Document:

Exhibit 10.2

 

EXECUTION VERSION

 

AMENDMENT NO. 3

TO SECOND MASTER REPURCHASE AGREEMENT

 

Amendment
No. 3, dated as of April 27, 2006 (this “Amendment”), among CREDIT SUISSE FIRST BOSTON
MORTGAGE CAPITAL LLC (the “Buyer”),
FIELDSTONE MORTGAGE COMPANY (a “Seller”)
and FIELDSTONE INVESTMENT CORPORATION (a “Seller” and, together with Fieldstone Mortgage
Company, the “Sellers”).

 

RECITALS

 

The
Buyer and the Sellers are parties to that certain Second Amended and Restated
Master Repurchase Agreement, dated as of March 31, 2005, as amended by
that certain Amendment No. 1 to Second Master Repurchase Agreement, dated
as of October 19, 2005 and Amendment No. 2 to Second Master
Repurchase Agreement, dated as of February 22, 2006 (as the same may have
been amended and supplemented from time to time, the “Existing Repurchase
Agreement” and as amended by this Amendment, the “Repurchase Agreement”). Capitalized terms used
but not otherwise defined herein shall have the meanings given to them in the
Existing Repurchase Agreement.

 

The Buyer and the Sellers have agreed, subject to the
terms and conditions of this Amendment, that the Existing Repurchase Agreement
be amended to reflect certain agreed upon revisions to the terms of the
Existing Repurchase Agreement.

 

Accordingly, the Buyer and the Sellers hereby agree,
in consideration of the mutual premises and mutual obligations set forth
herein, that the Existing Repurchase Agreement is hereby amended as follows:

 

SECTION 1.                                Definitions.
(a)  Section 2 of the Repurchase Agreement is hereby amended by
deleting the definitions of “Market Value,” “Maximum Aggregate Purchase Price,”
“Mortgage Loan,” “Par Percentage,” “Pricing Rate,” “Purchase Price,” “Purchase
Price Percentage,” “Repurchase Date,” and “Termination Date” in their entirety
and replacing the same with the following:

 

1.1                                 ““Market Value”
means, with respect to any Purchased Mortgage Loan as of any date, the
whole-loan servicing released fair market value of such Purchased Mortgage Loan
on such date as determined by Buyer (or an Affiliate thereof) in its good faith
discretion. Without limiting the generality of the foregoing, each Seller
acknowledges that the Market Value of a Purchased Mortgage Loan may be
reduced to zero by Buyer if:

 

(i)                    a material
breach of a representation, warranty or covenant made by any Seller in this
Agreement with respect to such Purchased Mortgage Loan has occurred and is
continuing;

 

(ii)                 except as set
forth in clause (xv) below, such Purchased Mortgage Loan is a Non-Performing
Mortgage Loan;

 

(iii)              a First Payment
Default occurs with respect to such Purchased Mortgage Loan;

 

1

 

(iv)             such Purchased
Mortgage Loan has been released from the possession of the Custodian under the
Custodial Agreement (other than to a Take-out Investor pursuant to a Bailee
Letter) for a period in excess of ten (10) calendar days;

 

(v)                such Purchased
Mortgage Loan has been released from the possession of the Custodian under the
Custodial Agreement to a Take-out Investor pursuant to a Bailee Letter for a
period in excess of 45 calendar days;

 

(vi)             such Purchased
Mortgage Loan has been subject to a Transaction for a period of greater than (a) 90
days (unless the Mortgage Loan is an Aged Loan or a Portfolio Second Lien
Mortgage Loan) or (b) 180 days with respect to each Aged Loan;

 

(vii)          such Purchased Mortgage
Loan is a Wet-Ink Mortgage Loan for which the Wet-Ink Mortgage File has not
been delivered to the Custodian on or prior to the eighth Business Day after
the related Purchase Date;

 

(viii)       when the Purchase Price for
such Purchased Mortgage Loan is added to other Purchased Mortgage Loans, the
aggregate Purchase Price of all Wet-Ink Mortgage Loans that are Purchased
Mortgage Loans exceeds (i) 40% of the Maximum Aggregate Purchase Price for
the first five Business Days and the last five Business Days of each month or (ii) 30%
of the Maximum Aggregate Purchase Price for the remainder of the month;

 

(ix)               when added to other
Purchased Mortgage Loans, the aggregate Purchase Price of all Sub-Prime
Mortgage Loans that are Purchased Mortgage Loans exceeds $280 million dollars;

 

