Use these links to rapidly review the document
Table of contents
Index to audited consolidated financial statements
Table of Contents
As filed with the Securities and Exchange Commission on September 29, 2014.
Registration No. 333-            

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549

FORM S-1
 REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

BOOT BARN HOLDINGS, INC.
 (Exact name of registrant as specified in its charter)

					
Delaware 
(State or other jurisdiction of
incorporation or organization)	 	5600 
(Primary Standard Industrial
Classification Code Number)	 	90-0776290 
(I.R.S. Employer
Identification Number)	

15776 Laguna Canyon Road
Irvine, California 92618
(949) 453-4400
 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

James G. Conroy
President and Chief Executive Officer
Boot Barn Holdings, Inc.
15776 Laguna Canyon Road
Irvine, California 92618
(949) 453-4400
 (Name, address, including zip code, and telephone number, including area code, of agent for service)

			
Richard J. Welch, Esq.
Timothy R. Rupp, Esq.
Bingham McCutchen LLP
600 Anton Boulevard, 18th Floor
Costa Mesa, California 92626
(714) 830-0600	 	William V. Fogg, Esq.
Johnny G. Skumpija, Esq.
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
(212) 474-1000	

Approximate date of commencement of proposed sale to the public:
 As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  o
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

							
Large accelerated filer  o	 	Accelerated filer  o	 	Non-accelerated filer  ý
(Do not check if a
smaller reporting company)	 	Smaller reporting company  o	

CALCULATION OF REGISTRATION FEE

	 	 	 	 	
 	
Title of each class of securities to be registered	 	Proposed maximum
aggregate offering
price (1)	 	Amount of
Registration Fee (2)	
 	
Common Stock, $0.001 par value per share	 	$86,250,000	 	$11,109	
 	
(1)  Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended. Includes the aggregate offering price of additional shares of common stock that the underwriters have the option to purchase.
(2)  Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum offering price.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

Table of Contents
Subject to completion, dated September 29, 2014
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.
                      shares

Common stock
$               per share
This is the initial public offering of common stock of Boot Barn Holdings, Inc. We are selling                           shares of our common stock, and the selling stockholders identified in this preliminary prospectus are selling                           shares of our common stock. We will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders.
Prior to this offering, there has been no public market for our common stock. We currently expect the initial public offering price to be between $              and $              per share of common stock. We intend to apply to have our common stock listed on the New York Stock Exchange under the symbol "BOOT".
The selling stockholders have granted the underwriters an option to purchase up to                           additional shares of our common stock at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus.
We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, and therefore have elected to comply with certain reduced public company reporting requirements. See "Prospectus summary—Implications of being an emerging growth company".
Investing in our common stock involves risks. See "Risk factors" beginning on page 14 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful and complete. Any representation to the contrary is a criminal offense.

								
 	 	
 	 	Per share	 	Total	 	
 	 	
Public offering price	 	$	 	 	$	 	 	
Underwriting discount	 	$	 	 	$	 	 	
Proceeds to us, before expenses	 	$	 	 	$	 	 	
Proceeds to the selling stockholders, before expenses	 	$	 	 	$	 	 	
 	 	
The underwriters expect to deliver the shares to purchasers on or about                           , 2014 through the book-entry facilities of The Depository Trust Company.

					
J.P. Morgan	 	Piper Jaffray	 	Jefferies	

			
Wells Fargo Securities	 	Baird	
Prospectus dated                           , 2014.

Table of Contents

 Table of contents

			
Prospectus summary	 	1	
Risk factors	 	14	
Special note regarding forward-looking statements	 	35	
Use of proceeds	 	37	
Dividend policy	 	38	
Capitalization	 	39	
Dilution	 	40	
Selected consolidated financial data	 	42	
Management's discussion and analysis of financial condition and results of operations	 	46	
Business	 	70	
Management	 	83	
Executive and director compensation	 	89	
Certain relationships and related party transactions	 	100	
Principal and selling stockholders	 	104	
Description of capital stock	 	106	
Material United States federal income tax consequences to non-U.S. holders of our common stock	 	111	
Shares eligible for future sale	 	116	
Underwriting	 	119	
Legal matters	 	127	
Experts	 	127	
Where you can find more information	 	127	
Index to consolidated financial statements and condensed consolidated financial statements	 	F-1	
Through and including                                             , 2014 (the 25th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
You should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the Securities and Exchange Commission, which we refer to as the SEC. Neither we nor the underwriters have authorized anyone to provide you with additional information or information different from that contained in this prospectus or in any free writing prospectus filed with the SEC. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give to you. We are offering to sell, and seeking offers to buy, our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any free writing prospectus, or of any sale of our common stock.
For investors outside the U.S.: neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that
i

Table of Contents
purpose is required, other than in the U.S. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus outside of the U.S.
Basis of presentation
We operate on a fiscal calendar that results in a 52- or 53-week fiscal year ending on the Saturday closest to March 31. For ease of reference, we identify our fiscal year in this prospectus by reference to the calendar year in which the fiscal year ends. This prospectus contains references to fiscal 2012, fiscal 2013, fiscal 2014 and fiscal 2015, which represent our fiscal years ended March 31, 2012, March 30, 2013, March 29, 2014 and March 28, 2015, respectively, all of which were 52-week periods. This prospectus also contains references to fiscal 2011, which represents our fiscal year ended April 2, 2011 and was a 53-week period. In a 52-week fiscal year, each quarter includes 13 weeks of operations; in a 53-week fiscal year, the first, second and third quarters each include 13 weeks of operations and the fourth quarter includes 14 weeks of operations. Each quarter ends on the last Saturday of the 13-week period (or the 14-week period in a 53-week fiscal year).
The period from April 3, 2011 to December 11, 2011, which is presented separately as the "Predecessor Period" in our consolidated financial statements and the related notes included elsewhere in this prospectus, consisted of approximately 36 weeks. The period from December 12, 2011 to March 31, 2012, which is presented separately as the "Successor Period" in our consolidated financial statements and the related notes included elsewhere in this prospectus, consisted of approximately 16 weeks. The Predecessor Period and the Successor Period have been combined (see "Prospectus summary—Our sponsor") and presented together as fiscal 2012 in all other sections of this prospectus. A presentation of these two periods in this manner is more reflective of how we assess the performance of our business and we believe that it facilitates comparisons of fiscal 2012 to our other fiscal years.
As used in this prospectus, the following terms have the following meanings:
•
"CAGR" means compound annual growth rate; 

•
"GAAP" means U.S. generally accepted accounting principles; 

•
"net cash investment" means, for a given store, our initial cash investment in that store, which consists of the cost of the initial inventory (net of accounts payable), pre-opening costs and capital investment (net of tenant improvement allowances); and 

•
"working capital" means current assets, excluding cash and cash equivalents, minus current liabilities, excluding the current portion of debt under our credit facilities, as determined in accordance with GAAP.
References in this prospectus to our "credit facilities" collectively refer to our term loan credit facility with Golub Capital LLC, which we refer to as our term loan facility, and our revolving credit facility with PNC Bank, N.A., which we refer to as our revolving credit facility.
Amounts presented in this prospectus in millions are approximations of the actual amounts in that they have been rounded to the nearest one decimal place.
Unless the context requires otherwise, references in this prospectus to "Boot Barn", the "Company", "we", "us" and "our" refer to Boot Barn Holdings, Inc. and its consolidated subsidiaries. Except as the context otherwise requires, all information included in this prospectus is presented after giving effect to the reorganization described in "Management's discussion and analysis of financial condition and results of operations—Factors affecting comparability of results of operations—Reorganization".
ii

Table of Contents
References in this prospectus to "RCC" refer to RCC Western Stores, Inc., which we acquired in August 2012, and references in this prospectus to "Baskins" refer to Baskins Acquisition Holdings, LLC, which we acquired in May 2013.
Trademarks and trade names
This prospectus includes our trademarks and trade names, such as "Boot Barn" and the names of our private brands, which are protected under applicable intellectual property laws and are our property. This prospectus also contains trademarks, trade names and service marks of other companies, which are the property of their respective owners. Solely for convenience, trademarks, trade names and service marks referred to in this prospectus may appear without the ®, TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of any applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of other parties' trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.
Industry and market data
Unless otherwise indicated, statements in this prospectus concerning our industry and the markets in which we operate, including our general expectations and competitive position, business opportunity and market size, growth and share, are based on information from independent industry organizations and other third-party sources (including industry publications, surveys and forecasts), data from our internal research and management estimates. Management estimates are derived from publicly available information and the information and data referred to above, and are based on assumptions and calculations made by us based upon our interpretation of such information and data, and on our knowledge of our industry and the categories in which we operate, which we believe to be reasonable. Furthermore, the information and data referred to above are imprecise and may prove to be inaccurate because the information cannot always be verified with complete certainty due to the limitations on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. However, we are responsible for all of the disclosure in this prospectus and believe it to be reasonable. Projections, assumptions, expectations, beliefs and estimates regarding our industry and the categories in which we operate and our future performance are also necessarily subject to risk and change based on various factors, including those discussed under the heading "Risk factors".
Certain statements in this prospectus regarding the estimated size and growth of the U.S. western and work wear markets are based on information from a study that we engaged Mōd Advisors LLC, or Mōd, to conduct, which we refer to as the Mōd study. The Mōd study was based, in part, upon industry data obtained from a March 2014 publication by Global Industry Analysts entitled "Workwear: A Global Strategic Business Report". The Mōd study was also based upon information and estimates obtained during interviews that Mōd conducted with executives at several western and work wear manufacturers, as well as an online survey commissioned by Mōd of 2,045 adults and teenagers regarding purchases of western wear products. A broader sampling and different methodologies, among other variables, could have led Mōd to arrive at different results; however, we know of no better methodology for estimation nor do we have any reason to believe that Mōd's consideration of additional or different data would have materially changed its conclusions regarding the size of the U.S. market for the western and work wear categories. We have not independently verified any of the data from the Mōd study, nor have we ascertained the underlying economic assumptions upon which the Mōd study relied. Market research is based on sampling and
iii

Table of Contents
subjective judgments by both the researchers and the respondents, including judgments about what types of products should be included in the relevant market. As a result, please be aware that the data and statistical information in this prospectus from the Mōd study may differ from information provided by our competitors or from information found in current or future studies conducted by market research institutes, consultancy firms or independent sources.
Statements in this prospectus regarding our competitive position, business opportunity and market size, growth and share in the U.S. are based on data that may not account for certain retailers. However, we believe that this data is a reasonable approximation of all relevant retailers, and we have no reason to believe that the inclusion of additional retailers in the data collection process would materially change the conclusions that we have drawn from this data. In addition, statements in this prospectus regarding the characteristics and preferences of our customers are based on internal analyses of our customers that have not been independently verified. A broader sampling of our customers and different methodologies, among other variables, could lead to different results; however, we know of no better methodology for estimation, nor do we have any reason to believe that our consideration of additional or different survey data would materially change the conclusions that we have drawn from these surveys.
Same store sales
As used in this prospectus, the term "same store sales" generally refers to net sales from stores that have been open at least 13 full fiscal months as of the end of the current reporting period, although we include or exclude stores from our calculation of same store sales in accordance with the following additional criteria:
•
stores that are closed for five or fewer days in any fiscal month are included in same store sales; 

•
stores that are closed temporarily, but for more than five days in any fiscal month, are excluded from same store sales beginning in the fiscal month in which the temporary closure begins until the first full month of operation once the store re-opens; 

•
stores that are closed temporarily and relocated within their respective trade areas are included in same store sales; 

•
stores that are permanently closed are excluded from same store sales beginning in the month preceding closure; and 

•
acquired stores are added to same store sales beginning on the later of (a) the first day of the first fiscal month following its applicable acquisition date and (b) the first day of the first fiscal month after the store has been open for at least 13 full fiscal months regardless of whether the store has been operated under our management or predecessor management.
If the criteria described above are met, then all net sales of an acquired store, excluding those net sales before our acquisition of that store, are included for the period presented. However, when an acquired store is included for the period presented, the net sales of such acquired store for periods before its acquisition are included (to the extent relevant) for purposes of calculating "same stores sales growth" and illustrating the comparison between the applicable periods. Pre-acquisition net sales numbers are derived from the books and records of the acquired store, or acquired company in the case of RCC and Baskins, as prepared prior to the acquisition by the acquired store or acquired company and have not been independently verified by us.
iv

Table of Contents
In addition to retail store sales, same store sales also includes e-commerce sales, e-commerce shipping and handling revenue and actual retail store or e-commerce sales returns. We exclude gift card escheatment and our provision for sales returns and future award redemptions from our sales in deriving net sales per store.
As used in this prospectus, the term "same store sales growth" refers to the percentage change in our same store sales as compared to the prior comparable period.
We believe that same store sales and same store sales growth provide investors with helpful information about our operating performance. Some of our competitors and other retailers may calculate "same" or "comparable" store sales or "same" or "comparable" store sales growth differently than we do. As a result, data in this prospectus regarding our same store sales and same stores sales growth may not be comparable to similar data made available by our competitors and other retailers. In addition, data regarding same store sales and same store sales growth are not audited or reviewed by our independent registered public accounting firm.
Non-GAAP financial measures
EBITDA and Adjusted EBITDA are financial measures that are not calculated in accordance with GAAP. We define EBITDA as net income (loss) adjusted to exclude income tax expense (benefit), net interest expense and depreciation and intangible asset amortization. We define Adjusted EBITDA as EBITDA adjusted to exclude non-cash stock-based compensation, the non-cash accrual for future award redemptions, recapitalization expenses, acquisition expenses, acquisition-related integration and reorganization costs, amortization of inventory fair value adjustment, loss on disposal of assets and other unusual or non-recurring expenses. In this prospectus, we present these non-GAAP measures together with a reconciliation of EBITDA and Adjusted EBITDA to our net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP. See "Prospectus summary—Summary consolidated financial and other data" and "Selected consolidated financial data".
We include EBITDA and Adjusted EBITDA in this prospectus because they are important financial measures that our management, board of directors and lenders use to assess our operating performance. We use EBITDA and Adjusted EBITDA as key performance measures because we believe that they facilitate operating performance comparisons from period to period by excluding potential differences primarily caused by the impact of variations from period to period in tax positions, interest expense and depreciation and amortization, as well as, in the case of Adjusted EBITDA, excluding non-cash expenses, such as non-cash stock-based compensation and the non-cash accrual for future award redemptions, and unusual or non-recurring costs and expenses that are not directly related to our operations, including recapitalization expenses, acquisition expenses, acquisition-related integration and reorganization costs, amortization of inventory fair value adjustment, loss on disposal of assets and other unusual or nonrecurring expenses. Because EBITDA and Adjusted EBITDA facilitate internal comparisons of our historical operating performance on a more consistent basis, we also use EBITDA and Adjusted EBITDA (or some variations thereof) for business planning purposes, in calculating covenant compliance for our credit facilities, in determining incentive compensation for members of our management and in evaluating acquisition opportunities. In addition, we believe that EBITDA and Adjusted EBITDA and similar measures are widely used by investors, securities analysts, ratings agencies and other parties in evaluating companies in our industry as a measure of financial performance and debt-service capabilities.
v

Table of Contents
Our use of EBITDA and Adjusted EBITDA has limitations as an analytical tool. Some of these limitations are:
•
neither EBITDA nor Adjusted EBITDA reflects income tax expense or the cash requirements to pay our taxes; 

•
neither EBITDA nor Adjusted EBITDA reflects our cash expenditures for capital equipment, leasehold improvements or other contractual commitments; 

•
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and neither EBITDA nor Adjusted EBITDA reflects capital expenditure requirements for such replacements; 

•
neither EBITDA nor Adjusted EBITDA reflects the interest expense or the cash requirements necessary to service interest or principal payments under our credit facilities; and 

•
neither EBITDA nor Adjusted EBITDA reflects changes in, or cash requirements for, our working capital needs.
EBITDA and Adjusted EBITDA should not be considered in isolation or as alternatives to net income or any other measure of financial performance calculated and presented in accordance with GAAP. Given that EBITDA and Adjusted EBITDA are measures not deemed to be in accordance with GAAP and are susceptible to varying calculations, our EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies, including companies in our industry, because other companies may calculate EBITDA and Adjusted EBITDA in a different manner than we calculate these measures.
In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we may or may not incur expenses similar to some of the adjustments in this presentation. Our presentation of EBITDA and Adjusted EBITDA does not imply that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider EBITDA and Adjusted EBITDA alongside other financial performance measures, including our net income and other GAAP results, and not rely on any single financial measure.
vi

Table of Contents

 Prospectus summary
This summary highlights information contained elsewhere in this prospectus and does not contain all the information that you should consider in making your investment decision. Before investing in our common stock, you should read this entire prospectus carefully, including the sections entitled "Risk factors" and "Management's discussion and analysis of financial condition and results of operations" and our consolidated financial statements, condensed consolidated financial statements and related notes included elsewhere in this prospectus.
Our company
We are the largest and fastest-growing lifestyle retail chain devoted to western and work-related footwear, apparel and accessories in the U.S. With 155 stores in 24 states as of June 28, 2014, we have over twice as many stores as our nearest direct competitor that sells primarily western and work wear, and believe we have the potential to grow our store base to at least 400 domestic locations. Our stores, which are typically freestanding or located in strip centers, average 10,800 square feet and feature a comprehensive assortment of approximately 200 brands and more than 1,500 styles on average, coupled with attentive, knowledgeable store associates. We target a broad and growing demographic, ranging from passionate western and country enthusiasts, to workers seeking dependable, high-quality footwear and clothing. We strive to offer an authentic, one-stop shopping experience that fulfills the everyday lifestyle needs of our customers and, as a result, many of our customers make purchases in both the western and work wear sections of our stores. Our store environment, product offering and marketing materials represent the aesthetics of the true American West, country music and rugged, outdoor work. These threads are woven together in our motto, "Be True", which communicates the genuine and enduring spirit of the Boot Barn brand.
Our product offering is anchored by an extensive selection of western and work boots and is complemented by a wide assortment of coordinating apparel and accessories. Many of the items that we offer are basics or necessities for our customers' daily lives and typically represent enduring styles that are not impacted by changing fashion trends. We carry market-leading assortments of boots, denim, western shirts, cowboy hats, belts and belt buckles, western-style jewelry and accessories. Our western assortment includes many of the industry's most sought-after brands, such as Ariat , Dan Post , Justin , Levi Strauss , Lucchese , Miss Me , Montana Silversmiths , Resistol and Wrangler . Our work assortment includes rugged footwear, outerwear, overalls, denim and shirts for the most physically demanding jobs where durability, performance and protection matter, including safety-toe boots and flame-resistant and high-visibility clothing. Among the top work brands sold in our stores are Carhartt , Dickies , Timberland Pro and Wolverine . Our merchandise is also available on our e-commerce website, www.bootbarn.com.
Boot Barn was founded in 1978 and, over the past 36 years, has grown both organically and through successful strategic acquisitions of competing chains. We have rebranded and remerchandised the acquired chains under the Boot Barn banner, resulting in sales and profit increases over their original concepts. We believe that our business model and scale provide us with competitive advantages that have contributed to our consistent and strong financial performance, generating sufficient cash flow to support national growth, as evidenced by:
•
19 consecutive quarters of positive same store sales growth averaging 11.6% per quarter (see the diagram below) and same store sales growth of 6.7% in fiscal 2014;
 
1

Table of Contents

•
store base expansion to 155 stores as of June 28, 2014 from 86 stores as of the end of fiscal 2012, with 14 new stores resulting from organic growth and 55 new stores resulting from strategic acquisitions; 

•
an increase in net sales from $168.7 million to $345.9 million between fiscal 2012 and fiscal 2014, including our e-commerce sales, representing a 43.2% CAGR; 

•
an increase in Adjusted EBITDA from $21.7 million to $40.3 million between fiscal 2012 and fiscal 2014, representing a 36.2% CAGR (see "—Summary consolidated financial and other data" for a discussion and reconciliation of Adjusted EBITDA to net income); and 

•
an increase in net income from a net loss of $5.3 million to net income of $5.7 million between fiscal 2012 and fiscal 2014.
Quarterly same store sales growth
 19 consecutive quarters of growth

For a description of the manner in which we calculate same store sales see "Same store sales" at the beginning of this prospectus.
Our competitive strengths
We believe the following strengths differentiate us from our competitors and provide a solid foundation for future growth:
Powerful lifestyle brand.     Our deep understanding of the western lifestyle enables us to create long-lasting relationships with our customers. Our brand is highly visible through our sponsorship of western events, which, in fiscal 2014, included 257 local community rodeos, 9 national rodeos and 89 other country and western events. We believe these grassroots marketing efforts make our brand synonymous with the western lifestyle, validate our brand's authenticity and establish Boot Barn as the trusted specialty retailer for all of our customers' everyday needs.
Largest and fastest growing specialty retailer of western and work wear in the U.S.     Our broad geographic footprint, which currently spans 24 states, provides us with significant economies of scale, enhanced supplier relationships, the ability to recruit and retain high quality store associates and the
 
2

Table of Contents

ability to reinvest in our business at levels that we believe exceed those of our competition. Over the past two fiscal years, we have grown our stores at a 32.9% CAGR.
Attractive, loyal customer base.     Our customers come to us for many aspects of their everyday footwear and clothing needs because of the breadth and availability of our product offering. Our loyalty program, B Rewarded, has grown rapidly since its inception in 2011, and includes approximately 2.2 million members who have purchased merchandise from us as of September 1, 2014. Approximately 90% of our sales in fiscal 2014 were generated by customers who were already in our loyalty program or signed up to participate in our loyalty program at the time of their purchase.
Differentiated shopping experience.     We deliver a one-stop shopping experience that engages our customers and, we believe, fulfills their lifestyle needs. Our stores are designed to create an inviting and engaging experience and feature strong in-stock positions across our broad assortment of boots, apparel and accessories. Our knowledgeable store associates are passionate about our merchandise and deliver a high level of service to our customers. These elements help promote customer loyalty and drive repeat visits.
Compelling merchandise assortment and strategy.     We believe we offer a diverse merchandise assortment that features the most sought-after western and work wear brands, well-regarded niche brands and exclusive private brands across a range of boots, apparel and accessories. In fiscal 2014, the vast majority of our merchandise sales were at full price, which, we believe, demonstrates the strength of our brand and the less discretionary nature of our product offering.
Portfolio of exclusive private brands.     We have leveraged our scale, merchandising experience and customer knowledge to launch a portfolio of private brands exclusive to us, including Shyanne , Cody James , American Worker and BB Ranch . Our private brands offer high-quality western and work boots as well as apparel and accessories for men, ladies and kids and address product and price segments that we believe are underserved by third-party brands.
Versatile store model with compelling unit economics.     We have successfully opened and currently operate stores that generate strong cash flow, consistent store-level financial results and an attractive return on investment across a variety of geographies, markets, store sizes and location types. As of the end of fiscal 2014, all of our stores included in same store sales were profitable. Our new store model requires an average net cash investment of approximately $670,000 and targets an average payback period of less than three years.
Highly experienced management team and passionate organization.     Our senior management team has extensive experience across all key retail disciplines. With an average of approximately 25 years of experience in their respective functional areas, our senior management team has been instrumental in developing a robust and scalable infrastructure to support our growth. Our senior management team embraces the genuine and enduring qualities of the western lifestyle and has created a positive culture of enthusiasm and entrepreneurial spirit which is shared by team members throughout our entire organization. Our strong company culture is exemplified by the long tenure of our employees at all levels. For example, our district and regional managers have an average of eight years of service with us and our store managers have an average of more than five years of service with us, including the companies acquired by us.
 
3

Table of Contents

Our growth strategies
We are pursuing several strategies to continue our profitable growth, including:
Expanding our store base.     Driven by our compelling store economics and based on an extensive internal analysis, we believe that we have the potential to grow our domestic store base from 155 stores as of June 28, 2014 to at least 400 domestic locations. We currently plan to target new store openings in both existing markets and new, adjacent and underserved markets. Over the past several years, we have made significant investments in personnel, information technology, warehouse infrastructure and an e-commerce platform to support the expansion of our operations. We believe that we can grow our store base in the U.S. by at least 10% annually for the next several years.
Driving same store sales growth.     We believe that we can continue to grow our same store sales by increasing our brand awareness, driving additional traffic to our stores and increasing the amount of merchandise purchased by customers while visiting our stores. Our management team has launched several initiatives to accelerate growth, enhance our store associates' selling skills, drive store-level productivity and increase customer engagement through our loyalty program.
Enhancing brand awareness.     We intend to enhance our brand awareness and customer loyalty in a number of ways, such as continuing to grow our store base and our online and social media initiatives. We use broadcast media such as radio, television and outdoor advertisements, to reach customers in new and existing markets. We also have an effective social media strategy with high customer engagement, as evidenced by our Facebook fan base. According to Internet Retailer, we were ranked number one for having the fastest growing fan base of all merchants covered by their survey released in January 2014. (1) As of September 1, 2014, our Facebook fan base eclipsed 2.1 million fans.
Growing our e-commerce business.     We continue to make investments aimed at increasing traffic to our e-commerce website, which reached over 7.5 million visits in fiscal 2014, and increasing the amount of merchandise purchased by customers who visit our website, while improving the shopping experience for our customers. Since re-launching our e-commerce website with a new platform in fiscal 2011, our e-commerce sales have grown at a 38.2% CAGR. Our e-commerce business allows us to reach customers outside our geographic footprint, with 32.7% of our domestic e-commerce sales during fiscal 2014 being made to customers in states where we do not operate stores.
Increasing profitability.     Our ability to leverage our infrastructure and drive store-level productivity due to economies of scale is expected to be a primary driver of our improvement in profitability. We intend to continually refine our merchandise mix and increase the penetration of our private brands to help differentiate us from our competitors and achieve higher merchandise margins. We also expect to capitalize on additional economies of scale in purchasing and sourcing as we grow our geographic footprint and online presence.
Our market opportunity
We participate in the large, growing and highly fragmented western and work wear markets of the broader apparel and footwear industry. We offer a variety of boots, apparel and accessories that are basics or necessities for our customers' daily lives. Many of our customers are employed in the agriculture, oil and gas, manufacturing and construction industries, and are often country and western enthusiasts.

(1)    Source: Stefany Moore, How Boot Barn uses Facebook to build a national brand , Internet Retailer (January 9, 2014), http://www.internetretailer.com/2014/01/09/how-boot-barn-uses-facebook-build-national-brand.
 
4

Table of Contents

The following data regarding these markets is derived from the Mōd study referenced at the beginning of this prospectus. See "Industry and market data". The U.S. western and work wear markets represented approximately $8 billion and $12 billion in retail sales, respectively, in calendar year 2013. The western wear market is composed of footwear, apparel and accessories, which in 2013 represented approximately $3.0 billion, $3.5 billion and $1.5 billion in retail sales, respectively. The work wear market is composed of footwear and apparel, which in 2013 represented approximately $3.0 billion and $9.0 billion in retail sales, respectively. Between 2009 and 2013, the western and work wear markets experienced estimated annual retail sales growth of approximately 6% to 8% and 1% to 3%, respectively. Over the next three to five years, Mōd estimates that retail sales in the western and work wear markets will grow annually at approximately 3% to 5% and 2% to 4%, respectively. We believe that growth in the western wear market has been and will continue to be driven by the growth of western events, such as rodeos, the popularity of country music and the continued strength and endurance of the western lifestyle. We believe that growth in the work wear market has been and will continue to be driven by increased output and employment in the oil and gas industries, increasing activity in the construction sector and the return of domestic manufacturing. Additionally, government regulations for workplace safety have driven and, we believe, will continue to drive, sales in specific categories, such as safety-toe boots and flame-resistant and high-visibility clothing for various industrial and outdoor occupations.
Risks associated with our business
We believe that our business strategy will continue to offer significant opportunities, but it also presents risks and challenges. These risks and challenges include, but are not limited to, the following:
•
there may be a decline in consumer spending or changes in consumer preferences; 

•
we may not be able to effectively execute on our growth strategy, including our store growth plan; 

•
we may not be able to maintain and enhance our strong brand image; 

•
we may not compete effectively; 

•
we may not be able to maintain good relationships with our key suppliers; 

•
we may not be able to improve and expand our exclusive product offerings; and 

•
there may be a substantial increase in product costs or general inflation.
See "Risk factors" for other important factors that could adversely impact our results of operations.
Our sponsor
Freeman Spogli & Co. is a private equity firm dedicated exclusively to investing and partnering with management in consumer-related and distribution companies in the U.S. Since its founding in 1983, Freeman Spogli & Co. has invested $3.3 billion of equity in 50 portfolio companies with aggregate transaction values of $20 billion. Freeman Spogli & Co. acquired its shares of our common stock in December 2011 in a transaction that we refer to as the Recapitalization. See "Management's discussion and analysis of financial condition and results of operations—Factors affecting comparability of results of operations—Recapitalization". Following the completion of this offering, Freeman Spogli & Co. will beneficially own approximately         % of our outstanding common stock, or         % if the underwriters fully exercise their option to purchase additional shares. It is possible that the interests of Freeman
 
5

Table of Contents

Spogli & Co. may in some circumstances conflict with our interests and the interests of our other stockholders.
Our corporate information
Boot Barn Holdings, Inc. was formed in Delaware on November 17, 2011 as WW Top Investment Corporation to facilitate the Recapitalization. On June 9, 2014, WW Holding Corporation and Boot Barn Holding Corporation were each merged with and into WW Top Investment Corporation. On June 10, 2014, the legal name of WW Top Investment Corporation was changed to Boot Barn Holdings, Inc. Our principal executive offices are located at 15776 Laguna Canyon Road, Irvine, California, 92618 and our telephone number is (949) 453-4400. Our website address is www.bootbarn.com. We do not incorporate the information contained on, or accessible through, our corporate website into this prospectus, and you should not consider it part of this prospectus. We have included our website address only as an inactive textual reference and do not intend it to be an active link to our website.
Implications of being an emerging growth company
We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, which we refer to as the JOBS Act. We will remain an emerging growth company until the earlier of (1) the last day of our fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of our most recently completed second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
•
the option to report only two years of audited financial statements and to present management's discussion and analysis of financial condition and results of operations for only those two years; 

•
exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002, which we refer to as the Sarbanes-Oxley Act, requiring that an independent registered public accounting firm provide an attestation report on the effectiveness of our internal controls over financial reporting; 

•
exemption from the "say on pay" and "say on golden parachute" advisory vote requirements of the Dodd-Frank Wall Street Reform and Customer Protection Act, which we refer to as the Dodd-Frank Act; 

•
exemption from certain disclosure requirements of the Dodd-Frank Act relating to compensation of our executive officers and permission to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act; and 

•
permission to provide a reduced level of disclosure concerning executive compensation and exemption from any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor's report on the financial statements.
We have not taken advantage of certain of these reduced reporting burdens in this prospectus, although we may choose to do so in future filings. If we do take advantage of any of these exemptions, we cannot
 
6

Table of Contents

predict if investors will find our common stock less attractive, or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our common stock.
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, which we refer to as the Securities Act, for complying with new or revised accounting standards. However, we are choosing to "opt out" of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
 
7

Table of Contents

 The offering

			
Common stock offered by us	 	                       Shares	

Common stock offered by the selling stockholders	
 	
                       Shares	

Common stock outstanding after this offering	
 	
                       Shares	

 	
The number of shares of our common stock outstanding after this offering is based on the assumptions outlined below.	

Underwriters' option to purchase additional shares from the selling stockholders	
 	
                       Shares	

Use of proceeds	
 	
We estimate that we will receive net proceeds from the sale of the shares of our common stock in this offering of approximately $          million, assuming an initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any proceeds from the sale of shares being sold by the selling stockholders, including any shares sold by the selling stockholders in connection with the underwriters' exercise of their option to purchase additional shares, although we will pay the expenses (other than underwriting discounts and commissions) associated with the sale of those shares.	

 	
We intend to use the net proceeds of this offering to repay a portion of our existing term loan facility, including applicable prepayment penalties and fees. See "Use of proceeds".	

Risk factors	
 	
See "Risk factors" on page 14 and the other information in this prospectus for a discussion of factors you should carefully consider before you decide to invest in our common stock.	

8

Table of Contents

			
Dividend policy	 	We anticipate that we will retain all of our available funds to repay existing indebtedness and for use in the operation and expansion of our business for the foreseeable future. Any future determination as to the payment of cash dividends on our common stock will be at the discretion of our board of directors and will depend on our financial condition, operating results, current and anticipated cash needs, plans for expansion, legal requirements and other factors that our board of directors considers to be relevant. In addition, financial and other covenants in our credit facilities and in any credit facilities, debt instruments or other agreements that we enter into in the future may restrict our ability to pay cash dividends on our common stock. See "Dividend policy".	

Proposed listing and symbol	
 	
We intend to apply to have our common stock listed on the New York Stock Exchange, or NYSE, under the symbol "BOOT".	
Unless otherwise indicated, information in this prospectus assumes:
•
an initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus and 

•
the underwriters have not exercised their option to purchase additional shares in this offering.
The number of shares outstanding immediately after this offering is based on 797,174 shares of common stock outstanding as of September 1, 2014 and excludes:
•
108,810 shares of our common stock issuable upon the exercise of options outstanding as of the date of this prospectus under our 2011 Equity Incentive Plan at a weighted average exercise price of $160.34; 

•
1,290 shares of our common stock issuable upon the exercise of options outstanding as of the date of this prospectus under our 2007 Stock Incentive Plan at a weighted average exercise price of $0.04; and 

•
an additional                           shares of our common stock reserved for future issuance under our 2011 Equity Incentive Plan. See "Executive and director compensation".
 
9

Table of Contents

 Summary consolidated financial and other data
The following tables summarize our consolidated financial and other data as of and for the periods indicated, as well as certain "as adjusted" financial data. We have derived the summary consolidated statement of operations data for the years ended March 31, 2012, March 30, 2013 and March 29, 2014 and the consolidated balance sheet data as of March 30, 2013 and March 29, 2014 from the audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated statements of operations data for the thirteen weeks ended June 29, 2013 and June 28, 2014 and the consolidated balance sheet data as of June 28, 2014 have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. The unaudited interim condensed consolidated financial statements were prepared on the same basis as our audited consolidated financial statements. In our opinion, such financial statements reflect all adjustments that are of a normal and recurring nature necessary to fairly present our financial position and results of operations in all material respects as of the dates and for the periods presented. The results of operations presented in the unaudited interim condensed consolidated financial statements are not necessarily indicative of the results that may be expected for a full fiscal year or in any future period.
The as adjusted consolidated balance sheet data as of June 28, 2014 is presented after giving effect to the offering contemplated by this prospectus and the application of the net proceeds received by us in the offering to repay outstanding indebtedness as described under "Use of proceeds", as though this offering and the application of net proceeds had occurred as of such date. The unaudited as adjusted financial data does not purport to represent what our results will be in future periods.
The consolidated statement of operations data and consolidated balance sheet data include the financial position, results of operations and cash flows of RCC and Baskins since their respective dates of acquisition in August 2012 and May 2013.
You should read the following summary consolidated financial and other data together with the sections of this prospectus titled "Use of proceeds", "Capitalization", "Selected consolidated financial data" and "Management's discussion and analysis of financial condition and results of operations" and the consolidated financial statements, condensed consolidated financial statements and related notes included elsewhere in this prospectus.
 
