5(b)(ii), on the
last Trading Day of the Averaging Period a balance (the “Settlement Balance”) shall be established
with an initial balance equal to the absolute value of the Settlement Amount. Following the
delivery of Restricted Payment Shares or any Make-Whole Payment Shares, Seller shall sell all such
Restricted Payment Shares or Make-Whole Payment Shares in a commercially

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reasonable manner. At the
end of each Trading Day upon which sales have been made, the Settlement Balance shall be reduced by
an amount, as determined by the Calculation Agent, (each a “Daily Amount”) equal to (i) (x) the
reported closing price of the Common Stock for the Trading Day on which such Payment Shares have
been sold minus (y) the Fair Value Discount multiplied by (ii) the number of Restricted Payment
Shares or Make-Whole Payment Shares sold on that Trading Day. If, on any Trading Day, all
Restricted Payment Shares and Make-Whole Payment Shares have been sold and the Settlement Balance
has not been reduced to zero, the Company shall elect to (i) deliver to Seller or as directed by
Seller on the Settlement Day corresponding to such Trading Day an additional number of Shares (the
“Make-Whole Payment Shares”) equal to (x) the Settlement Balance as of such Trading Day divided by
(y) the Restricted Share Value of the Make-Whole Payment Shares or (ii) promptly deliver to Seller
cash in an amount equal to the then remaining Settlement Balance. This provision shall be applied
successively until either the Settlement Balance is reduced to zero or the aggregate number of
Restricted Payment Shares and Make-Whole Payment Shares equals the Maximum Deliverable Number. If
on any Trading Day, the Settlement Balance has been reduced to zero and Restricted Payment Shares
or Make-Whole Payment Shares remain unsold or the aggregate Daily Amounts exceed the Settlement
Balance, the Seller shall promptly return to the Company such unsold Restricted Payment Shares or
Make-Whole Payment Shares and/or refund to the Company the amount of such excess.

     SECTION 6. Payment Shares.

     (a) If the Company elects to deliver Restricted Payment Shares pursuant to Section 5(a)(ii)(A)
and Make-Whole Payment Shares pursuant to Section 5(c):

     (i) all Restricted Payment Shares and Make-Whole Payment Shares shall be delivered to
the Seller (or any affiliate of the Seller designated by the Seller) pursuant to the
exemption from the registration requirements of the Securities Act provided by Section
4(2) thereof;

     (ii) BAS, the Seller and any potential purchaser of any such shares from the Seller
(or any affiliate of the Seller designated by the Seller) identified by BAS or the Seller
shall have been afforded a commercially reasonable opportunity to conduct a due diligence
investigation with respect to the Company customary in scope for private placements of
equity securities (including, without limitation, the right to have made available to them
for inspection all financial and other records, pertinent corporate documents and other
information reasonably requested by them); and

     (iii) an agreement (a “Private Placement Agreement”) shall have been entered into
between the Company and the Seller (or any affiliate of the Seller designated by the
Seller) in connection with the private placement of such shares by the Company to the
Seller (or any such affiliate) and the private resale of such shares by the Seller (or any
such affiliate), substantially similar to private placement purchase agreements customary
for private placements of equity securities, in form and substance commercially reasonably
satisfactory to the Seller, which Private Placement Agreement shall include, without
limitation, provisions substantially similar to those contained in such private placement
purchase agreements relating to the indemnification of, and contribution in connection
with the liability of, the Seller and its affiliates, and shall provide for the payment by
the Company of all fees and expenses in connection with such resale, including all fees
and expenses of a single outside counsel for the Seller, and shall contain
representations, warranties and agreements of the Company reasonably necessary

10

 

or
advisable to establish and maintain the availability of an exemption from the registration
requirements of the Securities Act for such resales.

     (b) If the Company elects to deliver Restricted Payment Shares pursuant to Section 5(a)(ii)(A)
above, the Company shall not take or cause to be taken any action that would make unavailable
either (i) the exemption set forth in Section 4(2) of the Securities Act for the sale of any
Restricted Payment Shares or Make-Whole Payment Shares by the Company to the Seller or (ii) an
exemption from the registration requirements of the Securities Act reasonably acceptable to the
Seller for resales of Restricted Payment Shares and Make-Whole Payment Shares by the Seller.

     (c) The Company expressly agrees and acknowledges that the public disclosure of all material
information relating to the Company is within the Company’s control.

     (d) Notwithstanding the provisions of Section 5(a) above or any other provision of this Letter
Agreement, if the Company has elected to deliver any Payment Shares hereunder, the Company shall
not be required to deliver more than the Maximum Deliverable Number of shares of Common Stock as
Payment Shares hereunder. The Company represents and warrants to the Seller (which representation
and warranty shall be deemed to be repeated on each day during the Averaging Period and, if the
Company has elected to deliver any Payment Shares hereunder, during the Valuation Period) that the
number of authorized but unissued shares of Common Stock of the Company that are not reserved for
future issuance in connection with transactions in such shares (other than the transactions under
this Agreement) (such shares of Common Stock, the “Available Shares”) equals or exceeds on any date
5,100,000, as adjusted for stock splits and similar pro-rata distributions of shares to all common
shareholders without consideration occurring on or prior to such date. In the event the Company
shall not have delivered the full number of shares of Common Stock otherwise deliverable as a
result of this Section 6(d) (the resulting deficit, the “Deficit Shares”), the Company shall be
continually obligated to deliver,
from time to time until the full number of Deficit Shares have been delivered pursuant to this
paragraph, shares of Common Stock when, and to the extent, that (i) Common Stock is repurchased,
acquired or otherwise received by the Company or any of its subsidiaries after the date hereof
(whether or not in exchange for cash, fair value or any other consideration), (ii) authorized and
unissued shares of Common Stock reserved for issuance in respect of other transactions prior to
such date which prior to the relevant date become no longer so reserved or (iii) the Company
additionally authorizes any unissued shares of Common Stock that are not reserved for other
transactions. The Company shall immediately notify the Seller of the occurrence of any of the
foregoing events (including the number of shares of Common Stock subject to clause (i), (ii) or
(iii) and the corresponding number of shares of Common Stock to be delivered) and promptly deliver
such shares thereafter. For the avoidance of doubt, so long as the Company has validly elected,
pursuant to Section 5(a), to deliver Restricted Payment Shares and, if applicable, Make-Whole
Payment Shares, then the company shall not be obligated to deliver cash to the Seller in respect of
the settlement of the transaction contemplated by this Letter Agreement, except to the extent that
Common Stock has been exchanged for or converted into cash (in whole or in part) in connection with
any merger or similar transaction involving the Company in which the consideration paid to holders
of shares of Common Stock includes cash.

     (e) For the avoidance of doubt, in no event shall the Company be obligated to elect cash
settlement pursuant to Section 5(a).

11

 

     SECTION 7. Adjustment of Terms.