(x)                  when added to
other Purchased Mortgage Loans, the aggregate Purchase Price of all Second Lien
Mortgage Loans and HELOCs that are Purchased Mortgage Loans (other than
Portfolio Second Lien Mortgage Loans) exceeds $60 million dollars;

 

(xi)               when added to other
Purchased Mortgage Loans, the aggregate Purchase Price of all Aged Loans that
are Purchased Mortgage Loans exceeds $200 million dollars;

 

(xii)            when added to other
Purchased Mortgage Loans, the aggregate Purchase Price of all Reperforming
Mortgage Loans exceeds $8 million dollars;

 

(xiii)         when added to other
Purchased Mortgage Loans, the aggregate Purchase Price of all Negative
Amortizations Loans exceeds $4 million;

 

2

 

(xiv)        when added to other
Purchased Mortgage Loans, the aggregate Purchase Price of all Portfolio Second
Lien Mortgage Loans exceeds $150 million;

 

(xv)           when added to other
Purchased Mortgage Loans, the aggregate Purchase Price of all Delinquent
Mortgage Loans exceeds $7.5 million; or

 

(xvi)        such Purchased Mortgage
Loan is no longer acceptable for purchase by Buyer (or an Affiliate thereof)
under any of the flow purchase or conduit programs for which Sellers then have
been approved due to a Requirement of Law relating to consumer credit laws or
otherwise.”

 

1.2                                 ““Maximum Aggregate Purchase Price” means FOUR
HUNDRED MILLION DOLLARS ($400,000,000).”

 

1.3                                 ““Mortgage Loan” means
any Sub-Prime Mortgage Loan, Exception Mortgage Loan, Jumbo Mortgage Loan, Alt
A Mortgage Loan, Portfolio Second Lien Mortgage Loan, Delinquent Mortgage Loan,
Reperforming Mortgage Loan, HELOC or Conforming Mortgage Loan which is a closed-end,
fixed or floating-rate, first lien or Second Lien Mortgage Loan, on a
one-to-four-family residential mortgage evidenced by a promissory note and
secured by a mortgage, which satisfies the requirements set forth in the
Underwriting Guidelines and Section 13(b) hereof which Mortgage Loan
the Custodian has been instructed to hold pursuant to the Custodial Agreement;
provided, however, that, except as expressly approved in writing by Buyer,
Mortgage Loans shall not include any “high-LTV” loans (i.e., a
mortgage loan having a loan-to-value ratio in excess of 100% or in excess of
such lower percentage set forth in the Underwriting Guidelines or with respect
to Second Lien Mortgage Loans, a combined loan-to-value ratio, in excess of the
lower of (i) the percentage specified in the Underwriting Guidelines or (ii) 100%)
or any High Cost Mortgage Loans and; provided, further, that the origination
date with respect to such Mortgage Loan is no earlier than thirty (30) days
prior to the related Purchase Date.”

 

1.4                                 ““Par
Percentage” in the case of Mortgage
Loans that are:

 

(a)                                  High
Purchase Price Mortgage Loans, 100%;

 

(b)                                 Medium
Purchase Price Mortgage Loans, 98%;

 

(c)                                  Low Purchase Price Mortgage Loans, 96%;

 

(d)                                 Portfolio
Second Lien Mortgage Loans, 90%;

 

(e)                                  Delinquent
Mortgage Loans; 85%; and

 

(f)                                    Exception
Mortgage Loans, a percentage to be determined by Buyer in its sole discretion.”

 

3

 

1.5                                 “Pricing Rate” means
LIBOR plus:

 

(A)                              in
the case of Purchased Mortgage Loans that are High Purchase Price Mortgage
Loans:

 

(i)                                     0.70%
with respect to Transactions the subject of which are Conforming Mortgage
Loans, Sub-Prime Mortgage Loans, Second Lien Mortgage Loans, HELOCs, Jumbo
Mortgage Loans or Alt-A Mortgage Loans (other than Portfolio Second Lien
Mortgage Loans, Aged Loans subject to a Transaction greater than 120 days and
Wet-Ink Mortgage Loans);

 

(ii)                                  0.75%
with respect to Transactions the subject of which are Aged Loans subject to a
Transaction greater than 120 days;

 

(iii)                               0.80%
with respect to Transactions the subject of which are Wet-Ink Mortgage Loans;

 

(iv)                              0.90%
with respect to Transactions the subject of which are Reperforming Mortgage
Loans;

 

(v)                                 0.95%
with respect to Transactions the subject of which are Portfolio Second Lien
Mortgage Loans; and

 

(vi)                              1.00%
with respect to Transactions the subject of which are Delinquent Mortgage
Loans; and

 