10

Table of Contents

																	
 	 	
 	 	Fiscal year ended (1)	 	Thirteen weeks ended	 	
(in thousands, except per share data)	 	March 29,
2014	 	March 30,
2013	 	March 31,
2012	 	June 28,
2014	 	June 29,
2013	 	
 	 	
Consolidated statement of operations data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	345,868	 	$	233,203	 	$	168,696	 	$	82,497	 	$	64,574	 	
Cost of goods sold	 	 	231,796	 	 	151,357	 	 	109,442	 	 	55,607	 	 	42,146	 	
Amortization of inventory fair value adjustment	 	 	867	 	 	9,199	 	 	9,369	 	 	—	 	 	145	 	
 	 	 	 	
Total cost of goods sold	 	 	232,663	 	 	160,556	 	 	118,811	 	 	55,607	 	 	42,291	 	
 	 	 	 	
Gross profit	 	 	113,205	 	 	72,647	 	 	49,885	 	 	26,890	 	 	22,283	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	 	 	91,998	 	 	62,609	 	 	40,914	 	 	21,497	 	 	18,845	 	
Acquisition-related expenses (2)	 	 	671	 	 	1,138	 	 	10,363	 	 	—	 	 	671	 	
 	 	 	 	
Total operating expenses	 	 	92,669	 	 	63,747	 	 	51,277	 	 	21,497	 	 	19,516	 	
 	 	 	 	
Income (loss) from operations	 	 	20,536	 	 	8,900	 	 	(1,392	)	 	5,393	 	 	2,767	 	
Interest expense, net	 	 	11,594	 	 	7,415	 	 	5,126	 	 	2,757	 	 	5,078	 	
Other income, net	 	 	39	 	 	21	 	 	75	 	 	18	 	 	8	 	
 	 	 	 	
Income (loss) before income taxes          	 	 	8,981	 	 	1,506	 	 	(6,443	)	 	2,654	 	 	(2,303	)	
Income tax expense (benefit)	 	 	3,321	 	 	826	 	 	(1,182	)	 	1,241	 	 	(858	)	
 	 	 	 	
Net income (loss)	 	 	5,660	 	 	680	 	 	(5,261	)	 	1,413	 	 	(1,445	)	
 	 	 	 	
Net income (loss) attributed to non-controlling interest	 	 	283	 	 	34	 	 	(230	)	 	4	 	 	(72	)	
 	 	 	 	
Net income (loss) attributed to Boot Barn Holdings, Inc. 	 	$	5,377	 	$	646	 	$	(5,031	)	$	1,409	 	$	(1,373	)	
 	 	 	 	
Net income (loss) per share: (3)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic shares	 	$	7.10	 	$	0.86	 	 	 	 	$	(0.05	)	$	(1.81	)	
Diluted shares	 	$	7.01	 	$	0.86	 	 	 	 	$	(0.05	)	$	(1.81	)	
Weighted average shares outstanding:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic shares	 	 	757	 	 	750	 	 	 	 	 	766	 	 	757	 	
Diluted shares	 	 	767	 	 	750	 	 	 	 	 	766	 	 	757	 	
As adjusted net income (loss) per share: (4)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic shares	 	$	 	 	$	 	 	 	 	 	$	 	 	$	 	 	
Diluted shares	 	$	 	 	$	 	 	 	 	 	$	 	 	$	 	 	
As adjusted weighted average shares outstanding: (4)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic shares	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted shares	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

11

Table of Contents

																	
 	 	
 	 	Fiscal year ended (1)	 	Thirteen weeks ended	 	
(in thousands, except selected store data)	 	March 29,
2014	 	March 30,
2013	 	March 31,
2012	 	June 28,
2014	 	June 29,
2013	 	
 	 	
Other financial data (unaudited):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA (5)	 	$	28,704	 	$	14,509	 	$	996	 	$	7,469	 	$	4,355	 	
Adjusted EBITDA (5)	 	$	40,271	 	$	28,933	 	$	21,702	 	$	7,789	 	$	5,900	 	
Capital expenditures	 	$	11,400	 	$	3,848	 	$	2,753	 	$	1,803	 	$	1,909	 	
Selected store data (unaudited):	 	 	

 	 	 	

Same store sales growth	 	 	6.7%	 	 	12.4%	 	 	18.1%	 	 	7.7%	 	 	8.4%	 	
Stores operating at end of period	 	 	152	 	 	117	 	 	86	 	 	155	 	 	149	 	
Total retail store square footage, end of period (in thousands)	 	 	1,642	 	 	1,082	 	 	814	 	 	1,676	 	 	1,591	 	
Average store square footage, end of period	 	 	10,801	 	 	9,251	 	 	9,466	 	 	10,811	 	 	10,676	 	
Average net sales per store (in thousands) (6)	 	$	2,162	 	$	1,861	 	$	1,840	 	$	511	 	$	419	 	

														
 	 	
 	 	As of	 	
(in thousands)	 	March 29,
2014	 	March 30,
2013	 	June 28,
2014	 	As adjusted
June 28,
2014 (7)	 	
 	 	
Consolidated balance sheet data:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	1,118	 	$	1,190	 	$	1,115	 	 	 	 	
Working capital	 	 	56,786	 	 	37,174	 	 	61,813	 	 	 	 	
Total assets	 	 	291,863	 	 	224,282	 	 	301,339	 	 	 	 	
Total debt	 	 	128,124	 	 	88,410	 	 	172,594	 	 	 	 	
Stockholders' equity	 	 	84,575	 	 	77,624	 	 	45,130	 	 	 	 	
 	 	
(1)    We operate on a fiscal calendar that results in a 52- or 53-week fiscal year ending on the Saturday closest to March 31. In a 52-week fiscal year, each quarter includes 13 weeks of operations; in a 53-week fiscal year, the first, second and third quarters each include 13 weeks of operations and the fourth quarter includes 14 weeks of operations. The data presented contain references to fiscal 2012, fiscal 2013 and fiscal 2014, which represent our fiscal years ended March 31, 2012, March 30, 2013 and March 29, 2014, respectively, all of which were 52-week periods. The results include the activities of RCC from August 2012 and Baskins from May 2013, their respective dates of acquisition. The period from April 3, 2011 to December 11, 2011, which is presented separately as the "Predecessor Period" in our consolidated financial statements and the related notes included elsewhere in this prospectus, consisted of approximately 36 weeks. The period from December 12, 2011 to March 31, 2012, which is presented separately as the "Successor Period" in our consolidated financial statements and the related notes included elsewhere in this prospectus, consisted of approximately 16 weeks. The Predecessor Period and the Successor Period have been combined and presented together as fiscal 2012. A presentation of these two periods in this manner is more reflective of how we assess the performance of our business and we believe that it facilitates comparisons of fiscal 2012 to our other fiscal years.
(2)    Represents costs incurred in connection with the acquisitions of RCC and Baskins, as well as the Recapitalization.
(3)    Net loss per share for the thirteen weeks ended June 28, 2014 reflects the deduction from net income, for purposes of determining the net income available to common stockholders, of the cash payment of $1.4 million made in April 2014 to holders of vested stock options. See "Management's discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Financing activities."
(4)   As adjusted per share data gives effect to (i) the sale by us of              shares of our common stock in this offering, assuming an initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and (ii) the application of the net proceeds of this offering as described under "Use of proceeds", in each case assuming such events occurred on June 28, 2014. Basic and diluted as adjusted net income per share consists of as adjusted net income divided by the basic and diluted as adjusted weighted average number of shares of common stock outstanding. As adjusted net income per share reflects the net decrease in interest expense of $              resulting from our intended repayment of debt under our credit facilities as described in "Use of proceeds". Interest expense is calculated as though we repaid a portion of our outstanding indebtedness under our credit facilities with the net proceeds from this offering on June 28, 2014.
(5)    EBITDA and Adjusted EBITDA are financial measures that are not calculated in accordance with GAAP. We define EBITDA as net income (loss) adjusted to exclude income tax expense (benefit), net interest expense and depreciation and intangible asset amortization. We define Adjusted EBITDA as EBITDA adjusted to exclude non-cash stock-based compensation, the non-cash accrual for future award redemptions, recapitalization expenses, acquisition expenses, acquisition-related integration and reorganization costs, amortization of inventory fair value adjustment, loss on disposal of assets and other unusual or non-recurring expenses. We include EBITDA and Adjusted EBITDA in this prospectus

12

Table of Contents

because they are important financial measures which our management, board of directors and lenders use to assess our operating performance. EBITDA and Adjusted EBITDA should not be considered in isolation or as alternatives to net income or any other measure of financial performance calculated and presented in accordance with GAAP. Given that EBITDA and Adjusted EBITDA are measures not deemed to be in accordance with GAAP and are susceptible to varying calculations, our EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies, including companies in our industry, because other companies may calculate EBITDA and Adjusted EBITDA in a different manner than we calculate these measures. See "Non-GAAP financial measures" at the beginning of this prospectus. The following table presents a reconciliation of EBITDA and Adjusted EBITDA to our net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, for each of the periods indicated:

																	
 	 	
 	 	Fiscal year ended	 	Thirteen weeks ended	 	
(in thousands)	 	March 29,
2014	 	March 30,
2013	 	March 31,
2012	 	June 28,
2014	 	June 29,
2013	 	
 	 	
EBITDA reconciliation:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	 	$	5,660	 	$	680	 	$	(5,261	)	$	1,413	 	$	(1,445	)	
Income tax expense (benefit)	 	 	3,321	 	 	826	 	 	(1,182	)	 	1,241	 	 	(858	)	
Interest expense, net	 	 	11,594	 	 	7,415	 	 	5,126	 	 	2,757	 	 	5,078	 	
Depreciation and intangible asset amortization          	 	 	8,129	 	 	5,588	 	 	2,313	 	 	2,058	 	 	1,580	 	
 	 	 	 	
EBITDA	 	 	28,704	 	 	14,509	 	 	996	 	 	7,469	 	 	4,355	 	
Non-cash stock-based compensation (a)	 	 	1,291	 	 	787	 	 	99	 	 	442	 	 	210	 	
Non-cash accrual for future award redemptions (b)           	 	 	591	 	 	219	 	 	854	 	 	(184	)	 	180	 	
Recapitalization expenses (c)	 	 	—	 	 	—	 	 	10,363	 	 	—	 	 	—	 	
Acquisition expenses (d)	 	 	671	 	 	1,138	 	 	—	 	 	—	 	 	667	 	
Acquisition-related integration and reorganization costs (e)	 	 	6,167	 	 	2,061	 	 	—	 	 	—	 	 	343	 	
Amortization of inventory fair value adjustment (f)	 	 	867	 	 	9,199	 	 	9,369	 	 	—	 	 	145	 	
Loss on disposal of assets (g)           	 	 	1,980	 	 	322	 	 	21	 	 	62	 	 	—	 	
Other unusual or non-recurring expenses (h)	 	 	—	 	 	698	 	 	—	 	 	—	 	 	—	 	
 	 	 	 	
Adjusted EBITDA	 	$	40,271	 	$	28,933	 	$	21,702	 	$	7,789	 	$	5,900	 	
 	 	
(a)    Represents non-cash compensation expenses related to stock options granted to certain of our employees.
(b)   Represents non-cash accrual for future award redemptions in connection with our customer loyalty program.
(c)    Represents non-capitalized costs associated with the Recapitalization.
(d)   Represents direct costs and fees related to the acquisitions of RCC and Baskins, which we acquired in August 2012 and May 2013, respectively.
(e)    Represents certain store integration, remerchandising and corporate consolidation costs incurred in connection with the integrations of RCC and Baskins, which we acquired in August 2012 and May 2013, respectively.
(f)    Represents the amortization of purchase-accounting adjustments that increased the value of inventory acquired to its fair value.
(g)    Represents loss on disposal of assets in connection with the rebranding of RCC and Baskins acquired stores and store closures, as well as other costs.
(h)   Represents professional fees and expenses incurred in connection with other acquisition activity.
(6)   Average net sales per store is calculated by dividing net sales for the applicable period by the number of stores operating at the end of the period. For the purpose of calculating net sales per store, e-commerce sales and certain other revenues are excluded from net sales.
(7)    As adjusted balance sheet data as of June 28, 2014 gives effect to (i) the sale by us of                                         sha res of our common stock in this offering, assuming an initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us and (ii) the application of the net proceeds of this offering as described under "Use of proceeds".

13

Table of Contents

 Risk factors
Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this prospectus, including our consolidated financial statements, condensed consolidated financial statements and related notes included elsewhere in this prospectus, before deciding whether to purchase shares of our common stock. If any of the following risks are realized, our business, operating results and prospects could be materially and adversely affected. In that event, the price of our common stock could decline, and you could lose part or all of your investment.
Risks related to our business
Our sales could be severely impacted by declines in consumer confidence and decreases in consumer spending or by changes in consumer preferences.
We depend upon consumers feeling confident about spending discretionary income on our products to drive our sales. Consumer spending may be adversely impacted by economic conditions, such as consumer confidence in future economic conditions, interest and tax rates, employment levels, salary and wage levels, general business conditions, the availability of consumer credit and the level of housing, energy and food costs. These risks may be exacerbated for retailers like us who focus on specialty footwear, apparel and accessories. Our financial performance is particularly susceptible to economic and other conditions in California and other western states where we have a significant number of stores. Our financial performance may also be susceptible to economic and other conditions relating to output and employment in the oil and gas industries, the construction sector, domestic manufacturing and the transportation and warehouse sectors because we believe that growth in these industries and sectors have driven the growth of our work wear business. In addition, our financial performance may be negatively affected if the popularity of the western and country lifestyle subsides, or if there is a general trend in consumer preferences away from boots and other western or country products in favor of another general category of footwear or attire. If this were to occur or if periods of decreased consumer spending persist, our sales could decrease, which could have a material adverse effect on our financial condition and results of operations.
Our continued growth depends upon successfully opening a significant number of new stores as well as integrating any acquired stores, and our failure to successfully open new stores or integrate acquired stores could negatively affect our business and stock price.
We have grown our store count rapidly in recent years, both organically and through strategic acquisitions of competing chains. However, we must continue to open and operate new stores to help maintain our revenue and profit growth. Our ability to successfully open and operate new stores is subject to a variety of risks and uncertainties, such as:
•
identifying suitable store locations, the availability of which is beyond our control;
•
obtaining acceptable lease terms;
•
sourcing sufficient levels of inventory;
•
selecting the appropriate merchandise to appeal to our customers;
•
hiring, training and retaining store employees;
•
assimilating new store employees into our corporate culture;
•
marketing the new stores' locations and product offerings effectively;
•
avoiding construction delays and cost overruns in connection with the build out of new stores;
•
managing and expanding our infrastructure to accommodate growth; and
•
integrating the new stores with our existing buying, distribution and other support operations.
14

Table of Contents
Our failure to successfully address these challenges could have a material adverse effect on our financial condition and results of operations. We opened three stores during the thirteen weeks ended June 28, 2014, nine stores in fiscal 2014 and four stores in fiscal 2013. We currently plan to open at least 14 new stores in the remainder of fiscal 2015. However, there can be no assurance that we will open the planned number of new stores in fiscal 2015 or thereafter, or that any such stores will be profitable. This expansion will place increased demands on our operational, managerial and administrative resources. These increased demands could cause us to operate our existing business less effectively, which in turn could cause the financial performance of our existing stores to deteriorate. In addition, we currently plan to open some new stores within existing markets. Some of these new stores may open close enough to our existing stores that a segment of customers will stop shopping at our existing stores and instead shop at the new stores, causing sales and profitability at those existing stores to decline. If this were to occur with a number of our stores, this could have a material adverse effect on our financial condition and results of operations.
In addition to opening new stores, we may acquire stores. Acquiring and integrating stores involves additional risks that could adversely affect our growth and results of operation. Newly acquired stores may be unprofitable and we may incur significant costs and expenses in connection with any acquisition including in remerchandising and rebranding the acquired stores. Integrating newly acquired stores may divert our senior management's attention from our core business. Our ability to integrate newly acquired stores will depend on the successful expansion of our existing financial controls, distribution model, information systems, management and human resources and on attracting, training and retaining qualified employees.
Our business largely depends on a strong brand image, and if we are unable to maintain and enhance our brand image, particularly in new markets where we have limited brand recognition, we may be unable to increase or maintain our level of sales.
We believe that our brand image and brand awareness has contributed significantly to the success of our business. We also believe that maintaining and enhancing our brand image, particularly in new markets where we have limited brand recognition, is important to maintaining and expanding our customer base. Our ability to successfully integrate new stores into their surrounding communities, to expand into new markets or to maintain the strength and distinctiveness of our brand image in our existing markets will be adversely impacted if we fail to connect with our target customers. Maintaining and enhancing our brand image may require us to make substantial investments in areas such as merchandising, marketing, store operations, community relations, store graphics and employee training, which could adversely affect our cash flow and which may ultimately be unsuccessful. Furthermore, our brand image could be jeopardized if we fail to maintain high standards for merchandise quality, if we fail to comply with local laws and regulations or if we experience negative publicity or other negative events that affect our image and reputation. Some of these risks may be beyond our ability to control, such as the effects of negative publicity regarding our suppliers. Failure to successfully market and maintain our brand image in new and existing markets could harm our business, results of operations and financial condition.
Our failure to adapt to new challenges that arise when expanding into new geographic markets could adversely affect our ability to profitably operate those stores and maintain our brand image.
Our expansion into new geographic markets could result in competitive, merchandising, distribution and other challenges that are different from those we encounter in the geographic markets in which we currently operate. In addition, as the number of our stores increases, we may face risks associated with market saturation of our product offerings and locations. Our suppliers may also restrict their sales to us
15

Table of Contents
in new markets to the extent they are already saturating that market with their products through other retailers or their own stores. There can be no assurance that any newly opened stores will be received as well as, or achieve net sales or profitability levels comparable to those of, our existing stores in the time periods estimated by us, or at all. If our stores fail to achieve, or are unable to sustain, acceptable net sales and profitability levels, our business may be materially harmed, we may incur significant costs associated with closing those stores and our brand image may be negatively impacted.
We face intense competition in our industry and we may be unable to compete effectively.
The retail industry for western and work wear is highly fragmented and characterized by primarily regional competitors. We estimate that there are thousands of independent specialty stores scattered across the country. We believe that we compete primarily with smaller regional chains and independents on the basis of product quality, brand recognition, price, customer service and the ability to identify and satisfy consumer demand. However, we also compete with farm supply stores, online retailers and, to a lesser degree, mass merchants. Competition with some or all of these retailers could require us to lower our prices or risk losing customers. In addition, significant or unusual promotional activities by our competitors may force us to respond in-kind and adversely impact our operating cash flow. As a result of these factors, current and future competition could have a material adverse effect on our financial condition and results of operations.
Many of the mass merchants that sell some western or work wear products have greater financial, marketing and other resources than we currently do, and therefore may be able to devote greater resources to the marketing and sale of these products, generate national brand recognition or adopt more aggressive pricing policies than we can, which would put us at a competitive disadvantage if they decide to expand their offerings of these product lines. Moreover, we do not possess exclusive rights to many of the elements that comprise our in-store experience and product offerings. Our competitors may seek to emulate facets of our business strategy and in-store experience, which could result in a reduction of some competitive advantages or special appeal that we might possess. In addition, most of our suppliers sell products to us on a non-exclusive basis. As a result, our current and future competitors may be able to duplicate or improve on some or all of the product offerings that we believe are important in differentiating our stores and our customers' shopping experience. If our competitors were to duplicate or improve on some or all of our in-store experience or product offerings, our competitive position and our business could suffer.
We depend on cash generated from our existing store operations to support our growth, which could strain our cash flow.
We primarily rely on cash flow generated from existing stores to fund our current operations and our growth. It typically takes several months and a significant amount of cash to open a new store. For example, our new store model requires an average net cash investment of approximately $670,000. If we continue to open a large number of stores relatively close in time, the cost of these store openings and the cost of continuing operations could reduce our cash position. An increase in our net cash outflow for new stores could adversely affect our operations by reducing the amount of cash available to address other aspects of our business.
In addition, as we expand our business, we will need significant amounts of cash from operations to pay our existing and future lease obligations, build out new store space, purchase inventory, pay personnel, pay for the increased costs associated with operating as a public company and, if necessary, further invest in our infrastructure and facilities. If our business does not generate sufficient cash flow from operations
16

Table of Contents
to fund these activities, and sufficient funds are not otherwise available from our existing or future credit facilities, we may need additional equity or debt financing. If such financing is not available to us on satisfactory terms, our ability to operate and expand our business or to respond to competitive pressures would be limited and we could be required to delay, curtail or eliminate planned store openings. Moreover, if we raise additional capital by issuing equity securities or securities convertible into equity securities, your ownership may be diluted. Any debt financing we may incur may impose covenants that restrict our operations, and will require interest payments that would create additional cash demands and financial risk for us.
We have expanded rapidly in recent years and have limited operating experience at our current size.
We have significantly expanded our operations in the last three years, increasing our locations from 86 stores in eight states as of the end of fiscal 2012 to 155 stores in 24 states as of June 28, 2014. If our operations continue to grow, we will be required to expand our sales, marketing and support services and our administrative personnel, and we may decide to change our distribution model. This expansion could increase the strain on our existing resources, causing operational difficulties such as difficulties in hiring, obtaining adequate levels of merchandise, and delayed shipments and decreased levels of customer service. These difficulties could cause our brand image to deteriorate and lead to a decrease in our revenues and income and the price of our common stock.
Any significant change in our distribution model could initially have an adverse impact on our cash flows and results of operations.
During fiscal 2014, our suppliers shipped approximately 94% of our in-store merchandise units directly to our stores and approximately 46% of our e-commerce merchandise units directly to our e-commerce customers. In the future, as part of our long-term strategic planning, we may change our distribution model to increase the amount of merchandise that we self-distribute through a centralized distribution center. We recently hired a leading supply chain consulting firm to study our current network, supplier structure and likely sources of growth and to recommend an optimal distribution model for our future operations. Changing our distribution model to increase distributions from a centralized distribution center to our stores and customers would initially involve significant capital expenditures, which would increase our borrowings and interest expense or temporarily reduce the rate at which we open new stores. In addition, if we are unable to successfully integrate a new distribution model into our operations in a timely manner, our supply chain could experience significant disruptions, which could reduce our sales and adversely impact our results of operations.
If we fail to maintain good relationships with our suppliers or if our suppliers are unable or unwilling to provide us with sufficient quantities of merchandise at acceptable prices, our business and operations may be adversely affected.
Our business is largely dependent on continued good relationships with our suppliers, including suppliers for our third-party branded products and manufacturers for our private brand products. During fiscal 2014, merchandise purchased from our top three suppliers accounted for approximately 18%, 12% and 10% of our sales. We operate on a purchase order basis for our private brand and third-party branded merchandise and do not have long-term written agreements with our suppliers. Accordingly, our suppliers can refuse to sell us merchandise, limit the type or quantity of merchandise that they sell to us, enter into exclusivity arrangements with our competitors or raise prices at any time, which could have an adverse impact on our business. Deterioration in our relationships with our suppliers could have a material adverse impact on our business, and there can be no assurance that we will be able to acquire desired
17

Table of Contents
merchandise in sufficient quantities on terms acceptable to us in the future. Also, some of our suppliers sell products directly from their own retail stores or e-commerce websites, and therefore directly compete with us. These suppliers may decide at some point in the future to discontinue supplying their merchandise to us, supply us less desirable merchandise or raise prices on the products they do sell us. If we lose key suppliers and are unable to find alternative suppliers to provide us with substitute merchandise for lost products, our business may be adversely affected.
Our plans to improve and expand our exclusive product offerings may be unsuccessful, and implementing these plans may divert our operational, managerial, financial and administrative resources, which could harm our competitive position and reduce our revenue and profitability.
In addition to our store expansion strategy, we currently plan to grow our business by improving and expanding our exclusive product offerings, which includes introducing new brands and growing and expanding our existing brands. The principal risks to our ability to successfully carry out our plans to improve and expand our product offering are that:
•
introduction of new products may be delayed, which may allow our competitors to introduce similar products in a more timely fashion, which could hinder our ability to be viewed as the exclusive provider of certain western and work apparel brands and items; 

•
the third-party suppliers of our exclusive product offerings may not maintain adequate controls with respect to product specifications and quality, which may lead to costly corrective action and damage to our brand image; 

•
if our expanded exclusive product offerings fail to maintain and enhance our distinctive brand identity, our brand image may be diminished and our sales may decrease; and 

•
implementation of these plans may divert our management's attention from other aspects of our business and place a strain on our operational, managerial, financial and administrative resources, as well as our information systems.
In addition, our ability to successfully improve and expand our exclusive product offerings may be affected by economic and competitive conditions, changes in consumer spending patterns and changes in consumer preferences. These plans could be abandoned, cost more than anticipated and divert resources from other areas of our business, any of which could impact our competitive position and reduce our revenue and profitability.
Any inability to balance our private brand merchandise with the third-party branded merchandise that we sell may have an adverse effect on our net sales and gross margin.
Our private brand merchandise represented approximately seven percent of our net sales in fiscal 2014. Our private brand merchandise generally has a higher gross margin than the third-party branded merchandise that we offer. As a result, we intend to attempt to increase the penetration of our private brands in the future. However, carrying our private brands limits the amount of third-party branded merchandise we can carry and, therefore, there is a risk that our customers' perception that we offer many major brands will decline or that our suppliers of third-party branded merchandise may decide to discontinue supplying, or reduce the supply of, their merchandise. If this occurs, it could have a material adverse effect on net sales and profitability.
18

Table of Contents
We purchase merchandise based on sales projections and our purchase of too much or too little inventory may adversely affect our overall profitability.
We must actively manage our purchase of inventory. We generally order our seasonal and private brand merchandise several months in advance of it being received and offered for sale. If there is a significant decrease in demand for these products or if we fail to accurately predict consumer demand, including by disproportionately increasing the penetration of our private brand merchandise, we may be forced to rely on markdowns or promotional sales to dispose of excess inventory. This could have an adverse effect on our margins and operating income. Conversely, if we fail to purchase a sufficient quantity of merchandise, we may not have an adequate supply of products to meet consumer demand, thereby causing us to lose sales or adversely affecting our customer relationships. Any failure on our part to anticipate, identify and respond effectively to changing consumer demand and consumer shopping preferences could adversely affect our results of operations.
A rise in the cost of fabrics and raw materials or the cost of labor and transportation could increase our cost of merchandise and cause our results of operations and margins to decline.
Fluctuations in the price, availability and quality of fabrics and raw materials, such as cotton and leather, that our suppliers use to manufacture our products, as well as the cost of labor and transportation, could have adverse impacts on our cost of merchandise and our ability to meet our customers' demands. In particular, because key components of our products are cotton and leather, any increases in the cost of cotton or leather may significantly affect the cost of our products and could have an adverse impact on our cost of merchandise. We may be unable to pass all or any of these higher costs on to our customers, which could have a material adverse effect on our profitability.
Most of our merchandise is produced in foreign countries, making the price and availability of our merchandise susceptible to international trade risks and other international conditions.
Many of our private brand products are manufactured in foreign countries. In addition, we purchase most of our third-party branded merchandise from domestic suppliers that have a majority of their merchandise made in foreign countries. Some foreign countries can be, and have been, affected by political and economic instability, public health emergencies and natural disasters, negatively impacting trade. The countries in which our merchandise currently is manufactured or may be manufactured in the future could become subject to trade restrictions imposed by the U.S. or other foreign governments. Trade restrictions, including increased tariffs or quotas, embargoes and customs restrictions, against apparel items, as well as U.S. or foreign labor strikes, work stoppages or boycotts, could increase the cost or reduce the supply of apparel available to us and have a material adverse effect on our business, financial condition and results of operations. In addition, our merchandise supply could be impacted if our suppliers' imports become subject to existing or future duties and quotas, or if our suppliers face increased competition from other companies for production facilities, import quota capacity or shipping capacity. Any increase in the cost of our merchandise or limitation on the amount of merchandise we are able to purchase could have a material adverse effect on our financial condition and results of operations.
In addition, there is a risk that our suppliers could fail to comply with applicable regulations, which could lead to investigations by U.S. or foreign government agencies responsible for international trade compliance. Resulting penalties or enforcement actions could delay future imports or exports or otherwise negatively affect our business.
19

Table of Contents
If our suppliers and manufacturers fail to use acceptable labor or other practices, our reputation may be harmed, which could negatively impact our business.
We purchase merchandise from independent third-party suppliers and manufacturers. If any of these suppliers have practices that are not legal or accepted in the U.S., consumers may develop a negative view of us, our brand image could be damaged and we could become the subject of boycotts by our customers or interest groups. Further, if the suppliers violate labor or other laws of their own country, these violations could cause disruptions or delays in their shipments of merchandise. For example, much of our merchandise is manufactured in China and Mexico, which have different labor practices than the U.S. We do not independently investigate whether our suppliers are operating in compliance with all applicable laws and therefore we rely upon the suppliers' representations set forth in our purchase orders and supplier agreements concerning the suppliers' compliance with such laws. If our goods are manufactured using illegal or unacceptable labor practices in these countries, or other countries from which our suppliers source the products we purchase, our ability to supply merchandise for our stores without interruption, our brand image and, consequently, our sales may be adversely affected.
If we lose key management personnel our operations could be negatively impacted.
We depend upon the leadership and experience of our executive management team. If we are unable to retain existing management personnel who are critical to our success, it could result in harm to our supplier and employee relationships, the loss of key information, expertise or know-how and unanticipated recruitment and training costs. The loss of the services of any of our key management personnel could have a material adverse effect on our business and prospects, and could be viewed negatively by investors and analysts, which could cause the price of our common stock to decline. We may be unable to find qualified individuals to replace key management personnel on a timely basis, without incurring increased costs or at all. We do not intend to purchase key person life insurance covering any employee. If we lose the services of any of our key management personnel or we are unable to attract additional qualified personnel, we may be unable to successfully manage our business.
If we cannot attract, train and retain qualified employees, our business could be adversely affected.
Our success depends upon the quality of the employees we hire. We recruit people who are welcoming, friendly and service-oriented, and who often live the western lifestyle or have a genuine affinity for it. Employees in many positions must have knowledge of our merchandise and the skill necessary to excel in a customer service environment. The turnover rate in the retail industry is typically high and finding qualified candidates to fill positions may be difficult. Our planned growth will require us to hire and train even more personnel. If we cannot attract, train and retain corporate employees, district managers, store managers and store associates with the qualifications we deem necessary, our ability to effectively operate and expand may be adversely affected. In addition, we rely on temporary and seasonal personnel to staff our distribution center. We cannot guarantee that we will be able to find adequate temporary or seasonal personnel to staff our operations when needed, which may strain our existing personnel and negatively impact our operations.
The concentration of our stores and operations in certain geographic locations subjects us to regional economic conditions and natural disasters that could adversely affect our business.
Our corporate headquarters and distribution center are in a single location in Irvine, California. If we encounter any disruptions to our operations at this building or if it were to shut down for any reason, including due to fire or other natural disaster, then we may be prevented from effectively operating our stores and our e-commerce business. Furthermore, the risk of disruption or shutdown at this building is
20

Table of Contents
greater than it might be if it were located in another region, as southern California is prone to natural disasters such as earthquakes and wildfires. Any disruption or shutdown at this location could significantly impact our operations and have a material adverse effect on our financial condition and results of operations.
In addition, most of the 155 stores that we operated as of June 28, 2014 were concentrated in the western U.S., with 78 of those stores located in Arizona, California and Texas. The geographic concentration of our stores may expose us to economic downturns in those states where our stores are located. For example, a recession in any area where we own several stores could adversely affect our ability to generate or increase operating revenues. Any negative impact upon or disruption to the operations of stores in these states could have a material adverse effect on our financial condition and results of operations.
We are required to make significant lease payments for our stores, corporate headquarters and distribution center, which may strain our cash flow.
We do not own any real estate. Instead, we lease all of our retail store locations as well as our corporate headquarters and distribution center. The store leases generally have a base lease term of five or 10 years, with multiple renewal periods of five years, on average, exercisable at our option. Many of our leases have early cancelation clauses which permit us to terminate the lease if certain sales thresholds are not met in certain periods of time. Our costs under these leases are a significant amount of our expenses and are growing rapidly as we expand the number of locations and the cost of leasing existing locations rises. In fiscal 2014, our total operating lease expense was $25.0 million, and we expect this amount to continue to increase as we open more stores. We are required to pay additional rent under many of our lease agreements based upon achieving certain sales thresholds for each store location. We are generally responsible for the payment of property taxes and insurance, utilities and common area maintenance fees. Many of our lease agreements also contain provisions which increase the rent payments on a set time schedule, causing the cash rent paid for a location to escalate over the term of the lease. In addition, rent costs could escalate when multi-year leases are renewed at the expiration of their lease term. These costs are significant, recurring and increasing, which places a consistent strain on our cash flow.
We depend on cash flows from operations to pay our lease expenses and to fulfill our other cash needs. If our business does not generate sufficient cash flows from operating activities, and sufficient funds are not otherwise available to us from borrowings under our existing revolving credit facility, future credit facilities or from other sources, we may be unable to service our operating lease expenses, grow our business, respond to competitive challenges or to fund our other liquidity and capital needs, which would harm our business.
Additional sites that we lease are likely to be subject to similar long-term leases. If an existing or future store is not profitable, and we decide to close it, we may nonetheless be committed to perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term. We may fail to identify suitable store locations, the availability of which is beyond our control, to replace such closed stores. In addition, as our leases expire, we may fail to negotiate renewals, either on commercially acceptable terms or at all, which could cause us to close stores in desirable locations. For the remainder of fiscal 2015, 8 of our 155 store leases will reach their termination date and none of these leases contain an option to automatically extend the lease term. If we are unable to enter into new leases or renew existing leases on terms acceptable to us or be released from our obligations under leases for stores that we close, our business, profitability and results of operations may be harmed.
21