     (a) In the event (i) of any corporate event involving the Company or the Common Stock
(including, without limitation, a stock split, stock dividend, bankruptcy, insolvency,
reorganization, Merger Event, Tender Offer, rights offering, recapitalization, spin-off or issuance
of any securities convertible or exchangeable into shares of Common Stock), or the announcement of
any such corporate event, (ii) the Seller determines, in its reasonable discretion, that it is
unable or it is impracticable to establish, re-establish, substitute or maintain a hedge of its
position in respect of the transactions contemplated by this Letter Agreement or (iii) the Seller
determines, in its reasonable discretion, that it is unable to borrow Common Stock at a rebate rate
greater than or equal to the Federal Funds Rate minus 50 basis points per annum, then, in each
case, the terms of the transaction (including, without limitation, the scheduled last day of the
Averaging Period, any Daily Average Price, the Cap Price and the Settlement Amount) described
herein shall be subject to adjustment by the Calculation Agent as in the exercise of its good faith
judgment it deems appropriate under the circumstances (including, without limitation, adjustments
to account for changes in the price or volatility of the Common Stock following the announcement of
any such corporate event). For the avoidance of doubt, no such adjustment shall result in an
obligation of the Company to make a cash payment to Seller, it being understood that such
adjustment may be reflected in the cash amount payable at the Company’s election pursuant to
Section 5(a)(ii)(B).

     (b) In the event that the Calculation Agent determines that an Announcement Date has occurred,
then, in addition to any adjustments effected pursuant to Section 7(a), (i) the definition of
Repurchase Cost shall be amended by deleting the proviso thereto, effective as of the Announcement
Date, and (ii) if the Announcement Date occurs during the Averaging Period, the Settlement Amount
shall be increased by an amount equal to the forward value on the last day of the Averaging Period
of the Cap Fair Market Value, as determined by the Calculation Agent. In addition, in the event
that the Calculation Agent determines prior to the date the Supplemental Terms Notice is executed
that the Announcement Date for a Friendly Transaction has occurred, then the parties shall not be
obligated to execute the Supplemental Terms Notice.

     (c) Notwithstanding the authority provided to the Calculation Agent in subsections (a) or (b)
of this Section 7, in the event of a corporate event (such as certain reorganizations, mergers, or
other similar events) in which all holders of Common Stock may receive consideration other
than the common equity securities of the continuing or surviving entity, the adjustments
referred to in such subsection shall permit the Company to satisfy its settlement obligations
hereunder by delivering the consideration received by holders of Common Stock upon such corporate
event, in such proportions as in the exercise of its good faith judgment the Calculation Agent
deems appropriate under the circumstances.

     SECTION 8. Governing Law; Waiver of Jury Trial.

     (a) THIS LETTER AGREEMENT SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. The parties
hereto irrevocably submit to the non-exclusive jurisdiction of the Federal and state courts located
in the Borough of Manhattan, in the City of New York in any suit or proceeding arising out of or
relating to this Letter Agreement or the transactions contemplated hereby.

     (b) EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

12

 

     SECTION 9. Assignment and Transfer.

     The rights and duties under this Letter Agreement may not be assigned or transferred by the
Company or the Seller without the prior written consent of the other party; provided that the
Seller may assign any of its rights or duties hereunder without the prior written consent of the
Company to any of the Seller’s affiliates if either (i) such affiliate has a credit rating equal to
or better than the credit rating of Bank of America Corporation or (ii) the obligations of such
affiliate to the Company are unconditionally guaranteed by a party that has a credit rating equal
to or better than the credit rating of Bank of America Corporation.

     SECTION 10. No Condition of Confidentiality.

     The Seller and the Company hereby acknowledge and agree that the Seller has authorized the
Company to disclose this Letter Agreement and the transactions contemplated hereby to any and all
persons, and there are no express or implied agreements, arrangements or understandings to the
contrary, and the Seller hereby waives any and all claims to any proprietary rights with respect to
this Letter Agreement and the transactions contemplated hereby, and authorizes the Company to use
any information that the Company receives or has received with respect to this Letter Agreement and
the transactions contemplated hereby in any manner.

     SECTION 11. Calculations.

     The Calculation Agent shall make all calculations in respect of this Letter Agreement in a
commercially reasonable manner.

     SECTION 12. Representations, Warranties and Agreements of the Company.

     The Company represents and warrants to, and agrees with, the Seller as follows:

     (a) The Company acknowledges and agrees that it is not relying, and has not relied, upon the
Seller or any affiliate of the Seller with respect to the legal, accounting, tax or other
implications of this Letter Agreement and that it has conducted its own analyses of the legal,
accounting, tax and other implications hereof. The Company further acknowledges and agrees that
neither the Seller nor any affiliate of the Seller has acted as its advisor in any capacity in
connection with this Letter Agreement or the transactions contemplated hereby. The Company is
entering into this Letter Agreement with a full understanding of all of the terms and risks
hereof (economic and otherwise), has adequate expertise in financial matters to evaluate those
terms and risks and is capable of assuming (financially and otherwise) those risks. Without
limiting the generality of the foregoing, the Company acknowledges that the Seller is not making
any representations or warranties with respect to the accounting treatment of the transactions
contemplated by this Letter Agreement.

     (b) The Company has all corporate power and authority to enter into this Letter Agreement and
to consummate the transactions contemplated hereby. This Letter Agreement has been duly authorized
and validly executed and delivered by the Company and constitutes a valid and legally binding
obligation of the Company, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general
equitable principles.

     (c) If Payment Shares are delivered pursuant to Section 5(a)(ii)(A) or Section 5(c), such
Payment Shares, when delivered, shall have been duly authorized and shall be duly and

13

 

validly
issued, fully paid and nonassessable and free of preemptive or similar rights, and such delivery
shall pass title thereto free and clear of any liens or encumbrances.

     (d) The Company is not entering into this Letter Agreement to facilitate a distribution of the
Common Stock (or any security convertible into or exchangeable for Common Stock) or in connection
with a future issuance of securities, and the transactions contemplated by this Letter Agreement
will not violate Rule 13e-1 or 13e-4 under the Exchange Act.

     (e) The Company is not entering into this Letter Agreement to create actual or apparent
trading activity in the Common Stock (or any security convertible into or exchangeable for Common
Stock) or to raise or depress or otherwise manipulate the price of the Common Stock (or any
security convertible into or exchangeable for Common Stock).

     (f) The execution and delivery by the Company of, and the compliance by the Company with all
of the provisions of, this Letter Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan agreement or any other
material agreement or instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, nor will such action result in any violation of
the provisions of the Certificate of Incorporation or By-laws or other constitutive documents of
the Company or any statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries or any of their respective
properties.

     (g) On the Purchase Date, (i) the assets of the Company at their fair valuation exceed the
liabilities of the Company, including contingent liabilities, (ii) the capital of the Company is
adequate to conduct the business of the Company and (iii) the Company has the ability to pay its
debts and obligations as such debts mature and does not intend to, or does not believe that it
will, incur debt beyond its ability to pay as such debts mature.