(b) in the case of
Purchased Mortgage Loans that are Medium Purchase Price Mortgage Loans:

 

(i)                                     0.60%
with respect to Transactions the subject of which are Conforming Mortgage
Loans, Sub-Prime Mortgage Loans, Second Lien Mortgage Loans, HELOCs, Jumbo
Mortgage Loans or Alt-A Mortgage Loans (other than Portfolio Second Lien
Mortgage Loans, Aged Loans subject to a Transaction greater than 120 days and
Wet-Ink Mortgage Loans);

 

(ii)                                  0.65%
with respect to Transactions the subject of which are Aged Loans subject to a
Transaction greater than 120 days;

 

(iii)                               0.75%
with respect to Transactions the subject of which are Wet-Ink Mortgage Loans;

 

(iv)                              0.80%
with respect to Transactions the subject of which are Reperforming Mortgage
Loans;

 

(v)                                 0.95%
with respect to Transactions the subject of which are Portfolio Second Lien
Mortgage Loans; and

 

(vi)                              1.00%
with respect to Transactions the subject of which are Delinquent Mortgage
Loans; and

 

4

 

(c) in the case of
Purchased Mortgage Loans that are Low Purchase Price Mortgage Loans:

 

(i)                                     0.50%
with respect to Transactions the subject of which are Conforming Mortgage
Loans, Sub-Prime Mortgage Loans, Second Lien Mortgage Loans, HELOCs, Jumbo
Mortgage Loans or Alt-A Mortgage Loans (other than Portfolio Second Lien
Mortgage Loans, Aged Loans subject to a Transaction greater than 120 days and
Wet-Ink Mortgage Loans);

 

(ii)                                  0.55%
with respect to Transactions the subject of which are Aged Loans subject to a
Transaction greater than 120 days;

 

(iii)                               0.70%
with respect to Transactions the subject of which are Wet-Ink Mortgage Loans;

 

(iv)                              0.70%
with respect to Transactions the subject of which are Reperforming Mortgage
Loans;

 

(v)                                 0.95%
with respect to Transactions the subject of which are Portfolio Second Lien
Mortgage Loans; and

 

(vi)                              1.00%
with respect to Transactions the subject of which are Delinquent Mortgage
Loans.”

 

1.6                                 ““Purchase Price” means (i) on
the Purchase Date, the price at which each Purchased Mortgage Loan is
transferred by a Seller to Buyer, which shall not exceed:

 

(a) in the case of
Purchased Mortgage Loans which are Conforming Mortgage Loans, Alt-A Mortgage
Loans, Second Lien Mortgage Loans, HELOCs, Jumbo Mortgage Loans, Portfolio
Second Lien Mortgage Loans or Delinquent Mortgage Loans, the lesser of (1) the
applicable Purchase Price Percentage for such Purchased Mortgage Loan
multiplied by the Market Value of such Purchased Mortgage Loan and (2) the
applicable Par Percentage for such Purchased Mortgage Loan multiplied by the
outstanding principal balance thereof as set forth on the related Mortgage Loan
Schedule; or

 

(b)  in the case of
Purchased Mortgage Loans which are Sub-Prime Mortgage Loans, the applicable
Purchase Price Percentage for such Sub-Prime Mortgage Loan multiplied by the
lesser of (1) the outstanding principal balance thereof as set forth on
the related Mortgage Loan Schedule and (2) the Market Value of such
Sub-Prime Mortgage Loan; or

 

(ii) after the applicable Purchase Date, except
where Buyer and the Sellers agree otherwise, such price decreased by the amount
of any cash transferred by the Sellers to Buyer pursuant to Section 6(c) hereof
or applied to reduce the Sellers’ obligations under clause (ii) of Section 4(b) hereof.”

 

5

 

1.7                                 ““Purchase Price Percentage”
means:

 

(a)                                  in
the case of Mortgage Loans, that are High Purchase Price Mortgage Loans, the
following percentage, as applicable:

 

(i)                                     99%
with respect to Purchased Mortgage Loans that are first lien Conforming
Mortgage Loans, Jumbo Mortgage Loans or Alt A Mortgage Loans;

 

(ii)                                  98%
with respect to Purchased Mortgage Loans that are Sub-Prime Mortgage Loans;

 

(iii)                               95%
with respect to Purchased Mortgage Loans that are Second Lien Mortgage Loans or
HELOCs (other than Portfolio Second Lien Mortgage Loans);

 

(iv)                              90%
with respect to Purchased Mortgage Loans that are Portfolio Second Lien
Mortgage Loans;

 