Table of Contents
We may be unable to maintain same store sales or net sales per square foot, which may cause our results of operations to decline.
The investing public may use same store sales or net sales per square foot projections or results, over a certain period of time, such as on a quarterly or yearly basis, as an indicator of our profitability growth. See "Same store sales". Our same store sales can vary significantly from period to period for a variety of reasons, such as the age of stores, changing economic factors, unseasonable weather, pricing, the timing of the release of new merchandise and promotional events and increased competition. These factors could cause same store sales or net sales per square foot to decline period to period or fail to grow at expected rates, which could adversely affect our results of operations and cause the price of our common stock to be volatile during such periods.
If our management information systems fail to operate or are unable to support our growth, our operations could be disrupted.
We rely upon our management information systems in almost every aspect of our daily business operations. For example, our management information systems serve an integral part in enabling us to order merchandise, process merchandise at our distribution center and retail stores, perform and track sales transactions, manage personnel, pay suppliers and employees, operate our e-commerce business and report financial and accounting information to management. In addition, we rely on our management information systems to enable us to leverage our costs as we grow. If our management information systems fail to operate or are unable to support our growth, our store operations and e-commerce business could be severely disrupted, and we could be required to make significant additional expenditures to remediate any such failure.
We rely on UPS and the United States Postal Service to deliver our e-commerce merchandise to our customers and our business could be negatively impacted by disruptions in the operations of these third-party service providers.
We rely on UPS and the United States Postal Service to deliver our e-commerce merchandise to our customers. Relying on these third-party delivery services puts us at risk from disruptions in their operations, such as employee strikes, inclement weather and their inability to meet our shipping demands. If we are forced to use other delivery services, our costs could increase and we may be unable to meet shipment deadlines. Moreover, we may be unable to obtain terms as favorable as those received from the transportation providers we currently use, which would further increase our costs. In addition, if our products are not delivered to our customers on time, our customers may cancel their orders or we may lose business from these customers in the future. These circumstances may negatively impact our financial condition and results of operations.
Use of social media may adversely impact our reputation or subject us to fines or other penalties.
There has been a substantial increase in the use of social media platforms, including blogs, social media websites and other forms of Internet-based communication, which allow individuals access to a broad audience of consumers and other interested persons. Negative commentary regarding us or the brands that we sell may be posted on social media platforms or similar devices at any time and may harm our reputation or business. Consumers value readily available information concerning retailers and their goods and services and often act on such information without further investigation and without regard to its accuracy. The harm may be immediate without affording us an opportunity for redress or correction. In addition, social media platforms provide users with access to such a broad audience that collective action against our stores, such as boycotts, can be more easily organized. If such actions were organized, we could suffer reputational damage as well as physical damage to our stores and merchandise.
22

Table of Contents
We also use social medial platforms as marketing tools. For example, we maintain Facebook, Instagram and Twitter accounts. As laws and regulations rapidly evolve to govern the use of these platforms and devices, the failure by us, our employees or third parties acting at our direction to abide by applicable laws and regulations in the use of these platforms and devices could adversely impact our business, financial condition and results of operations or subject us to fines or other penalties.
Our e-commerce business subjects us to numerous risks that could have an adverse effect on our results of operations.
Our e-commerce business and its continued growth subject us to certain risks that could have an adverse effect on our results of operations, including:
•
diversion of traffic from our stores; 

•
liability for online content; 

•
government regulation of the Internet; and 

•
risks related to the computer systems that operate our e-commerce website and related support systems, including computer viruses, electronic data theft and similar disruptions.
In addition, as we expand our e-commerce operations, we face the risk of increased losses from credit card fraud. We do not carry insurance against the risk of credit card fraud, so under current credit card practices, we may be liable for fraudulent credit card transactions even though the associated financial institution has approved payment of the orders. If we are unable to deter or control credit card fraud, or if credit card companies require more burdensome terms or refuse to accept credit card charges from us, our net income could be reduced.
A breach of our e-commerce security measures could also reduce demand for our services.
Our sales can significantly fluctuate based upon shopping seasons, which may cause our operating results to fluctuate disproportionately on a quarterly basis.
Because of a traditionally higher level of sales during the Christmas shopping season, our sales are typically higher in the third fiscal quarter than they are in the other fiscal quarters. We also incur significant additional costs and expenses during our third fiscal quarter due to increased staffing levels and higher purchase volumes. Accordingly, the results of a single fiscal quarter should not be relied on as an indication of our annual results or future performance. In addition, any factors that harm our third fiscal quarter operating results could have a disproportionate effect on our results of operations for the entire fiscal year.
We buy and stock merchandise based upon seasonal weather patterns and therefore unseasonable or extreme weather could negatively impact our sales, financial condition and results of operations.
We buy and stock merchandise for sale based upon expected seasonal weather patterns. If we encounter unseasonable weather, such as warmer winters or cooler summers than would be considered typical, these weather variations could cause some of our merchandise to be inconsistent with what consumers wish to purchase, causing our sales to decline. In addition, weather conditions affect the demand for our products, which in turn has an impact on prices. In past years, weather conditions, including unseasonably warm weather in winter months, and extreme weather conditions, including snow and ice storms, flood and wind damage, hurricanes, tornadoes, extreme rain and droughts, have affected our sales and results of operations both positively and negatively. Furthermore, extended unseasonable weather conditions in the
23

Table of Contents
western U.S., particularly in California, will likely have a greater impact on our sales because of our store concentration in that region. Our strategy is to remain flexible and to react to unseasonable and extreme weather conditions by adjusting our merchandise assortments and redirecting inventories to stores affected by the weather conditions. Should such a strategy not be effective, unseasonable or extreme weather may have a material adverse effect on our financial condition and results of operations.
If we fail to obtain and retain high-visibility sponsorship or endorsement arrangements with celebrities, or if the reputation of any of the celebrities that we partner with is impaired, our business may suffer.
A principal component of our marketing program is to partner with well-known country music artists and other celebrities for sponsorship and endorsement arrangements. Although we have partnered with several well-known celebrities in this manner, some of these persons may not continue their endorsements, may not continue to succeed in their fields or may engage in activities which could bring disrepute on themselves and, in turn, on us and our brand image and products. We also may not be able to attract and partner with new celebrities that may emerge in the future. Competition for endorsers is significant and adverse publicity regarding us or our industry could make it more difficult to attract and retain endorsers. Any of these failures by us or the celebrities that we partner with could adversely affect our business and revenues.
Our internal operations or management information systems could be disrupted by system security failures or by the failure of, or lack of access to, our Enterprise Resource Planning system. These disruptions could negatively impact our sales, increase our expenses, harm our reputation and cause the price of our common stock to decline.
Hackers, computer programmers and internal users may be able to penetrate our network security and create system disruptions, cause shutdowns and misappropriate our confidential information or that of our employees and third parties, including our customers. Therefore, we could incur significant expenses addressing problems created by security breaches to our network. This risk is heightened because we collect and store customer information for marketing purposes, as well as debit and credit card information. We must, and do, take precautions to secure customer information and prevent unauthorized access to our database of confidential information. However, if unauthorized parties, including external hackers or computer programmers, gain access to our database, they may be able to steal this confidential information. Our failure to secure this information could result in costly litigation, adverse publicity or regulatory action, or result in customers discontinuing the use of debit or credit cards in our stores, or customers not shopping in our stores or on our e-commerce website altogether. These consequences could have a material adverse effect on our financial condition and results of operations. In addition, sophisticated hardware and operating system software and applications that we procure from third parties may contain defects in design or manufacture that could unexpectedly interfere with our operations. The cost to alleviate security risks and defects in software and hardware and to address any problems that occur could negatively impact our sales, distribution and other critical functions, as well as our financial results.
We operate our Enterprise Resource Planning system on a software-as-a-service platform, and we use this system for integrated point-of-sale, merchandising, planning, sales audit, customer relationship management, inventory control, loss prevention, purchase order management and business intelligence. Accordingly, we depend on this system, and the third-party provider of this service, for many aspects of our operations. If this service provider or this system fails, or if we are unable to continue to have access to this system on commercially reasonable terms, or at all, our operations would be severely disrupted
24

Table of Contents
until an equivalent system could be identified, licensed or developed, and integrated into our operations. This disruption would have a material adverse effect on our business.
If we are unable to protect our intellectual property rights, our financial results may be negatively impacted.
Our success depends in large part on our brand image. Our name, logo, domain name and our private brands and other intellectual property are valuable assets that differentiate us from our competitors. We currently rely on a combination of copyright, trademark, trade dress and unfair competition laws to establish and protect our intellectual property rights, but the steps taken by us to protect our proprietary rights may be inadequate to prevent infringement of our trademarks and proprietary rights by others, including imitation and misappropriation of our brand. Additional obstacles may arise as we expand our product lines and geographic scope. Moreover, litigation may be necessary to protect or enforce these intellectual property rights, which could result in substantial costs and diversion of our resources, causing a material adverse effect on our business, financial condition, results of operations or cash flows. The unauthorized use or misappropriation of our intellectual property or our failure to protect our intellectual property rights could damage our brand image and the goodwill we have created, which could cause our sales to decline.
We have not registered any of our intellectual property outside of the U.S. and cannot prohibit other companies from using our trademarks in foreign countries. Use of our trademarks in foreign countries could negatively impact our identity in the U.S. and cause our sales to decline.
We may be subject to liability if we, or our suppliers, infringe upon the intellectual property rights of third parties.
We may be subject to claims that our activities or the products that we sell infringe upon the intellectual property rights of others. Any such claims can be time consuming and costly to defend, and may divert our management's attention and resources, even if the claims are meritless. If we were to be found liable for any such infringement, we could be required to enter into costly settlements or license agreements and could be subject to injunctions preventing further infringement. Such infringement claims could harm our brand image. In addition, any payments that we are required to make and any injunction with which we are required to comply as a result of such infringement actions could adversely affect our financial results.
We purchase merchandise from suppliers that may be subject to design copyrights or design patents, or otherwise may incorporate protected intellectual property. We are not involved in the manufacture of any of the merchandise we purchase from our suppliers for sale to our customers, and we do not independently investigate whether these suppliers legally hold intellectual property rights to merchandise that they are manufacturing or distributing. As a result, we rely upon the suppliers' representations set forth in our purchase orders and supplier agreements concerning their right to sell us the products that we purchase from them. If a third party claims to have licensing rights with respect to merchandise we purchased from a supplier, or if we acquire unlicensed merchandise, we could be obligated to remove such merchandise from our stores, incur costs associated with destruction of such merchandise if the distributor or supplier is unwilling or unable to reimburse us and be subject to liability under various civil and criminal causes of action, including actions to recover unpaid royalties and other damages and injunctions. Any of these results could harm our brand image and have a material adverse effect on our business and growth.
25

Table of Contents
The terms of our credit facilities may restrict our current and future operations, which could adversely affect our ability to respond to changes in our business and to manage our operations.
Our credit facilities contain, and any additional debt financing we may incur would likely contain, covenants requiring us to maintain or adhere to certain financial ratios or limits and covenants that restrict our operations, which may include limitations on our ability to, among other things:
•
incur additional indebtedness;
•
create liens on assets;
•
engage in mergers or consolidations;
•
sell assets;
•
make investments, loans or advances;
•
make certain acquisitions;
•
engage in certain transactions with affiliates;
•
authorize or pay dividends;
•
change our line of business or fiscal year; and
•
make capital expenditures.
Complying with these covenants could adversely affect our ability to respond to changes in our business and manage our operations. In addition, these covenants could affect our ability to invest capital in our new stores and fund capital expenditures for existing stores. Our ability to comply with these covenants and other provisions in our credit facilities and any future credit facilities or debt instruments may be affected by changes in our operating and financial performance, changes in general business and economic conditions, adverse regulatory developments or other events beyond our control. A failure by us to comply with the financial ratios and restrictive covenants contained in our credit facilities and any future credit facilities or debt instruments could result in an event of default. Upon the occurrence of an event of default, the lenders could elect to declare all amounts outstanding to be due and payable and exercise other remedies as set forth in our credit facilities and any future credit facilities or debt instruments. In addition, if we are in default, we may be unable to borrow additional amounts under any such facilities to the extent that they would otherwise be available and our ability to obtain future financing may also be impacted negatively. If the indebtedness under our credit facilities and any future credit facilities or debt instruments were to be accelerated, it would have a material adverse effect on our future financial condition.
Litigation costs and the outcome of litigation could have a material adverse effect on our business.
Our business is characterized by a high volume of customer traffic and by transactions involving a wide variety of product selections, each of which exposes us to a higher risk of consumer litigation than companies operating in other industries. From time to time we may be subject to litigation claims through the ordinary course of our business operations regarding, but not limited to, employment matters, compliance with the Americans with Disabilities Act of 1990, footwear, apparel and accessory safety standards, security of customer and employee personal information, contractual relations with suppliers, marketing and infringement of trademarks and other intellectual property rights. Litigation to defend ourselves against claims by third parties, or to enforce any rights that we may have against third parties, may be necessary, which could result in substantial costs and diversion of our resources, causing a material adverse effect on our business, financial condition, results of operations or cash flows.
26

Table of Contents
Union attempts to organize our employees could negatively affect our business.
Currently, none of our employees are represented by a union. However, if some or all of our workforce were to unionize and the terms of the collective bargaining agreement were significantly different from our current compensation arrangements, it could increase our costs and adversely impact our profitability. Moreover, participation in labor unions could put us at increased risk of labor strikes and disruption of our operations. Responding to unionization attempts may distract management and our workforce. Any of these changes could adversely affect our business, financial condition, results of operations or cash flows.
Violations of or changes in laws, including employment laws and laws related to our merchandise, could make conducting our business more expensive or change the way we do business.
We are subject to numerous regulations, including labor and employment, customs, truth-in-advertising, consumer protection and zoning and occupancy laws and ordinances that regulate retailers generally, that govern the importation, promotion and sale of merchandise and that regulate the operation of stores and warehouse facilities. If these regulations were violated by our management, employees or suppliers, the costs of certain goods could increase, or we could experience delays in shipments of our goods, be subject to fines or penalties or suffer reputational harm, which could reduce demand for our merchandise and hurt our business and results of operations.
Similarly, changes in laws could make operating our business more expensive or require us to change the way we do business. For example, changes in laws related to employee health care, hours, wages, job classifications and benefits could significantly increase operating costs. In addition, changes in product safety or other consumer protection laws could lead to increased costs for certain merchandise, or additional labor costs associated with readying merchandise for sale. It may be difficult for us to foresee regulatory changes impacting our business and our actions needed to respond to changes in the law could be costly and may negatively impact our operations.
Health care reform could adversely affect our business.
The enacted Patient Protection and Affordable Care Act, as well as other health care reform legislation considered by Congress and state legislatures, could significantly impact our health care cost structure and increase our health care-related expenses. We expect that we will be required to modify our programs and operations in future fiscal years as a result of health care reform legislation. If we cannot effectively modify our programs and operations in response to the new legislation, our results of operations, financial condition and cash flows may be adversely impacted.
We may engage in strategic transactions that could negatively impact our liquidity, increase our expenses and present significant distractions to our management.
We have made strategic acquisitions in the past and may in the future consider strategic transactions and business arrangements, including, but not limited to, acquisitions, asset purchases, partnerships, joint ventures, restructurings, divestitures and investments. The success of such a transaction is based on our ability to make accurate assumptions regarding the valuation, operations, growth potential, integration and other factors relating to the respective business. Acquisitions may result in difficulties in assimilating acquired companies and may result in the diversion of our capital and our management's attention from other business issues and opportunities. We may be unable to successfully integrate operations that we acquire, including their personnel, financial systems, distribution, operations and general operating procedures. Any such transaction may require us to incur non-recurring or other charges, may increase our
27

Table of Contents
near and long-term expenditures and may pose significant integration challenges or disrupt our management or business, which could harm our operations and financial results.
Terrorism or civil unrest could negatively affect our business.
Terrorist attacks, threats of terrorist attacks or civil unrest involving public areas could cause people to avoid visiting some areas where our stores are located. Further, armed conflicts or acts of war throughout the world may create uncertainty, causing consumers to spend less on discretionary purchases, including on footwear, apparel and accessories, or disrupt our ability to obtain merchandise for our stores. Such decreases in consumer spending or disruptions in our ability to obtain merchandise would likely decrease our sales and materially adversely affect our financial condition and results of operations.
If our goodwill becomes impaired, we may be required to record a significant charge to earnings.
We have a significant amount of goodwill. Our goodwill balance as of June 28, 2014 of $93.1 million was generated by the initial acquisition of Boot Barn Holding Corporation and the subsequent acquisitions of RCC and Baskins. We test goodwill for impairment at least annually or more frequently if indicators of impairment exist. Goodwill is considered to be impaired when the net book value of an intangible asset exceeds its estimated fair value. No impairment losses have been recorded in the consolidated financial statements included elsewhere in this prospectus and we do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions that we use to calculate long-lived asset impairment losses. However, an impairment of a significant portion of our goodwill could materially adversely affect our financial condition and results of operations.
Risks related to this offering and ownership of our common stock
The price of our common stock may be volatile and may decline in value.
The market for specialty retail stocks can be highly volatile. As a result, the market price of our common stock is likely to be volatile and investors may experience a decrease in the value of our common stock, which may be unrelated to our operations. The price of our common stock could fluctuate significantly in response to a number of factors, as discussed elsewhere in this "Risk factors" section and such as those listed below:
•
variations in our quarterly or annual financial results and operating performance and the performance of our competitors; 

•
publication of research reports or recommendations by securities or industry analysts about us, our competitors or our industry, or a lack of such securities analyst coverage; 

•
our failure or our competitors' failure to meet analysts' projections or guidance; 

•
ratings downgrades by any securities analysts who follow our common stock; 

•
our levels of same store sales; 

•
sales or anticipated sales of large blocks of our common stock; 

•
changes to our management team; 

•
regulatory developments negatively affecting our industry; 

•
changes in stock market valuations of our competitors;
28

Table of Contents
•
the development and sustainability of an active trading market for our common stock; 

•
the public's response to press releases or other public announcements by us or third parties, including our filings with the SEC; 

•
the performance and successful integration of any new stores that we open or acquire; 

•
actions by competitors; 

•
announcements by us or our competitors of new product offerings or significant acquisitions; 

•
short selling of our common stock by investors; 

•
limited "public float" in the hands of a small number of persons whose sales or lack of sales of our common stock could result in positive or negative pricing pressure on the market price for our common stock; 

•
fluctuations in the stock markets generally; and 

•
changes in general market and economic conditions.
Further, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management's attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation. The threat or filing of class action litigation could cause the price of our common stock to decline.
We intend to use all of the proceeds that we receive in this offering to pay down outstanding indebtedness, and no proceeds will be used to fund our operations or further our growth strategies.
We intend to use all of the net proceeds from this offering to repay a portion of our existing term loan facility rather than to fund our existing operations or an expansion of our business. Approximately $30.8 million of the current borrowings under this facility was incurred to fund a portion of the dividend paid to our existing stockholders on April 17, 2014. See "Management's discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Financing activities". Amounts repaid under this facility will not subsequently be available for future borrowings. As a result, the net proceeds of this offering will not be used to improve our operating results, expand our business or otherwise increase the value of your investment.
We will initially be controlled by Freeman Spogli & Co., which may prevent other stockholders from influencing corporate decisions and may result in conflicts of interest that cause the price of our common stock to decline.
Upon the completion of this offering, Freeman Spogli & Co. will control approximately              % of the total voting power of our outstanding common stock, assuming no exercise by the underwriters of their option to purchase additional shares of common stock in this offering. As a result, Freeman Spogli & Co. is in a position to dictate the outcome of any corporate actions requiring stockholder approval, including the election of directors and mergers, acquisitions and other significant corporate transactions. Freeman Spogli & Co. may delay or prevent a change of control from occurring, even if the change of control would benefit our stockholders. It is also possible that the interests of Freeman Spogli & Co. may in some circumstances conflict with our interests and the interests of our stockholders. This ownership
29

Table of Contents
concentration may adversely impact the trading of our common stock because of a perceived conflict of interest that may exist, thereby depressing the value of our common stock.
Our certificate of incorporation contains provisions renouncing our interest and expectancy in certain corporate opportunities identified by or presented to Freeman Spogli & Co.
Freeman Spogli & Co. and its affiliates are in the business of providing capital to growing companies, and they may acquire interests in businesses that directly or indirectly compete with certain portions of our business. Our certificate of incorporation provides that Freeman Spogli & Co. and its affiliates will not have any duty to refrain from (1) engaging, directly or indirectly, in our line of business or (2) doing business with any of our customers or suppliers. In the event that Freeman Spogli & Co. or its affiliates (other than in the capacity as one of our officers or directors) acquires knowledge of a potential business opportunity which may be a corporate opportunity for us, then Freeman Spogli & Co. does not have any duty to communicate or offer such business opportunity to us and may take any such opportunity for itself or offer it to another person. Our certificate of incorporation also provides that Freeman Spogli & Co. and its officers, directors and employees will not be liable to us or to any of our stockholders for breach of any fiduciary or other duty by engaging in any such activity and we will waive and renounce any claim based on such activity. This provision applies even if the business opportunity is one that we might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so. These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations or prospects if attractive business opportunities are allocated by Freeman Spogli & Co. to itself or its other affiliates instead of to us. The terms of our certificate of incorporation are more fully described in "Description of capital stock—Corporate opportunity".
We will initially be a "controlled company" within the meaning of the NYSE rules, and, as a result, we may rely on exemptions from certain corporate governance requirements. You will not have the same protection afforded to stockholders of companies that are subject to these corporate governance requirements.
As long as Freeman Spogli & Co. continues to control more than 50% of the total voting power of our common stock, we will be considered a "controlled company" under the NYSE corporate governance listing standards. As a controlled company, we will be exempt from the obligation to comply with certain NYSE corporate governance requirements, including the following:
•
that a majority of our board of directors consist of independent directors, as defined under the rules of the NYSE; 

•
that we have a corporate governance and nominating committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities; 

•
that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities; and 

•
that there be an annual performance evaluation of our corporate governance and nominating committee and compensation committee.
Although we intend to comply with these listing requirements even though we will be a controlled company, there is no guarantee that we will not take advantage of these exemptions in the future. Accordingly, our stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.
30

Table of Contents
There has been no public market for our common stock and an active trading market for our common stock may never develop following the offering.
Prior to this offering, there has been no public market for our common stock and we cannot guarantee that an active trading market will develop or be sustained after the offering. If an active market does not develop or is not sustained, it may be difficult for you to sell your common stock at a favorable price or at all. We cannot predict the future value of our common stock. The initial public offering price will be based upon negotiations between us and the underwriters and may not bear any relationship to the market price of our common stock after this offering. As a result, the value of our common stock may decline below the initial public offering price, based upon the market for our common stock or changes in our financial condition or results of operations, and you may be unable to resell your shares of our common stock at or above the initial public offering price.
Future sales of our common stock by existing stockholders could cause the price of our common stock to decline.
The market price for our common stock may decline as a result of sales of a substantial number of shares of our common stock in the public market after this offering, or the perception that such sales might occur. Upon the completion of this offering, we will have                                         s hares of common stock outstanding, excluding 110,100 shares of common stock issuable upon the exercise of outstanding stock options. All of these shares, other than the                                         sh ares held by                                         , will be freely tradable without restriction under the Securities Act. The shares held by                                         and our directors, officers and their affiliates are restricted securities under the Securities Act, and may not be sold in the public market unless the sale is registered under the Securities Act or an exemption from registration is available.
Each of our executive officers and directors and the selling stockholders have agreed, subject to certain exceptions, to be bound by a lock-up agreement that prevents us and them from selling or transferring shares of our common stock during the 180-day period following this offering. However, these shares will be freely tradable, subject to the limitations of Rule 144, in the public markets after the expiration of the lock-up period, which could depress the value of our common stock. Moreover, J.P. Morgan Securities LLC, Piper Jaffray & Co. and Jefferies LLC may, in their sole discretion, release any of the shares held by our executive officers or directors or other current stockholders from the restrictions of the lock-up agreement at any time without notice, which would allow the immediate sale of these shares in the market, subject to the limitations of Rule 144. See "Underwriting".
Anti-takeover provisions in our corporate organizational documents and credit facilities and under Delaware law may delay, deter or prevent a takeover of us and the replacement or removal of our management, even if such a change of control would benefit our stockholders.
The anti-takeover provisions under Delaware law, as well as the provisions contained in our corporate organizational documents, may make an acquisition of us more difficult. For example:
•
our certificate of incorporation includes a provision authorizing our board of directors to issue blank check preferred stock without stockholder approval, which, if issued, would increase the number of outstanding shares of our capital stock and make it more difficult for a stockholder to acquire us; 

•
our bylaws provide that director vacancies and newly created directorships can only be filled by an affirmative vote of a majority of directors then in office; 

•
our bylaws require advance notice of stockholder proposals and director nominations;
31

Table of Contents
•
our certificate of incorporation provides that our board of directors may adopt, amend, add to, modify or repeal our bylaws without stockholder approval; 

•
our bylaws do not permit our stockholders to act by written consent without a meeting unless that action is taken with regard to a matter that has been approved by our board of directors or requires the approval only of certain classes or series of our stock; 

•
our certificate of incorporation contains a requirement that, to the fullest extent permitted by law, certain proceedings against or involving us or our directors, officers or employees must be brought exclusively in the Court of Chancery of the State of Delaware unless we consent in writing to an alternative forum; 

•
our bylaws do not permit our stockholders to call special meetings; and 

•
the General Corporation Law of the State of Delaware, or the DGCL, may prevent any stockholder or group of stockholders owning at least 15% of our common stock from completing a merger or acquisition of us.
Our debt instruments also contain provisions that could have the effect of making it more difficult or less attractive for a third party to acquire control of us. Specifically under our term loan facility a fee is payable in connection with a mandatory prepayment on a change of control. In addition, each of our credit facilities provides that a change of control constitutes an event of default under that credit facility and would permit the lenders under such credit facility to declare the indebtedness to be immediately due. Our future debt agreements may contain similar provisions. The need to repay all of this indebtedness may deter potential third parties from acquiring us.
Under these various provisions in our certificate of incorporation, bylaws and credit facilities, a takeover attempt or third-party acquisition of us, including a takeover attempt that may result in a premium over the market price for shares of our common stock, could be delayed, deterred or prevented. In addition, these provisions may prevent the market price of our common stock from increasing in response to actual or rumored takeover attempts and may also prevent changes in our management. As a result, these anti-takeover and change of control provisions may limit the price that investors are willing to pay in the future for shares of our common stock.
Our failure to maintain adequate internal controls over our financial and management systems may cause errors in our financial reporting. These errors may cause a loss of investor confidence and result in a decline in the price of our common stock.
Our public company reporting obligations and our anticipated growth will likely strain our financial and management systems, internal controls and employees. In addition, pursuant to Section 404 of the Sarbanes-Oxley Act, which we refer to as Section 404, we are required to finish documenting and testing our internal controls so that our management can certify the effectiveness of our internal controls over financial reporting by the time our annual report for fiscal 2016 is due and annually thereafter.
We are currently taking the necessary steps to comply with Section 404. However, this process is time consuming and costly. If, during this process, we identify one or more material weaknesses in our internal controls, it is possible that our management may be unable to certify that our internal controls are effective by the certification deadline. We cannot be certain we will be able to successfully complete the implementation and certification requirements of Section 404 within the time period allowed.
32

Table of Contents
Moreover, if we identify any material weaknesses or deficiencies that aggregate to a material weakness in our internal controls, we will have to implement appropriate changes to these controls, which may require specific compliance training for our directors, officers and employees, require the hiring of additional finance, accounting, legal and other personnel, entail substantial costs to modify our existing accounting systems and take a significant period of time to complete. Such changes may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially impair our ability to operate our business. Effective internal controls are necessary for us to produce reliable financial reports and are important to prevent fraud. As a result, our failure to satisfy the requirements of Section 404 on a timely basis could result in us being subject to regulatory action and a loss of investor confidence in the reliability of our financial statements, both of which in turn could cause the market value of our common stock to decline and affect our ability to raise capital.
We will incur significant expenses as a result of being a publicly traded company, which would negatively impact our earnings.
As a public company we expect to incur significant incremental legal, accounting, insurance and other expenses. Compliance with the Sarbanes-Oxley Act and the rules implemented by the SEC and the stock exchanges requires changes to our corporate governance practices that did not apply to us before becoming a public company. In addition, the reporting requirements of the Exchange Act will require, among other things, that we file annual, quarterly and current reports with respect to our business and financial condition. Our compliance with these laws, rules and regulations has increased, and will continue to increase, our expenses, including legal and accounting costs, and has made, and will continue to make, some of our operations more costly and time consuming. In addition, it may also be more difficult for us to find and retain qualified persons to serve on our board of directors or as executive officers. Further, any additional expenses in legal, accounting, insurance and other related expenses could reduce our earnings and have a material adverse effect on our financial condition and results of operations.
If securities or industry analysts do not publish research and reports or publish inaccurate or unfavorable research and reports about our business, the price and trading volume of our common stock could decline.
The trading market for our common stock will be influenced by the research and reports that securities or industry analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of us following this offering, the trading price for our common stock would likely be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our common stock or publishes inaccurate or unfavorable research about our business, the price of our common stock would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our common stock could decrease, which could cause the price of our common stock and trading volume to decline.
We do not currently intend to pay cash dividends on our common stock, which may make our common stock less desirable to investors and decrease its value.
We intend to retain all of our available funds for use in the operation and expansion of our business and do not anticipate paying any cash dividends on our common stock for the foreseeable future. Any future determination to pay cash dividends on our common stock will be at the discretion of our board of
33

Table of Contents
directors and will depend upon many factors, including our financial condition, results of operations and liquidity, legal requirements and restrictions that may be imposed by the terms of our credit facilities and in any future financing instruments. Therefore, you may only receive a return on your investment in our common stock if the market price increases above the price at which you purchased it, which may never occur. See "Dividend policy".
You will experience immediate and substantial dilution.
If you purchase shares of our common stock in this offering, you will incur immediate and substantial dilution of $              per share based on an assumed initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and our net tangible book value immediately after this offering. This dilution arises because purchasers of our common stock in this offering will pay a price per share that is substantially higher than the as adjusted net tangible book value per share of our outstanding common stock immediately after this offering. See "Dilution".
We will take advantage of the reduced disclosure requirements applicable to "emerging growth companies", which may make our common stock less attractive to investors.
The JOBS Act provides that, so long as a company qualifies as an "emerging growth company", it will, among other things:
•
be permitted to report only two years of audited financial statements and to present management's discussion and analysis of financial condition and results of operations for only those two years; 

•
be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its internal controls over financial reporting; 

•
be exempt from the "say on pay" and "say on golden parachute" advisory vote requirements of the Dodd-Frank Act; 

•
be exempt from certain disclosure requirements of the Dodd-Frank Act relating to compensation of its executive officers and be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Exchange Act; and 

•
be permitted to provide a reduced level of disclosure concerning executive compensation and be exempt from any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor's report on the financial statements.
If we remain an emerging growth company, we may take advantage of these exemptions. We cannot predict if investors will find our common stock less attractive if we elect to rely on these exemptions, or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our common stock. Also, as a result of our intention to take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us as long as we qualify as an emerging growth company, our financial statements may not be comparable to companies that fully comply with regulatory and reporting requirements upon the public company effective dates.
34

Table of Contents

 Special note regarding forward-looking statements
This prospectus contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical or current fact included in this prospectus are forward-looking statements. Forward-looking statements refer to our current expectations and projections relating to, by way of example and without limitation, our financial condition, liquidity, profitability, results of operations, margins, plans, objectives, strategies, future performance, business and industry. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate", "estimate", "expect", "project", "plan", "intend", "believe", "may", "might", "will", "could", "should", "can have", "likely" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events, but not all forward-looking statements contain these identifying words. For example, all statements we make relating to our estimated and projected earnings, revenues, costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future operations, growth or initiatives, strategies or the expected outcome or impact of pending or threatened litigation are forward-looking statements. We believe the risks attending any forward-looking statements include, but are not limited to, those described under "Risk factors" and include, among other things:
•
declines in consumer confidence and decreases in consumer spending or changes in consumer preferences; 

•
our ability to successfully open a significant number of new stores and adapt to the preferences of new geographic markets in which those stores open; 

•
our ability to maintain and enhance a strong brand image; 

•
our ability to attract customers in the various retail venues and geographic markets in which our stores are currently located or in which we may open stores in the future; 

•
our ability to compete effectively in an environment of intense competition; 

•
our ability to generate adequate cash from our existing stores to support our growth; 

•
our ability to effectively adapt to our rapid expansion in recent years and our planned future expansion; 

•
our ability to successfully integrate any new distribution model into our operations; 

•
our dependence on third-party suppliers to provide us with sufficient quantities of merchandise at acceptable prices; 

•
our ability to improve and expand our exclusive product offerings; 

•
our ability to balance our private brand merchandise with third-party branded merchandise; 

•
price reductions or inventory shortages resulting from failure to purchase the appropriate amount of inventory in advance of the season in which it will be sold; 

•
increases in the costs of fabrics, raw materials, labor or transportation; 

•
failure of our suppliers and their manufacturing sources to use acceptable labor or other practices; 

•
our inability to hire or retain key executive management and other talent required for our business;
35

Table of Contents
•
failure of our management information systems to support our current and growing business; 

•
our reliance upon third-party transportation providers for our e-commerce merchandise shipments; 

•
risks relating to our e-commerce website, such as diversion of traffic from our stores, liability for online content and government regulation of the Internet; 

•
disruptions in our internal operations or management information systems due to system security failures; 

•
litigation costs and the outcomes of litigation; 

•
the impact of changes in or violations of laws or regulations; 

•
our ability to manage strategic transactions that may impact our liquidity, increase our expenses and distract our management; and 

•
the possibility that our goodwill might become impaired.
We derive many of our forward-looking statements from our current operating budgets and forecasts, which are based upon detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. For these reasons, we caution readers not to place undue reliance on these forward-looking statements.
See "Risk factors" for a more complete discussion of the risks and uncertainties mentioned above and for a discussion of other risks and uncertainties. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements as well as others made in this prospectus and hereafter in our other SEC filings and public communications. You should evaluate all forward-looking statements made by us in the context of these risks and uncertainties.
We caution you that the risks and uncertainties identified by us may not be all of the factors that are important to you. Furthermore, the forward-looking statements included in this prospectus are made only as of the date hereof. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
36

Table of Contents

 Use of proceeds
We estimate that we will receive net proceeds from the sale of the shares of our common stock in this offering of approximately $               million, assuming an initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
A $              increase or decrease in the assumed initial public offering price of $              per share would increase or decrease, respectively, the net proceeds to us from this offering by approximately $               million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated the underwriting discounts and commissions and estimated offering expenses payable by us.
We will not receive any proceeds from the sale of shares being sold by the selling stockholders, including any shares sold by the selling stockholders in connection with the underwriters' exercise of their option to purchase additional shares, although we will pay the expenses (other than underwriting discounts and commissions) associated with the sale of those shares.
We intend to use all of the net proceeds from this offering to repay a portion of our existing term loan facility, including applicable prepayment penalties and fees, in the amount of approximately $          million. Our term loan facility matures on May 31, 2019 and bears interest at LIBOR or at a base rate, plus an applicable margin. The applicable margin rate is 5.75% with respect to a LIBOR loan and 4.75% with respect to a base rate loan. On April 14, 2014, we amended our term loan facility to, among other things, increase our borrowings under that facility by approximately $30.8 million. We used the net proceeds from those additional borrowings to fund a portion of the $39.9 million dividend that was paid to our stockholders on April 17, 2014. See "Management's discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Financing activities". As of June 28, 2014, there were $130.0 million in borrowings under this facility. See "Management's discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Debt and other obligations—Our credit facilities".
37

Table of Contents

 Dividend policy
On April 17, 2014, we paid a special pro rata cash dividend of approximately $39.9 million in the aggregate to record holders of the outstanding shares of our common stock as of the record date of April 14, 2014. See "Management's discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Financing activities". However, we do not anticipate paying any cash dividends on our common stock in the foreseeable future. We anticipate that we will retain all of our available funds to repay existing indebtedness and for use in the operation and expansion of our business.
Any future determination as to the payment of cash dividends on our common stock will be at the discretion of our board of directors and will depend on our financial condition, operating results, current and anticipated cash needs, plans for expansion, legal requirements and other factors that our board of directors considers to be relevant. In addition, financial and other covenants in our credit facilities and in any credit facilities, debt instruments or other agreements that we enter into in the future may restrict our ability to pay cash dividends on our common stock. See "Management's discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Debt and other obligations—Our credit facilities". As a result, capital appreciation, if any, of our common stock will be your sole source of gain from your purchase of our common stock for the foreseeable future.
38

Table of Contents

 Capitalization
The table below sets forth our cash and cash equivalents and capitalization as of June 28, 2014, as follows:
•
on an actual basis; and 

•
on an as adjusted basis to give effect to (i) the sale by us of                                         sha res of our common stock in this offering, assuming an initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, (ii) the application of the net proceeds of this offering as described under "Use of proceeds", and (iii) the incremental number of shares, based on the assumed offering price of $         , that would have been required to be issued to generate sufficient proceeds to pay the portion of the dividend that exceeds earnings for fiscal 2014.
You should read the information in this table together with "Use of proceeds", "Selected consolidated financial data" and "Management's discussion and analysis of financial condition and results of operations" and our consolidated financial statements, condensed consolidated financial statements and accompanying notes appearing elsewhere in this prospectus.