     (h) Except as contemplated by clause (i) below, no consent, approval, authorization, order,
registration, qualification or filing of or with any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their respective properties is
required for the execution and delivery by the Company of, and the compliance by the Company with
all the terms of, this Letter Agreement or the consummation by the Company of the transactions
contemplated hereby.

     (i) The Company has made, and shall use its commercially reasonable efforts during the
Averaging Period and the Valuation Period (if any) to make, all filings, if any, required to be
made by it with the Securities and Exchange Commission, any securities exchange or any other
regulatory body with respect to the transactions contemplated hereby.

     (j) As of the date hereof and as of the date, if any, that the Company elects to transfer any
Payment Shares to the Seller or for the Seller to transfer any Refund Shares to the Company, (i)
none of the Company and its officers and directors is, or will be, as the case may be, aware of any
material nonpublic information regarding the Company or the Common Stock and (ii) all reports and
other documents filed by the Company with the Securities and Exchange Commission pursuant to the
Exchange Act when considered as a whole (with the more recent such reports and documents deemed to
amend inconsistent statements contained in any earlier such reports and documents), do not, or will
not, as the case may be, contain any untrue statement of a material fact

14

 

or any omission of a
material fact required to be stated therein or necessary to make the statements therein, in the
light of the circumstances in which they were made, not misleading.

     (k) The Company has publicly disclosed on September 13, 2007 its intention to institute a
program for the acquisition of shares of Common Stock.

     (l) The Company represents and warrants to the Seller that the Company is not, and after
giving effect to the transactions contemplated by the Agreement, will not be, an “investment
company” as such term is defined in the Investment Company Act of 1940, as amended.

     (m) For the avoidance of doubt, the parties agree that the commissions incorporated in the
definitions of Restricted Share Amount and Restricted Share Value and in Section 5(c) above are
commercially reasonable fees for BAS’s activities in connection with Settlement under Section 5.

     (n) The parties hereto agree and acknowledge that the Seller is a “financial institution,”
“swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C)
and 101(22A) of Title 11 of the United States Code (the “Bankruptcy Code”). The parties hereto
further agree and acknowledge that (A) this Letter Agreement is (i) a “securities contract,” as
such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment
and delivery hereunder or in connection herewith is a “settlement payment” within the meaning of
Sections 362 and 546 of the Bankruptcy Code and (ii) a “swap agreement,” as such term is defined in
Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder
or in connection herewith is a “transfer” and a “payment or other transfer of property” within the
meaning of Sections 362 and 546 of the Bankruptcy Code, and (B) the Seller is entitled to the
protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17), 362(o), 546(e),
546(g), 555, 560 and 561 of the Bankruptcy Code.

     (o) The Company shall not declare or pay any dividend for which the ex-dividend date occurs
from and including the date of this Letter Agreement through and including the last day of the
Averaging Period.

     (p) The Company accepts and agrees to be bound by the contractual terms and conditions as set
forth in the Supplemental Terms Notice. Upon receipt of the Supplemental Terms Notice, the Company
shall promptly execute and return such Supplemental Terms Notice to the Seller; provided that the
Company’s failure to so execute and return the Supplemental Terms Notice shall not affect the
binding nature of the Supplemental Terms Notice, and the terms set forth therein shall be binding
on the Company to the same extent, and with the same force and effect, as if the Company had
executed a written version of the Supplemental Terms Notice.

     (q) The Company and the Seller agree and acknowledge that (i) the transactions contemplated by
this Letter Agreement will be entered into in reliance on the fact that this Letter Agreement and
the Supplemental Terms Notice form a single agreement between the Company and the Seller, and the
Seller would not otherwise enter into such transactions, (ii) this Letter Agreement, as
supplemented by the Supplemental Terms Notice, is a “qualified financial contract”, as such term is
defined in Section 5-701(b)(2) of the General Obligations Law of New York (the “General Obligations
Law”); (iii) the Supplemental Terms Notice, regardless of whether the Supplemental Terms Notice is
transmitted electronically or otherwise, constitutes a “confirmation in writing sufficient to
indicate that a contract has been made between the parties” hereto, as set forth in Section
5-701(b)(3)(b) of the General Obligations Law; and (iv) this Letter Agreement constitutes a prior
“written contract”, as set forth in Section 5-701(b)(1)(b) of the

15

 

General Obligations Law, and each
party hereto intends and agrees to be bound by this Letter Agreement, as supplemented by the
Supplemental Terms Notice.

     (r) The Company and the Seller further agree and acknowledge that this Letter Agreement, as
supplemented by the Supplemental Terms Notice, constitutes a contract “for the sale or purchase of
a security”, as set forth in Section 8-113 of the Uniform Commercial Code of New York.

     (s) Notwithstanding anything to the contrary herein, the Company agrees that the Seller may,
by prior notice to the Company, satisfy its obligation to deliver any shares of Common Stock or
other securities on any date due (an “Original Delivery Date”) by making separate deliveries of
such shares of Common Stock or such securities, as the case may be, at more than one time on or
prior to such Original Delivery Date, so long as the aggregate number of shares of Common Stock and
other securities so delivered on or prior to such Original Delivery Date is equal to the number
required to be delivered on such Original Delivery Date.

     SECTION 13. Representations, Warranties and Agreements of the Seller.

     The Seller represents and warrants to, and agrees with, the Company as follows:

     (a) The Seller has all power and authority to enter into this Letter Agreement and to
consummate the transactions contemplated hereby. This Letter Agreement has been duly authorized
and validly executed and delivered by the Seller and constitutes a valid and legally binding
obligation of the Seller, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general
equitable principles.

     (b) The execution and delivery by the Seller of, and the compliance by the Seller with all of
the provisions of, this Letter Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan agreement or any other
agreement or instrument to which the Seller or any of its subsidiaries is a party or by which the
Seller or any of its subsidiaries is bound or to which any of the property or assets of the Seller
or any of its subsidiaries is subject, nor will such action result in any violation of the
provisions of the constitutive documents of the Seller or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over the Seller or any
of its subsidiaries or any of their respective properties.

     (c) No consent, approval, authorization, order, registration, qualification or filing of or
with any court or governmental agency or body having jurisdiction over the Seller or any of its
subsidiaries or any of their respective properties is required for the execution and delivery by
the Seller of, and the compliance by the Seller with all the terms of, this Letter Agreement or the
consummation by the Seller of the transactions contemplated hereby

     (d) Prior to the Initial Hedge Start Date, the Seller will not engage in any hedging
activities related to the transactions contemplated by this Letter Agreement.

     SECTION 14. Acknowledgments and Agreements With Respect To Hedging and Market Activity.