(v)                                 85%
with respect to Purchased Mortgage Loans that are Delinquent Mortgage Loans;
and

 

(vi)                              with
respect to Transactions the subject of which are Exception Mortgage Loans, a
percentage to be determined by Buyer in its sole discretion; and

 

(b) in the case of
Mortgage Loans that are Medium Purchase Price Mortgage Loans, the
following percentage, as applicable:

 

(i)                                     97%
with respect to Purchased Mortgage Loans that are first lien Conforming
Mortgage Loans, Jumbo Mortgage Loans or Alt A Mortgage Loans;

 

(ii)                                  96%
with respect to Purchased Mortgage Loans that are Sub-Prime Mortgage Loans;

 

(iii)                               93%
with respect to Purchased Mortgage Loans that are Second Lien Mortgage Loans or
HELOCs (other than Portfolio Second Lien Mortgage Loans); and

 

(iv)                              90%
with respect to Purchased Mortgage Loans that are Portfolio Second Lien
Mortgage Loans;

 

(v)                                 85%
with respect to Purchased Mortgage Loans that are Delinquent Mortgage Loans;
and

 

(vi)                              with
respect to Transactions the subject of which are Exception Mortgage Loans, a
percentage to be determined by Buyer in its sole discretion; and

 

6

 

(c) in the case of
Mortgage Loans that are Low Purchase Price Mortgage Loans, the
following percentage, as applicable:

 

(i)                                     95%
with respect to Purchased Mortgage Loans that are first lien Conforming
Mortgage Loans, Jumbo Mortgage Loans or Alt A Mortgage Loans;

 

(ii)                                  94%
with respect to Purchased Mortgage Loans that are Sub-Prime Mortgage Loans;

 

(iii)                               91%
with respect to Purchased Mortgage Loans that are Second Lien Mortgage Loans or
HELOCs (other than Portfolio Second Lien Mortgage Loans);

 

(iv)                              90%
with respect to Purchased Mortgage Loans that are Portfolio Second Lien
Mortgage Loans;

 

(v)                                 85%
with respect to Purchased Mortgage Loans that are Delinquent Mortgage Loans;
and

 

(vi)                              with
respect to Transactions the subject of which are Exception Mortgage Loans, a
percentage to be determined by Buyer in its sole discretion.”

 

1.8                                 ““Repurchase Date” means
the earlier of (i) the Termination Date, (ii) the date set forth in
the applicable Purchase Confirmation which shall be no later than 180 days
following the date on which the Purchased Assets are transferred by a Seller to
the Buyer, (iii) the date determined by application of Section 16
hereof or (iv) the date identified to Buyer by a Seller as the date that
the related Mortgage Loan is to be sold pursuant to a Take-out Commitment. Notwithstanding
the foregoing, with respect to any Portfolio Second Lien Mortgage Loan, the
date specified pursuant to clause (ii) above may be later than such
180 days so long as such date is not later than the date set forth in clause (a) of
the definition of “Termination Date”.”

 

1.9                                 ““Termination
Date” means the earlier of (a) April 23, 2007 or (b) the
date of the occurrence of an Event of Default.”

 

(b)                                 Section 2
of the Repurchase Agreement is hereby amended by adding the following
definitions:

 

1.10                           ““Delinquent
Mortgage Loan” means any Mortgage Loan (i) for which any payment of
principal or interest is more than thirty (30) days and less than ninety (90)
days past due.”

 

1.11                           ““Portfolio
Second Lien Mortgage Loan” means any Second Lien Mortgage Loan (i) that
is designated as such on the related Mortgage Loan Schedule by the related
Seller, (ii) that is not a Delinquent Mortgage Loan at the time it becomes
a Purchased

 

7

 

Mortgage Loan, and (iii) does
not become 60 days or more delinquent while such Mortgage Loan is a Purchased
Mortgage Loan.”

 

SECTION 2.                                Conditions
Precedent. This Amendment shall become effective on April 27, 2006
(the “Amendment Effective Date”),
subject to the satisfaction of the following conditions precedent:

 

2.1                                 Delivered
Documents. On the Amendment Effective Date, the Buyer shall have received
the following documents, each of which shall be satisfactory to the Buyer in form and
substance:

 

(a)                                  this
Amendment, executed and delivered by a duly authorized officer of the Buyer and
Sellers;

 

(b)                                 such
other documents as the Buyer or counsel to the Buyer may reasonably
request.

 

SECTION 3.                                Representations
and Warranties. Each of the Sellers hereby represents and warrants to the
Buyer that they are in compliance with all the terms and provisions set forth
in the Repurchase Agreement on their part to be observed or performed, and
that no Event of Default has occurred or is continuing, and hereby confirm and
reaffirm the representations and warranties contained in Section 13 of the
Existing Repurchase Agreement.