								
 	 	
 	 	As of June 28, 2014	 	
(in thousands)	 	Actual	 	As adjusted (1)	 	
 	 	
 	 	(unaudited)	 	(unaudited) 	 	
Cash and cash equivalents	 	$	1,115	 	 	 	 	
 	 	 	 	
Debt:	 	 	 	 	 	 	 	
Revolving credit facility	 	 	42,594	 	 	 	 	
Term loan facility	 	 	130,000	 	 	 	 	
 	 	 	 	
Total debt	 	 	172,594	 	 	 	 	
Stockholders' equity:	 	 	

Common stock, $0.001 par value; 1,500,000 shares authorized, 797,174 shares issued and outstanding, actual;               shares authorized,               shares issued and outstanding, as adjusted	 	 	1	 	 	 	 	
Additional paid-in capital	 	 	43,720	 	 	 	 	
Retained earnings	 	 	1,409	 	 	 	 	
Noncontrolling interest	 	 	—	 	 	 	 	
 	 	 	 	
Total stockholders' equity	 	 	45,130	 	 	 	 	
 	 	 	 	
Total capitalization	 	$	217,724	 	 	 	 	
 	 	
(1)    Each $              increase or decrease in the assumed initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, our cash and cash equivalents, additional paid-in capital and total stockholders' equity by approximately $          million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase or decrease of $1.0 million in the number of shares of common stock offered by us would increase or decrease, as applicable, our cash and cash equivalents, additional paid-in capital and total stockholders' equity by approximately $     million, assuming that the assumed initial public offering price remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.
39

Table of Contents

 Dilution
Dilution is the amount by which the offering price paid by the purchasers of our common stock in this offering exceeds the net tangible book value per share or deficit per share of our common stock after giving effect to this offering. Net tangible book value or deficit per share of our common stock is determined at any date by subtracting our total liabilities from our total assets less our intangible assets and dividing the difference by the number of shares of our common stock deemed to be outstanding at that date.
If you invest in our common stock, your investment will be diluted immediately to the extent of the difference between the initial public offering price per share of our common stock and the net tangible book value or deficit per share of our common stock after giving effect to this offering.
Our net tangible book deficit as of June 28, 2014 was $               million, or $              per share (based on              shares of common stock outstanding immediately prior to this offering). After giving effect to (i) the sale of the                                         sh ares of common stock offered by us, assuming an initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, less estimated underwriting discounts and commissions of $               million and estimated net offering expenses of $               million payable by us, (ii) the application of the estimated net proceeds from this offering as described under "Use of proceeds" and (iii) the incremental number of shares, based on the assumed offering price of $         , that would have been required to be issued to generate sufficient proceeds to pay the portion of the dividend that exceeds earnings for fiscal 2014, our net tangible book deficit, as adjusted, as of June 28, 2014, would have been approximately $               million, or $              per share. This represents an immediate increase in net tangible book value of $              per share to our existing stockholders and an immediate dilution of $               per share to new investors.
The following table illustrates this dilution.

								
 	 	
Assumed initial public offering price per share	 	 	 	 	$	 	 	
 	 	 	 	 	 	 	
 ​	​	​	​	​	​	​	​	
Net tangible book deficit per share as of June 28, 2014	 	$	 	 	 	 	 	
 	 	 	 	 	 	 	
 ​	​	​	​	​	​	​	​	
Increase in net tangible book value per existing share attributable to this offering	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	
 ​	​	​	​	​	​	​	​	
Net tangible book deficit per share as of June 28, 2014, as adjusted	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	
 ​	​	​	​	​	​	​	​	
Dilution per share to new investors	 	 	 	 	$	 	 	
 	 	
The following table summarizes, as of June 28, 2014, and as adjusted for this offering, the difference between our existing stockholders and new investors with respect to the number of shares of common stock issued in this offering, and the total consideration paid and the average price paid per share. The table assumes an initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus.

															
 	 	
 	 	Shares purchased	 	Total consideration	 	 	 	
 					 	Average price
per share	 	
 	 	Number	 	Percent	 	Amount	 	Percent			 	
 	 	
Existing stockholders	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
New investors in this offering	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	
Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	
40

Table of Contents
The foregoing discussion and tables do not give effect to shares of our common stock that the selling stockholders will sell if the underwriters exercise their option to purchase up to                                          additional shares of common stock in this offering.
Assuming no change in the number of shares of common stock offered by us as set forth on the cover page of this prospectus, a $              increase (decrease) in the assumed initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) our as adjusted net tangible book value or deficit by approximately $               million, or $              per share, and the dilution per share to investors in this offering by approximately $              per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
We may also increase or decrease the number of shares of common stock we are offering. A                                           million increase (decrease) in the number of shares offered by us would increase (decrease) our as adjusted net tangible book value or deficit by approximately $               million, or $              per share, assuming an initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and the dilution per share to investors in this offering by approximately $              per share, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
If the underwriters exercise their option to purchase additional shares of common stock in this offering in full, the number of shares of our common stock held by new investors would increase to                            , or approximately         % of the total number of shares of our common stock outstanding after this offering, and the number of shares held by our existing stockholders would decrease to                                         sha res, or approximately         % of the total number of shares of our common stock outstanding after this offering.
The as adjusted information discussed above is illustrative only.
41

Table of Contents

 Selected consolidated financial data
The following tables present our selected consolidated financial and other data as of and for the periods indicated, as well as certain "as adjusted" financial data. We have derived the selected consolidated statement of operations data for the years ended March 31, 2012, March 30, 2013 and March 29, 2014 and the consolidated balance sheet data as of March 30, 2013 and March 29, 2014 from the audited consolidated financial statements included elsewhere in this prospectus. The selected consolidated statements of operations data for the thirteen weeks ended June 29, 2013 and June 28, 2014 and the consolidated balance sheet data as of June 28, 2014 have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. The unaudited interim condensed consolidated financial statements were prepared on the same basis as our audited consolidated financial statements. In our opinion, such financial statements reflect all adjustments that are of a normal and recurring nature necessary to fairly present our financial position and results of operations in all material respects as of the dates and for the periods presented. The results of operations presented in the unaudited interim condensed consolidated financial statements are not necessarily indicative of the results that may be expected for a full fiscal year or in any future period.
The as adjusted consolidated balance sheet data as of June 28, 2014 is presented after giving effect to the offering contemplated by this prospectus and the application of the net proceeds received by us in the offering to repay outstanding indebtedness as described under "Use of proceeds", as though this offering and the application of net proceeds had occurred as of such date. The unaudited as adjusted financial data does not purport to represent what our results will be in future periods.
The consolidated statement of operations data and consolidated balance sheet data include the financial position, results of operations and cash flows of RCC and Baskins since their respective dates of acquisition in August 2012 and May 2013.
You should read the following selected consolidated financial and other data together with the sections of this prospectus titled "Use of proceeds", "Capitalization" and "Management's discussion and analysis of financial condition and results of operations" and the consolidated financial statements, condensed consolidated financial statements and related notes included elsewhere in this prospectus.
42

Table of Contents

																	
 	 	
 	 	Fiscal year ended (1)	 	Thirteen weeks ended	 	
(in thousands, except per share data)	 	March 29,
2014	 	March 30,
2013	 	March 31,
2012	 	June 28,
2014	 	June 29,
2013	 	
 	 	
Consolidated statement of operations data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	345,868	 	$	233,203	 	$	168,696	 	$	82,497	 	$	64,574	 	
Cost of goods sold	 	 	231,796	 	 	151,357	 	 	109,442	 	 	55,607	 	 	42,146	 	
Amortization of inventory fair value adjustment	 	 	867	 	 	9,199	 	 	9,369	 	 	—	 	 	145	 	
 	 	 	 	
Total cost of goods sold	 	 	232,663	 	 	160,556	 	 	118,811	 	 	55,607	 	 	42,291	 	
 	 	 	 	
Gross profit	 	 	113,205	 	 	72,647	 	 	49,885	 	 	26,890	 	 	22,283	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	 	 	91,998	 	 	62,609	 	 	40,914	 	 	21,497	 	 	18,845	 	
Acquisition-related expenses (2)	 	 	671	 	 	1,138	 	 	10,363	 	 	—	 	 	671	 	
 	 	 	 	
Total operating expenses	 	 	92,669	 	 	63,747	 	 	51,277	 	 	21,497	 	 	19,516	 	
 	 	 	 	
Income (loss) from operations	 	 	20,536	 	 	8,900	 	 	(1,392	)	 	5,393	 	 	2,767	 	
Interest expense, net	 	 	11,594	 	 	7,415	 	 	5,126	 	 	2,757	 	 	5,078	 	
Other income, net	 	 	39	 	 	21	 	 	75	 	 	18	 	 	8	 	
 	 	 	 	
Income (loss) before income taxes	 	 	8,981	 	 	1,506	 	 	(6,443	)	 	2,654	 	 	(2,303	)	
Income tax expense (benefit)	 	 	3,321	 	 	826	 	 	(1,182	)	 	1,241	 	 	(858	)	
 	 	 	 	
Net income (loss)	 	 	5,660	 	 	680	 	 	(5,261	)	 	1,413	 	 	(1,445	)	
 	 	 	 	
Net income (loss) attributed to non-controlling interest	 	 	283	 	 	34	 	 	(230	)	 	4	 	 	(72	)	
 	 	 	 	
Net income (loss) attributed to Boot Barn Holdings, Inc. 	 	$	5,377	 	$	646	 	$	(5,031	)	$	1,409	 	$	(1,373	)	
 	 	 	 	
Net income (loss) per share: (3)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic shares	 	$	7.10	 	$	0.86	 	 	 	 	$	(0.05	)	$	(1.81	)	
Diluted shares	 	$	7.01	 	$	0.86	 	 	 	 	$	(0.05	)	$	(1.81	)	
Weighted average shares outstanding:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic shares	 	 	757	 	 	750	 	 	 	 	 	766	 	 	757	 	
Diluted shares	 	 	767	 	 	750	 	 	 	 	 	766	 	 	757	 	
As adjusted net income (loss) per share: (4)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic shares	 	$	 	 	$	 	 	 	 	 	$	 	 	$	 	 	
Diluted shares	 	$	 	 	$	 	 	 	 	 	$	 	 	$	 	 	
As adjusted weighted average shares outstanding: (4)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic shares	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted shares	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	
43

Table of Contents

																	
 	 	
 	 	Fiscal year ended (1)	 	Thirteen weeks ended	 	
(in thousands, except selected store data)	 	March 29,
2014	 	March 30,
2013	 	March 31,
2012	 	June 28,
2014	 	June 29,
2013	 	
 	 	
Other financial data (unaudited):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA (5)	 	$	28,704	 	$	14,509	 	$	996	 	$	7,469	 	$	4,355	 	
Adjusted EBITDA (5)	 	$	40,271	 	$	28,933	 	$	21,702	 	$	7,789	 	$	5,900	 	
Capital expenditures	 	$	11,400	 	$	3,848	 	$	2,753	 	$	1,803	 	$	1,909	 	
Selected store data (unaudited):	 	 	

 	 	 	

Same store sales growth	 	 	6.7%	 	 	12.4%	 	 	18.1%	 	 	7.7%	 	 	8.4%	 	
Stores operating at end of period	 	 	152	 	 	117	 	 	86	 	 	155	 	 	149	 	
Total retail store square footage, end of period (in thousands)	 	 	1,642	 	 	1,082	 	 	814	 	 	1,676	 	 	1,591	 	
Average store square footage, end of period	 	 	10,801	 	 	9,251	 	 	9,466	 	 	10,811	 	 	10,676	 	
Average net sales per store (in thousands) (6)	 	$	2,162	 	$	1,861	 	$	1,840	 	$	511	 	$	419	 	

														
 	 	
 	 	As of	 	
(in thousands)	 	March 29,
2014	 	March 30,
2013	 	June 28,
2014	 	As adjusted
June 28,
2014 (7)	 	
 	 	
Consolidated balance sheet data:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	1,118	 	$	1,190	 	$	1,115	 	 	 	 	
Working capital	 	 	56,786	 	 	37,174	 	 	61,813	 	 	 	 	
Total assets	 	 	291,863	 	 	224,282	 	 	301,339	 	 	 	 	
Total debt	 	 	128,124	 	 	88,410	 	 	172,594	 	 	 	 	
Stockholders' equity	 	 	84,575	 	 	77,624	 	 	45,130	 	 	 	 	
 	 	
(1)    We operate on a fiscal calendar that results in a 52- or 53-week fiscal year ending on the Saturday closest to March 31. In a 52-week fiscal year, each quarter includes 13 weeks of operations; in a 53-week fiscal year, the first, second and third quarters each include 13 weeks of operations and the fourth quarter includes 14 weeks of operations. The data presented contain references to fiscal 2012, fiscal 2013 and fiscal 2014, which represent our fiscal years ended March 31, 2012, March 30, 2013 and March 29, 2014, respectively, all of which were 52-week periods. The results include the activities of RCC from August 2012 and Baskins from May 2013, their respective dates of acquisition. The period from April 3, 2011 to December 11, 2011, which is presented separately as the "Predecessor Period" in our consolidated financial statements and the related notes included elsewhere in this prospectus, consisted of approximately 36 weeks. The period from December 12, 2011 to March 31, 2012, which is presented separately as the "Successor Period" in our consolidated financial statements and the related notes included elsewhere in this prospectus, consisted of approximately 16 weeks. The Predecessor Period and the Successor Period have been combined and presented together as fiscal 2012. A presentation of these two periods in this manner is more reflective of how we assess the performance of our business and we believe that it facilitates comparisons of fiscal 2012 to our other fiscal years.
(2)    Represents costs incurred in connection with the acquisitions of RCC and Baskins, as well as the Recapitalization.
(3)    Net loss per share for the thirteen weeks ended June 28, 2014 reflects the deduction from net income, for purposes of determining the net income available to common stockholders, of the cash payment of $1.4 million made in April 2014 to holders of vested stock options. See "Management's discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Financing activities".
(4)   As adjusted per share data gives effect to (i) the sale by us of              shares of our common stock in this offering, assuming an initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and (ii) the application of the net proceeds of this offering as described under "Use of proceeds", in each case assuming such events occurred on June 28, 2014. Basic and diluted as adjusted net income per share consists of as adjusted net income divided by the basic and diluted as adjusted weighted average number of shares of common stock outstanding. As adjusted net income per share reflects the net decrease in interest expense of $              resulting from our intended repayment of debt under our credit facilities as described in "Use of proceeds". Interest expense is calculated as though we repaid a portion of our outstanding indebtedness under our credit facilities with the net proceeds from this offering on June 28, 2014.
(5)    EBITDA and Adjusted EBITDA are financial measures that are not calculated in accordance with GAAP. We define EBITDA as net income (loss) adjusted to exclude income tax expense (benefit), net interest expense and depreciation and intangible asset amortization. We define Adjusted EBITDA as EBITDA adjusted to exclude non-cash stock-based compensation, the non-cash accrual for future award redemptions, recapitalization expenses, acquisition expenses, acquisition-related integration and reorganization costs, amortization of inventory fair value adjustment, loss on disposal of assets and other unusual or non-recurring expenses. We include EBITDA and Adjusted EBITDA in this prospectus
44

Table of Contents
because they are important financial measures which our management, board of directors and lenders use to assess our operating performance. EBITDA and Adjusted EBITDA should not be considered in isolation or as alternatives to net income or any other measure of financial performance calculated and presented in accordance with GAAP. Given that EBITDA and Adjusted EBITDA are measures not deemed to be in accordance with GAAP and are susceptible to varying calculations, our EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies, including companies in our industry, because other companies may calculate EBITDA and Adjusted EBITDA in a different manner than we calculate these measures. See "Non-GAAP financial measures" at the beginning of this prospectus. The following table presents a reconciliation of EBITDA and Adjusted EBITDA to our net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, for each of the periods indicated:

																	
 	 	
 	 	Fiscal year ended	 	Thirteen weeks ended	 	
(in thousands)	 	March 29,
2014	 	March 30,
2013	 	March 31,
2012	 	June 28,
2014	 	June 29,
2013	 	
 	 	
EBITDA reconciliation:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	 	$	5,660	 	$	680	 	$	(5,261	)	$	1,413	 	$	(1,445	)	
Income tax expense (benefit)	 	 	3,321	 	 	826	 	 	(1,182	)	 	1,241	 	 	(858	)	
Interest expense, net	 	 	11,594	 	 	7,415	 	 	5,126	 	 	2,757	 	 	5,078	 	
Depreciation and intangible asset amortization	 	 	8,129	 	 	5,588	 	 	2,313	 	 	2,058	 	 	1,580	 	
 	 	 	 	
EBITDA	 	 	28,704	 	 	14,509	 	 	996	 	 	7,469	 	 	4,355	 	
Non-cash stock-based compensation (a)	 	 	1,291	 	 	787	 	 	99	 	 	442	 	 	210	 	
Non-cash accrual for future award redemptions (b)	 	 	591	 	 	219	 	 	854	 	 	(184	)	 	180	 	
Recapitalization expenses (c)	 	 	—	 	 	—	 	 	10,363	 	 	—	 	 	—	 	
Acquisition expenses (d)	 	 	671	 	 	1,138	 	 	—	 	 	—	 	 	667	 	
Acquisition-related integration and reorganization costs (e)	 	 	6,167	 	 	2,061	 	 	—	 	 	—	 	 	343	 	
Amortization of inventory fair value adjustment (f)	 	 	867	 	 	9,199	 	 	9,369	 	 	—	 	 	145	 	
Loss on disposal of assets (g)	 	 	1,980	 	 	322	 	 	21	 	 	62	 	 	—	 	
Other unusual or non-recurring expenses (h)	 	 	—	 	 	698	 	 	—	 	 	—	 	 	—	 	
 	 	 	 	
Adjusted EBITDA	 	$	40,271	 	$	28,933	 	$	21,702	 	$	7,789	 	$	5,900	 	
 	 	
(a)    Represents non-cash compensation expenses related to stock options granted to certain of our employees.
(b)   Represents non-cash accrual for future award redemptions in connection with our customer loyalty program.
(c)    Represents non-capitalized costs associated with the Recapitalization.
(d)   Represents direct costs and fees related to the acquisitions of RCC and Baskins, which we acquired in August 2012 and May 2013, respectively.
(e)    Represents certain store integration, remerchandising and corporate consolidation costs incurred in connection with the integrations of RCC and Baskins, which we acquired in August 2012 and May 2013, respectively.
(f)    Represents the amortization of purchase-accounting adjustments that increased the value of inventory acquired to its fair value.
(g)    Represents loss on disposal of assets in connection with the rebranding of RCC and Baskins acquired stores and store closures, as well as other costs.
(h)   Represents professional fees and expenses incurred in connection with other acquisition activity.
(6)   Average net sales per store is calculated by dividing net sales for the applicable period by the number of stores operating at the end of the period. For the purpose of calculating net sales per store, e-commerce sales and certain other revenues are excluded from net sales.
(7)    As adjusted balance sheet data as of June 28, 2014 gives effect to (i) the sale by us of                                         sha res of our common stock in this offering, assuming an initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us and (ii) the application of the net proceeds of this offering as described under "Use of proceeds".

45

Table of Contents

 Management's discussion and analysis of financial condition and results of operations
You should read the following discussion in conjunction with the consolidated financial statements, condensed consolidated financial statements and the accompanying notes included elsewhere in this prospectus, as well as the information presented under "Selected consolidated financial data". The statements in the following discussion and analysis regarding expectations about our future performance, liquidity and capital resources and any other non-historical statements in this discussion and analysis are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those described under "Risk factors" and "Special note regarding forward looking statements" elsewhere in this prospectus. Our actual results could differ materially from those contained in or implied by any forward-looking statements.
Overview
We are the largest and fastest-growing lifestyle retail chain devoted to western and work-related footwear, apparel and accessories in the U.S. As of June 28, 2014, we operated 155 stores in 24 states, as well as a growing e-commerce website, bootbarn.com. Our stores feature a comprehensive assortment of approximately 200 brands and more than 1,500 styles on average, coupled with attentive, knowledgeable store associates. Our product offering is anchored by an extensive selection of western and work boots and is complemented by a wide assortment of coordinating apparel and accessories. Many of the items that we offer are basics or necessities for our customers' daily lives and typically represent enduring styles that are not impacted by changing fashion trends.
We strive to offer an authentic, one-stop shopping experience that fulfills the everyday lifestyle needs of our customers, and as a result, many of our customers make purchases in both the western and work wear sections of our stores. We target a broad and growing demographic, ranging from passionate western and country enthusiasts, to workers seeking dependable, high-quality footwear and clothing. Our broad geographic footprint, which comprises more than twice as many stores as our nearest direct competitor that sells primarily western and work wear, provides us with significant economies of scale, enhanced supplier relationships, the ability to recruit and retain high quality store associates and the ability to reinvest in our business at levels that we believe exceed those of our competition.
Growth strategies and outlook
We plan to continue to expand our business, increase our sales growth and profitability and enhance our competitive position by executing the following strategies:
•
expanding our store base;
•
driving same store sales growth;
•
enhancing brand awareness;
•
growing our e-commerce business; and
•
increasing profitability.
Since the founding of Boot Barn in 1978, we have grown both organically and through successful strategic acquisitions of competing chains. We have rebranded and remerchandised the acquired chains under the Boot Barn banner, resulting in sales and profit increases over their original concepts. We believe that our business model and scale provide us with competitive advantages that have contributed to our consistent and strong financial performance, generating sufficient cash flow to support national growth.
46

Table of Contents
Factors affecting comparability of results of operations
Recapitalization
On December 12, 2011, we consummated a recapitalization with Freeman Spogli & Co., which we refer to as the Recapitalization, to provide liquidity for certain existing stockholders, to repay existing indebtedness and to help us achieve our long-term growth objectives by partnering with a private equity firm with expertise in assisting retail companies in executing their growth strategies. Funds affiliated with Freeman Spogli & Co. purchased shares of our common stock representing a 90.4% equity interest in our subsidiary, Boot Barn Holding Corporation. In connection with the Recapitalization, management and other investors purchased shares of our common stock and common stock of Boot Barn Holding Corporation, collectively representing a 9.6% equity interest in Boot Barn Holding Corporation. In addition, on December 12, 2011, we entered into an amended and restated revolving credit facility and term loan facility and issued $25.0 million in mezzanine notes. The purchase price associated with the Recapitalization has been allocated to assets acquired and liabilities assumed based on their fair values as of the date of the Recapitalization, which has resulted in the recognition of goodwill.
RCC Acquisition
On August 31, 2012, we acquired RCC, a western and work-related retail chain of 29 stores located in 12 states. We refer to our acquisition of RCC as the RCC Acquisition. In connection with the RCC Acquisition, we amended our revolving credit facility and our then-existing term loan facility to increase the size of both facilities. We also raised an additional $25.5 million by issuing new mezzanine notes and issued 11,869 shares of our common stock to one of our mezzanine lenders, which represented a 1.5% equity interest in Boot Barn Holding Corporation immediately following the RCC Acquisition. Upon the closing of the RCC Acquisition, we used borrowings under our revolving credit facility and our then-existing term loan facility, as well as the new mezzanine notes, to, among other things, pay the cash portion of the acquisition consideration, as well as related fees and expenses incurred in connection with the RCC Acquisition. Commencing on August 31, 2012, our consolidated financial statements and condensed consolidated financial statements include the financial position, results of operations and cash flows of RCC. The purchase price has been allocated to assets acquired and liabilities assumed based on their fair values as of the closing date of the RCC Acquisition, which has resulted in the recognition of goodwill.
Through the RCC Acquisition, we increased our store base by 33% and expanded our geographic footprint into the Midwest and Southeast. In addition, we have achieved significant benefits from the RCC Acquisition as a result of improved purchasing efficiencies from suppliers and corporate support efficiencies. All of the RCC stores have been rebranded under the Boot Barn banner.
Baskins Acquisition
As of May 25, 2013, we acquired Baskins, a western and work-related retail chain of 30 stores located in Texas and Louisiana. We refer to our acquisition of Baskins as the Baskins Acquisition. In connection with the Baskins Acquisition, we amended our revolving credit facility to increase the size of the facility to $60.0 million and entered into our term loan facility. Upon the closing of the Baskins Acquisition, we used borrowings under our revolving credit facility and our term loan facility, to, among other things, pay the cash portion of the acquisition consideration, repay our then-existing term loan facility and mezzanine notes, including prepayment penalties, and pay fees and expenses incurred in connection with the Baskins Acquisition. Commencing on May 25, 2013, our consolidated financial statements and condensed consolidated financial statements include the financial position, results of operations and cash flows of Baskins. The purchase price has been allocated to assets acquired and liabilities assumed based on their
47

Table of Contents
fair values as of the closing date of the Baskins Acquisition, which has resulted in the recognition of goodwill.
Through the Baskins Acquisition, we entered the attractive Texas market, which is the number one market for western boots, apparel and accessories. In addition, both Texas and Louisiana have benefited from increased output and employment in the oil and gas industries, which have positively impacted the demand for the work-related products that we offer. All of the Baskins stores have been rebranded under the Boot Barn banner and have been merchandised to be consistent with our existing stores. We have seen an increase in both sales and profitability since rebranding and remerchandising the stores acquired in the Baskins Acquisition.
Reorganization
As of June 8, 2014, WW Top Investment Corporation held all of the outstanding shares of common stock of WW Holding Corporation, which held 95.0% of the outstanding shares of common stock of Boot Barn Holding Corporation. Boot Barn Holding Corporation held all of the outstanding shares of common stock of Boot Barn, Inc., which is our primary operating subsidiary. To simplify our organizational structure, we completed a reorganization on June 9, 2014, whereby WW Holding Corporation was merged with and into WW Top Investment Corporation and then Boot Barn Holding Corporation was merged with and into WW Top Investment Corporation. As a result of this reorganization, Boot Barn, Inc. became a direct wholly owned subsidiary of WW Top Investment Corporation, and the minority stockholders that formerly held 5.0% of Boot Barn Holding Corporation became holders of 5.0% of WW Top Investment Corporation. The legal name of WW Top Investment Corporation was subsequently changed to Boot Barn Holdings, Inc.
How we assess the performance of our business
In assessing the performance of our business, we consider a variety of performance and financial measures. The key indicators we use to evaluate the financial condition and operating performance of our business are net sales and gross profit. In addition, we also review other important metrics, such as same store sales, new store openings, SG&A expenses, EBITDA and Adjusted EBITDA. See "Non-GAAP financial measures" at the beginning of this prospectus for our definition of EBITDA and Adjusted EBITDA and why we present EBITDA and Adjusted EBITDA, and see "Prospectus summary—Summary consolidated financial and other data" for a reconciliation of our EBITDA and Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.
Net sales
Net sales reflect revenue from the sale of our merchandise at retail locations, as well as sales of merchandise through our e-commerce website. We recognize revenue upon the purchase of merchandise by customers at our stores and upon delivery of the product in the case of our e-commerce website. Net sales also include shipping and handling fees for e-commerce shipments that have been delivered to the customer. Net sales are net of returns on sales during the period as well as an estimate of returns and award redemptions expected in the future stemming from current period sales. Revenue from the sale of gift cards is deferred until the gift cards are used to purchase merchandise.
Our business is moderately seasonal and as a result our revenues fluctuate from quarter to quarter. In addition, our revenues in any given quarter can be affected by a number of factors including the timing of holidays and weather patterns. The third quarter of our fiscal year, which includes the Christmas shopping season, has historically produced stronger sales and disproportionately stronger operating results than the other quarters of our fiscal year.
48

Table of Contents
Same store sales
Same store sales generally consist of net sales from stores that have been open at least 13 full fiscal months as of the end of the current reporting period, which is when we believe comparability is achieved. For a complete description of the manner in which we calculate same store sales see "Same store sales" at the beginning of this prospectus.
Retail store sales, e-commerce sales, e-commerce shipping and handling revenue and actual sales returns are included in same store sales. Measuring the change in year-over-year same store sales allows us to evaluate how our store base is performing. Numerous factors affect our same store sales, including:
•
national and regional economic trends;
•
our ability to identify and respond effectively to regional consumer preferences;
•
changes in our product mix;
•
changes in pricing;
•
competition;
•
changes in the timing of promotional and advertising efforts;
•
holidays or seasonal periods; and
•
weather.
Opening new stores is an important part of our growth strategy and we anticipate that a significant percentage of our net sales in the near future will come from stores not included in our same store sales calculation. Accordingly, same store sales are only one measure we use to assess the success of our business and growth strategy. Some of our competitors and other retailers may calculate "same" or "comparable" store sales differently than we do. As a result, data in this prospectus regarding our same store sales may not be comparable to similar data made available by other retailers.
New store openings
New store openings reflect the number of stores, excluding acquired stores, that are opened during a particular reporting period. In connection with opening new stores, we incur pre-opening costs. Pre-opening costs consist of costs incurred prior to opening a new store and primarily consist of manager and other employee payroll, travel and training costs, marketing expenses, initial opening supplies and costs of transporting initial inventory and certain fixtures to store locations, as well as occupancy costs incurred from the time that we take possession of a store site to the opening of that store. Occupancy costs are included in cost of goods sold and the other pre-opening costs are included in SG&A expenses. All of these costs are expensed as incurred.
New stores often open with a period of high sales levels, which subsequently decrease to normalized sales volumes. In addition, we experience typical inefficiencies in the form of higher labor, advertising and other direct operating expenses, and as a result, store-level profit margins at our new stores are generally lower during the start-up period of operation. The number and timing of store openings has had, and is expected to continue to have, a significant impact on our results of operations. In assessing the performance of a new store, we review its actual sales against the sales that we projected that store to achieve at the time we initially approved its opening. We also review the actual number of stores opened in a fiscal year against the number of store openings that we included in our budget at the beginning of that fiscal year.
Gross profit
Gross profit is equal to our net sales less our cost of goods sold. Cost of goods sold includes the cost of merchandise, obsolescence and shrinkage provisions, store and warehouse occupancy costs (including rent,
49

Table of Contents
depreciation and utilities), inbound and outbound freight, supplier allowances, occupancy-related taxes, compensation costs for merchandise purchasing and warehouse personnel, and other inventory acquisition-related costs. These costs are significant and can be expected to continue to increase as we grow. The components of our reported cost of goods sold may not be comparable to those of other retail companies, including our competitors. As a result, data in this prospectus regarding our gross profit may not be comparable to similar data made available by other retailers.
Our gross profit is variable in nature and generally follows changes in net sales. We regularly analyze the components of gross profit, as well as gross profit as a percentage of net sales. Specifically, we examine the initial markup on purchases, markdowns and reserves, shrinkage, buying costs, distribution costs and occupancy costs. Any inability to obtain acceptable levels of initial markups, or a significant increase in our use of markdowns or in inventory shrinkage, or a significant increase in freight and other inventory acquisition costs could have an adverse impact on our gross profit and results of operations.
Gross profit is also impacted by shifts in the proportion of sales of our private brand products compared to third-party brand products, as well as by sales mix shifts within and between brands and between major product categories such as footwear, apparel or accessories.
Selling, general and administrative expenses
Our selling, general and administrative expenses, or SG&A expenses, are composed of labor and related expenses, other operating expenses and general and administrative expenses not included in cost of goods sold. Specifically, our SG&A expenses include the following:
•
Labor and related expenses —Labor and related expenses include all store-level salaries and hourly labor costs, including salaries, wages, benefits and performance incentives, labor taxes and other indirect labor costs. 