     (a) The Company acknowledges and agrees that:

16

 

     (i) During the Averaging Period and, if applicable, the Valuation Period, the Seller
and its affiliates may buy or sell shares of Common Stock or other securities or buy or
sell options or futures contracts or enter into swaps or other derivative securities in
order to adjust its hedge position with respect to the transactions contemplated by this
Letter Agreement;

     (ii) The Seller and its affiliates also may be active in the market for the Common
Stock other than in connection with hedging activities in relation to the transactions
contemplated by this Letter Agreement;

     (iii) Except as set forth in Section 13(d), the Seller shall make its own
determination as to whether, when or in what manner any hedging or market activities in
the Company’s securities shall be conducted and shall do so in a manner that it deems
appropriate to hedge its price and market risk with respect to the Daily Average Price and
Reported VWAP; and

     (iv) Any market activities of the Seller and its affiliates with respect to the
Common Stock may affect the market price and volatility of the Common Stock, as well as
the Daily Average Price and Reported VWAP, each in a manner that may be adverse to the
Company.

     (b) Each of the Company and the Seller agrees that Non-Reliance as set forth in Section 13.1
of the ISDA Definitions, Agreements and Acknowledgments Regarding Hedging Activities as set forth
in Section 13.2 of the ISDA Definitions and Additional Acknowledgments as set forth in Section 13.4
of the ISDA Definitions shall be deemed to be Applicable to the transactions contemplated by this
Letter Agreement as if this Letter Agreement were a confirmation that was governed by, and
incorporated, such Sections of the ISDA Definitions.

     SECTION 15. Notices.

     Unless otherwise specified, notices under this contract may be made by telephone, to be
confirmed in writing to the address below. Changes to the notice information below must be made in
writing.

     (a) If to the Company:

Tween Brands, Inc.

8323 Walton Parkway

New Albany, OH 43054

Attn: Kurt Gatterdam

Telephone: 614-775-3460

Facsimile: 614-775-3935

     (b) If to the Seller:

Bank of America, N.A.

c/o Banc of America Securities LLC

9 West 57th Street, 40th Floor

New York, NY 10019

Attn: John Servidio

Telephone: 212-847-6527

Facsimile: 212-230-8610

17

 

     SECTION 16. Designation of Affiliate for Transactions in Common Stock.

     The Seller may designate any of its affiliates (the “Designee”) to deliver or take delivery,
as the case may be, and otherwise perform its obligations to deliver or take delivery of, as the
case may be, any shares of Common Stock in respect of the transactions contemplated by this Letter
Agreement, and the Designee may assume such obligations and the obligations of the Seller under
this Letter Agreement with respect to such shares of Common Stock. Such designation shall not
relieve the Seller of any of its obligations hereunder. Notwithstanding the previous sentence, if
the Designee shall have performed the obligations of the Seller hereunder, then the Seller shall be
discharged of its obligations to the Company to the extent of such performance. In addition, the
parties acknowledge and agree that every time that the Seller is described in this Letter Agreement
as buying, selling or otherwise transacting with third parties in the Common Stock, such buying,
selling or transacting may be conducted by the Seller or one or more of its affiliates.

     SECTION 17. Equity Rights.

     The Seller acknowledges and agrees that this Letter Agreement is not intended to convey to it
rights with respect to this transaction that are senior to the claims of common stockholders in the
event of the Company’s bankruptcy. For the avoidance of doubt, the parties acknowledge that this
Letter Agreement is not secured by any collateral that would otherwise secure the obligations of
the Company herein under or pursuant to any other agreement.

18

 

     Please confirm your agreement to the foregoing by signing and returning to John Servidio via
facsimile at 212-230-8610 the enclosed duplicate of this Letter Agreement.

	 	 	 	 	 
	 	Very truly yours,

BANK OF AMERICA, N.A.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Acknowledged and agreed to as of

the date first above written,

TWEEN BRANDS, INC.

	 	 	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

APPENDIX A

[Date]

Tween Brands, Inc.

8323 Walton Parkway

New Albany, OH 43054

               Re: Enhanced Overnight Share Repurchase

Ladies and Gentlemen:

     Reference is made to the Enhanced Overnight Share Repurchase Letter Agreement between you and
Bank of America, N.A. dated as of September 13, 2007 (the “Agreement”). Capitalized terms used
without definition in this letter have the definitions assigned to them in the Agreement.

     In accordance with Section 4 of the Agreement, the Seller agrees that you may purchase shares
of Common Stock during the Averaging Period subject to the following procedures:

     (i) all such purchases will be made by Banc of America Securities LLC (“BAS”) in
accordance with Rule 10b-18(b) or otherwise in a manner that you and BAS believe is in
compliance with applicable legal requirements;

     (ii) each purchase order you place with BAS will be an all or nothing order to
purchase a minimum of 10,000 shares;

     (iii) you will pay to BAS a $0.04 per share commission for each share of Common Stock
purchased; and

     (iv) you agree that, in purchasing shares of Common Stock, BAS may purchase shares of
Common Stock for the account of the Seller, which is an affiliate of BAS, other than any
single block of 10,000 or more shares of Common Stock, without your prior consent; you
acknowledge that, because any orders you place pursuant to the above procedures will be
all or nothing orders, other orders to purchase Common Stock (including orders placed by
the Seller or BAS) may reduce the number of shares of Common Stock available for purchase
and may therefore impact your ability to obtain execution of any such all or nothing
orders.

 

 

     We may terminate this letter agreement upon the effectiveness of any change in applicable law
or regulation that would cause the procedures set forth herein to impede our ability to execute
appropriate trading transactions in relation to the Seller’s obligations under the Agreement
(including, without limitation, Section 3(a) of the Agreement) in a manner consistent with
applicable law and regulation.

     Please indicate your agreement to, and acknowledgment of, the above by signing and returning
to us a copy of this letter.

	 	 	 	 	 
	 	Very truly yours,

BANK OF AMERICA, N.A.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Acknowledged and agreed to as of

the date first above written,

	 	 	 	 	 
	 	TWEEN BRANDS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

APPENDIX B

[Company Letterhead]

Bank of America, N.A.

c/o Banc of America Securities LLC

9 W. 57th Street

New York, New York 10019

Attn:

               Re:
Enhanced Overnight Share Repurchase

Ladies and Gentlemen:

     In connection with our entry into an Enhanced Overnight Share Repurchase Letter Agreement
dated as of September 13, 2007 (the “Agreement”), we hereby represent that set forth below is the
total number of shares of our common stock purchased by or for us or any of our affiliated
purchasers in Rule 10b-18 purchases of blocks pursuant to the once-a-week block exception contained
in Rule 10b-18(b)(4) (all defined in Rule 10b-18 under the Securities Exchange Act of 1934, as
amended) during the four full calendar weeks immediately preceding the first day of the Averaging
Period (as defined in the Agreement) and the week during which the first day of the Averaging
Period occurs:

	 	 	 	 	 	 	 
	 	 	Monday’s	 	Friday’s	 	Share
	 	 	Date	 	Date	 	Number
	Week 4:
	 	 	 	 	 	 
	Week 3:
	 	 	 	 	 	 
	Week 2:
	 	 	 	 	 	 
	Week 1:
	 	 	 	 	 	 
	Current Week:
	 	 	 	 	 	 

     We understand that you will use this information in calculating trading volume for purposes of
Rule 10b-18.