 

SECTION 4.                                Limited
Effect. Except as expressly amended and modified by this Amendment, the
Repurchase Agreement shall continue to be, and shall remain, in full force and
effect in accordance with its terms.

 

SECTION 5.                                Counterparts.
This Amendment may be executed by each of the parties hereto on any number
of separate counterparts, each of which shall be an original and all of which
taken together shall constitute one and the same instrument.

 

SECTION 6.                                  GOVERNING
LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CHOICE OF LAW
PROVISIONS THEREOF.

 

[SIGNATURE PAGE FOLLOWS]

 

8

 

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

 

 

	
  Buyer:

  	
  CREDIT
  SUISSE FIRST BOSTON

  
	
   

  	
  MORTGAGE
  CAPITAL LLC,

  
	
   

  	
  as
  Buyer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce S.
  Kaiserman

  
	
   

  	
   

  	
  Name: Bruce S.
  Kaiserman

  
	
   

  	
   

  	
  Title: Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Seller:

  	
  FIELDSTONE
  MORTGAGE COMPANY,

  
	
   

  	
  as
  Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark C.
  Krebs

  
	
   

  	
   

  	
  Name: Mark C.
  Krebs

  
	
   

  	
   

  	
  Title: Sr. Vice
  President & Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Seller:

  	
  FIELDSTONE
  INVESTMENT

  CORPORATION,

  
	
   

  	
  as
  Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark C.
  Krebs

  
	
   

  	
   

  	
  Name: Mark C.
  Krebs

  
	
   

  	
   

  	
  Title: Sr. Vice
  President & TreasurerExhibit 10.1

 

AMENDMENT
NO. 1, dated as of April 28, 2006 (this “Amendment No. 1”), among THE
WILLIAM CARTER COMPANY, a Massachusetts corporation (the “Borrower”),
each lender from time to time party hereto (collectively, the “Lenders”
and individually, a “Lender”), BANK OF AMERICA, N.A., as Administrative
Agent, and the Required Lenders, the Term Lenders and the Additional Term 1
Lenders (as defined below), in each case listed on the signature pages hereto,
to the Credit Agreement dated as of July 14, 2005 (as amended, supplemented,
amended and restated or otherwise modified from time to time) (the “Credit
Agreement”) among the Borrower, the Administrative Agent and the Lenders
named therein. Capitalized terms used and not otherwise defined herein shall
have the meanings assigned to them in the Credit Agreement.

 

WHEREAS,
the Borrower desires to create a new Class of Term 1 Loans under the Credit
Agreement having identical terms with, having the same rights and obligations
under the Loan Documents as and in the same aggregate principal amount as, the
Term Loans, as set forth in the Credit Agreement and Loan Documents, except as
such terms are amended hereby;

 

WHEREAS,
each Term Loan Lender who executes and delivers this Amendment No. 1 shall be
deemed, upon effectiveness of this Amendment No. 1, to have exchanged its Term
Loan Commitment and Term Loans (which Term Loan Commitment and Term Loans shall
thereafter be deemed terminated) for a Term 1 Loan Commitment and Term 1 Loans
in the same aggregate principal amount as such Lender’s Term Loans, and such
Lender shall thereafter become a Term 1 Loan Lender;

 

WHEREAS,
each Person who executes and delivers this Amendment No. 1 as an Additional
Term 1 Loan Lender will make Term 1 Loans on the effective date of this Amendment
No. 1 to the Borrower, the proceeds of which will be used by the Borrower to
repay in full the outstanding principal amount of Term Loans of Non-Consenting
Term Loan Lenders;

 

WHEREAS,
the Borrower shall pay to each Term Loan Lender all accrued and unpaid interest
on its Term Loans to, but not including, the date of effectiveness of this Amendment
No. 1 on such date of effectiveness;

 

WHEREAS,
the Borrower desires to make certain other changes to the Credit Agreement as
set forth herein;

 

NOW,
THEREFORE, in consideration of the premises and covenants contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:

 

 

Amendments Relating to Term 1 Loans.

 

Section 1.01 of the Credit Agreement is
hereby amended by deleting clause (b) of the definition of “Applicable Rate” in
its entirety and replacing it with the following:

 

“(b)(i) 0.50% with
respect to Term 1 Loans that are Base Rate Loans and (ii) 1.50% with respect to
Term 1 Loans that are Eurodollar Rate Loans.”