•
Other operating expenses —Other operating expenses include all operating costs, including those for advertising, marketing campaigns, operating supplies, utilities, and repairs and maintenance, as well as credit card fees and costs of third-party services. 

•
General and administrative expenses —General and administrative expenses comprise expenses associated with corporate and administrative functions that support the development and operations of our stores, including compensation and benefits, travel expenses, corporate occupancy costs, stock compensation costs, legal and professional fees, insurance and other related corporate costs.
The components of our SG&A expenses may not be comparable to those of our competitors and other retailers. We expect that our SG&A expenses will increase in future periods due to our store growth strategy and, in part, due to additional legal, accounting, insurance and other expenses that we expect to incur as a result of being a public company. In addition, we expect that compliance with the Sarbanes-Oxley Act and related rules and regulations could result in significant incremental legal, accounting and other overhead costs after we cease to be an emerging growth company.
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are important financial measures used by our management, board of directors and lenders to assess our operating performance. We use EBITDA and Adjusted EBITDA as key performance measures because we believe that they facilitate operating performance comparisons from period to period by excluding potential differences primarily caused by the impact of variations from period to period in tax positions, interest expense and depreciation and amortization, as well as, in the
50

Table of Contents
case of Adjusted EBITDA, excluding non-cash expenses, such as stock-based compensation and the non-cash accrual for future award redemptions, and unusual or non-recurring costs and expenses that are not directly related to our operations, including recapitalization expenses, acquisition expenses, acquisition-related integration and reorganization costs, amortization of inventory fair value adjustment, loss on disposal of assets and other unusual or non-recurring expenses. Because EBITDA and Adjusted EBITDA facilitate internal comparisons of our historical operating performance on a more consistent basis, we also use EBITDA and Adjusted EBITDA (or some variations thereof) for business planning purposes, in calculating covenant compliance for our credit facilities, in determining incentive compensation for members of our management and in evaluating acquisition opportunities. In addition, we believe that EBITDA and Adjusted EBITDA and similar measures are widely used by investors, securities analysts, ratings agencies and other parties in evaluating companies in our industry as a measure of financial performance and debt-service capabilities.
Results of operations
We operate on a fiscal calendar which results in a 52- or 53-week fiscal year ending on the Saturday closest to March 31. In a 52-week fiscal year, each quarter includes 13 weeks of operations; in a 53-week fiscal year, the first, second and third quarters each include 13 weeks of operations and the fourth quarter includes 14 weeks of operations. For ease of reference, we identify our fiscal years by reference to the calendar year in which the fiscal year ends. The following discussion contains references to fiscal 2012, fiscal 2013 and fiscal 2014, which represent our fiscal years ended March 31, 2012, March 30, 2013 and March 29, 2014, respectively, all of which were 52-week periods.
The following table summarizes key components of our results of operations for the periods indicated, both in dollars and as a percentage of our net sales. The period from April 3, 2011 to December 11, 2011, which is presented separately as the "Predecessor Period" in our consolidated financial statements and the related notes included elsewhere in this prospectus, consisted of approximately 36 weeks. The period from December 12, 2011 to March 31, 2012, which is presented separately as the "Successor Period" in our consolidated financial statements and the related notes included elsewhere in this prospectus, consisted of approximately 16 weeks. The Predecessor Period and the Successor Period have been combined and presented together as fiscal 2012. A presentation of these two periods in this manner is more reflective of how we assess the performance of our business and we believe that it facilitates comparisons of fiscal 2012 to our other fiscal years. In addition, our results of operations include the activities of RCC since August 31, 2012 and of Baskins since May 25, 2013, which are the respective effective dates of the RCC Acquisition and the Baskins Acquisition.
51

Table of Contents

																	
 	 	
 	 	Fiscal year ended	 	Thirteen weeks ended	 	
(in thousands)	 	March 29,
2014	 	March 30,
2013	 	March 31,
2012	 	June 28,
2014	 	June 29,
2013	 	
 	 	
Consolidated statements of operations data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	345,868	 	$	233,203	 	$	168,696	 	$	82,497	 	$	64,574	 	
Cost of goods sold	 	 	231,796	 	 	151,357	 	 	109,442	 	 	55,607	 	 	42,146	 	
Amortization of inventory fair value adjustment	 	 	867	 	 	9,199	 	 	9,369	 	 	—	 	 	145	 	
 	 	 	 	
Total cost of goods sold	 	 	232,663	 	 	160,556	 	 	118,811	 	 	55,607	 	 	42,291	 	
 	 	 	 	
Gross profit	 	 	113,205	 	 	72,647	 	 	49,885	 	 	26,890	 	 	22,283	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	 	 	91,998	 	 	62,609	 	 	40,914	 	 	21,497	 	 	18,845	 	
Acquisition-related expenses	 	 	671	 	 	1,138	 	 	10,363	 	 	—	 	 	671	 	
 	 	 	 	
Total operating expenses	 	 	92,669	 	 	63,747	 	 	51,277	 	 	21,497	 	 	19,516	 	
 	 	 	 	
Income (loss) from operations	 	 	20,536	 	 	8,900	 	 	(1,392	)	 	5,393	 	 	2,767	 	
Interest expense, net	 	 	11,594	 	 	7,415	 	 	5,126	 	 	2,757	 	 	5,078	 	
Other income, net	 	 	39	 	 	21	 	 	75	 	 	18	 	 	8	 	
 	 	 	 	
Income (loss) before income taxes	 	 	8,981	 	 	1,506	 	 	(6,443	)	 	2,654	 	 	(2,303	)	
Income tax expense (benefit)	 	 	3,321	 	 	826	 	 	(1,182	)	 	1,241	 	 	(858	)	
 	 	 	 	
Net income (loss)	 	 	5,660	 	 	680	 	 	(5,261	)	 	1,413	 	 	(1,445	)	
 	 	 	 	
Percentage of net sales:	 	 	

 	 	 	

Net sales	 	 	100.0%	 	 	100.0%	 	 	100.0%	 	 	100.0%	 	 	100.0%	 	
Cost of goods sold	 	 	67.0%	 	 	64.9%	 	 	64.9%	 	 	67.4%	 	 	65.3%	 	
Amortization of inventory fair value adjustment	 	 	0.3%	 	 	3.9%	 	 	5.5%	 	 	0.0%	 	 	0.2%	 	
 	 	 	 	
Total cost of goods sold	 	 	67.3%	 	 	68.8%	 	 	70.4%	 	 	67.4%	 	 	65.5%	 	
 	 	 	 	
Gross profit	 	 	32.7%	 	 	31.2%	 	 	29.6%	 	 	32.6%	 	 	34.5%	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	 	 	26.6%	 	 	26.8%	 	 	24.3%	 	 	26.1%	 	 	29.2%	 	
Acquisition-related expenses	 	 	0.2%	 	 	0.5%	 	 	6.1%	 	 	0.0%	 	 	1.0%	 	
 	 	 	 	
Total operating expenses	 	 	26.8%	 	 	27.3%	 	 	30.4%	 	 	26.1%	 	 	30.2%	 	
 	 	 	 	
Income (loss) from operations	 	 	5.9%	 	 	3.8%	 	 	(0.8%	)	 	6.5%	 	 	4.3%	 	
Interest expense, net	 	 	3.4%	 	 	3.2%	 	 	3.0%	 	 	3.3%	 	 	7.9%	 	
Other expense (income), net	 	 	0.0%	 	 	0.0%	 	 	0.0%	 	 	0.0%	 	 	0.0%	 	
 	 	 	 	
Income (loss) before income taxes	 	 	2.6%	 	 	0.6%	 	 	(3.8%	)	 	3.2%	 	 	(3.6%	)	
Income tax expense (benefit)	 	 	1.0%	 	 	0.4%	 	 	(0.7%	)	 	1.5%	 	 	(1.4%	)	
 	 	 	 	
Net income (loss)	 	 	1.6%	 	 	0.3%	 	 	(3.1%	)	 	1.7%	 	 	(2.2%	)	
 	 	
Thirteen weeks ended June 28, 2014 compared to thirteen weeks ended June 29, 2013
Net sales.     Net sales increased by $17.9 million, or 27.8%, to $82.5 million for the thirteen weeks ended June 28, 2014 compared to $64.6 million for the thirteen weeks ended June 29, 2013. The increase in net sales was due to an increase in same store sales of $5.5 million, or 7.7%, and partially due to contributions from nine new store openings. We opened three stores during the thirteen weeks ended June 28, 2014 and nine stores in fiscal 2014 (including two in the thirteen weeks ended June 29, 2013). Same store sales
52

Table of Contents
during the thirteen weeks ended June 28, 2014 included $14.5 million in net sales realized from the 30 stores that we acquired in the Baskins Acquisition in fiscal 2013.
Gross profit.     Gross profit increased by $4.6 million, or 20.7%, to $26.9 million for the thirteen weeks ended June 28, 2014 from $22.3 million for the thirteen weeks ended June 29, 2013. The increase in gross profit was primarily the result of increased overall net sales and a decrease in the amortization of acquisition-related inventory fair value adjustments, which are recorded in cost of goods sold. The stores acquired in the Baskins Acquisition contributed $4.1 million and $1.2 million of gross profit for the thirteen weeks ended June 28, 2014 and June 29, 2013, respectively. There was no amortization of these adjustments for the thirteen weeks ended June 28, 2014. As a percentage of net sales, gross profit was 32.6% and 34.5% for the thirteen weeks ended June 28, 2014 and June 29, 2013, respectively. This decrease was largely driven by competitive pressures in certain markets resulting in lower merchandise margins earned, as well as an increase in other cost of goods sold-related expenses.
Selling, general and administrative expenses.     SG&A expenses increased by $2.7 million, or 14.1%, to $21.5 million for the thirteen weeks ended June 28, 2014 from $18.8 million for the thirteen weeks ended June 29, 2013. As a percentage of net sales, SG&A expenses were 26.1% and 29.2% for the thirteen weeks ended June 28, 2014 and June 29, 2013, respectively. Labor and related expenses, operating expenses and general and administrative expenses all increased as a result of the Baskins Acquisition, additional investment in our corporate organization to support our planned growth for fiscal 2014 as well as the net addition of six new stores since the end of the thirteen weeks ended June 29, 2013.
Acquisition-related expenses.     Acquisition-related expenses for the thirteen weeks ended June 29, 2013 were $0.7 million, which related to the Baskins Acquisition. There were no acquisition-related expenses during the thirteen weeks ended June 28, 2014.
Income from operations.     Income from operations increased by $2.6 million, or 94.9%, to $5.4 million for the thirteen weeks ended June 28, 2014 from $2.8 million for the thirteen weeks ended June 29, 2013. As a percentage of net sales, income from operations was 6.5% and 4.3% for the thirteen weeks ended June 28, 2014 and June 29, 2013, respectively. The change in income from operations was attributable to the factors noted above.
Interest expense.     Interest expense decreased by $2.3 million, or 45.7%, to $2.8 million for the thirteen weeks ended June 28, 2014 from $5.1 million for the thirteen weeks ended June 29, 2013. The decrease in interest expense was primarily due to a $2.0 million write-off of deferred loan costs and loan termination costs in the first quarter of fiscal 2013 in connection with our refinancing our debt.
Income tax expense (benefit).     Income tax expense increased to $1.2 million for the thirteen weeks ended June 28, 2014 from an income tax benefit of $0.9 million for the thirteen weeks ended June 29, 2013. The increase in our income tax expense was due to our achieving income before taxes in the thirteen weeks ended June 28, 2014 as opposed to a net loss before taxes for the thirteen weeks ended June 29, 2013. Our effective tax rate was 46.8% for the thirteen weeks ended June 28, 2014 compared to 37.3% for the thirteen weeks ended June 29, 2013. The increase in the effective tax rate for the thirteen weeks ended June 28, 2014 was due to an increase in the overall federal tax rate from 34% to 35% and the corresponding deferred tax liability as a result of our increased earnings projections.
Net income (loss).     Net income was $1.4 million for the thirteen weeks ended June 28, 2014, compared to a net loss of $1.4 million for the thirteen weeks ended June 29, 2013. The change in net income was attributable to the factors noted above.
53

Table of Contents
Adjusted EBITDA.     Adjusted EBITDA increased by $1.9 million, or 32.0%, to $7.8 million for the thirteen weeks ended June 28, 2014 from $5.9 million for the thirteen weeks ended June 29, 2013. This increase was primarily due to the increase in net income noted above, together with increases in the following non-cash adjustments, which are added to net income to arrive at Adjusted EBITDA: increased income tax expense offset by lower interest expense, as discussed above, plus additional depreciation and amortization expense resulting from the assets acquired in the Baskins Acquisition and the net addition of six new stores. These increases in non-cash expenses were offset in part by a reduction in the amortization of inventory fair value adjustment, acquisition expenses and acquisition-related integration and reorganization costs. See "Prospectus summary—Summary consolidated financial and other data" for a discussion and reconciliation of Adjusted EBITDA to net income.
Fiscal 2014 compared to fiscal 2013
Net sales.     Net sales in fiscal 2014 increased by $112.7 million, or 48.3%, to $345.9 million compared to $233.2 million in fiscal 2013. The increase in net sales was partially due to an increase in same store sales of $19.8 million, or 6.7%, during fiscal 2014 and partially due to contributions from nine new store openings during fiscal 2014. Same store sales in fiscal 2014 included $63.4 million in net sales realized from the 30 stores that we acquired in the Baskins Acquisition during the ten full fiscal months in fiscal 2014 in which we owned those stores, but only to the extent that those stores had been opened for 13 full fiscal months. The percentage increase in same store sales was lower in fiscal 2014 than in previous years because of the high growth in same store sales in prior fiscal years and maturation of our store base. We closed four stores in fiscal 2014. Three of those stores were acquired in the RCC Acquisition and were consolidated into one new store located in the same market. The fourth store reached the end of its lease and was consolidated into a store operating in the same market. On an as adjusted basis, giving effect to the net sales of Baskins and RCC in each period as though those entities were acquired on the first day of such period, net sales in fiscal 2014 increased $41.4 million, or 13.2%, to $354.2 million compared to $312.8 million in fiscal 2013 (see Note 3 to the consolidated financial statements included elsewhere in this prospectus).
Gross profit.     Gross profit increased by $40.6 million, or 55.9%, to $113.2 million in fiscal 2014 from $72.6 million in fiscal 2013. The increase in gross profit was primarily the result of increased overall net sales, increased sales of higher margin merchandise including our private brands, and a decrease in the amortization of acquisition-related inventory fair value adjustments, which are recorded in cost of goods sold. The stores acquired in the Baskins Acquisition contributed $16.4 million of gross profit in fiscal 2014. Amortization of acquisition-related inventory fair value adjustments recorded in cost of goods sold was $0.9 million in fiscal 2014 compared to $9.2 million in fiscal 2013. Gross profit as a percentage of net sales increased to 32.7% in fiscal 2014 from 31.2% in fiscal 2013. However, gross profit as a percentage of net sales, exclusive of amortization of acquisition related inventory fair value, decreased 2.0% from fiscal 2013. The decrease was largely driven by larger markdowns and liquidation of inventory acquired in the Baskins Acquisition. The larger markdowns reduced gross profit by $0.9 million and a reserve for the liquidation of remaining unsold acquired inventory as of March 29, 2014 reduced gross profit by $1.4 million. The unsold acquired inventory was subsequently sold to a broker in April 2014. These events are directly related to the Baskins Acquisition and the remerchandising of the Baskins stores and are non-recurring. The impact to gross profit in fiscal 2013 related to the acquired inventory in the RCC Acquisition was immaterial.
Selling, general and administrative expenses.     SG&A expenses increased by $29.4 million, or 47.0%, to $92.0 million in fiscal 2014 from $62.6 million in fiscal 2013. As a percentage of net sales, SG&A expenses were 26.6% for fiscal 2014 compared to 26.8% for fiscal 2013. Labor and related expenses, operating expenses and general and administrative expenses all increased as a result of the Baskins Acquisition and
54

Table of Contents
the related integration of the Baskins stores, the cost to consolidate the corporate offices as well as the net addition of five new stores during the fiscal year. During fiscal 2014, we invested in our corporate organization to support the larger number of stores. In addition, we incurred one-time expenses associated with the closure of Baskins' corporate headquarters, the termination of certain contracts, severance and retention payments, and fees and expenses to integrate the Baskins' store operations under our management. The total cost associated with these additional one-time expenses was $3.5 million. Additionally, the Baskins Acquisition agreement included an earn out provision. The fair value of the earn-out as of the acquisition date was $1.7 million. Subsequent to the acquisition date the fair value of the earn out increased $0.4 million. This non-recurring expense is included in SG&A expenses in fiscal 2014. As a result of these actions, we expect to realize ongoing efficiencies from the consolidation of the Baskins operations that may reduce some future SG&A expenses.
Acquisition-related expenses.     Acquisition-related expenses in fiscal 2014 were $0.7 million compared to $1.1 million in fiscal 2013. We completed the Baskins Acquisition and RCC Acquisition in May 2013 and August 2012, respectively. Costs associated with these acquisitions have been reflected in their respective fiscal years.
Income (loss) from operations.     Income from operations increased by $11.6 million, or 130.3%, to $20.5 million in fiscal 2014 from $8.9 million in fiscal 2013. As a percentage of net sales, income from operations was 5.9% and 3.8% during fiscal 2014 and 2013, respectively. The change in income from operations was attributable to the factors noted above.
Interest expense.     Interest expense increased by $4.2 million, or 56.8%, to $11.6 million in fiscal 2014 from $7.4 million in fiscal 2013. The increase in interest expense was primarily a result of the additional debt incurred in connection with the RCC Acquisition and the Baskins Acquisition, which was partially offset by more favorable borrowing rates on our credit facilities. Also included in interest expense are deferred loan costs that were expensed at the time of the refinancing of our debt in fiscal 2014.
Income tax expense (benefit).     Income tax expense was $3.3 million in fiscal 2014 compared to $0.8 million in fiscal 2013. The increase in our income tax expense was due primarily to an increase in our income before taxes to $9.0 million in fiscal year 2014 from $1.5 million in fiscal 2013. Our effective tax rate was 37.0% in fiscal 2014, compared to 54.8% in fiscal 2013. The high effective tax rate in fiscal 2013 was mainly due to acquisition costs.
Net income (loss).     Net income increased to $5.7 million in fiscal 2014 from a net income of $0.7 million in fiscal 2013. The change in net income was attributable to the factors noted above.
Adjusted EBITDA.     Adjusted EBITDA increased by $11.3 million, or 39.2%, to $40.3 million in fiscal 2014 from $28.9 million in fiscal 2013. This increase was primarily due to the increase in net income noted above, together with increases in the following non-cash expenses, which are added to net income to arrive at Adjusted EBITDA: increased income tax expense and additional interest expense, as discussed above, plus additional depreciation and amortization expense resulting from the RCC Acquisition and Baskins Acquisition and the net addition of five new stores, additional acquisition-related integration and reorganization costs for the Baskins Acquisition, and additional loss on disposal of assets in connection with the rebranding of RCC and Baskins acquired stores. These increases in non-cash expenses were offset in part by a reduction in the amortization of inventory fair value adjustment. See "Prospectus summary—Summary consolidated financial and other data" for a discussion and reconciliation of Adjusted EBITDA to net income.
55

Table of Contents
Fiscal 2013 compared to fiscal 2012
Net sales.     Net sales in fiscal 2013 increased by $64.5 million, or 38.2%, to $233.2 million compared to $168.7 million of net sales in fiscal 2012. The increase in net sales was partially due to an increase in same store sales of $23.9 million, or 12.4%, during fiscal 2013 and partially due to contributions from four new store openings during fiscal 2013. Same store sales in fiscal 2013 included $35.5 million in net sales realized from the 29 stores that we acquired in the RCC Acquisition during the seven full fiscal months in fiscal 2013 in which we owned those stores, but only to the extent that those stores had been opened for 13 full fiscal months. The percentage increase in same store sales was lower in fiscal 2013 than in previous years because of the high growth in same store sales in prior fiscal years and maturation of our store base. We closed two stores in fiscal 2013, one of which was acquired in the RCC Acquisition. Both stores reached the end of their respective leases and were consolidated with other stores operating in the same markets. On an as adjusted basis, giving effect to the net sales of Baskins and RCC in each period as though those entities were acquired on the first day of such period, net sales in fiscal 2013 increased $49.0 million, or 18.6%, to $312.8 million compared to $263.8 million in fiscal 2012 (see Note 3 to the consolidated financial statements included elsewhere in this prospectus).
Gross profit.     Gross profit increased by $22.7 million, or 45.5%, to $72.6 million in fiscal 2013 from $49.9 million in fiscal 2012. The increase in gross profit was primarily the result of increased overall net sales. The stores acquired in the RCC Acquisition contributed $12.1 million of gross profit in Fiscal 2013. Amortization of acquisition-related inventory fair value adjustments recorded in cost of goods sold was $9.2 million in fiscal 2013 compared to $9.4 million in fiscal 2012. Gross profit as a percentage of net sales increased to 31.2% in fiscal 2013 from 29.6% in fiscal 2012 as a result of increased sales of higher margin merchandise including our private brands.
Selling, general and administrative expenses.     SG&A expenses increased by $21.7 million, or 53.1%, to $62.6 million in fiscal 2013 from $40.9 million in fiscal 2012. As a percentage of net sales, SG&A expenses were 26.8% for fiscal 2013 compared to 24.3% for fiscal 2012. Labor and related expenses, operating expenses and general and administrative expenses all increased as a result of the RCC Acquisition and the related integration of the RCC stores and consolidation of corporate offices, as well as the net addition of two new stores during the fiscal year. During fiscal 2013, we invested in our corporate organization to support the operations of the stores acquired in the RCC Acquisition. In addition, we incurred one-time expenses associated with the closure of RCC's corporate headquarters, the termination of certain contracts, severance and retention payments, and fees and expenses to integrate the RCC store operations under our management. The total costs associated with these additional one-time expenses related to the RCC Acquisition were $2.1 million. In addition, we incurred $0.7 million in professional fees and expenses related to other acquisition activity.
Acquisition-related expenses.     Acquisition-related expenses in fiscal 2013 were $1.1 million compared to acquisition-related costs of $10.4 million in fiscal 2012. We completed the RCC Acquisition in August 2012. As a result, costs associated with the RCC Acquisition have been reflected in fiscal 2013. In December 2011, we consummated the Recapitalization. Expenses associated with the Recapitalization have been reflected in fiscal 2012 and include both buyer and seller expenses.
Income (loss) from operations.     Income from operations increased by $10.3 million to $8.9 million in fiscal 2013 from a loss of $1.4 million in fiscal 2012. As a percentage of net sales, income from operations was 3.8% in fiscal 2013 compared with a loss from operations of 0.8% in fiscal 2012. The change in income from operations was attributable to the factors noted above.
56

Table of Contents
Interest expenses.     Interest expense increased $2.3 million, or 44.7%, to $7.4 million in fiscal 2013 compared to interest expense of $5.1 million in fiscal 2012. The increase in interest expenses was primarily a result of the additional debt incurred in connection with the Recapitalization and the RCC Acquisition. Included in interest expense are deferred loan costs that were expensed at the time of the refinancing of our debt in the fiscal 2013.
Income tax expense (benefit).     Income tax expense (benefit) was $0.8 million in fiscal 2013 compared to an income tax benefit of $1.2 million in fiscal 2012. The increase in our income tax expense (benefit) was due primarily to an increase in our income before taxes to $1.5 million in fiscal 2013 from a loss before taxes of $6.4 million in fiscal 2012. Our effective tax rate was 54.8% in fiscal 2013, compared to 18.3% in fiscal 2012. The high effective tax rate in fiscal 2013 was mainly due to acquisition costs.
Net income (loss).     Net income increased to $0.7 million in fiscal 2013 from a net loss of $5.3 million in fiscal 2012. The change in net income was attributable to the factors noted above.
Adjusted EBITDA.     Adjusted EBITDA increased by $7.2 million, or 33.3%, to $28.9 million in fiscal 2013 from $21.7 million in fiscal 2012. This increase was primarily due to the increase in net income noted above, together with increases in the following non-cash expenses, which are added to net income to arrive at Adjusted EBITDA: increased income tax expense and additional interest expense, as discussed above, plus additional depreciation and amortization expense resulting from the RCC Acquisition and the Recapitalization, additional acquisition expenses, and acquisition-related integration and reorganization costs for the RCC Acquisition. These increases in non-cash expenses were offset in part by a reduction in non-capitalized costs associated with the Recapitalization. See "Prospectus summary—Summary consolidated financial and other data" for a discussion and reconciliation of Adjusted EBITDA to net income.
57

Table of Contents
Quarterly financial data
The following table sets forth selected unaudited quarterly statements of operations and other data for each of our most recent nine fiscal quarters. The unaudited quarterly information has been prepared on a basis consistent with the audited financial statements included elsewhere herein. In our opinion, such financial statements reflect all adjustments that are of a normal and recurring nature necessary to fairly present our results of operations in all material respects for the periods presented.
In a 52-week fiscal year, each quarter includes 13 weeks of operations; in a 53-week fiscal year, the first, second and third quarters each include 13 weeks of operations and the fourth quarter includes 14 weeks of operations. Each quarter ends on the last Saturday of the 13-week period (or the 14-week period in a 53-week fiscal year). Fiscal 2015, fiscal 2014 and fiscal 2013 are all 52-week periods.
This information should be read in conjunction with our consolidated financial statements, condensed consolidated financial statements and accompanying notes included elsewhere in this prospectus. The operating results for any fiscal quarter are not indicative of the operating results for a full fiscal year or for any future period and there can be no assurance that any trend reflected in such results will continue in the future.

																													
 	 	
 	 	Fiscal 2015	 	Fiscal 2014	 	Fiscal 2013	 	
(in thousands, except selected store data)	 	First
quarter	 	Fourth
quarter	 	Third
quarter	 	Second
quarter	 	First
quarter	 	Fourth
quarter	 	Third
quarter	 	Second
quarter	 	First
quarter	 	

Net sales	 	$	82,497	 	$	88,486	 	$	115,438	 	$	77,370	 	$	64,574	 	$	58,329	 	$	83,895	 	$	49,020	 	$	41,959	 	
Gross profit	 	 	26,890	 	 	27,517	 	 	39,676	 	 	23,729	 	 	22,283	 	 	19,742	 	 	28,211	 	 	15,903	 	 	8,791	 	
Income (loss) from operations	 	 	5,393	 	 	4,829	 	 	13,072	 	 	(132	)	 	2,767	 	 	2,409	 	 	8,068	 	 	868	 	 	(2,445	)	
Net income (loss)	 	 	1,413	 	 	1,892	 	 	6,673	 	 	(1,460	)	 	(1,445	)	 	(131	)	 	3,501	 	 	(439	)	 	(2,251	)	
Percentage of annual results:	 	 	

 	 	 	

 	 	 	

 	 	
Net sales	 	 	 	 	 	25.6%	 	 	33.4%	 	 	22.4%	 	 	18.7%	 	 	25.0%	 	 	36.0%	 	 	21.0%	 	 	18.0%	 	
Gross profit	 	 	 	 	 	24.3%	 	 	35.0%	 	 	21.0%	 	 	19.7%	 	 	27.2%	 	 	38.8%	 	 	21.9%	 	 	12.1%	 	
Income (loss) from operations	 	 	 	 	 	23.5%	 	 	63.7%	 	 	(0.6%	)	 	13.5%	 	 	27.1%	 	 	90.7%	 	 	9.8%	 	 	(27.5%	)	
Net income (loss)	 	 	 	 	 	33.4%	 	 	117.9%	 	 	(25.8%	)	 	(25.5%	)	 	(19.3%	)	 	514.9%	 	 	(64.6%	)	 	(331.0%	)	
Percentage of net sales:	 	 	

 	 	 	

 	 	 	

 	 	
Gross profit	 	 	32.6%	 	 	31.1%	 	 	34.4%	 	 	30.7%	 	 	34.5%	 	 	33.8%	 	 	33.6%	 	 	32.4%	 	 	21.0%	 	
Income (loss) from operations	 	 	6.5%	 	 	5.5%	 	 	11.3%	 	 	(0.2%	)	 	4.3%	 	 	4.1%	 	 	9.6%	 	 	1.8%	 	 	(5.8%	)	
Net income (loss)	 	 	1.7%	 	 	2.1%	 	 	5.8%	 	 	(1.9%	)	 	(2.2%	)	 	(0.2%	)	 	4.2%	 	 	(0.9%	)	 	(5.4%	)	
Selected store data:	 	 	

 	 	 	

 	 	 	

 	 	
Stores operating at end of quarter	 	 	155	 	 	152	 	 	155	 	 	151	 	 	149	 	 	117	 	 	116	 	 	116	 	 	87	 	
Same store sales growth	 	 	7.7%	 	 	9.3%	 	 	3.6%	 	 	7.1%	 	 	8.4%	 	 	7.8%	 	 	11.0%	 	 	15.1%	 	 	18.8%	 	
 	 	
Liquidity and capital resources
We rely on cash flows from operating activities and our revolving credit facility as our primary sources of liquidity. Our primary cash needs have been for inventories, operating expenses, capital expenditures associated with opening new stores and remodeling or refurbishing existing stores, improvements to our distribution facilities, marketing and information technology expenditures, debt service and taxes. We have also used cash for the RCC Acquisition and the Baskins Acquisition, the subsequent rebranding and integration of the stores acquired in those acquisitions and costs to consolidate the corporate offices. In addition to cash and cash equivalents, the most significant components of our working capital are accounts receivable, inventories, accounts payable and accrued expenses and other current liabilities. We believe that cash flows from operating activities and the availability of cash under our revolving credit facility or
58

Table of Contents
other financing arrangements will be sufficient to cover working capital requirements, anticipated capital expenditures and other anticipated cash needs for at least the next 12 months.
Our liquidity is moderately seasonal. Our cash requirements generally increase in our third fiscal quarter as we incur additional marketing expenses and increase our inventory in advance of the Christmas shopping season. Our cash flows from operations increased in fiscal 2014 as a result of efficiencies realized upon our integration of the operations of stores that we acquired in the RCC Acquisition and the Baskins Acquisition, and from an increase in our private brand products as a percentage of our overall product mix, which has incrementally increased our margins, in addition to our general growth.
Although we did not have any material capital expenditure commitments as of the end of fiscal 2014, we are planning to open new stores, remodel and refurbish our existing stores at a greater rate than we have typically done in the past, and make improvements to our information technology infrastructure, which will result in increased capital expenditures. We estimate that our capital expenditures in fiscal 2015 will be between approximately $13.0 million and $15.0 million (of which $1.8 million has been spent through June 28, 2014), and we anticipate that we will use cash flows from operations to fund these expenditures.
Following the completion of this offering and the application of the net proceeds of this offering as described under "Use of proceeds", our outstanding indebtedness (assuming debt balances as of June 28, 2014 and a per share offering price equal to $              , which is the midpoint of the range set forth on the cover of this prospectus) will be reduced by approximately $               million, or         %, and our annualized interest expense will decline by approximately $              (including the elimination of approximately $               million of annual interest expense relating to our term loan facility), which would have represented a reduction of approximately         % of our $11.6 million of interest expense for fiscal 2014.
As of June 28, 2014, a total of $42.6 million was outstanding under our revolving credit facility (including letters of credit) and there was $25.4 million of unused availability under the borrowing base formula.
Cash and cash equivalents were $1.1 million as of June 28, 2014 compared to $1.1 million as of March 29, 2014 and $1.2 million as of March 30, 2013.
The following table present summary cash flow information for the periods indicated:

																	
 	 	
 	 	Fiscal year ended	 	Thirteen weeks ended	 	
(in thousands)	 	March 29,
2014	 	March 30,
2013	 	March 31,
2012 (1)	 	June 28,
2014	 	June 29,
2013	 	
 	 	
 	 	 	 	 	 	 	 	(unaudited)	 	(unaudited)	 	
Net cash provided by (used in):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating activities	 	$	12,780	 	$	11,924	 	$	2,085	 	$	(669	)	$	(7,911	)	
Investing activities	 	 	(27,272	)	 	(45,699	)	 	(88,323	)	 	(1,803	)	 	(15,693	)	
Financing activities	 	 	14,420	 	 	34,373	 	 	88,798	 	 	2,469	 	 	24,747	 	
 	 	 	 	
Net increase (decrease) in cash	 	$	(72	)	$	598	 	$	2,560	 	$	(3	)	$	1,143	 	
 	 	
(1)    The cash flow activity includes $2.5 million of cash generated in the Predecessor Period that was offset against the proceeds paid in the acquisition by Freeman Spogli & Co. This cash was excluded from the Successor Period's beginning cash balance in the consolidated statement of cash flows.
59