	 	 	 	 	 
	 	Very truly yours,

TWEEN BRANDS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

APPENDIX C

[Form of Supplemental Terms Notice]

Bank of America, N.A.

9 West 57th Street

New York, New York 10019

[date]

Tween Brands, Inc.

8323 Walton Parkway

New Albany, OH 43054

Supplemental Terms Notice – Overnight Share Repurchase

Ladies and Gentlemen:

     Reference is made to the Overnight Share Repurchase Letter Agreement dated as of September 13,
2007 (the “Agreement”) between Tween Brands, Inc. (the “Company”) and Bank of America, N.A. (the
“Seller”). Capitalized terms used in this Supplemental Terms Notice and not otherwise defined
shall have the meanings assigned to them in the Agreement.

     Please be advised that the Calculation Agent has determined the following terms relating to
the Agreement upon the completion of the Seller’s Initial Hedge:

	 	 	 	 	 
	 

	 	Cap Price:
	 	U.S. $[                    ] per share
	 
	 	 	 	 
	 

	 	Hedge Execution Price:
	 	U.S. $[                    ] per share
	 
	 	 	 	 
	 

	 	Initial Hedge Completion Date:
	 	[                                        ]
	 
	 	 	 	 
	 

	 	Earliest Acceleration	 	 
	 

	 	Date:
	 	[                                        ] (which shall be the date 70 scheduled

Trading Days following (but excluding) the Initial Hedge Completion Date)
	 
	 	 	 	 
	 

	 	Scheduled Final Averaging Date:
	 	[                                        ] (which shall be the date 100

scheduled Trading Days following (but excluding) the Initial Hedge

Completion Date)

 

 

	 	 	 	 	 
	 	Very truly yours,

BANC OF AMERICA SECURITIES LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Receipt acknowledged,

TWEEN BRANDS, INC.

	 	 	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:exv10w7

 

Exhibit
10.7

AIRCRAFT CHARTER AGREEMENT

This AIRCRAFT CHARTER AGREEMENT (“Agreement”) is by and between Inn of the Mountain Gods Resort and
Casino, an enterprise of the Mescalero Apache Tribe, (hereinafter referred to as “IMG”), with its
offices located at 287 Carrizo Canyon Road, Mescalero, New Mexico 88340, and Vision Airlines, Inc.
(hereinafter collectively referred to as “Vision”), incorporated under the laws of the State of
Nevada, with it’s offices located at 2634 Airport Dr., Suite 106, North Las Vegas, NV 89032.

Recitals:

Whereas, Vision is in the business of providing aircraft charter services and Vision desires to
provide such services to IMG.

Whereas, IMG desires to utilize Vision’s aircraft charter services.

NOW, THEREFORE, incorporating the foregoing recitals and in consideration of the mutual covenants
and agreements contained in this Agreement and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, IMG and Vision intending to be legally bound,
hereby covenant and agree as follows:

Definitions:

“Aircraft” shall mean a thirty (30) seat Dornier 328 aircraft operated by Vision.

“Flight Crew” shall mean two (2) pilots, a captain and first officer, and one (1) flight attendant.

“Charter Flight” shall mean any aircraft take off and landing in performance of Vision’s aircraft
charter services.

“Aircraft Charter Services” shall mean those services prescribed in Article 1A, Article 1B and as
scheduled in accordance with Article 3 herein.

“Coach” shall mean a fifty (50) passenger MCI Motor Coach, including a duly licensed driver, driver
housing, board, fuel and insurance.

“Week” shall mean the time period beginning Sunday up to, and including Friday.

“Hazardous Materials” shall mean any article or substance the transportation of which by air is
prohibited, restricted or otherwise affected by any rule or governmental regulation.

Article 1 Charter Services:

	A.	 	Vision will provide an aircraft, with flight crew, to IMG for found trip transportation of
IMG’s guests from Houston, Texas, IAH airport, to Alamogordo, New Mexico, ALM airport, and
then return IMG’s guests from Alamogordo, New Mexico, ALM airport, to Houston, Texas, IAH
airport. Vision may, without prior notice and in its sole discretion, substitute one or more
alternate aircraft for the aircraft, which alternate aircraft shall be

1

 

	 	 	substantially similar to and at least equivalent in capacity and general capabilities as the
aircraft.

	B.	 	Vision will provide complimentary in-flight catering services of light snacks, soft drinks,
fruit juice and light alcohol. Beverage service shall be consistent with Vision’s standard
beverage service practices. Vision, at it’s sole discretion and without penalty, may limit or
eliminate such services due to flight times or flight conditions.

	C.	 	Vision will provide a coach for round trip transportation of IMG’s guests from Alamogordo,
New Mexico, ALM airport to the Inn of the Mountain Gods and then return IMG’s guests from the
Inn of the Mountain Gods to Alamogordo, New Mexico, ALM airport. Coach service is reserved
exclusively, and only, for IMG’s guests who are passengers of Vision aircraft charters in
accordance with the provisions of Articles 1, 2 and 3 herein.

	D.	 	Vision may provide additional services to IMG upon IMG’s request. Additional services must
be mutually agreed upon by the parties subject to a written agreement to include the scope and
costs of the additional services.

Article 2 Term:

	A.	 	Twenty six (26) weeks consisting of an aggregate total of One Hundred Four (104) round trip
charter services.

	B.	 	Charter services will commence September 2, 2007, and continue up to, and including, February
29, 2008, at which time thereafter this Agreement will terminate.

	C.	 	At the sole discretion of IMG, IMG may extend this Agreement for an additional twenty six
(26) weeks under the same terms and provisions as set forth herein. Notice of such extension
shall be sent by notice in accordance with the Agreement no later than forty five (45) days
prior to the expiration of the original term (February 29, 2008).

Article 3 Charter Services Schedule:

	A.	 	Vision will provide a total of four (4) round trip charter services on, and only on, Sunday,
Monday, Wednesday and Friday of each week.

	B.	 	Aircraft charter services will, tentatively and subject to change, depart from Houston,
Texas, IAH airport at 10:30 a.m., and depart from Alamogordo, New Mexico, ALM airport at 1:00
p.m., on the days prescribed in Article 3A herein. Departure times are subject to aircraft
routing, airport gate space, weather conditions, unforeseen and unscheduled aircraft
maintenance and other operational factors. Subject to such factors, Vision and IMG will use
reasonable efforts to cause on time departures.

Article 4 Price of Charter Services:

	A.	 	Total price of this Agreement is One Million Two Hundred Sixty Eight Thousand dollars,
($1,268,000.00).

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	B.	 	Price of each round trip charter services is Twelve Thousand Two Hundred dollars,
($12,200,00).

	C.	 	Not included in the price of this Agreement.

	 	1.	 	Fuel costs over $2.75 per gallon; landing fees; deicing; extra baggage charges;
and special on flight catering requests, which will be charged to IMG as an additional
cost;
	 
	 	2.	 	If IMG requests, then Vision will provide Motor Coach Charter Service, other
than the coach services prescribed in Article 1C herein. This additional Motor Coach
Charter Service will be charged to IMG as an additional cost as follows:

	 	(a)	 	At the rate of Five Hundred dollars, ($500.00) per day;
	 
	 	(b)	 	forty eight cents, ($.48), per mile for each additional mile
over Four Hundred, (400), miles per day;
	 
	 	(c)	 	drivers room and board only if motor coach charter service
requires an over night stay at a location other than Ruidoso or Alamogordo.