 

Section 2.05 of the Credit Agreement is
hereby amended by adding to the end of such Section new paragraphs (i) and (j)
as follows:

 

“(i)          Notwithstanding the
foregoing, 100% of the proceeds of all Term 1 Loans shall be used to repay Term
Loans and the requirements of Sections 2.05(g) and (h) shall not apply to such
proceeds and any repayments made with such proceeds.

 

(j)            Notwithstanding the
foregoing, if the Borrower makes any optional prepayment of Term 1 Loans prior
to the one year anniversary of the Amendment No. 1 Effective Date in connection
with any Repricing Transaction, the Borrower shall pay to the Administrative
Agent, for the ratable account of  each
Term 1 Loan Lender, a prepayment premium of 1% of the amount of such Term 1
Loans being prepaid.”

 

Section 2.06(b) of the Credit Agreement is
hereby amended by adding to the end of such Section new sentence as follows:

 

“The Term 1 Loan Commitment of each Term 1 Loan Lender shall be
automatically terminated on the Amendment No. 1 Effective Date upon the
Borrowing of the Term 1 Loans on such date.”

 

Section 6.11 of the Credit Agreement is
hereby amended by adding to the end of such Section a new sentence as follows:

 

“The Borrower further covenants and agrees that the proceeds of all
Term 1 Loan Borrowings hereunder will be used to refinance the existing Term
Loans.”

 

2

 

All references to “Term Loan Borrowing,” “Term
Loan Commitment,” “Term Loan Lender,” “Term Loan Maturity Date,” “Term Loan
Note” and “Term Loans” in the Credit Agreement and the Loan Documents shall be
deemed to be references to “Term 1 Loan Borrowing,” “Term 1 Loan Commitment,” “Term
1 Loan Lender,” “Term 1 Loan Maturity Date,” “Term 1 Loan Note” and “Term 1
Loans,” respectively (unless the context otherwise requires).

 

The Term 1 Loans made on the Amendment No. 1
Effective Date shall not constitute Incremental Term Loans under Section 2.14
of the Credit Agreement.

 

The following defined terms shall be added to
Section 1.01 of the Credit Agreement in alphabetic order:

 

“Additional
Term 1 Loan Commitment” means, with respect to an Additional Term 1 Loan
Lender, the commitment of such Additional Term 1 Loan Lender to make Additional
Term 1 Loans on the Amendment No. 1 Effective Date, in an amount set forth next
to the signature of such Additional Term 1 Loan Lender on Amendment No. 1. The
aggregate amount of the Additional Term 1 Loan Commitments of all Additional
Term 1 Loan Lenders shall equal the outstanding principal amount of Term Loans
of Non-Consenting Term Loan Lenders.

 

“Additional
Term 1 Loan Lender” means a Person with an Additional Term 1 Loan
Commitment to make Additional Term 1 Loans to the Borrower on the Amendment No.
1 Effective Date, which for the avoidance of doubt may be an existing Term Loan
Lender.

 

“Additional
Term 1 Loan” means a Loan that is made pursuant to Section 2.01(d)(ii) of
the Credit Agreement on the Amendment No. 1 Effective Date.

 

“Amendment
No. 1” means Amendment No. 1 to this Agreement dated as of April 28, 2006.

 

“Amendment
No. 1 Effective Date” means April 28, 2006, the date on which all
conditions precedent set forth in Section 4 of Amendment No. 1 are satisfied.

 

“Non-Consenting
Term Loan Lender” means each Term Loan Lender that has not executed and
delivered a counterpart of Amendment No. 1 on or prior to the Amendment No. 1
Effective Date.

 

“Repricing
Transaction” means the incurrence by any Loan Party of any Indebtedness
(including, without limitation, any new or additional term loans under this
Agreement) that is secured or is broadly marketed or syndicated to banks and
other institutional investors in financings similar to the Credit Agreement (i)
having an effective interest rate margin or weighted average yield (to be determined
by the Administrative Agent consistent with generally accepted financial
practice) that is less than the Applicable Rate for, or weighted average yield
(to be determined by the Administrative Agent on the same basis) of, the Term 1

 

3

 

Loans
and (ii) the proceeds of which are used to repay, in whole or in part,
principal of outstanding Term 1 Loans.

 

“Term
1 Loan Commitment” means, with respect to a Term Loan Lender, the agreement
of such Term Loan Lender to exchange its Term Loans for an equal aggregate
principal amount of Term 1 Loans on the Amendment No. 1 Effective Date, as evidenced
by such Term Loan Lender executing and delivering Amendment No. 1.

 

“Term
1 Loan Lender” means a Lender with outstanding Term 1 Loans.