Table of Contents
Operating activities
Cash provided by (used in) operating activities consists primarily of net income adjusted for non-cash items that include depreciation, amortization and stock-based compensation, plus the effect on cash of changes during the year in our assets and liabilities.
Net cash used in operating activities decreased $7.2 million in the thirteen weeks ended June 28, 2014 as compared to the thirteen weeks ended June 29, 2013. The significant components of cash flows used in operating activities were net income of $1.4 million, the add-back of non-cash depreciation and amortization expense of $2.1 million, stock-based compensation expense of $0.4 million, amortization of deferred loan fees of $0.2 million and an increase in deferred taxes of $0.4 million. Accounts payable and accrued expenses and other current liabilities decreased by a total of $10.6 million due to the timing of payments and the Baskins Acquisition in the thirteen weeks ended June 29, 2013. The above was offset by an increase in inventories of $5.1 million due to the growth of the Company.
Net cash provided by operating activities increased $0.9 million in fiscal 2014 as compared to fiscal 2013. The significant components of cash flows from operating activities were net income of $5.7 million, the add-back of non-cash depreciation and amortization expense of $8.1 million, amortization of deferred loan fees of $2.5 million and loss on disposal of assets of $2.0 million. Accounts payable and accrued expenses and other current liabilities increased by a total of $9.1 million due to the growth of the Company. The above were offset by an increase in inventories of $14.1 million in fiscal 2014 as compared to $4.8 million in fiscal 2013 due primarily to the Baskins Acquisition, and increases in deferred taxes and prepaid expenses and other current assets of $2.7 million in fiscal 2014 as compared to $3.1 million in fiscal 2013 due primarily to increases in deferred taxes and prepaid rent as the Company's income and store count grew.
Net cash provided by operating activities increased $9.8 million in fiscal 2013 as compared to fiscal 2012. The significant components of cash flows from operating activities in fiscal 2013 were the add-back of non-cash depreciation and amortization expense of $5.6 million and amortization of the fair value inventory adjustment of $9.2 million. Accounts payable and accrued expenses and other current liabilities increased in fiscal 2013 by a total of $7.4 million due to the growth of the Company. The above were offset by an increase in inventories of $4.8 million in fiscal 2013 as compared to an increase of $6.0 million in fiscal 2012 due primarily to the RCC Acquisition and an increase in deferred taxes and prepaid expenses and other current assets of $3.1 million as compared to an increase of $2.6 million in fiscal 2012 due to the growth of the Company.
Investing activities
Cash provided by (used in) investing activities consists primarily of purchases of property and equipment but also includes funds used to effect the Recapitalization, the RCC Acquisition and the Baskins Acquisition. Net cash used in investing activities was $88.3 million, $45.7 million and $27.3 million in fiscal 2012, 2013 and 2014, respectively.
Net cash used in investing activities decreased $13.9 million in the thirteen weeks ended June 28, 2014 as compared to the thirteen weeks ended June 29, 2013. This decrease was primarily due to the $13.8 million investment related to the Baskins Acquisition which occurred during the first quarter of fiscal 2013.
Net cash used in investing activities decreased $18.4 million in fiscal 2014 as compared to fiscal 2013, primarily due to the $15.7 million investment related to the Baskins Acquisition, including subsequent fixed asset purchases, in fiscal 2014 compared to the $41.9 million investment related to the RCC Acquisition in fiscal 2013. This was largely offset by purchases of property and equipment of $11.4 million in fiscal 2014
60

Table of Contents
compared to $3.8 million in fiscal 2013. The increase in purchases of property and equipment was primarily related to rebranding stores acquired in the Baskins and RCC Acquisitions in fiscal 2014 and 2013, respectively, integrating Baskins and RCC stores onto our management systems, opening new stores and remodeling existing stores.
Net cash used in investing activities decreased $42.6 million in fiscal 2013 as compared to fiscal 2012, primarily due to the $41.9 million investment related to the RCC Acquisition compared to the $85.6 million investment related to the Recapitalization in fiscal 2012. This was partially offset by purchases of property and equipment of $3.9 million in fiscal 2013 compared to $2.8 million in fiscal 2012. The increase in purchases of property and equipment was primarily related to rebranding stores acquired in the RCC Acquisition, integrating RCC stores onto our management systems, opening new stores and remodeling existing stores.
Financing activities
Cash provided by (used in) financing activities consists primarily of advances and repayments on our credit facilities, payment of assumed contingent consideration and debt from acquisitions and issuance of stock. Net cash provided by financing activities was $88.8 million, $34.4 million and $14.4 million in fiscal years 2012, 2013 and 2014, respectively.
On April 17, 2014, we paid a pro rata cash dividend of approximately $39.9 million in the aggregate to record holders of the outstanding shares of our common stock as of the record date of April 14, 2014. We also made a payment to holders of our outstanding vested stock options with exercise prices below the value of our common stock, for an aggregate payment to those option holders of approximately $1.4 million. These dividend and other payments were funded entirely from additional borrowings under our credit facilities. In addition, we reduced the per-share exercise price of each of our unvested stock options outstanding as of the record date by the per-share dividend amount. Those stock options will, upon vesting, be exercisable for 76,742 shares of our common stock. The payments made in respect of, and the decrease in the exercise price of, options were mandated by the antidilution provisions of our 2011 Equity Incentive Plan.
Net cash provided by financing activities decreased $22.3 million in the thirteen weeks ended June 28, 2014 as compared to the thirteen weeks ended June 29, 2013. During the thirteen weeks ended June 29, 2013, we obtained $100.0 million from our credit facility with Golub Capital LLC and repaid $69.5 million in debt and capital lease obligations, as well as repaying debt in connection with the Baskins Acquisition totaling $20.1 million. We also incurred net borrowings under our revolving credit facility of $17.6 million. During the thirteen weeks ended June 28, 2014, we obtained $30.8 million of additional financing under our term loan facility with Golub Capital LLC and had net borrowings of $14.0 million under our revolving credit facility. The new debt was used to fund the dividend to stockholders and related payment to option holders noted above.
Net cash provided by financing activities decreased $20.0 million in fiscal 2014 as compared to fiscal 2013, primarily due to the payment of contingent consideration and assumed debt of $21.8 million in fiscal 2014 compared to $5.4 million in fiscal 2013 related to the Baskins and RCC Acquisitions, respectively. This was partially offset by a net increase in debt of $39.6 million in fiscal 2014 compared to $38.9 million in fiscal 2013. The company received $2.0 million from the issuance of common stock in fiscal 2013, and no common stock was issued in 2014.
Net cash provided by financing activities decreased $54.4 million in fiscal 2013 as compared to fiscal 2012, primarily due to $2.0 million of proceeds from the issuance of common stock in fiscal 2013 compared with
61

Table of Contents
$76.0 million of proceeds from the issuance of common stock in fiscal 2012. This was partially offset by a net increase in debt of $38.9 million in fiscal 2013 compared to $14.2 million in fiscal 2012.
Debt and other obligations
Our credit facilities.     As of June 28, 2014, the terms of our revolving credit facility are set forth in a Second Amended and Restated Revolving Credit and Security Agreement with PNC Bank, N.A., as amended, which we refer to as the revolving credit agreement, and the terms of our term loan facility are set forth in a Term Loan and Security Agreement with Golub Capital LLC, as amended, which we refer to as the term loan agreement. Our primary operating subsidiary, Boot Barn, Inc., is the borrower under both of our credit facilities.
The revolving credit agreement currently provides for a $70.0 million revolving credit facility, including a $5.0 million sub-limit for letters of credit. Subject to certain terms and conditions, PNC is committed to increase the facility by an additional $10.0 million at our request. Borrowings under the revolving credit agreement are subject to a borrowing base tied to specified percentages of eligible inventory and credit card receivables. Interest on borrowings is payable, at our election, at a rate based on an alternative base rate (the rate equal to the highest of (1) PNC's publicly announced commercial lending rate, (2) the daily federal funds open rate plus 0.50% or (3) the one month LIBOR rate plus 1.00%) or LIBOR (for one, two, three or six month periods at our election), plus applicable margins of 0.75% or 1.00% for alternative base rate loans and 1.75% or 2.00% for LIBOR advances, in each case determined by reference to availability under the borrowing base formula. In addition, we pay a commitment fee on the unused portion of the revolving credit facility equal to (1) 0.375% if our average utilization of the revolving facility over the preceding calender quarter was equal to or less than 60% of borrowing base availability or (2) 0.25% if average utilization exceeded 60% of borrowing base availability. The revolving credit agreement matures on May 31, 2018. As of June 28, 2014, a total of $42.6 million was outstanding under the revolving credit agreement (including letters of credit) and there was $25.4 million of unused availability under the borrowing base formula.
The term loan agreement currently provides for a $130.0 million term loan that matures on May 31, 2019, and bears interest, at our election, at a base rate (the rate equal to the greater of (1) the higher of the "prime rate" as published by the Wall Street Journal or the overnight Federal Funds Rate plus 0.50% and (2) the one month LIBOR rate (but not less than 1.25%) plus 1.00%) or at LIBOR for a period of one, two, three, six or, if available to all lenders, nine or 12 months, at our election (with a floor of 1.25%), plus applicable margins of 4.75% for base rate advances and 5.75% for LIBOR advances. The term loan agreement requires amortization of $0.3 million per fiscal quarter, with the remaining balance due at maturity, as well as certain customary mandatory prepayments including a specified portion of annual "excess cash flow". As of June 28, 2014, there were $130.0 million in borrowings under our term loan facility. We intend to use the net proceeds of this offering to repay a portion of our term loan facility, including applicable prepayment penalties and fees. See "Use of proceeds". Amounts repaid under this facility will no longer be available for future borrowings.
The revolving credit agreement and the term loan agreement were amended in April 2014 to, among other things, permit the payment of a dividend to our stockholders in that month and to increase the amount of borrowings permitted under each of those agreements. An additional $30.8 million in term loans provided under the amendment to the term loan agreement was used to fund a portion of the dividend paid to our stockholders. See "—Financing activities" for more information about the dividend and certain related payments and adjustments.
62

Table of Contents
The obligations of Boot Barn, Inc. under the revolving credit agreement and the term loan agreement are guaranteed by Boot Barn Holdings, Inc. and each of its current and future domestic subsidiaries. All obligations of Boot Barn, Inc. and the guarantors under the revolving credit agreement and the term loan agreement are secured by a lien on all of the assets (subject to customary exclusions) of Boot Barn, Inc. and the guarantors (including equity interests), provided that under the terms of a customary intercreditor agreement, the revolving credit agreement has a senior lien in our accounts receivable, inventory and certain other current assets and the term loan agreement has a senior lien in all of our other assets.
Our credit facilities contain a number of covenants that restrict, among other things and subject to certain exceptions, our ability to:
•
incur additional indebtedness;
•
create liens on assets;
•
engage in mergers or consolidations;
•
sell assets;
•
make investments, loans or advances;
•
make certain acquisitions;
•
engage in certain transactions with affiliates;
•
authorize or pay dividends; and
•
change our line of business or fiscal year.
In addition, the term loan agreement requires us to maintain a specified minimum interest coverage ratio and not to exceed a specified maximum total leverage ratio during each specified measurement period. The term loan agreement also limits the amount we can spend on capital expenditures per year. Under the revolving credit agreement, we will become subject to a minimum fixed charge coverage ratio if our "excess availability" falls below specified floor levels. As of the date of this prospectus, our excess availability exceeded the triggers specified in the revolving credit agreement and we were in compliance with the financial covenants in the term loan agreement. The revolving credit agreement and term loan agreement contain customary events of default (subject to an "equity cure" provision in the case of financial covenant defaults), including a change of control. As of June 28, 2014, we were in compliance with all of our debt covenants.
Contractual obligations.     We enter into long-term contractual obligations and commitments in the normal course of business, primarily non-cancelable capital and operating leases.
As of March 29, 2014, our contractual cash obligations over the next several periods are set forth below.

																	
 	 	
 	 	Payments due by period	 	
(In thousands)	 	Total	 	Less than
1 year	 	1 - 2
years	 	3 - 5
years	 	More than
5 years	 	
 	 	
Capital lease obligations	 	$	88	 	$	61	 	$	27	 	$	—	 	$	—	 	
Operating lease obligations	 	 	96,402	 	 	19,632	 	 	31,108	 	 	21,691	 	 	23,971	 	
Debt and line of credit	 	 	128,124	 	 	1,000	 	 	2,000	 	 	30,624	 	 	94,500	 	
Interest expense on debt	 	 	37,960	 	 	7,735	 	 	15,278	 	 	13,829	 	 	1,118	 	
 	 	 	 	
Total	 	$	262,574	 	$	28,428	 	$	48,413	 	$	66,144	 	$	119,589	 	
 	 	
Capital lease obligations relate to equipment leases that expire at various dates through fiscal 2017. We lease our stores, facilities and certain other equipment under non-cancelable operating leases. These operating leases expire at various dates through fiscal 2025 and contain various provisions for rental
63

Table of Contents
adjustments, including, in certain cases, adjustments based on increases in the Consumer Price Index. They also generally contain renewal provisions for varying periods. Our future operating lease obligations would change if we were to exercise these renewal provisions or if we were willing to enter into additional operating leases.
Debt consists of $130.0 million outstanding under our term loan facility and $42.6 million outstanding under our revolving credit facility as of June 28, 2014. Our term loan facility provides for regularly scheduled principal payments. Payments with respect to our revolving credit facility are due on May 31, 2018, which is the maturity date of that facility. We intend to use the net proceeds of this offering to repay a portion of our existing term loan facility. See "Use of proceeds".
Interest expense on debt consists of scheduled interest payments under our term loan facility and our revolving credit facility. The interest expense relating to our term loan facility is calculated using the current 7.0% interest rate. The interest expense relating to our revolving credit facility is calculated using the current 4.0% interest rate applicable to base rate loans, which applies to approximately 15% of the amounts outstanding under this facility, and the current 1.9% interest rate applicable to LIBOR loans, which applies to approximately 85% of the amounts outstanding under this facility.
Off-balance sheet arrangements.     We are not a party to any off-balance sheet arrangements, except for the operating leases discussed above.
Quantitative and qualitative disclosure of market risks
Interest rate risk
We are subject to interest rate risk in connection with borrowings under our revolving credit facility and our term loan facility, which bear interest at variable rates. As of June 28, 2014, we had $42.6 million in outstanding borrowings under our revolving credit facility and $130.0 million under our term loan facility. On January 30, 2012, we entered into an interest rate cap transaction pursuant to which we will receive from the counterparty to that transaction an amount equal to a notional principal amount of $5.0 million multiplied by any amount by which LIBOR exceeds 3.0% in periods prior to February 1, 2015. We do not currently engage in any other interest rate hedging activity and have no plans to do so in the foreseeable future. Based on the amounts outstanding under our revolving credit facility and term loan facility as of June 28, 2014, a hypothetical change in the respective blended interest rates applicable to these facilities of 1.0% would result in a change in interest expense of $1.7 million, disregarding the LIBOR floor of 1.25% under our term loan facility.
Foreign exchange rate risk
We currently purchase all of our merchandise through domestic and international suppliers on a U.S. dollar-denominated basis. We do not hedge using any derivative instruments and historically have not been impacted by changes in exchange rates.
Impact of inflation
Our results of operations and financial condition are presented based on historical cost. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we believe that the effects of inflation, if any, on our results of operations and financial condition have been immaterial.
64

Table of Contents
Critical accounting policies and estimates
The preparation of financial statements in conformity with GAAP requires the appropriate application of certain accounting policies, some of which require us to make estimates and assumptions about future events and their impact on amounts reported in our financial statements. Since future events and their impact cannot be determined with absolute certainty, our actual results will inevitably differ from our estimates.
We believe that the application of our accounting policies, and the estimates inherently required therein, are reasonable. Our accounting policies and estimates are reevaluated on an ongoing basis and adjustments are made when facts and circumstances dictate a change.
The policies and estimates discussed below involve the selection or application of alternative accounting policies that are material to our financial statements. With respect to critical accounting policies, even a relatively minor variance between actual and expected experience can potentially have a materially favorable or unfavorable impact on subsequent results of operations. However, our historical results for the periods presented in our financial statements have not been materially impacted by such variances. Our accounting policies are more fully described in Note 2 to our consolidated financial statements and Note 2 to our condensed consolidated financial statements included elsewhere in this prospectus. Management has discussed the development and selection of these critical accounting policies and estimates with our board of directors.
We have certain accounting policies that require more significant management judgment and estimates than others. These include our accounting policies with respect to revenue recognition, inventories, goodwill, intangible and long-lived assets, stock-based compensation, stock option re-pricing and income taxes, which are more fully described below.
Revenue recognition
Sales are recognized at the time of purchase by customers at our retail store locations. Sales are recorded net of taxes collected from customers. For e-commerce sales, revenue is recognized at the estimated time that the customer takes title of the merchandise and assumes the risk of loss, collection of the relevant receivable is reasonably assured, persuasive evidence of an arrangement exists, and the sales price is fixed or determinable, which generally occurs upon receipt by the customer of the goods. On average, customers receive goods within approximately five days of being ordered. The estimate of the transit times for these shipments is based on shipping terms and historical delivery times. Shipping and handling fees billed to customers for online sales are included in net sales and the related shipping and handling costs are classified as cost of goods sold in the consolidated statements of operations.
We reserve for projected merchandise returns based upon historical experience and various other assumptions that we believe to be reasonable. Customers can return merchandise purchased in-store within 30 days of the original purchase date, and can return merchandise purchased online within 45 days of the original purchase date. Merchandise returns are often resalable merchandise and the purchase price is generally refunded by issuing the same tender used in the original purchase. Merchandise exchanges of the same product and price are not considered merchandise returns and, therefore, are not included in the population when calculating our sales returns reserve. We record the impact of adjustments to our sales return reserve quarterly within total net sales. Should the returns rate as a percentage of net sales significantly change in future periods, it could have a material impact on our results of operations.
65

Table of Contents
We maintain a customer loyalty program. Under the program, customers accumulate points based on purchase activity. For customers to maintain their active point balance, they must make a qualifying purchase of merchandise at least once in a 365-day period. Once a loyalty program member achieves a certain point level, the member earns awards that may be redeemed for credits on merchandise purchases. To redeem awards, the member must make a qualifying purchase of merchandise within 60 days of the date the award was granted. Unredeemed awards and accumulated partial points are accrued as unearned revenue and as an adjustment to net sales. If actual redemptions ultimately differ from accrued redemption levels, or if we further modify the terms of the program in a way that affects expected redemption value and levels, we could record adjustments to the unearned revenue accrual, which would affect net sales.
We recognize the sales from gift cards, gift certificates and store credits as they are redeemed for merchandise. Prior to redemption, we maintain an unearned revenue liability for gift cards, gift certificates and store credits until we are released from such liability, including potential obligations arising under state escheatment laws. Our gift cards, gift certificates and store credits do not have expiration dates, and unredeemed gift cards, gift certificates and store credits are subject to state escheatment laws. We retain the percentage of the value of such unredeemed gift cards, gift certificates and store credits not escheated and recognize these amounts in net sales.
Inventories
Inventories, which consist primarily of general consumer merchandise held for sale, are valued at the lower of cost or market value. Cost is determined on the first-in, first-out method and includes the cost of merchandise and import related costs, including freight, duty and agent commissions.
During each accounting period, we record adjustments to our inventories, which are reflected in cost of goods sold, if the cost of specific inventory items on hand exceeds the amount that we expect to realize from the ultimate sale or disposal of the inventory. A periodic review of inventory is performed in order to determine if inventory is properly stated at the lower of cost or market value. This adjustment calculation requires us to make assumptions and estimates, which are based on factors such as average selling cycle and seasonality of merchandise, the historical rate at which merchandise has sold below cost during the average selling cycle, and the value and nature of merchandise currently priced below original cost. A provision is recorded to reduce the cost of inventories to the estimated net realizable values, if appropriate.
To the extent that management's estimates differ from actual results, additional markdowns may be required that could reduce our gross margin, operating income and the carrying value of inventories.
We also record an inventory shrinkage reserve calculated as a percentage of net sales for estimated merchandise losses for the period between the last physical inventory count and the balance sheet date. These estimates are based on historical percentages and can be affected by changes in merchandise mix and changes in shrinkage trends. We perform periodic physical inventory counts for our entire chain of stores and our distribution center and adjust the inventory shrinkage reserve accordingly. If actual physical inventory losses differ significantly from the estimate, our results of operations could be adversely impacted. The inventory shrinkage reserve reduces the value of total inventory and is a component of inventories on the consolidated balance sheets.
66

Table of Contents
Goodwill, intangible and long-lived assets
Goodwill and indefinite lived intangible assets.     Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets. Intangible assets with indefinite lives include the Boot Barn trademark that was acquired as part of the Recapitalization. We test goodwill and indefinite-lived intangible assets for impairment at least annually or more frequently if indicators of impairment exist. The annual impairment test is performed as of the first day of our fourth fiscal quarter. We evaluate the fair value of the reporting unit by using market-based analysis to review market capitalization and by reviewing a discounted cash flow analysis using management's assumptions. We conduct a two-step goodwill impairment test. The first step of the impairment test involves comparing the fair value of the reporting unit with its carrying value. Our entire operations represent one reporting unit. We determine the fair value of our reporting unit using the income approach and market approach to valuation, as well as other generally accepted valuation methodologies. If the carrying amount of the reporting unit exceeds the reporting unit's fair value, we perform the second step of the goodwill impairment test. The second step of the goodwill impairment test involves comparing the implied fair value of the reporting unit's goodwill with the carrying value of that goodwill. The amount, by which the carrying value of the goodwill exceeds its implied fair value, if any, will be recognized as an impairment loss.
Definite-lived intangible assets and long-lived assets.     Definite-lived intangible assets consist of certain trademarks, customer lists, non-compete agreements, and below-market leases. Definite-lived intangible assets are recorded at their fair value as of the acquisition date with amortization computed utilizing the straight-line method over the assets' estimated useful lives, with the exception of customer lists, which are amortized based on the estimated attrition rate. The period of amortization for trademarks is six months, non-compete agreements is four to five years, customer lists is five years, and below-market leases is two to 17 years.
Long-lived assets consist of leasehold improvements, machinery and equipment, furniture and fixtures and vehicles. Long-lived assets are subject to depreciation and amortization. We assess potential impairment of our definite-lived intangible assets and long-lived assets whenever events or changes in circumstances indicate that the asset's carrying value may not be recoverable. Factors that are considered important that could trigger an impairment review include a current-period operating or cash flow loss combined with a history of operating or cash flow losses and a projection or forecast that demonstrates continuing losses or insufficient income associated with the use of a long-lived asset or asset group. Other factors include a significant change in the manner of the use of the asset or a significant negative industry or economic trend. This evaluation is performed based on estimated undiscounted future cash flows from operating activities compared with the carrying value of the related assets. If the undiscounted future cash flows are less than the carrying value, an impairment loss is recognized, measured by the difference between the carrying value and the estimated fair value of the assets, with such estimated fair values determined using the best information available and in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements ("ASC 820").
We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate long-lived asset impairment losses. However, if actual results are not consistent with our estimates and assumptions, our operating results could be adversely affected.
Stock-based compensation
We account for employee stock options in accordance with relevant authoritative literature. We employ a reputable independent third party to help us assess the grant date fair value of our stock price. Stock
67

Table of Contents
options are granted with exercise prices equal to or greater than the estimated fair market value of the underlying stock on the date of grant as authorized by our board of directors. Stock options granted have five year vesting provisions. Stock option grants are generally subject to forfeiture if employment terminates prior to vesting. We have selected the Black-Scholes option pricing model for estimating the grant date fair value of stock option awards granted. We have considered the retirement and forfeiture provisions of the options and utilized the simplified method to estimate the expected life of the options. We base the risk-free interest rate on the yield of a zero-coupon U.S. Treasury security with a maturity equal to the expected life of the option from the date of the grant. We estimate the volatility of the share price of our common stock by considering the historical volatility of the stock of similar public entities. In determining the appropriateness of the public entities included in the volatility assumption, we considered a number of factors, including the entity's life cycle stage, growth profile, size, financial leverage and products offered. Stock-based compensation cost is measured at the grant date based on the value of the award, net of estimated forfeitures, and is recognized as expense over the requisite service period based on the number of years for which the requisite service is expected to be rendered.
To value our common stock, we utilized a discounted cash flow analysis, a market approach of comparable companies in our industry and a comparable acquisitions analysis in order to determine our enterprise value. The discounted cash flow method involves cash flow projections that are discounted at an appropriate rate. The market approach involves companies in our industry that we determine to be comparable. Comparable acquisitions analysis involves analyzing sales of controlling interests in companies that we determine are comparable. Estimates used in our valuation of share-based compensation are highly complex and subjective. Valuations and estimates of our common stock value will no longer be necessary once we are a publicly traded company, at which point we will rely on market price to determine the market value of our common stock.
Income taxes
We account for income taxes in accordance with FASB ASC Topic 740, Income Taxes ("ASC 740"), which requires the asset and liability approach for financial accounting and reporting of income taxes. Deferred tax assets and liabilities are attributable to differences between financial statement and income tax reporting. Deferred tax assets, net of any valuation allowances, represent the future tax return consequences of those differences and for operating loss and tax credit carryforwards, which will be deductible when the assets are recovered. Deferred tax assets are reduced by a valuation allowance if it is deemed more likely than not that some or all of the deferred tax assets will not be realized. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
We account for uncertain tax positions in accordance with ASC 740, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements. It prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Such changes in recognition or measurement might result in the recognition of a tax benefit or an additional charge to the tax provision in the period.
68

Table of Contents
We recognize interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying statement of operations. See Note 13 to our consolidated financial statements and Note 7 to our condensed consolidated financial statements included elsewhere in this prospectus for further information regarding our tax disclosures.
Recent accounting pronouncements
In July 2013, the FASB issued Accounting Standards Update (ASU) No. 2013-11, "Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force)" . The amendments in this ASU provide guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. An unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward with certain exceptions, in which case such an unrecognized tax benefit should be presented in the financial statements as a liability. The amendments in this ASU do not require new recurring disclosures. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Companies may choose to apply this guidance retrospectively to each prior reporting period presented. We adopted this ASU on March 30, 2014, and the adoption of this guidance did not have a material impact on our consolidated financial statements.
In April 2014, the FASB issued amended guidance on the presentation of financial statements and reporting discontinued operations and disclosures of disposals of components of an entity within property, plant and equipment. This guidance amends the definition of a discontinued operation and requires entities to disclose additional information about disposal transactions that do not meet the discontinued-operations criteria. The effective date is for disposals that occur in annual periods (and interim periods therein) beginning on or after December 15, 2014. Early adoption is permitted, and we intend to early adopt.
In May 2014, the FASB and the IASB jointly issued a new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under GAAP. The revenue recognition standard will allow for the recognition of revenue when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard is effective for public entities for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted under GAAP. We are currently evaluating the impact that the adoption of this guidance will have on our consolidated financial statements.
In August 2014, the FASB issued a new accounting standard which requires management to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for us for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. We expect to adopt this new standard for the fiscal year ending March 31, 2018 and we will continue to assess the impact on our financial statements.
69

Table of Contents

 Business
Our company
We are the largest and fastest-growing lifestyle retail chain devoted to western and work-related footwear, apparel and accessories in the U.S. With 155 stores in 24 states as of June 28, 2014, we have over twice as many stores as our nearest direct competitor that sells primarily western and work wear, and believe we have the potential to grow our store base to at least 400 domestic locations. Our stores, which are typically freestanding or located in strip centers, average 10,800 square feet and feature a comprehensive assortment of approximately 200 brands and more than 1,500 styles on average, coupled with attentive, knowledgeable store associates. We target a broad and growing demographic, ranging from passionate western and country enthusiasts, to workers seeking dependable, high-quality footwear and clothing. We strive to offer an authentic, one-stop shopping experience that fulfills the everyday lifestyle needs of our customers and, as a result, many of our customers make purchases in both the western and work wear sections of our stores. Our store environment, product offering and marketing materials represent the aesthetics of the true American West, country music and rugged, outdoor work. These threads are woven together in our motto, "Be True", which communicates the genuine and enduring spirit of the Boot Barn brand.
Our product offering is anchored by an extensive selection of western and work boots and is complemented by a wide assortment of coordinating apparel and accessories. Many of the items that we offer are basics or necessities for our customers' daily lives and typically represent enduring styles that are not impacted by changing fashion trends. Accordingly, approximately 70% of our inventory is kept in-stock through automated replenishment programs. The majority of our merchandise is sold at full price and is not subject to typical inventory markdowns. Our boot selection, which comprises approximately one-third of each store's selling square footage space, is merchandised on self-service fixtures with western boots arranged by size and work boots arranged by brand. This allows us to display the full breadth of our inventory and deliver a convenient shopping experience. We also carry market-leading assortments of denim, western shirts, cowboy hats, belts and belt buckles, western-style jewelry and accessories. Our western assortment includes many of the industry's most sought-after brands, such as Ariat , Dan Post , Justin , Levi Strauss , Lucchese , Miss Me , Montana Silversmiths , Resistol and Wrangler . Our work assortment includes rugged footwear, outerwear, overalls, denim and shirts for the most physically demanding jobs where durability, performance and protection matter, including safety-toe boots and flame-resistant and high-visibility clothing. Among the top work brands sold in our stores are Carhartt , Dickies , Timberland Pro and Wolverine . Our merchandise is also available on our e-commerce website, www.bootbarn.com.
Boot Barn was founded in 1978 and, over the past 36 years, has grown both organically and through successful strategic acquisitions of competing chains. We have rebranded and remerchandised the acquired chains under the Boot Barn banner, resulting in sales and profit increases over their original concepts. We believe that our business model and scale provide us with competitive advantages that have contributed to our consistent and strong financial performance, generating sufficient cash flow to support national growth, as evidenced by:
•
19 consecutive quarters of positive same store sales growth averaging 11.6% per quarter and same store sales growth of 6.7% in fiscal 2014; 

•
store base expansion to 155 stores as of June 28, 2014 from 86 stores as of the end of fiscal 2012, with 14 new stores resulting from organic growth and 55 new stores resulting from strategic acquisitions;
70

Table of Contents
•
an increase in net sales from $168.7 million to $345.9 million between fiscal 2012 and fiscal 2014, including our e-commerce sales, representing a 43.2% CAGR; 

•
an increase in Adjusted EBITDA from $21.7 million to $40.3 million between fiscal 2012 and fiscal 2014, representing a 36.2% CAGR (see "Prospectus summary—Summary consolidated financial and other data" for a discussion and reconciliation of Adjusted EBITDA to net income); and 

•
an increase in net income from a net loss of $5.3 million to net income of $5.7 million between fiscal 2012 and fiscal 2014.
Our competitive strengths
We believe the following strengths differentiate us from our competitors and provide a solid foundation for future growth:
Powerful lifestyle brand.     The Boot Barn brand is built on western lifestyle values that are core to American culture. Our deep understanding of this lifestyle enables us to create long-lasting relationships with our customers who embody these ideals. Our brand is highly visible through our sponsorship of rodeos, stock shows, concerts and country music artists. In fiscal 2014, we sponsored 257 local community rodeos, 9 national rodeos and 89 other country and western events. We sell our products through pop-up shops at several of the largest events that we sponsor. We believe these grassroots marketing efforts make our brand synonymous with the western lifestyle, validate our brand's authenticity and establish Boot Barn as the trusted specialty retailer for all of our customers' everyday needs.
Largest and fastest growing specialty retailer of western and work wear in the U.S.     Our broad geographic footprint, which currently spans 24 states and is comprised of more than twice as many stores as our nearest direct competitor that sells primarily western and work wear, provides us with significant economies of scale, enhanced supplier relationships, the ability to recruit and retain high quality store associates and the ability to reinvest in our business at levels that we believe exceed those of our competition. Over the past two fiscal years, we have grown our stores at a 32.9% CAGR.
Attractive, loyal customer base.     Our customers come to us for many aspects of their everyday footwear and clothing needs because of the breadth and availability of our product offering. In fiscal 2011 we implemented our customer loyalty program, B Rewarded, to enhance our connection and relationship with our customers. Our loyalty program has grown rapidly since inception and includes approximately 2.2 million members who have purchased merchandise from us as of September 1, 2014. Approximately 90% of our sales in fiscal 2014 were generated by customers who were already in our loyalty program or signed up to participate in our loyalty program at the time of their purchase. We leverage this database, which provides useful information about our customers, to enhance our marketing activities across our channels, refine our merchandising and planning efforts and assist in our selection of sites for new stores.
Differentiated shopping experience.     We deliver a one-stop shopping experience that engages our customers and, we believe, fulfills their lifestyle needs. Our stores are designed to create an inviting and engaging experience and include prominent storefront signage, a simple and easy-to-shop layout and a large and conveniently arranged self-service selection of boots. We offer significant inventory breadth and depth across a range of boots, apparel and accessories. We believe that our strong, long-lasting supplier relationships enhance our ability to provide a compelling merchandise assortment with a strong in-stock position both in-store and online. Our knowledgeable store associates are passionate about our merchandise and deliver a high level of service to our customers. These elements help promote customer loyalty and drive repeat visits.
71

Table of Contents
Compelling merchandise assortment and strategy.     We believe we offer a diverse merchandise assortment that features the most sought-after western and work wear brands, well-regarded niche brands and exclusive private brands across a range of boots, apparel and accessories. We have a core assortment of styles that serves as a foundation for our merchandising strategy and we augment and tailor that assortment by region to cater to local preferences. In fiscal 2014, the vast majority of our merchandise sales were at full price, which, we believe, demonstrates the strength of our brand and the less discretionary nature of our product offering.
Portfolio of exclusive private brands.     We have leveraged our scale, merchandising experience and customer knowledge to launch a portfolio of private brands exclusive to us, including Shyanne , Cody James , American Worker and BB Ranch . Our private brands offer high-quality western and work boots as well as apparel and accessories for men, ladies and kids. Each of our private brands, which address product and price segments that we believe are underserved by third-party brands, offers exclusive products to our customers and achieves better merchandise margins. Customer receptivity and demand for our private brands has been strong, demonstrated by the private brands' increasing penetration and significant sales momentum across our store base and online.
Versatile store model with compelling unit economics.     We have successfully opened and currently operate stores that generate strong cash flow, consistent store-level financial results and an attractive return on investment across a variety of geographies, markets, store sizes and location types. As of the end of fiscal 2014, all of our stores included in same store sales were profitable. We successfully operate stores in markets characterized as agribusiness centers, ranch regions, oil and gas markets, as well as in various geographies in the U.S., such as California, the Southwest, the Midwest and the South. Our stores are successful in small, rural towns as well as major metropolitan areas, such as Houston, Los Angeles, Nashville and Phoenix.
Our new store model requires an average net cash investment of approximately $670,000 and targets an average payback period of less than three years. Our lean operating structure, coupled with our strong supplier relationships, has allowed us to grow with minimal supply chain investments as most of our products ship directly from our suppliers to our stores. We believe that our proven retail model and attractive unit economics support our ability to grow our store footprint in both new and existing markets across the U.S.
Highly experienced management team and passionate organization.     Our senior management team has extensive experience across all key retail disciplines. With an average of approximately 25 years of experience in their respective functional areas, our senior management team has been instrumental in developing a robust and scalable infrastructure to support our growth. In addition to playing an important role in developing our long-term growth initiatives, our senior management team embraces the genuine and enduring qualities of the western lifestyle and has created a positive culture of enthusiasm and entrepreneurial spirit which is shared by team members throughout our entire organization. Our strong company culture is exemplified by the long tenure of our employees at all levels. For example, our district and regional managers have an average of eight years of service with us and our store managers have an average of more than five years of service with us, including the companies acquired by us.
72