	 	3.	 	Other additional services requested by IMG in accordance with Article 1D
herein; and additional costs that may be incurred by Vision in accordance with this
Agreement.
	 
	 	4.	 	IMG agrees to collect and pay the Federal Excise Tax and passenger tax. IMG
agrees to indemnify and hold Vision, its affiliates, officers, directors, employees and
agents, harmless from the payment or collection of any such taxes or assessments, and
from any and all liabilities, penalties or expenses arising out of any failure by IMG
to make payment of such taxes or assessments.

Article 5 Payment Schedule:

	A.	 	Contract Price:

	 	1.	 	IMG will make a weekly advanced payment in the amount of Forty Eight Thousand
Eight Hundred dollars, ($48,800.00), for a total of twenty-six (26) weekly payments.
	 
	 	2.	 	IMG’s payment is due, in advance, on the Monday prior to, and preceding, the
following weeks scheduled flight. By way example; IMG’s first payment is due and owing
on Monday, August 27, 2007, in payment of the first weekly scheduled charter service
beginning Sunday, September 2, 2007. If in the event the scheduled payment due date
falls on a holiday and banks are closed, then payment is immediately due the following
day thereafter.

3

 

	 	3.	 	Payments is to be made by wire transfer to Vision’s depository bank account
pursuant to the following wiring instructions:
	 
	 	 	 	(Need wiring information)

	B.	 	Additional charges:

	 	1.	 	Vision, every two weeks, will invoice IMG for additional charges incurred by
IMG as prescribed by and in accordance with Article 4 herein and nay other additional
costs incurred in accordance with this Agreement;
	 
	 	2.	 	IMG will submit payment with Ten (10) days of receipt of invoice; and,
	 
	 	3.	 	Payments are to be made by wire transfer to Vision’s depository bank account in
accordance with Article 5A3 herein.

Article 6 Insurance:

	A.	 	Vision shall maintain insurance for the Aircraft and Coach, at no expense to IMG, which
conforms to the requirements of this Article. It is expressly agreed that the Aircraft
Liability Insurance must be placed with a reputable insurer approved by IMG. Copies of such
policies or policy shall be provided to IMG by Vision.

	B.	 	During the Term, the following coverage must be maintained: (i) aviation liability, including
passenger liability, public liability, and property damage liability, which will aggregate a
combined limit of not less than $100,000.00 per occurrence, against claims for death or injury
to person or loss of or damage to property in connection with the possession, use, and or
operation of the Aircraft; and (ii) Workers Compensation coverage at statutory limits.

	C.	 	The insurance policies described in this Article shall include provisions to the effect that:
(i) the insurance is primary and not excess, contributory, or contingent; and (ii) prior to
operating any flights pursuant to this Agreement, Vision shall provide a Certificate of
Insurance for IMG’s approval naming Inn of the Mountain Gods as an additional insured; and
(iii) IMG shall not be responsible for paying any deductibles under the required insurance
policies.

	D.	 	The aircraft shall not be operated unless the insurance described hereunder is in full force
and effect, nor shall the aircraft be operated in a location or any manner which would cause
such insurance to be suspended, impaired or canceled, or its protection to be jeopardized.

	E.	 	In the event of loss or destruction of, or damage to, the aircraft Vision and IMG shall
cooperate in good faith and promptly furnish information, execute such documents and do all
such other acts and things as may be reasonably necessary or appropriate to collect the
proceeds of any insurance policy or policies.

4

 

Article 7 Indemnification:

	A.	 	Vision agrees to protect, defend, indemnify, release and hold harmless IMG, the Mescalero
Apache Tribe, subsidiary, and affiliated companies, contractors and subcontractors, and the
directors, officers, employees, and representatives of IMG and the Mescalero Apache Tribe from
and against any and all claims, demands, causes of action, damages, and cots, including
attorneys’ fees, for personal injury, death, or property damage sustained by any person,
directly or indirectly arising out of, or in connection with, the services provided hereunder.
Notwithstanding the foregoing, Vision shall not be required to protect, defend, indemnify,
release and hold harmless, IMG from and against acts of terrorism. Vision’s indemnification
is limited by the terms of its insurance as outlined in Article 6 herein.

	B.	 	IMG agrees to protect, defend, indemnify, release and hold harmless Vision, its parent,
subsidiary, and affiliated companies, its co-owners, contractors and subcontractors, and the
directors, officers, employees, and representatives of Vision from and against any and all
claims, demands, causes of action, damages, and costs, including attorneys’ fees, (a) for a
personal injury, death, or property damage sustained by any person, directly or indirectly,
due to any fault or negligence of IMG or its guests arising out of, or in connection with, the
services provided hereunder, and (b) for all any and all penalties, damages, fines, or other
liability that any governmental entity may impose upon Vision due to any fault, negligence,
responsibility, or failure of responsibility on the part of IMG.

Article 8 Regulatory Compliance:

	A.	 	Vision shall ensure the Aircraft is at all times appropriately registered with the Federal
Aviation Administration. Vision shall obtain and maintain in full force and effect any and
all certificates, licenses, permits, and authorizations that are necessary for the use and
operation of the Aircraft in accordance with this Agreement including certification under Part
135 of the Federal Aviation Regulations. Upon the request by IMG, Vision shall provide copies
of all documents referred to in this paragraph.

	B.	 	Vision shall properly inspect, maintain, service, repair, overhaul, and test the aircraft in
accordance with an FAA approved maintenance program under Part 135 of the Federal Aviation
Regulations and make or cause to be made all necessary repairs or replacements so as to (i)
keep the aircraft and each part in good operating condition; (ii) maintain the cabin and
exterior of the Aircraft in good condition; (iii) keep the aircraft duly certified as
airworthy; (iv) comply with all appropriate FAA airworthiness directives; (v) comply with all
maintenance manuals and airworthiness alerts applicable to the aircraft or any part thereof
and diligently and promptly maintain, repair and service the aircraft in accordance with same;
(vi) comply with all applicable statutes, rules, and regulations and the standards set forth
in the aircraft’s service and operations manuals; and (vii) schedule service to the aircraft
in a prudent and responsible manner so as to endeavor to ensure that the aircraft is at all
times in good operating condition; (viii) without limiting the generality of the foregoing,
Vision shall operate the aircraft only in accordance with applicable manufacturer’s
recommendations and airport climactic conditions and shall

5

 

ensure that the aircraft will not be operated
unless an appropriate airworthiness certificate
is in effect. Vision shall not permit the
aircraft to be maintained, used, or operated in
violation of any law, rule, regulation,
ordinance, or order of any governmental authority
having jurisdiction or in violation of any
airworthiness certificate, license, or
registration relating to the aircraft.