 

“Term
1 Loan” means an Additional Term 1 Loan or a Loan that is deemed made
pursuant to Section 2.01(d)(i).

 

Section 2.01 of the Credit Agreement is
hereby amended by adding the following clause (d) to such Section:

 

“(d)         (i)  Subject to the terms and conditions hereof
and of Amendment No. 1, each Term Loan Lender with a Term 1 Loan Commitment
severally agrees to exchange its Term Loans for a like principal amount of Term
1 Loans on the Amendment No. 1 Effective Date;

 

(ii) 
Subject to the terms and conditions hereof and of Amendment No. 1, each
Additional Term 1 Loan Lender severally agrees to make Additional Term 1 Loans
to the Borrower on the Amendment No. 1 Effective Date in a principal amount not
to exceed its Additional Term 1 Loan Commitment on the Amendment No. 1 Effective
Date. The Borrower shall prepay all Term Loans of Non-Consenting Term Loan
Lenders with the gross proceeds of the Additional Term 1 Loans;

 

(iii) 
The Borrower shall pay to the Term Loan Lenders all accrued and unpaid
interest on the Term Loans to, but not including, the Amendment No. 1 Effective
Date on such Amendment No. 1 Effective Date and to the Non-Consenting Term Loan
Lenders any breakage loss or expense under Section 3.05. The Amendment No. 1
Effective Date shall be deemed the first day of a new Interest Period with
respect to the Term 1 Loans; and

 

(iv) 
The Term 1 Loans shall have the same terms as the Term Loans as set
forth in the Credit Agreement and Loan Documents, except as modified by this
Amendment No. 1. For the avoidance of doubt, the Term 1 Loans (and all
principal, interest and other amounts in respect thereof) will constitute “Obligations”
under

 

4

 

the Credit Agreement and the other Loan Documents and shall have the
same rights and obligations under the Credit Agreement and Loan Documents as
the Term Loans.”

 

Other Amendments.

 

The definition of “Cash Equivalents” in
Section 1.01 is hereby amended by deleting clauses (g) through (h) of such
definition and replacing such clauses with the following:

 

“(g) auction rate securities with interest rate or dividend reset date
intervals not greater than thirty-five (35) days duration, and whose underlying
securities are rated at least AAA or the equivalent thereof by Standard &
Poor’s Rating Service or at least Aaa or the equivalent thereof by Moody’s
Investors Service Inc.; (h) investments in money market funds substantially all
of whose assets comprise securities of the types described in clauses (a)
through (g) above; and (i) in the case of Foreign Subsidiaries, Investments
made locally of a type comparable to those described in clauses (a) through (h)
of this definition.”

 

The following defined term shall be added to
Section 1.01 of the Credit Agreement in alphabetic order:

 

“Amendment
No. 1 Transaction Costs” means the fees, costs and expenses
payable by Holdings, the Borrower or any of the Borrower’s Subsidiaries in
connection with entering into Amendment No. 1.

 

Section 1.01 of the Credit Agreement is
hereby amended by amending the definition of “Consolidated EBITDA” by (i)
deleting the “and” appearing at the end of clause (x) of  such definition; (ii) inserting the word “and”
at the end of clause (xi) of such definition and (iii) adding the following
clause (xii) immediately following clause (xi) of such definition: “(xi)
Amendment No. 1 Transaction Costs;”

 

Section 7.06(h) of the Credit Agreement is
hereby amended by (i) substituting for “1:50” where it appears therein the
following: “2:50” and (ii) deleting the phrase “in an amount not to exceed the
Cumulative Growth Amount immediately prior to the time of the making of such
Restricted Payment” appearing in such Section and replacing it with the
following:

 

“; provided
that immediately following any such Restricted Payment, Borrower shall have not
less than $75,000,000 of current availability under the Revolving Loan Commitments”

 

5

 

Representations
and Warranties. The Borrower represents and warrants to the Lenders as of the
date hereof and the Amendment No. 1 Effective Date that:

 

The execution, delivery and performance of
this Amendment No. 1 have been duly authorized by all necessary corporate
action by the Borrower, and do not and will not (i) contravene the terms of the
Borrower’s Organization Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, or require any payment to
be made under (i) any Contractual Obligation to which the Borrower is a party
or (ii) any order, injunction, writ or decree of any Governmental Authority or
any arbitral award to which such Person or its property is subject; or (c)
violate any Law, except in the case of clause (b) or (c) as would not
reasonably be expected to have a Material Adverse Effect.