Table of Contents
Our growth strategies
We are pursuing several strategies to continue our profitable growth, including:
Expanding our store base.     Driven by our compelling store economics, we believe that there is a significant opportunity to expand our store base in the U.S. Based on an extensive internal analysis, we believe that we have the potential to grow our domestic store base from 155 stores as of June 28, 2014 to at least 400 domestic locations. We currently plan to target new store openings in both existing markets and new, adjacent and underserved markets that we believe will be receptive to our concept. Over the past several years, we have made significant investments in personnel, information technology, warehouse infrastructure and an e-commerce platform to support the expansion of our operations. We believe that we can grow our store base in the U.S. by at least 10% annually for the next several years.
Driving same store sales growth.     We have delivered 19 consecutive quarters of positive same store sales growth and averaged same store sales growth of 6.7% during the last 12 full fiscal years. We believe that we can continue to grow our same store sales by increasing our brand awareness, driving additional traffic to our stores and increasing the amount of merchandise purchased by customers while visiting our stores. Our management team has launched several initiatives to accelerate growth, enhance our store associates' selling skills, drive store-level productivity and increase customer engagement through our loyalty program.
Enhancing brand awareness.     We intend to enhance our brand awareness and customer loyalty in a number of ways, such as continuing to grow our store base and our online and social media initiatives. We use broadcast media such as radio, television and outdoor advertisements, to reach customers in new and existing markets. We also maintain our strong market position through our grassroots marketing efforts, including sponsorship of rodeos, stock shows and other western industry events as well as our association with country music and partnerships with up-and-coming country musicians. We have an effective social media strategy with high customer engagement, as evidenced by our Facebook fan base. According to Internet Retailer, we were ranked number one for having the fastest growing fan base of all merchants covered by their survey released in January 2014. (2) As of September 1, 2014, our Facebook fan base eclipsed 2.1 million fans.
Growing our e-commerce business.     Our growing national footprint, expansive Facebook following and broader marketing efforts drive traffic to our e-commerce website. We continue to make investments aimed at increasing traffic to our e-commerce website, which reached over 7.5 million visits in fiscal 2014, and increasing the amount of merchandise purchased by customers who visit our website, while improving the shopping experience for our customers. Since re-launching our e-commerce website with a new platform in fiscal 2011, our e-commerce sales have grown at a 38.2% CAGR. Although our e-commerce sales accounted for only 4.1% of our net sales in fiscal 2014, our e-commerce business allows us to reach customers outside our geographic footprint, with 32.7% of our domestic e-commerce sales during fiscal 2014 being made to customers in states where we do not operate stores. We recently added an e-commerce portal to each of our store locations, offering our in-store customers an "endless aisle" with additional styles, colors and sizes not carried in stores or not currently in stock.
Increasing profitability.     We believe that we have a variety of opportunities to increase the profitability of our business over time. Our ability to leverage our infrastructure and drive store-level productivity due to economies of scale is expected to be a primary driver of our improvement in profitability. We intend to continually refine our merchandise mix and increase the penetration of our private brands to help

(2)    Source: Stefany Moore, How Boot Barn uses Facebook to build a national brand , Internet Retailer (January 9, 2014), http://www.internetretailer.com/2014/01/09/how-boot-barn-uses-facebook-build-national-brand.
73

Table of Contents
differentiate us from our competitors and achieve higher merchandise margins. We also expect to capitalize on additional economies of scale in purchasing and sourcing as we grow our geographic footprint and online presence.
Our market opportunity
We participate in the large, growing and highly fragmented western and work wear markets of the broader apparel and footwear industry. We offer a variety of boots, apparel and accessories that are basics or necessities for our customers' daily lives. Many of our customers are employed in the agriculture, oil and gas, manufacturing and construction industries, and are often country and western enthusiasts.
The following data regarding these markets is derived from the Mōd study referenced at the beginning of this prospectus. See "Industry and market data". The U.S. western and work wear markets represented approximately $8 billion and $12 billion in retail sales, respectively, in calendar year 2013. The western wear market is composed of footwear, apparel and accessories, which in 2013 represented approximately $3.0 billion, $3.5 billion and $1.5 billion in retail sales, respectively. The work wear market is composed of footwear and apparel, which in 2013 represented approximately $3.0 billion and $9.0 billion in retail sales, respectively. Between 2009 and 2013, the western and work wear markets experienced estimated annual retail sales growth of approximately 6% to 8% and 1% to 3%, respectively. Over the next three to five years, Mōd estimates that retail sales in the western and work wear markets will grow annually at approximately 3% to 5% and 2% to 4%, respectively. We believe that growth in the western wear market has been and will continue to be driven by the growth of western events, such as rodeos, the popularity of country music and the continued strength and endurance of the western lifestyle. We believe that growth in the work wear market has been and will continue to be driven by increased output and employment in the oil and gas industries, increasing activity in the construction sector and the return of domestic manufacturing. Additionally, government regulations for workplace safety have driven and, we believe, will continue to drive, sales in specific categories, such as safety-toe boots and flame-resistant and high-visibility clothing for various industrial and outdoor occupations.
Our sales channels
Our stores
As a lifestyle retail concept, our stores offer a broad array of merchandise to outfit an entire family, while working during the week, relaxing on the weekend, or dressing up for an evening out. Our stores are easy to navigate with clear sight lines to all major product categories. Our preferred store layout has ladies' and children's apparel on the right side of the store and men's western and men's work apparel on the left side. Our basic denim is usually merchandised on shelving placed on the exterior walls, while our premium-priced, more stylized denim and clothing are prominently displayed on floor fixtures and mannequins. We utilize the space in the front of the store for accessories such as hats, belts, jewelry, handbags, home merchandise, gifts and various impulse purchase items.
Boots, our signature category, anchor the rear of the store with an expansive assortment displayed on fixtures up to six shelves in height. We offer virtually all of our boots in pairs out on the sales floor. To reflect the typical purchasing decision process of each of our customer segments, we arrange all western boots by size and all work boots by brand. While our knowledgeable and friendly store associates are readily available to assist our customers, the store design facilitates a self-service shopping experience.
Our stores are generally located in or near power and large neighborhood shopping centers with trade areas of five or more miles, and we have also successfully opened stores in malls and outlet center
74

Table of Contents
locations. Our stores generally average 10,800 square feet and feature a comprehensive assortment of approximately 200 brands and more than 1,500 styles on average, coupled with attentive, knowledgeable store associates. On average, each of our stores typically has 10 full- and part-time employees, with our larger stores having over 20 employees and smaller stores having as few as five employees. Our stores are designed and managed to drive profitability and, we believe, create a compelling customer shopping experience.
As of June 28, 2014, our retail footprint included 155 stores in the U.S. Two of our stores are operated under the "American Worker" name. Our American Worker stores primarily feature work-related footwear, apparel and accessories. We do not currently intend to open additional American Worker stores.
The below map shows our store footprint as of June 28, 2014:

75

Table of Contents
The following table shows the number of stores in each of the 24 states in which we operated as of June 28, 2014:

					
 	 	
State	 	Number of stores	 	
 	 	
Arizona	 	 	14	 	
California	 	 	36	 	
Colorado	 	 	7	 	
Florida	 	 	4	 	
Georgia	 	 	1	 	
Idaho	 	 	3	 	
Illinois	 	 	1	 	
Indiana	 	 	1	 	
Iowa	 	 	3	 	
Louisiana	 	 	5	 	
Minnesota	 	 	2	 	
Missouri	 	 	1	 	
Montana	 	 	3	 	
Nevada	 	 	8	 	
New Mexico	 	 	7	 	
North Carolina	 	 	1	 	
North Dakota	 	 	6	 	
Oregon	 	 	3	 	
South Dakota	 	 	3	 	
Tennessee	 	 	5	 	
Texas	 	 	28	 	
Utah	 	 	1	 	
Wisconsin	 	 	1	 	
Wyoming	 	 	11	 	
 	 	 	 	
Total	 	 	155	 	
 	 	
bootbarn.com
Our e-commerce website is a natural extension of our brand and in-store experience, allowing us to further build awareness in our current markets and to reach customers not served by our current geographic footprint. Our e-commerce platform is highly scalable and has exhibited strong growth with e-commerce sales growing at a 38.2% CAGR from fiscal 2011 to fiscal 2014. During fiscal 2014, we had over 7.5 million visits to our website and we sold merchandise to customers in all 50 states. During the same fiscal year, 32.7% of our domestic e-commerce sales were from customers in states where we do not operate any stores, with another 11.9% coming from states where we have only one store.
Our growing national footprint and broader marketing efforts drive traffic to our e-commerce website, which in turn also drives traffic to our stores. We believe that many customers, especially those shopping for boots, browse online and then visit our stores to make their purchases to ensure a proper fit. As a multi-channel retailer, we are implementing technology initiatives that integrate in-store and e-commerce platforms into one seamless customer experience. As an example, we recently added an e-commerce portal to each of our store locations, offering our in-store customers an "endless aisle" with additional styles, colors and sizes not carried in the store. In fiscal 2015, we expect to enhance customer service by improving real-time inventory sharing among our stores and e-commerce business.
76

Table of Contents
We also communicate information on current promotions and upcoming events on our e-commerce website, which helps drive purchases online and traffic to our stores. We are working toward making our B Rewarded loyalty program multi-channel, allowing our members who currently earn points, check balances and redeem awards in our stores to also do so online.
Store expansion opportunities and site selection
We have substantial experience in opening stores in new geographic markets and as of June 28, 2014 have successfully added, on a net basis, 69 new stores through a combination of organic growth and strategic acquisitions since the end of fiscal 2012. We evaluate potential new locations in light of a variety of criteria, including local demographics and population, the area's industrial base, the existing competitive landscape, occupancy costs, store visibility, traffic, co-tenancy and accessibility. We also consider a region's total store potential to help ensure efficiencies in store management and media spending. Most of our stores are in high-traffic and highly visible locations and many have freeway signage. Stores located in metropolitan areas are typically established in high-density neighborhoods, and stores located in rural areas are established near highways or major thoroughfares.
Based on an extensive internal analysis of our current customer base, store performance drivers and competitor penetration, we believe that the U.S. market can support at least 400 locations. We utilized multiple methods for measuring market size, including a review of demographic and psychographic factors on a state-by-state basis. We supplemented that data by analyzing our share of the geographic markets in which we currently operate and extrapolating that share to new geographic markets. Based on our market analysis, we have created a regional and state-by-state development plan to strategically extend our store portfolio. Careful consideration was given to operational constraints and merchandising differences in new and existing markets, while balancing the relevant risks associated with opening stores in those markets.
Over the past several years, we have invested in real estate and construction resources, information technology and warehouse infrastructure to support the expansion of our operations. In addition, we have developed a model for new stores that assumes a leased 8,000 to 12,000 square foot space, requires an average net cash investment of approximately $670,000 and targets an average payback period of less than three years. We believe that under this model we can grow our store base by at least 10% annually over the next several years without substantially modifying our current resources and infrastructure.
Store management and training
We have a strong culture focused on providing superior customer service. We believe that our store associates and managers form the foundation of the Boot Barn brand. We recruit people who are welcoming, friendly and service-oriented, and who often live the western lifestyle or have a genuine affinity for it. We have a positive culture of enthusiasm and entrepreneurial spirit throughout the Company, which is particularly strong in our stores. Given the lifestyle nature of the Boot Barn brand, we have developed a natural connection between our customers and our store associates.
The strength of our culture results in a store management team with more longevity and lower turnover than traditional specialty retail industry standards. On average, our store managers have an average of more than five years of service with the Company and our voluntary turnover of full-time store associates is only 10% annually.
Given the importance of both fit and function in selling much of our product, we utilize a well-developed sales, service and product training program. We provide over 20 hours of training for new store associates,
77

Table of Contents
as well as ongoing product, sales and leadership training. Additionally, we provide home office and supplier-led workshops on products, selling skills and leadership at our annual three-day store manager meeting. Our store management training programs emphasize building skills that lead to effective store management and overall leadership. Our store managers are responsible for hiring and staffing our stores and are empowered with the sales, customer service and operational tools necessary to monitor employee and store performance. We believe that our continued investments in training our employees help drive loyalty from our store associates and, in turn, our customers.
We are committed to providing the right merchandise solution for each of our customers based on the ultimate end use of our products. Our goal is to train each of our store associates to be able to guide a customer throughout a store and provide helpful knowledge on product fit, functions and features across our departments. Rather than rely heavily on sales commissions and supplier-specific incentive programs, we utilize a system under which the vast majority of a store associate's compensation is based on an hourly wage. We believe that this produces a team-oriented culture, creates a less pressured selling environment and helps ensure that our store associates are focused on the specific needs of our customers.
Merchandising
Strategy
We seek to establish our stores as a one-stop destination for western and work-related footwear, apparel and accessories, with approximately 200 brands and more than 1,500 styles on average. Our merchandising strategy is to offer a core assortment of products, brands and styles by store, department and price point. We augment and tailor this assortment by region to cater to local preferences such as toe profiles for western boots, styling for western apparel, and functions and features for work apparel and work boots depending on climate and the local industries served. In addition, we actively maintain a balance between third party brands and our own brands that, we believe, offers our customers a compelling mix between selection, product and value.
We believe that our sales throughout the year are more consistent than most other specialty retail chains. As a result of the dispersion of various western events throughout the year, we rely less on Christmas results, which impact our third fiscal quarter, than other specialty retail chains. Over the last three fiscal years we have generated approximately 33.6% of our net sales during our third fiscal quarter, on average.
Historically, neither the western nor the work component of our business has been meaningfully impacted by fashion trends or seasonality. We believe that many of our customers are driven primarily by utility and brand, and our best-selling styles tend to be items that carry over from year to year with only minor updates. We have a minimal amount of seasonal merchandise that could necessitate significant markdowns. This allows us to implement automated replenishment systems for approximately 70% of our merchandise, meaning that, as sales are captured in a store's POS system, recommended purchase orders are systematically generated for approval by our merchandising group, ensuring our strong in-stock inventory position. As a result, demand and margins for the majority of our products are fairly predictable which reduces our inventory risk.
Our products
During fiscal 2014, our products contributed to overall sales in the following manner:
•
Gender: Men's merchandise accounted for approximately 58% of our sales with the balance being ladies, kids and unisex merchandise.
78

Table of Contents
•
Styling: Western styles comprised approximately 68% of our sales, with work-related and other styles making up the balance. 

•
Product category: Boots accounted for nearly half of our sales, with apparel comprising an additional 34% and the balance consisting of hats, gifts, accessories and home merchandise.
Throughout our long history we have maintained collaborative relationships with our key suppliers. These relationships, coupled with our scale, have allowed us to carry a wide selection of popular and niche brands, including Ariat , Carhartt Workwear , Cinch , Corral , Dan Post , Georgia Boot , Harley-Davidson , Justin Boots , Levi Strauss & Co. , Lucchese , Old Gringo , Rocky , Stetson , Timberland , Tony Lama , Wolverine and Wrangler. In many cases, we are one of the largest accounts of our suppliers and have become important as the largest specialty retailer of western and work wear in the U.S. As a result, we have several advantages relative to our competitors, including increased buying power and access to first-to-market or limited edition products. This provides us with competitive differentiation and greater merchandise margins.
Our scale has also allowed us to introduce our own proprietary western wear brands, Shyanne and Cody James, which offer high-quality western boots, shirts, jackets and hats for women and men, respectively. We also develop private brand merchandise for our work wear business under the name American Worker , and for our home and gift category under the name BB Ranch . We created these brands to address segments that we believe are underserved by third-party brands. We have a dedicated product development team that designs and sources merchandise from suppliers around the world. These product assortments are exclusive to Boot Barn and are merchandised and marketed as if they were third-party brands both in our stores and on our e-commerce website. In fiscal 2014, sales from our private brand products accounted for approximately 7% of our overall sales. These private brands differentiate us from our competitors and produce higher incremental merchandise margins than the third-party brands that we carry.
Planning and allocation
We believe that we have assembled a talented and experienced team in both the buying and merchandise planning functions. The experience of our team is critical to understanding the technical requirements of our merchandise based on region and use, such as the appropriate safety toe regulations for work boots in a particular industry. The team is constantly managing our replenishment model to ensure a high in-stock position by stock keeping unit, or SKU, on a store-by-store basis. Our merchandising team optimizes the product selection, mix and depth across our stores by analyzing demand on a market-by-market basis, continuously reviewing our sell-through results, communicating with our suppliers about local market preferences and new products, shopping our competitors' stores, and immersing themselves in trade and western lifestyle events including rodeos, country music concerts and other industry-specific activities. Our merchandising team also makes frequent visits to our stores and partners with our regional, district and store managers to refine the merchandise assortment by region. Our team has demonstrated the ability to effectively manage merchandising, pricing and promotional strategies across our store base.
To keep the product assortment fresh, we reposition a small portion of our merchandise on the sales floor every four to six weeks. To drive traffic to our stores and create in-store energy and excitement, we execute a promotional calendar that showcases select brands or merchandise categories throughout the year and rotates on a monthly cadence. Our promotional activity also enables us to consistently engage with our customers both online and in-store, as well as through our various marketing media. While our promotional activity is important for customer engagement, the vast majority of our merchandise sales are
79

Table of Contents
at full price. In addition, we have the ability to optimize the price for each merchandise category on a market-by-market basis, which helps us to maximize profitability while remaining price competitive.
Marketing and advertising
Our marketing strategy is designed to build brand awareness, acquire new customers, enhance customer loyalty and drive in-store and online transactions. We customize our marketing mix for each of our markets and purposes. For example, for store grand openings we engage in additional local community outreach and advertise in local print media in select markets. We primarily use the following forms of media:
Radio and television —We purchase spots on regional radio stations, primarily country music channels, to draw customers to nearby locations. We also maintain relationships with several country music artists in order to capitalize on the popularity of country music, using our stores and marketing communications to promote their album sales or concerts. In return, these country music artists often make in-store appearances or mention us on social media and occasionally give private performances. We have also started purchasing television spots to create awareness in new markets and occasionally help support grand openings of new stores.
Direct mail —We conduct several direct mail campaigns, sending out approximately 4.5 million mailers during fiscal 2014, which range in size from postcards to catalogs of over 70 pages.
E-mail —We e-mail our e-commerce customers and members of our B Rewarded loyalty program as part of our cross-channel effort to drive traffic to our stores and website. We currently plan to send 350 million e-mails in fiscal 2015.
Social media —We also have a marketing strategy that has produced a fast-growing social media presence. As of September 1, 2014, we had 2.1 million fans on Facebook and often have more than 15,000 fans per day actively engaged in conversation. Our posts celebrate country and western life and humor, and routinely get thousands of likes, hundreds of shares and dozens of comments each. We maintain a social media presence in other key channels, including Instagram and Twitter.
Event sponsorship —We typically sponsor over 300 community-based, western events each year within the regional footprint of our store locations. Houston Livestock Show and Rodeo, a well-known 20-day celebration of western heritage, is one of our most prominent sponsorships and attracts more than two million visitors to Houston, Texas, where we operate nine stores. Other prominent sponsorships include Cheyenne Frontier Days, the largest outdoor rodeo in the U.S., the Professional Rodeo Cowboys Association and related National Finals Rodeo in Las Vegas, Nevada, Professional Bull Riders and the National High School Rodeo Association, which supports rodeos for competitors in high school and junior high school. At more prominent events, we often set up pop-up shops as large as 9,000 square feet, which allows participants to purchase our merchandise.
Distribution
During fiscal 2014, our suppliers shipped approximately 94% of our in-store merchandise units directly to our stores and approximately 46% of our e-commerce merchandise units directly to our e-commerce customers. The remaining units were shipped from our 43,646 square foot distribution center that is co-located with our corporate headquarters in Irvine, California. Our distribution center is used to fulfill e-commerce orders and to distribute our private brand purchases and bulk purchases to our stores. In addition, our distribution center also helps to provide inventory for sponsored events and new store openings. In accordance with our automated replenishment programs, third-party suppliers typically deliver
80

Table of Contents
merchandise to our stores daily, ensuring in-stock merchandise availability and a steady flow of new inventory for our customers.
Competition
The retail industry for western and work wear is highly fragmented and characterized by primarily regional competitors. We estimate that there are thousands of independent specialty stores scattered across the country. We believe that we compete primarily with smaller regional chains and independents on the basis of product quality, brand recognition, price, customer service and the ability to identify and satisfy consumer demand. However, we also compete with farm supply stores, online retailers and, to a lesser degree, mass merchants, some of which are significantly larger than us, but most of which realize only a small percentage of their total revenues from the sale of western and work wear. We have more than twice as many stores as our nearest direct competitor that sells primarily western and work wear and we believe that our nationally recognized lifestyle brand, economies of scale, breadth and depth of inventory across a variety of categories, strong in-stock position, portfolio of authentic private brands, enhanced supplier partnerships, exclusive offerings and ability to recruit and retain high quality store associates favorably differentiate us from our competitors.
Properties
Our e-commerce operations, corporate offices and distribution center are housed in three buildings in Irvine, California, which we have leased through October 2015. Of the largest of these buildings, our corporate offices account for 27,076 square feet and our distribution center accounts for the remaining 43,646 square feet. We have 49,905 square feet of additional warehouse space and 13,442 square feet of additional office space located in our other two buildings. Our distribution center and additional warehouse space contain inventory to support our e-commerce operations, and provides staging and storage space to support our private brand initiatives, bulk purchasing programs, event sales and new store openings. All of our stores are occupied under operating leases. The store leases generally have a base lease term of five or 10 years, with multiple renewal periods of five years, on average, exercisable at our option. For the remainder of fiscal 2015, 8 of our 155 store leases will reach their termination date and none of these leases contain an option to automatically extend the lease term. We are generally responsible for the payment of property taxes and insurance, utilities and common area maintenance fees.
Information technology
We have made significant investments to create a scalable information technology platform to support growth in our retail and e-commerce sales without further near-term investments in our information technology infrastructure. In 2008, we installed a new Enterprise Resource Planning system, which we refer to as Epicor Retail. We use this system for integrated point-of-sale, merchandising, planning, sales audit, customer relationship management, inventory control, loss prevention, purchase order management and business intelligence. We operate Epicor Retail on a software-as-a-service platform. This approach allows us to regularly upgrade to the most recent software release with minimal operational disruption, nominal systems infrastructure investment and with a relatively small in-house information technology department. Epicor Retail also interfaces with our accounting system, Microsoft Dynamics.
Intellectual property
We regard our trademarks as having value and as being important to our marketing efforts. We have registered our trademarks in the U.S., including our brand name "Boot Barn" and our private label brands.
81

Table of Contents
We have not sought foreign trademark protection because we do not actively conduct business outside of the U.S. We also own the domain name for our website, www.bootbarn.com. Our policy is to pursue registration of our trademarks and to oppose their infringement by third parties.
Our employees
As of September 1, 2014, we employed approximately 700 full-time and 975 part-time employees, of which approximately 175 were employed at our corporate office and distribution center and approximately 1,500 were employed at our stores. The number of employees, especially part-time employees, fluctuates depending upon our seasonal needs and, in fiscal 2014 after the Baskins Acquisition, which added approximately 150 full-time and 200 part-time employees, varied between approximately 1,500 and 1,825 employees. None of our employees are represented by a labor union and we consider our relationship with our employees to be good. We have never experienced a strike or significant work stoppage.
Regulation and legislation
We are subject to labor and employment laws, laws governing truth-in-advertising, privacy laws, safety regulations and other laws at the federal, state and local level, including consumer protection regulations, such as the Consumer Product Safety Improvement Act of 2008, that regulate retailers and govern the promotion and sale of merchandise and the operation of stores and warehouse facilities. We monitor changes in these laws and believe that we are in material compliance with all applicable laws.
We source many of our private brand products from outside the U.S. The U.S. Foreign Corrupt Practices Act and other similar anti-bribery and anti-kickback laws and regulations generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Our policies and our supplier compliance agreements mandate compliance with applicable law, including these laws and regulations.
Legal proceedings
We are occasionally a party to legal actions arising in the ordinary course of our business, including employment-related claims and actions relating to intellectual property. None of these legal actions, many of which are covered by insurance, has had a material effect on us. Although, as of the date of this prospectus, we are not a party to any material pending legal proceedings and are not aware of any claims, litigation is inherently unpredictable. Therefore, we could incur judgments or enter into settlements that could have a material adverse effect on our business, financial condition or results of operations.
82

Table of Contents

 Management
Executive officers and directors
The following table sets forth the names, ages and positions of our directors and executive officers as of September 1, 2014:

						
 	
Name	 	Age	 	Position(s)	
 	
James G. Conroy	 	 	44	 	President, Chief Executive Officer and Director	
Paul Iacono	 	 	53	 	Chief Financial Officer and Secretary	
Laurie Grijalva	 	 	56	 	Chief Merchandising Officer	
Peter Starrett	 	 	66	 	Chairman of the Board	
Greg Bettinelli	 	 	42	 	Director	
Brad J. Brutocao	 	 	40	 	Director	
Christian B. Johnson	 	 	33	 	Director	
Brenda I. Morris	 	 	49	 	Director	
J. Frederick Simmons	 	 	59	 	Director	
 	
Executive officers
James G. Conroy.     Mr. Conroy has been a director and our President and Chief Executive Officer since 2012. Prior to joining Boot Barn, Mr. Conroy was with Claire's Stores, Inc. from 2007 to 2012 where Mr. Conroy served as Chief Operating Officer and Interim Co-Chief Executive Officer in 2012, President from 2009 to 2012 and Executive Vice President from 2007 to 2009. Before joining Claire's Stores, Inc., Mr. Conroy was also employed by Blockbuster Entertainment Group from 1996 to 1998, Kurt Salmon Associates from 2003 to 2005 and Deloitte Consulting in various key capacities. Mr. Conroy received a bachelor's degree in business management and marketing and a master's degree in business administration from Cornell University. We believe Mr. Conroy is qualified to serve on our board of directors because of his expertise in the strategic and operational aspects of the retail industry, which he has gained during his 22 years working in the industry.
Paul Iacono.     Mr. Iacono has been our Chief Financial Officer since 2009 and our Secretary since 2012. From 2006 to 2009, Mr. Iacono was a CFO partner with Tatum LLC where he provided interim CFO services to companies in transition including Logistics Express, Big Train and Kate Somerville. From 2000 to 2006, Mr. Iacono was the Chief Financial Officer of Pinecreek Capital, a small business investment company (SBIC). Prior to 2000, Mr. Iacono held various financial executive and director level positions primarily with plastics manufacturing businesses. Mr. Iacono received his bachelor's degree in business administration from California State University, Fullerton and an executive master's degree in business administration from Pepperdine University.
Laurie Grijalva.     Ms. Grijalva has been our Chief Merchandising Officer since July 2014. From 2004 through July 2014, she was our Vice President of Buying and Merchandising. Ms. Grijalva joined Boot Barn in 1993 as Senior Merchant and has served in a variety of capacities since that time. Prior to joining Boot Barn, Ms. Grijalva was employed by LeRoy Knitted Sportswear, Grunewald Marx Apparel and Shelley's Tall Girl Shops.
83

Table of Contents
Directors
Biographical information for Mr. Conroy is provided above under "Executive officers". Certain biographical information for our other directors is set forth below.
Peter Starrett.     Mr. Starrett has served as Chairman of the Board since 2012 and as member of our board of directors since 2011. From May to November of 2012, Mr. Starrett served as our interim Chief Executive Officer. Mr. Starrett has over 30 years of experience in the retail industry. In 1998, Mr. Starrett founded Peter Starrett Associates, a retail advisory firm, and has served as its President since that time. From 1990 to 1998, Mr. Starrett served as the President of Warner Bros. Studio Stores Worldwide, a specialty retailer. Previously, he was Chairman and Chief Executive Officer at The Children's Place, a specialty clothing retailer. Prior to that, he held senior executive positions at both Federated Department Stores and May Department Stores, each a department store retailer. Mr. Starrett also serves as Chairman of the board of directors of Pacific Sunwear, Inc., a clothing retailer, and serves on the boards of directors of Floor & Decor, Inc., a retailer of hard surface flooring, hhgregg, Inc., a retailer of appliances and consumer electronics, and PETCO Animal Supplies, Inc., a retailer of pet food and supplies. Mr. Starrett also has served on the board of directors of Guitar Center, a retailer of musical instruments. Mr. Starrett received a bachelor's degree from the University of Denver and received a master's degree in business administration from Harvard University. We believe that Mr. Starrett is qualified to serve on our board of directors because of his extensive experience as an officer and director of both public and private companies in the retail industry.
Greg Bettinelli.     Mr. Bettinelli has served as a member of our board of directors since 2012. Mr. Bettinelli has over 15 years of experience in the Internet and e-commerce industries. Since January 2014, Mr. Bettinelli has been a Venture Partner with Upfront Ventures, a venture capital firm. From 2009 to 2013, Mr. Bettinelli was the Chief Marketing Officer for HauteLook, a leading online flash-sale retailer. From 2008 to 2009, Mr. Bettinelli was Executive Vice President of Business Development and Strategy at Live Nation, a ticketing business. From 2003 to 2008, Mr. Bettinelli held a number of leadership positions at eBay, including Senior Director of Business Development at StubHub and Director of Event Tickets and Media. Mr. Bettinelli also serves on the board of directors of hhgregg, Inc., a retailer of appliances and consumer electronics. Mr. Bettinelli received a bachelor's degree from the University of San Diego and a master's degree in business administration from Pepperdine University. We believe that Mr. Bettinelli is qualified to serve on our board of directors because of his extensive experience in online retail marketing and e-commerce.
Brad J. Brutocao.     Mr. Brutocao has served as a member of our board of directors since 2011. In 1997, Mr. Brutocao joined Freeman Spogli & Co., a private equity investment firm and our controlling stockholder, and, in 2008, became a partner. From 1995 to 1997, Mr. Brutocao was employed by Morgan Stanley & Co. Incorporated in the Mergers and Acquisitions Group and Corporate Finance Department. Mr. Brutocao currently serves on the boards of directors of the parent entities of Arhaus LLC, a home furnishings retailer, Floor & Decor, Inc., a retailer of hard surface flooring, and Paradies Holdings LLC, an operator of retail stores and restaurants in airports. Mr. Brutocao received his bachelor's degree from the University of California, Los Angeles. We believe that Mr. Brutocao is qualified to serve on our board of directors because of his experience managing investments in, and serving on the board of, companies operating in the retail and consumer industries.
Christian B. Johnson.     Mr. Johnson has served as a member of our board of directors since 2011. In 2006, Mr. Johnson joined Freeman Spogli & Co., a private equity investment firm and our controlling stockholder, and, in December 2011, became a principal. From 2003 to 2006, Mr. Johnson was employed by Wachovia
84

Table of Contents
Securities (now Wells Fargo Securities) in the Leveraged Finance Group. Mr. Johnson currently serves on the board of directors of the parent entity of First Watch Restaurants, Inc., a breakfast, brunch and lunch restaurant chain. Mr. Johnson received his bachelor's degree from Colgate University. We believe that Mr. Johnson is qualified to serve on our board of directors because of his experience and insights into strategic expansion opportunities, transactional structuring and debt and equity financing.
Brenda I. Morris.     Ms. Morris was appointed to our board of directors in September 2014. Ms. Morris has over 30 years of experience in finance, accounting and operations roles, with over 20 years in the consumer products, retail and wholesale sectors. Ms. Morris most recently served as Chief Financial Officer for 5.11 Tactical, a tactical gear and apparel wholesaler and retailer. From 2011 to 2013. Ms. Morris was the Chief Financial Officer for Love Culture, a young women's fashion retailer. From 2009 to 2011 Ms. Morris was the Chief Financial Officer for Icicle Seafoods, a premium seafood processor and distributor. Ms. Morris was also Chief Operating Officer and Chief Financial Officer of iFloor.com from 2007 to 2009, Chief Financial Officer at Zumiez Inc. from 2003 to 2007, Chief Financial Officer at K2 Corporation from 1999 to 2003, Controller at Unionbay Sportswear from 1995 to 1999, Controller at Bowers Machine from 1992 to 1995 and held various senior accounting roles at UtilX Corporation from 1987 to 1992 and Wilcox Family Farms from 1984 to 1987. Ms. Morris is a graduate of Pacific Lutheran University, where she earned a bachelor's degree in business administration with a concentration in accounting, and she earned her master's degree in business administration from Seattle University. Ms. Morris has served on the Pacific Lutheran University Board of Regents from May 2011 to present and is the current Vice-Chair of that board. Ms. Morris has served on several non-profit boards in various capacities, including Treasurer, Audit Chair and Compensation Chair. Ms. Morris is a Certified Public Accountant (inactive), Certified Management Accountant and Certified Global Management Accountant. We believe that Ms. Morris is qualified to serve on our board of directors because her extensive experience in accounting and executive management provides her with the ability to share valuable insights into financial reporting, corporate finance, transactional knowledge and operations.
J. Frederick Simmons.     Mr. Simmons has served as a member of our board of directors since 2011. In 1986, Mr. Simmons joined Freeman Spogli & Co., a private equity investment firm and our controlling stockholder, and became a partner in 1991. Prior to joining Freeman Spogli & Co., Mr. Simmons was a Vice President at Bankers Trust Company, specializing in lending to leveraged buyouts. From 1978 to 1984, he held other key positions with Bankers Trust, including responsibility for middle-market lending in Southern California and serving in the Commercial Banking Group in New York City. Mr. Simmons also serves on the board of directors of the parent entities of PETCO Animal Supplies, a retailer of pet food and supplies, Smile Brands Group, a provider of support services to dental practices, and totes ›› Isotoner Holdings Corp., a designer, marketer and distributor of high quality branded rain products, cold weather products, footwear and related accessories. Mr. Simmons received his bachelor's degree from Williams College and his master's degree in business administration from New York University. We believe that Mr. Simmons is qualified to serve on our board of directors because of his extensive experience as a board member of numerous retail and consumer businesses and his extensive experience and insight into strategic expansion opportunities, capital markets and capitalization strategies.
Composition of the board of directors after this offering
Currently our board of directors consists of seven directors. Our amended and restated bylaws will provide that our board of directors will consist of the number of directors that our board of directors may determine from time to time, up to a maximum of nine directors. Our board of directors has determined that Mr. Bettinelli and Ms. Morris are currently independent for the purpose of serving on our board of
85

Table of Contents
directors under the independence standards promulgated by the NYSE. Mr. Starrett will be independent for this purpose under those standards beginning in December 2014, and Messrs. Brutocao, Johnson and Simmons will be independent for this purpose under those standards beginning in March 2015.
Upon the completion of this offering, Freeman Spogli & Co. will control approximately         % of the total voting power of our outstanding common stock, assuming no exercise by the underwriters of their option to purchase additional shares of common stock in this offering. As a result, we will be considered a "controlled company" under the corporate governance listing standards of the NYSE. As a controlled company, we will be exempt from the obligation to comply with certain NYSE corporate governance requirements, including the following:
•
that a majority of our board of directors consists of "independent directors", as defined under the rules of the NYSE; 