Article 9 Independent Contractor:

Vision is, and shall remain at all times, an independent contractor of IMG in providing the charter
services. All persons employed by Vision in connection with the provision of such charter services
shall be and remain employees solely of Vision and subject only to the supervision of Vision’s
supervisory personnel. Except as specifically provided herein, none of the parties shall act or
represent or hold itself out as having authority to act as an agent or partner of the other party,
or in any way bind or commit the other party to any obligations. Nothing contained in this
Agreement shall be construed as creating a partnership, joint venture, agency, trust or other
association of any kind, each party being individually responsible only for its obligations as set
forth in this Agreement. If a travel company or other entity assists or provides IMG with services
related to the charter flights or makes arrangements for hotel accommodations, tours or land
travel, then such company or other entity shall act solely as a representative of IMG and not of
Vision.

Article 10 Charter Flight Operations Rights and Responsibilities:

	A.	 	IMG and all passengers shall observe the instructions of Vision’s flight crew, employees and
agents. The aircraft and its crew will at all times be under the exclusive command and
control of the Captain. The Captain shall not be obligated to comply with any request from
IMG or any passenger. In furtherance of the foregoing, IMG agrees the Captain shall have full
authority concerning all decisions necessary for the safety of the aircraft, its passengers,
crew, and cargo, including, but not limited to loading, load, distribution, stowage, unloading
of baggage and cargo, how the charter flight shall be operated, whether the agreed route can
be followed and the location of any landing or intermediate landing.

	B.	 	If Vision, at it sole discretion, determines an airport or any facilities at any airport are
inadequate for safe operation, or if landing is prohibited or restricted by law or operating
conditions, then Vision may, without liability of any kind to IMG or any passengers,
substitute in lieu thereof the nearest point at which suitable facilities are available and
landing can be made. If a charter flight lands at an alternate airport and is unable to
continue to its scheduled destination due to weather conditions, air traffic control delays,
or other causes outside Vision’s reasonable control; then Vision, if requested by the IMG,
shall use its reasonable efforts to make alternative transportation arrangements for the
passengers. IMG shall reimburse Vision for costs incurred by Vision in making such
arrangements.

	C.	 	If any delay in excess of thirty (30) minutes of the scheduled departure time of a charter
flight is caused through the action or at the request of IMG, and such delay creates
additional costs to Vision, then IMG agrees to reimburse Vision for the reasonable costs

6

 

	 	 	incurred by Vision as a direct result of such delays. Vision will invoice IMG for any such
additional costs.

	D.	 	Vision will accept baggage subject to the following conditions:

	 	1.	 	Total allowable baggage per passenger shall not exceed the limit of two pieces
collectively weighing no more than fifty (50) pounds;
	 
	 	2.	 	All baggage is subject to search and inspection at any time;
	 
	 	3.	 	Vision will not accept baggage, the size, weight or character of which makes it
unsuitable for transportation on the aircraft, as determined in the sole discretion by
Vision;
	 
	 	4.	 	No firearms and/or hazardous materials may be transported on any Vision
aircraft;
	 
	 	5.	 	Vision will not accept for carriage any cargo other than the baggage of
passengers; and
	 
	 	6.	 	Vision is not the responsible or liable for any damage and/or loss of any items
in passenger baggage or the baggage itself.

	E.	 	Vision shall have the right without refund or reduction of the charter services fee to
utilize any unused passenger or cargo space in the Aircraft for the transportation of Vision’s
own personnel or cargo.

	F.	 	IMG shall be responsible for all damage by passengers to the property of Vision, excepting
reasonable wear and tear. Upon prior written notice to IMG, the cost to repair any such
damage will be invoiced separately at the actual cost incurred. Prior to making such repairs
or replacement for damaged property, written notice shall be provided to IMG outlining
specifically the damage, where applicable the date of such damage and any other details
necessary for determination of potential liability by IMG.

Article 11 Delays and Cancellations:

	A.	 	If the aircraft described above is not available for any charter flights scheduled in
accordance with Article 3 herein, then Vision, at Vision’s sole expense, shall secure
substitute transportation for the passengers equal to the transportation required to be
provided by Vision in accordance with this Agreement. If Vision is not able to secure equal
transportation for IMG’s passengers, Vision shall immediately refund to IMG the payment(s)
made for the cancelled flight(s).

	B.	 	Vision shall not be liable to IMG or any passengers for any damage, loss, cost, or expense
arising out of or in connection with the cancellation of any charter flight due to the failure
to receive timely issuance of any and all necessary approvals, clearances, permits and
operating authority by or from governmental authorities, including, without limitation,
landing and overflight rights. Vision shall use its reasonable and timely

7

 

	 	 	efforts to obtain issuance of all such approvals, clearances, permits and operating
authority on a timely basis. If any charter flight or any portion of a charter flight is
cancelled due to a failure to receive on a timely basis any approval, clearance, permit or
operating authority described in this Article, then Vision shall refund to IMG all payments
received by Vision applicable to such charter flight.

	C.	 	Vision’s obligation to perform charter flights is contingent upon IMG making the advanced
payment in accordance with Article 5 herein. Vision shall not be liable to IMG or any
passengers for any damage, loss, cost, or expense arising out of or in connection with the
cancellation of any charter flight due to nonpayment in violation of Article 5 herein.

	D.	 	Vision may refuse to transport, or may remove any passenger from any charter flight for any
of the reasons set forth below. Upon such removal, Vision shall not be required to refund any
charter payments made by IMG for such charter flight:

	 	1.	 	Vision reserves the right to refuse carriage to IMG or to any passenger whose
documents are incomplete or who has not complied with the applicable laws, regulations,
orders, demands or travel requirements. Vision shall not be liable for loss or expense
due to failure of IMG or passengers to comply with applicable law and regulations.

	 	2.	 	If Vision’s Captain or First Officer determines that such passenger’s conduct
is disorderly, abusive or violent, or such passenger:

	 	(a)	 	appears to be intoxicated or under the influence of drugs;
	 
	 	(b)	 	attempts to interfere with any member of the flight crew;
	 
	 	(c)	 	appears to be mentally deranged or incapacitated;
	 
	 	(d)	 	engages in any action that might jeopardize the safety or
comfort of other passengers;
	 
	 	(e)	 	causes any unusual hazard or risk to himself/herself or to
other persons or to property.

	E.	 	Force Majeure. Neither Vision nor IMG shall be liable to the other for any loss, failure or
delay in the performance of any of their respective obligations herein due to events beyond
the parties control, including, but not limited to; weather whether actual, threatened or
reported; strikes; lockouts; other industrial; labor disturbances; acts of public enemy;
wars,; acts of terrorism; riots; epidemics; lightning; earthquakes; hurricanes; arrests;
explosions; accident to or failure of the aircraft or any part of component thereof, for any
other mechanical equipment; failure of public utilities, unavailability of fuel; inability to
secure operating approval; seizure under legal process; sanctions; quarantine restrictions;
fire; smog; fog; flood; act of God; any restricted acts of government; bomb threats;
unavailability of insurance coverage at commercially

8

 

	 	 	reasonable rates due to civil or political unrest or acts of terrorism; and any other event
beyond the control of the parties.