 

Before and after giving effect to this
Amendment No. 1, the representations and warranties set forth in the Credit
Agreement are true and correct in all material respects on and as of the date
of such Credit Extension, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall be
true and correct in all material respects as of such earlier date.

 

At the time of and after giving effect to
this Amendment No. 1, no Default or Event of Default has occurred and is continuing.

 

Conditions
to Effectiveness. This Amendment No. 1 shall become effective on the date on
which each of the following conditions is satisfied:

 

The Administrative Agent (or its counsel)
shall have received from (i) Lenders constituting (A) the Required Lenders and
(B) each Term Loan Lender, or in lieu of one or more Term Loan Lenders, one or
more Additional Term 1 Loan Lenders, and (ii) each of the other parties
hereto, either (x) a counterpart of this Amendment No. 1 signed on behalf of
such party or (y) written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission of a signed signature page of this
Amendment No. 1) that such party has signed a counterpart of this Amendment No.
1;

 

The Borrower shall have provided the
Administrative Agent with a Borrowing request three Business Days prior to the
Amendment No. 1 Effective Date with respect to the borrowing of Additional Term
1 Loans on the Amendment No. 1 Effective Date; provided that if the
Borrower shall have requested a Borrowing of Eurodollar Rate Loans, the
Borrower shall have provided the Administrative Agent with a funding indemnity
agreement satisfactory to the Administrative Agent;

 

Each Term 1 Loan Lender shall have received,
if requested, one or more Notes payable to the order of such Lender duly
executed by the Borrower in substantially the form of Exhibit C-1 to the
Credit Agreement, as modified by this Amendment No. 1, evidencing its Term 1
Loans;

 

6

 

The Borrower shall have paid to all Term Loan
Lenders simultaneously with the making of Term 1 Loans hereunder all accrued
and unpaid interest on the Term Loans of such Term Loan Lenders to, but not
including, the Amendment No. 1 Effective Date on the Amendment No. 1 Effective
Date;

 

The Borrower shall have paid to the
Administrative Agent all reasonable costs and expenses (including, without
limitation, the reasonable fees, charges and disbursements of Cahill Gordon
& Reindel LLP, counsel for the Agents) of the Administrative Agent;

 

All corporate and other proceedings taken or
to be taken in connection with this Amendment No. 1 and all documents
incidental thereto, whether or not referred to herein, shall be satisfactory in
form and substance to the Administrative Agent; and

 

At the time of and after giving effect to the
Amendment No. 1, no Default or Event of Default has occurred and is continuing.

 

Expenses. The Borrower agrees to reimburse the Administrative Agent
for its and the other Agents’ reasonable out-of-pocket expenses incurred by
them in connection with this Amendment No. 1, including the reasonable fees,
charges and disbursements of Cahill Gordon & Reindel LLP, counsel for the
Administrative Agent.

 

Counterparts. This Amendment No. 1 may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which when so executed and delivered shall be deemed to be an original, but all
of which when taken together shall constitute a single instrument. Delivery of
an executed counterpart of a signature page of this Amendment No. 1 by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof.

 

Applicable
Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

Headings. The headings of this Amendment No. 1 are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.

 

7

 

Effect
of Amendment. Except as expressly set forth
herein, this Amendment No. 1 shall not by implication or otherwise limit,
impair, constitute a waiver of or otherwise affect the rights and remedies of
the Lenders or the Agents under the Credit Agreement or any other Loan
Document, and shall not alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other provision of the Credit Agreement or any other Loan Document,
all of which are ratified and affirmed in all respects and shall continue in
full force and effect. The Required Lenders agree that the Borrower and the
Administrative Agent may enter into an Amended and Restated Credit Agreement
after the Amendment No. 1 Effective Date in form and substance satisfactory to
the Administrative Agent to give effect to this Amendment No. 1. By executing
and delivering a copy hereof, each Loan Party hereby agrees and confirms that
all Loans and Obligations (including, without limitation, the Term 1 Loans)
shall be fully guaranteed by Holdings and Subsidiary Guarantors pursuant to the
Guarantee Agreement and shall be fully secured pursuant to the Security
Documents.

 

8

 

IN WITNESS
WHEREOF, the parties hereto have caused this Amendment No. 1 to be duly
executed as of the date first above written.

 

	
   

  	
   

  	
    THE
  WILLIAM CARTER COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

9

 

	
   

  	
   

  	
    BANK
  OF AMERICA, N.A., as

    Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

10

 

	
   

  	
   

  	
    [LENDER],

    as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

11

 

	
   

  	
   

  	
  [LENDER],

  as an Additional Term 1 Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Term 1
  Commitment:

  	
  $

  
				

 

12

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