	F.	 	In the event that any charter flights are cancelled at the request of IMG, a cancellation
charge is to be computed as follows:

	 	1.	 	If a charter flight is cancelled more than thirty (30) calendar days prior to
the date of the charter flight is to depart from its point of origin as prescribed in
Article 1 herein, then the cancellation charge shall be ten percent (10%) of the total
round trip charter price for such charter flight pursuant to Article 4B herein;
	 
	 	2.	 	If the charter flight is cancelled less than thirty (30) calendar days prior to
the date the charter flight is to depart from its point of origin as prescribed in
Article 1 herein, then the cancellation charge shall be fifty percent (50%) of the
total round trip charter price for such charter flight(s) pursuant to Article 4B
herein.

Article 12 Termination:

	A.	 	By IMG for Cause: The term of this Agreement may be terminated by IMG in the event Vision
commits any material default hereunder which Vision fails to remedy within twenty (20) days
after having been notified in writing of the default. Notwithstanding the foregoing, IMG may
terminate the term of this Agreement immediately if Vision declares bankruptcy, becomes
insolvent, or ceases its normal business operations.

	B.	 	By Vision for Cause: The term of this Agreement may be terminated by Vision in the event IMG
commits any material default hereunder which IMG fails to remedy within twenty (20) days after
having been notified in writing of the default. Notwithstanding the foregoing, Vision may
terminate the term of this Agreement immediately if IMG declares bankruptcy, becomes
insolvent, ceases its normal business operations.

	C.	 	Either Party may terminate this Agreement, for and by convenience, by providing ninety (90)
days prior written notice to the other party.

Article 13 Confidentiality and Non-Disclosure:

During the term of this Agreement, and forever thereafter, the parties shall not, directly or
indirectly, voluntarily or involuntarily, disclose to any person or entity any confidential
information of the other party. For the purposes of this Agreement, “Confidential Information”
shall include, but is not limited to, any of the other part’s confidential, proprietary or trade
secret information disclosed to the other party or the other party otherwise learns during the term
of this Agreement such as, but not limited to, business plans, customer lists, customer names,
customer contact information, price lists, flow charts, product plans, and any other information
designated as confidential information.

Article 14 Disclaimer of Warranties:

Except as expressly set forth in this Agreement, Vision makes no representations or warranties,
express or implied, with respect to the aircraft.

9

 

Article 15 Assignment:

Neither party shall assign or transfer the rights or obligations associated with this Agreement, in
whole or in part, without the other party’s express written consent, which shall not be
unreasonably withheld.

Article 16 Governing Law and Jurisdiction:

This agreement shall be governed, construed and interpreted by, through and under the laws of the
State of New Mexico. IMG expressly consent to the personal jurisdiction and venue of the local,
state and federal courts of New Mexico for any and all disputes arising out of this agreement.

Article 17 Severability:

The provision of this Agreement shall be deemed severable, and the invalidity or unenforceability
of any one or more of the provisions hereof shall not affect the validity and enforceability of the
other provisions herein.

Article 18 Corporate Identity:

As used herein, the term “Vision” shall include any corporation which is at any time a parent,
affiliate, or subsidiary of Vision.

Article 19
Notices:

Any notice required to be or otherwise given hereunder shall be sufficient if in writing, and sent
certified or registered mail, return receipt requested, first-class postage prepaid, as follows:

To Vision:

Vision Airlines, Inc.

4155 N. Rancho Drive, Suite 120

Las Vegas, NV 89130

Attention: Brian Cody, Esq.

To IMG:

Inn of the Mountain Gods Resort and Casino

P.O. Box 269

Mescalero, New Mexico 88340

Attention: Brian D. Parrish, COO

Randolph Burroughs, Esq.

Burroughs & Rhodes

906 Virginia Avenue

Alamogordo, New Mexico 88310

10

 

Article 20 Waiver and Modification:

No waiver of any provision and no modification of this Agreement shall be valid unless the same is
in writing and signed by both parties; moreover, no valid waiver of any provision of this Agreement
at any time shall be deemed a waiver of any other provision of this Agreement at such or any other
time. Any changes to the designated flight time schedule or change of the operation by Vision
requested by IMG of additional charter flights services, other than those set forth herein, must be
set forth in writing an mutually agreed by the parties.

Article 21 Headings:

The headings used herein are for the convenience of the parties only and shall not be used to
define, enlarge or limit any term of this Agreement.

Article 22 Independent Legal Counsel:

IMG and Vision acknowledges that IMG and Vision have read all of the provisions of this Agreement;
understands all the provisions of this Agreement; has sought and/or had the opportunity to seek
independent legal counsel and advise regarding the legal effects of each and every provisions
herein; agrees to be bound by said provisions; and does so under no duress, no undue influence, nor
coercion.

Article 23 No Party Deemed Drafter:

The Parties acknowledge they substantially and materially contributed to the preparation of this
Agreement and agree that none of them shall be deemed drafter of this Agreement. In the event this
Agreement is construed by a court of competent jurisdiction, such court shall not construe this
Agreement or any of its provisions against any of the Parties as the drafter.

Article 24 Entire Agreement:

This Agreement contains the entire agreement and understanding by and between Vision and IMG with
respect to this Agreement. No representations, promises, agreements or understandings, written or
oral, not herein contained shall be of any force or effect of the same.

Article 25
Tribal Instrumentality:

IMG represents that it is a tribal enterprise, instrumentality or otherwise duly formed under the
laws and authority of the Mescalero Apache Tribe and that it is duly authorized to enter into this
agreement.

Article 26
Limited Waiver of Sovereign Immunity:

IMG hereby grants to Vision a limited waiver of sovereign immunity and consents to the jurisdiction
as set forth under Article 16 above. In no instance shall any enforcement of any kind be allowed
against any tribal assets excepted undistributed revenues of the Inn of the Mountain Gods Resort
and Casino. This limited waiver is applicable only to. Vision and does not apply to action by
third parties or any disputes outside of this agreement.

11

 

IN WITNESS WHEREOF, IMG and Vision have duly executed this Agreement as of the day hereby evidenced
by signature.

	 	 	 	 	 	 	 
	By: Vision Airlines, Inc.

	 	By:
	 	The Inn of the Mountain Gods Resort and
Casino, a enterprise of the Mescalero Apache
Tribe	 	 
	 
	 	 	 	 	 	 
	 
	/s/

	 	/s/
Brian D. Parish
	 	 
	Signature	 	Signature
	 
	 	 	 	 	 	 
	 
	          
 Director of Charter Sales

	 	Brian
D. Parish, Chief Operating Officer
	 	 
	Print Name and Title	 	Print Name and Title
	 
	 	 	 	 	 	 
	 
	July 10,
2007	 	June 29,
2007
	 	 
	Date	 	Date

12

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