•
that we have a corporate governance and nominating committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities; 

•
that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities; and 

•
that there be an annual performance evaluation of our corporate governance and nominating committee and compensation committee.
These exemptions do not modify the independence requirements for our audit committee, and we intend to comply with the applicable requirements of the Sarbanes-Oxley Act and rules with respect to our audit committee within the applicable time frame. We also intend to comply with all of the corporate governance requirements of the NYSE, regardless of any exemption from those requirements available to us as a controlled company.
Board committees
Prior to the completion of this offering, our board of directors will establish the following committees: an audit committee, a compensation committee and a corporate governance and nominating committee. The initial composition and responsibilities of each committee are described below. Members will serve on these committees until their resignation or until otherwise determined by our board of directors.
Audit committee
Our audit committee will provide oversight of our accounting and financial reporting process, the audit of our financial statements and our internal control function. Among other matters, the audit committee will be responsible for the following:
•
assisting the board of directors in oversight of the independent auditors' qualifications, independence and performance; 

•
the engagement, retention, oversight, evaluation and compensation of the independent auditors; 

•
reviewing the scope of the annual audit; 

•
reviewing and discussing with management and the independent auditors the results of the annual audit and the review of our quarterly financial statements, including the disclosures in our annual and quarterly reports filed with the SEC;
86

Table of Contents
•
reviewing our risk assessment and risk management processes; 

•
reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls and compliance with legal and regulatory requirements; 

•
establishing procedures for receiving, retaining and investigating complaints received by us regarding accounting, internal accounting controls or audit matters; and 

•
approving audit and permissible non-audit services provided by our independent auditor.
The initial members of our audit committee will be Brenda I. Morris, who will be the chair of the committee, Peter Starrett and Greg Bettinelli. All members of our audit committee will meet the requirements for financial literacy under the applicable rules and regulations of the SEC and the NYSE. Our board of directors has determined that Ms. Morris is an audit committee financial expert as defined under the applicable rules of the SEC and has the requisite financial sophistication as defined under the applicable rules and regulations of the NYSE. Ms. Morris and Mr. Bettinelli will be independent directors of our audit committee as defined under the applicable rules and regulations of the SEC and the NYSE. Our board of directors has determined that Mr. Starrett will not be independent for purposes of serving on the audit committee until December 2014, and until that time we intend to rely on the NYSE's transition rules applicable to companies completing an initial public offering. Our audit committee will have a written charter that sets forth our audit committee's purpose and responsibilities.
Compensation committee
Our compensation committee will adopt, administer and review the compensation policies, plans and benefit programs for our executive officers and all other members of our executive team. Our compensation committee will also be responsible for the duties set forth in its written charter, including:
•
evaluating annually the performance of our Chief Executive Officer in consultation with the board of directors; 

•
reviewing and approving corporate goals and objectives relevant to compensation of our Chief Executive Officer; 

•
determining the compensation of our Chief Executive Officer based on its evaluation and review; 

•
reviewing and approving the compensation of all other executive officers; 

•
adopting and administering our equity compensation plans; 

•
making recommendations regarding non-employee director compensation to the full board of directors; 

•
reviewing the performance of the compensation committee, including compliance with its charter; and 

•
retaining and supervising compensation consultants and other advisors to the compensation committee and evaluating independence and conflict of interest issues with respect to these advisors to ensure compliance with applicable laws and listing standards.
The initial members of our compensation committee will be Brad J. Brutocao, who will be the chair of the committee, Peter Starrett and J. Frederick Simmons. Our board of directors has determined that Mr. Starrett will not be independent under the applicable rules and regulations of the NYSE for the purpose of serving on the compensation committee until December 2014, and Messrs. Brutocao and Simmons will not be independent under those rules and regulations for this purpose until March 2015, and
87

Table of Contents
until that time we intend to rely on the NYSE's transition rules applicable to companies completing an initial public offering. The members of our compensation committee, other than Mr. Starrett, will be "non-employee directors" within the meaning of Rule 16b-3 under the Exchange Act and "outside directors" within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, which we refer to as the Code.
Corporate governance and nominating committee
Our corporate governance and nominating committee will be responsible for, among other things, making recommendations regarding corporate governance, the composition of our board of directors, identification, evaluation and nomination of director candidates and the structure and composition of committees of our board of directors. In addition, our corporate governance and nominating committee will be responsible for:
•
identifying individuals qualified to become board members;
•
overseeing our corporate governance guidelines;
•
approving our committee charters;
•
overseeing compliance with our code of business conduct and ethics;
•
contributing to succession planning;
•
reviewing actual and potential conflicts of interest of our directors and officers;
•
overseeing the management evaluation process; and
•
overseeing the board self-evaluation process.
The initial members of our corporate governance and nominating committee will be Christian B. Johnson, who will be the chair of the committee, Brad J. Brutocao and Brenda I. Morris. Our board of directors has determined that Ms. Morris is currently independent for the purpose of serving on our governance and nominating committee under the applicable rules and regulations of the NYSE, and Messrs. Brutocao and Johnson will be independent under those rules and regulations for this purpose beginning in March 2015, and until that time we intend to rely on the NYSE's transition rules applicable to companies completing an initial public offering. Our corporate governance and nominating committee will have a written charter that sets forth the committee's purpose and responsibilities.
Code of business conduct and ethics
Prior to the completion of this offering, we will adopt a code of business conduct and ethics that applies to all of our employees, including our executive officers and directors, and those employees responsible for financial reporting. As required under the applicable rules and regulations of the SEC and the NYSE, our code of business conduct and ethics addresses, among other things, conflicts of interest, public disclosure, corporate opportunities, confidentiality, fair dealing, protection and proper use of listed company assets, compliance with laws, rules and regulations, whistleblowing and enforcement provisions. Any waiver of our code of business conducts and ethics with regard to our Chief Executive Officer, Chief Financial Officer, or persons performing similar functions may only be authorized by our audit committee. The code of business conduct and ethics will be available on our website. We intend to disclose any amendments to the code, or any waivers of its requirements, on our website.
88

Table of Contents

 Executive and director compensation
Summary compensation table
The following table presents information regarding the total compensation of our principal executive officer and our two other most highly compensated executive officers for services rendered during fiscal 2014. We refer to these executive officers as our "named executive officers".

																	
 	 	
Name & principal position	 	Year	 	Salary
($)	 	Non-equity
incentive plan
compensation
($) (1)	 	All other
compensation
($) (2)	 	Total
($)	 	
 	 	
James G. Conroy
President, Chief Executive Officer and Director	 	 	2014	 	$	600,000	 	$	419,368	 	$	—	 	$	1,019,368	 	

Paul Iacono
Chief Financial Officer and Secretary	

2014	
 	
$	
259,020	
 	
$	
161,038	
 	
 $	
10,200	
 	
 $	
430,258	

Laurie Grijalva
Chief Merchandising Officer	

2014	
 	
 $	
229,615	
 	
$	
75,033	
 	
 $	
27,585	
 	
 $	
332,233	

 	

 	

 	

 	

 	

 	

 	
 	
(1)    Amounts shown represent the annual cash performance-based bonus earned by the named executive officer for fiscal 2014 pursuant to the achievement of certain company and, in the case of Ms. Grijalva, individual performance objectives.
(2)    Amounts shown represent matching contributions to our 401(k) plan for the named executive officers and, in the case of Ms. Grijalva, the cash-out of accrued vacation time.
Narrative disclosure to summary compensation table
Salaries and non-equity incentive awards
Our board of directors assesses salary recommendations made by our senior management after reviewing those recommendations alongside our performance and financial condition for the fiscal year and carefully evaluating each executive officer's performance during the fiscal year, subject to the requirements set forth in any applicable employment agreement. Our board of directors also establishes an annual incentive bonus program designed to reward our senior executives for achieving targeted amounts of a variation of Adjusted EBITDA set at the beginning of the fiscal year, as well as additional individual performance goals in the case of one of our senior executives. Regardless of any bonus criteria set forth in their employment agreements, our board of directors, with the consent of Messrs. Conroy and Iacono, determined that the annual incentive bonus for fiscal 2014 for Messrs. Conroy and Iacono would be based entirely on the achievement of the variation of Adjusted EBITDA target set by our board of directors at the beginning of the fiscal year. If that target was achieved, Mr. Conroy and Mr. Iacono would be awarded bonuses equal to 60% and 50%, respectively, of their base salaries, and if that target were exceeded, then their bonuses would be increased, as a percentage of their base salary, on a sliding scale based on the amount by which the target was exceeded, up to 120% and 100%, respectively, of their base salaries. The annual incentive bonus for fiscal 2014 for Ms. Grijalva was based on the achievement of targets more closely related to individual performance, which consisted of a merchandise margin target and sales targets for our private brands, in addition to that variation of Adjusted EBITDA target, in each case set by our board of directors at the beginning of fiscal 2014. Each of these three bonus components was weighted equally with respect to the determination of Ms. Grijalva's total target bonus amount of 30% of her base salary. In addition, if the Adjusted EBITDA target or the merchandise margin target was exceeded, then the portion of her bonus based on that target, in each case consisting of 10% of her base salary if the target was met, would be
89

Table of Contents
increased on a sliding scale based on the amount by which the target was exceeded, up to a maximum amount in each case of 20% of her base salary. No corresponding additional bonus was possible with respect to the bonus component based on sales targets set for our private brands, and therefore the maximum aggregate bonus available to Ms. Grijalva for fiscal 2014 was 50% of her base salary. See "Non-GAAP financial measures" at the beginning of this prospectus.
Employment agreements in effect during fiscal 2014
The following descriptions of the employment agreements that we have entered into with Messrs. Conroy and Iacono are summaries only. They do not contain complete descriptions of all provisions of those employment agreements and we encourage you to read in their entirety the copies of these agreements that are filed as exhibits to the registration statement of which this prospectus forms a part.
James G. Conroy
We entered into an employment agreement with Mr. Conroy on November 12, 2012 pursuant to which Mr. Conroy serves as our President and Chief Executive Officer. Mr. Conroy's employment agreement has a term of three years, after which it will automatically renew each year for successive one-year terms unless either party provides written notice of non-renewal or his employment is otherwise terminated, in each case pursuant to the terms of his employment agreement.
Mr. Conroy's employment agreement provides him with a base salary of $600,000 per year. He is also eligible to receive a bonus of 60% of his base salary each year if we achieve our budget, with the opportunity to receive a maximum aggregate bonus of up to 120% of his base salary if we achieve additional performance targets established by our board of directors. For fiscal 2014, his performance target was based on achieving a budgeted variation of Adjusted EBITDA, with the opportunity to earn an additional bonus based on any amount by which that budget was exceeded, as described above. Pursuant to this agreement, Mr. Conroy participates in our health and welfare benefit plans that are generally available to our executives.
If we terminate Mr. Conroy's employment without "Cause" or if he resigns for "Good Reason" (as those terms are defined in his employment agreement), or if we fail to renew his employment agreement, he is entitled to receive, subject to his execution of a valid release of claims, severance pay equal to his base salary for a period of 12 months. If Mr. Conroy's employment is terminated without Cause within one year following a change of control (as defined in his employment agreement), then in addition to the foregoing payments, he is entitled to receive a bonus equal to 60% of his base salary.
Paul Iacono
We entered into an employment agreement with Mr. Iacono on November 23, 2011 pursuant to which Mr. Iacono served as our Chief Financial Officer, which agreement was terminated and replaced by a new employment agreement in January 2, 2014.
Prior employment agreement.     Mr. Iacono's prior employment agreement provided him with a base salary of $250,000 per year. He was also eligible to participate in our bonus plan and to receive a bonus of up to 50% of his base salary each year if we achieved performance goals (including revenue and EBITDA targets) established by our board of directors.
Current employment agreement.     Mr. Iacono's current employment agreement provides him with a base salary of $261,363 per year. He is also eligible to participate in our bonus plan upon achieving certain revenue targets and other goals established by our board of directors from time to time. Mr. Iacono is
90

Table of Contents
eligible to earn a target bonus of 50% of his base salary. For fiscal 2014, his performance target was based on achieving a budgeted variation of Adjusted EBITDA, with the opportunity to earn an additional bonus based on any amount by which that budget was exceeded, as described above. Mr. Iacono is eligible to participate in our benefit plans and programs that are generally available to our executives.
If we terminate Mr. Iacono's employment without "Cause" or if he resigns for "Good Reason" (as those terms are defined in his employment agreement), he is entitled to receive, subject to his execution of a valid release of claims, severance pay equal to his base salary for a period of nine months and a prorated bonus payment. If Mr. Iacono's employment terminates due to his death or Disability (as defined in his employment agreement), he or his personal representatives or heirs are entitled to receive, subject to execution of a valid release of claims, severance pay equal to his base salary for three months and a prorated bonus payment.
Restrictive covenants
Each of our named executive officers are subject to certain non-solicitation restrictions while employed and after termination of employment. In addition, each of our named executive officers is subject to confidentiality and non-disparagement restrictions.
Laurie Grijalva
Ms. Grijalva was not party to a written employment agreement in fiscal 2014, but her compensation arrangements for that fiscal year were formalized in an employment agreement, effective May 11, 2014, pursuant to which Ms. Grijalva serves as our Vice President of Buying and Merchandising. The following description of the Ms. Grijalva's employment agreement is a summary only. It does not contain a complete description of all provisions of her employment agreement and we encourage you to read in its entirety the copies of this agreement that is filed as an exhibit to the registration statement of which this prospectus forms a part.
That employment agreement provides her with a base salary of $245,000 per year. She is eligible to participate in our bonus plan, and her potential target bonus compensation is 30% of her base salary each year, based upon meeting goals (including targets based on individual performance and a budgeted variation of Adjusted EBITDA) established by us, with the opportunity to earn an additional bonus based on any amount by which certain targets are exceeded, as described above. Ms. Grijalva is eligible to participate in our sponsored health and welfare benefit plans available to other similarly situated officers of the Company. Ms. Grijalva receives reimbursement for reasonable business expenses of the type authorized by the Company.
If we terminate Ms. Grijalva's employment without "Cause" (as defined in her employment agreement), then she is entitled to receive, subject to her execution of a valid release of claims, severance pay equal to her base salary for a period of six months.
91

Table of Contents
Outstanding equity awards at fiscal year end
The following table sets forth information regarding outstanding equity awards held by our named executive officers as of March 29, 2014.

												
 	
 	 	Number of securities underlying unexercised options (1)	 	 	 	 	
 			 	Option
exercise price ($)	 	Option expiration date	
Name	 	Exercisable (#)	 	Unexercisable (#)					
 	
 James G. Conroy (3)	 	 	2,392	 	 	9,566	 	$	186.76	(2)	December 21, 2022	
	 	 	2,392	 	 	9,566	 	$	280.14	(2)	December 21, 2022	
Paul Iacono (4)	 	 	1,570	 	 	2,355	 	$	100.00	(2)	January 27, 2022	
	 	 	1,570	 	 	2,355	 	$	200.00	(2)	January 27, 2022	
 Laurie Grijalva (4)	 	 	645	(5)	 	—	 	$	0.04	 	March 24, 2018	
	 	 	1,570	 	 	2,355	 	$	100.00	(2)	January 27, 2022	
	 	 	1,570	 	 	2,355	 	$	200.00	(2)	January 27, 2022	
 	
(1)    All of the options reflected in this table were granted pursuant to our 2011 Equity Incentive Plan, except for 645 options granted to Ms. Grijalva under our 2007 Stock Incentive Plan. Under the 2011 Equity Incentive Plan, there is no automatic acceleration of vesting upon a change of control. All options granted under our 2007 Stock Incentive Plan are fully vested. Our right to repurchase shares of common stock issued upon exercise of options upon termination of employment will terminate upon consummation of this offering.
(2)    Reflects the exercise price as applicable to the options as of March 29, 2014. In connection with the special dividend that was paid to our stockholders on April 17, 2014, the exercise price of these options was reduced by $50.00 per share, which was the amount of the dividend paid to our stockholders. No modifications were made to any other terms of the previously issued stock options. See "Management's discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Financing activities".
(3)    Stock options granted to Mr. Conroy vested or vest in five equal annual installments beginning December 21, 2013, subject to his continued employment with us.
(4)   Except as otherwise indicated, stock options granted to Mr. Iacono and Ms. Grijalva vested or vest in five equal annual installments beginning January 27, 2013, subject to his or her continued employment with us.
(5)    Stock options granted to Ms. Grijalva were fully vested on December 12, 2011.
401(k) plan
We currently maintain, and following the offering will continue to maintain, a tax-qualified 401(k) retirement plan for all employees who satisfy certain eligibility requirements. Under our 401(k) plan, employees may elect to defer a portion of their eligible compensation subject to applicable annual Code limits. Under the 401(k) plan, we make matching contributions to participants equal to 100% of the participant's elective deferrals, up to a maximum of 3% of the participant's annual compensation, and 50% of the participant's additional elective deferrals, up to a maximum of 5% of the participant's annual compensation. We intend for the 401(k) plan to qualify under Sections 401(a) and 501(a) of the Code so that contributions by employees to the 401(k) plan, and income earned on those contributions, are not taxable to employees until withdrawn from the 401(k) plan.
Severance benefits
See "Executive and director compensation—Narrative disclosure to summary compensation table—Employment agreements in effect during fiscal 2014" for a description of payments that may be made to our named executive officers in connection with their termination of employment.
2011 Equity Incentive Plan and 2007 Stock Incentive Plan
None of our named executive officers received grants of equity awards in fiscal 2014. We maintain our 2011 Equity Incentive Plan, pursuant to which there were 99,310 non-qualified stock options outstanding as of March 29, 2014, and our 2007 Stock Incentive Plan, pursuant to which there were 1,290 non-qualified
92

Table of Contents
stock options outstanding as of March 29, 2014. The options outstanding under these plans were granted to our or our subsidiaries' employees, consultants and non-employee directors, and include the option awards granted to our named executive officers prior to fiscal 2014 and described in the immediately preceding table. We intend to cease granting awards under each of these plans upon the implementation of our 2014 Equity Incentive Plan described below.
2014 Equity Incentive Plan
The following is a summary of the material terms of our 2014 Equity Incentive Plan as it is currently contemplated, which will be in effect upon the completion of this offering. Our board of directors is still in the process of developing, approving and implementing the 2014 Equity Incentive Plan and, accordingly, this summary is subject to change.
Our 2014 Equity Incentive Plan provides for the grant of incentive stock options and nonstatutory stock options, stock appreciation rights, restricted stock and stock unit awards, performance units, stock grants, qualified performance-based awards and other stock or stock-based awards, which we collectively refer to as "awards", in connection with our 2014 Equity Incentive Plan. Directors, officers and other employees of the Company and our subsidiaries and commonly controlled affiliates, as well as others performing consulting or advisory services for us, are eligible for grants under our 2014 Equity Incentive Plan. The purpose of our 2014 Equity Incentive Plan is to provide incentives that will attract, retain and motivate highly competent directors, officers, employees and consultants to promote the success of our business.
Administration
Our 2014 Equity Incentive Plan is expected to be administered by the compensation committee of the board of directors. The board of directors itself may also exercise any of the powers and responsibilities under our 2014 Equity Incentive Plan. Subject to the terms of our 2014 Equity Incentive Plan, the plan administrator will select the recipients of awards and determine, among other things:
•
the number of shares of common stock covered by the awards and the dates upon which such awards shall become exercisable or any restrictions lapse, as applicable; 

•
the type of award and the exercise or purchase price and method of payment for each such award; 

•
the vesting period for awards, risks of forfeiture and any potential acceleration of vesting or lapses in risks of forfeiture; and 

•
the duration of awards.
All decisions, determinations and interpretations by the compensation committee with respect to our 2014 Equity Incentive Plan and the terms and conditions of or operation of any award are final and binding on all participants, beneficiaries, heirs, assigns or other persons holding or claiming rights under our 2014 Equity Incentive Plan or any award.
Available shares
The aggregate number of shares of our common stock which may be issued or used for reference purposes under our 2014 Equity Incentive Plan or with respect to which awards may be granted, subject to the automatic increase provisions described below, may not exceed                           shares. These shares may be either authorized and unissued shares of our common stock or shares of common stock held in or acquired for our treasury. In general, if awards under our 2014 Equity Incentive Plan are for any reason canceled, or expire or terminate unexercised, the number of shares covered by such awards will again be
93

Table of Contents
available for the grant of awards under our 2014 Equity Incentive Plan. In addition, (i) shares used to pay the exercise price of a stock option and (ii) shares delivered to or withheld by us to pay the withholding taxes related to an award do not count as issued under our 2014 Equity Incentive Plan and will therefore again be available for the grant of future awards. The maximum number of shares of common stock that may be subject to awards granted to any one participant during a calendar year shall be                           .
The general pool of                           shares of common stock initially authorized under our 2014 Equity Incentive Plan also will be increased each January 1 starting in 2015 by an amount equal to the lesser of (i)                            % of our outstanding common stock on a fully diluted basis as of the end of our immediately preceding calendar year, (ii)                            shares and (iii) any lower amount determined by our board.
Adjustment for corporate actions
In the event of any change in the outstanding shares of common stock as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar distribution with respect to the shares of common stock, an appropriate and proportionate adjustment will be made in (i) the maximum numbers and kinds of shares subject to our 2014 Equity Incentive Plan, (ii) the numbers and kinds of shares or other securities subject to then outstanding awards, (iii) the exercise price for each share or other unit of any other securities subject to then outstanding stock options or SARs (without change in the aggregate purchase price as to which such stock options or SARs remain exercisable) and (iv) the repurchase price of each share of restricted stock then subject to a risk of forfeiture in the form of a Company repurchase right. Any such adjustment in awards will be determined and made by the compensation committee in its sole discretion.
Eligibility for participation
Members of our board of directors, as well as employees of, and consultants to, us or any of our subsidiaries and affiliates are eligible to receive awards under our 2014 Equity Incentive Plan. The selection of participants is within the sole discretion of the compensation committee.
Awards
The following sections briefly describe the principal features of the various awards that may be granted under our 2014 Equity Incentive Plan.
Incentive stock options.     Incentive stock options are intended to qualify as incentive stock options under Section 422 of the U.S. Internal Revenue Code of 1986, as amended, which we refer to as the Code, and will be granted pursuant to incentive stock option agreements. The plan administrator will determine the exercise price for an incentive stock option, which may not be less than 100% of the fair market value of the stock underlying the option determined on the date of grant. In addition, incentive stock options granted to participants who own, or are deemed to own, more than 10% of our voting stock, must have an exercise price not less than 110% of the fair market value of the stock underlying the option determined on the date of grant. No incentive option may be exercised on or after the tenth anniversary of the grant date (or after the fifth anniversary with respect to a participant who owns, or is deemed to own, more than 10% of our voting stock).
Nonstatutory stock options.     Nonstatutory stock options are not intended to qualify as incentive stock options under Section 422 of the Code and will be granted pursuant to nonstatutory stock option agreements. The plan administrator will determine the exercise price for a nonstatutory stock option.
94

Table of Contents
Stock appreciation rights.     A stock appreciation right, or a SAR, entitles a participant to receive a payment equal in value to the difference between the fair market value of a share of stock on the date of exercise of the SAR over the grant price of the SAR. SARs may be granted in tandem with a stock option, such that the recipient has the opportunity to exercise either the stock option or the SAR, but not both. The exercise price (above which any appreciation is measured) will not be less than 50% of the fair market value of the common stock on the date of grant of the SAR or, in the case of a SAR granted in tandem with a stock option, the exercise price of the related stock option. In addition, SARS related to options which can only be exercised following a change of control may entitle the participant to receive an amount based upon the highest price paid for stock in the change of control or paid during the 30 days prior to the change of control. The SAR may be settled in cash, in shares of our common stock, or a combination. The terms, methods of exercise, methods of settlement, form of consideration payable in settlement, and any other terms and conditions of any SAR will be determined by the administrator at the time of the grant of award and will be reflected in the award agreement.
Restricted stock and stock units.     A restricted stock award or restricted stock unit award is the grant of shares of our common stock either currently (in the case of restricted stock) or at a future date (in the case of restricted stock units) at a price determined by the administrator (including zero), that is nontransferable and is subject to substantial risk of forfeiture until specific conditions or goals are met. Conditions are typically based on continuing employment. During the period of restriction, participants holding shares of restricted stock shall, except as otherwise provided in an individual award agreement, have full voting and dividend rights with respect to such shares which dividends may be required to be deferred until the close of the applicable restriction period or reinvested in additional shares of restricted stock, as determined by the plan administrator. Participants holding restricted stock units may be entitled to receive payments equivalent to any dividends declared with respect to the common stock referenced in the grant of the restricted stock units, but only following the close of the applicable restriction period and then only if the underlying common stock has been earned. The restrictions will lapse in accordance with a schedule or other conditions determined by the administrator.
Performance units.     A performance unit award is a contingent right to receive a predetermined number of shares of our common stock if certain performance goals are met. The value of performance units will depend on the degree to which the specified performance goals are achieved. The administrator may, in its discretion, pay earned performance shares in cash, or stock, or a combination of both. Furthermore, based on the level of performance, the number of shares issued upon achievement of specified levels of performance could be more than the number of performance units. At the discretion of the compensation committee, participants may be entitled to receive any dividends declared with respect to stock that has been earned in connection with the grants of performance units but not yet distributed to participants.
The compensation committee has discretion to select the length of any applicable restriction or performance period, the kind and/or level of the applicable performance goal, and whether the performance goal is to apply to us, one of our subsidiaries or any division or business unit, or to the recipient, provided, that any performance goals with respect to qualified performance-based awards be objective and otherwise meet the requirements of Section 162(m) of the Code. Generally, a recipient will be eligible to receive payment under a qualified performance-based award only if the applicable performance goal or goals are achieved within the applicable performance period, as determined by the compensation committee.
Stock grants.     A stock grant is an award of shares of common stock without restriction. Stock grants may only be made in limited circumstances, such as in lieu of other earned compensation or as inducement grants or achievement awards. Stock grants are made without any forfeiture conditions.
95

Table of Contents
Qualified performance-based awards.     Qualified performance-based awards include performance criteria intended to satisfy Section 162(m) of the Code. Section 162(m) of the Code limits our federal income tax deduction for compensation to certain specified senior executives to $1.0 million dollars, but excludes from that limit "performance-based compensation". Any form of award permitted under our 2014 Equity Incentive Plan other than stock grants, may be granted as a qualified performance-based award, but in each case will be subject to satisfaction of performance goals or (in the case of stock options) based on continued service. The performance criteria used to establish performance goals are limited to the following: (i) cash flow (before or after dividends), (ii) earnings per share (including, without limitation, earnings before interest, taxes, depreciation and amortization), (iii) stock price, (iv) return on equity, (v) stockholder return or total stockholder return, (vi) return on capital (including, without limitation, return on total capital or return on invested capital), (vii) return on investment, (viii) return on assets or net assets, (ix) market capitalization, (x) economic value added, (xi) debt leverage (debt to capital), (xii) revenue, (xiii) sales or net sales, (xiv) backlog, (xv) income, pre-tax income or net income, (xvi) operating income or pre-tax profit, (xvii) operating profit, net operating profit or economic profit, (xviii) gross margin, operating margin or profit margin, (xix) return on operating revenue or return on operating assets, (xx) cash from operations, (xxi) operating ratio, (xxii) operating revenue, (xxiii) market share improvement, (xxiv) general and administrative expenses and (xxv) customer service. No adjustments to any qualified performance-based awards may be made if such adjustment would cause such award to provide other than "performance-based compensation" within the meaning of Section 162(m) of the Code.
Other Stock Unit Award.     An other stock unit award is an award of stock or other award that is valued in whole or in part by reference to, or is otherwise based on, stock or other property. Such other stock unit awards may be granted either alone or in addition to any other award under the 2014 Equity Incentive Plan. Other stock unit awards may be paid in stock, cash or any other form of property as the compensation committee shall determine. Other stock unit awards granted to employees subject only to continued employment conditions will have a vesting period of not less than three years. Other stock unit awards may be subject to restrictions on transfer as set forth in the 2014 Equity Incentive Plan and the applicable award agreement.
Transferability
Awards granted under our 2014 Equity Incentive Plan are generally nontransferable (other than by will or the laws of descent and distribution), except that the compensation committee may provide for the transferability of nonstatutory stock options at the time of grant or thereafter to certain family members.
Transactions
In the event of a transaction involving (i) any merger or consolidation of the Company, (ii) any sale or exchange of all of the common stock of the Company, (iii) any sale, transfer or other disposition of all or substantially all of the Company's assets, or (iv) any liquidation or dissolution of the Company, the compensation committee may, with respect to all or any outstanding stock options and SARs, (1) provide that such awards will be assumed, or substantially equivalent rights shall be provided in substitution therefore by the acquiring or succeeding entity, (2) provide that the recipient's unexercised awards will terminate immediately prior to the consummation of such transaction unless exercised within a specified period following written notice to the recipient, (3) provide that outstanding awards shall become exercisable in whole or in part prior to or upon the occurrence of the transaction, (4) provide for cash payments generally equal to the amount (if positive) of the spread on such awards based on the applicable acquisition price (with any awards whose exercise price is greater than such acquisition price being canceled without consideration), net of applicable tax withholdings, to be made to the recipients,
96

Table of Contents
(5) provide that, in connection with a liquidation or dissolution of the Company, awards shall convert into the right to receive liquidation proceeds net of the exercise price of the awards and any applicable tax withholdings, or (6) any combination of the foregoing. With respect to outstanding awards other than stock options or SARs, upon the occurrence of a transaction other than a liquidation or dissolution of the Company that is not part of another form of transaction, the repurchase and other rights of the Company under each such award will transfer to the Company's successor. Upon the occurrence of a liquidation or dissolution of the Company that is not part of another form of transaction, all risks of forfeiture and performance goals applicable to such other awards will automatically be deemed terminated or satisfied, unless specifically provided to the contrary in the award agreement or other applicable agreement between the Company and the holder. Any determinations required to carry out any of the foregoing will be made by the compensation committee in its sole discretion.
Change of control
Subject to any contrary provisions in any applicable award agreement, upon the occurrence of a change of control:
•
all outstanding unvested awards and awards subject to a risk of forfeiture, other than awards conditioned on the achievement of performance goals, will immediately become vested in full and no longer be subject to any risk of forfeiture unless they are assumed or otherwise continued in a manner satisfactory to the compensation committee, or substantially equivalent rights are provided in substitution for such awards, in each case by the acquiring or succeeding entity or one of its affiliates; and 

•
if a pro rata portion of the performance goals under awards conditioned on the achievement of performance goals or other business objectives has been achieved as of the effective date of the change of control, then such performance goals or other business objectives shall be deemed satisfied as of such change of control with respect to a pro rata portion of the number of shares subject to the original award. The pro rata portion of the performance goals or other business objectives and the number of shares subject to the original awards shall each be based on the length of time within the performance period which has elapsed prior to the change of control. The pro rata portion of any award deemed earned in this manner will be paid out within 30 days following the change of control. The remaining portion of such an award that is not eligible to be deemed earned as of the change of control will be deemed to have been satisfied, earned or forfeited as of the change of control in such amounts as the compensation committee shall determine in its sole discretion unless that remaining portion is assumed by the acquiring or succeeding entity or one of its affiliates, which will be deemed to occur if that remaining portion is subjected to (i) comparable performance goals based on the post-change of control business of the acquiror or succeeding entity or one of its affiliates, and (ii) a measurement period using a comparable period of time to the original award, each in a manner satisfactory to the compensation committee.
Under our 2014 Equity Incentive Plan, a change of control is defined as the occurrence of any of the following: (1) a transaction, as described above, unless securities possessing more than 50% of the total combined voting power of the resulting entity or ultimate parent entity are held by one or more persons who held securities possessing more than 50% of the total combined voting power of the Company immediately prior to the transaction; (2) any person or group of persons, excluding the Company and certain other related entities, directly or indirectly acquires beneficial ownership of securities possessing more than 20% of the total combined voting power of the Company, unless pursuant to a tender or exchange offer that the Company's board of directors recommends stockholders accept; (3) over a period
97

Table of Contents
of no more than 36 consecutive months there is a change in the composition of the Company's board such that a majority of the board members ceases to be composed of individuals who either (i) have been board members continuously since the beginning of that period, or (ii) have been elected or nominated for election as board members during such period by at least a majority of the remaining board members who have been board members continuously since the beginning of that period; or (4) a majority of the board members vote in favor of a decision that a change of control has occurred.
Amendment and termination
Our board of directors may at any time amend any or all of the provisions of our 2014 Equity Incentive Plan, or suspend or terminate it entirely, retroactively or otherwise, subject to stockholder approval of certain amendments as required by the plan or applicable law or stock exchange requirement. Unless otherwise required by law or specifically provided in our 2014 Equity Incentive Plan, the rights of a participant under awards granted prior to any amendment, suspension or termination may not be adversely affected without the consent of the participant. Our 2014 Equity Incentive Plan expires after 10 years.
Allocation of awards; plan benefits
It is not presently possible to determine the dollar value of award payments that may be made or the number of options, shares of restricted stock, restricted stock units, or other awards that may be granted under our 2014 Equity Incentive Plan in the future, or the individuals who may be selected for such awards because awards under our 2014 Equity Incentive Plan are granted at the discretion of the compensation committee.
Limitation on liability and indemnification matters
Section 145 of the DGCL authorizes a corporation's board of directors to grant, and authorizes a court to award, indemnity to officers, directors, and other corporate agents.
As permitted by Section 102 of the DGCL, our amended and restated certificate of incorporation provides that, to the fullest extent permitted by Delaware law, no director will be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director. Pursuant to Delaware law, such protection would be unavailable for liability:
•
for any breach of a duty of loyalty to us or our stockholders; 

•
for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; 

•
for an act or omission for which the liability of a director is expressly provided by an applicable statute, including unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or 

•
for any transaction from which the director derived an improper benefit.
Our amended and restated certificate of incorporation also provides that if Delaware law is amended after the approval by our stockholders of the amended and restated certificate of incorporation to authorize corporate action further limiting or eliminating the personal liability of directors, then the liability of our directors will be limited or eliminated to the fullest extent permitted by Delaware law.
98

Table of Contents
Our amended and restated bylaws will further provide that we must indemnify our directors and officers to the fullest extent permitted by Delaware law. Our amended and restated bylaws will also authorize us to indemnify any of our employees or agents and permit us to secure insurance on behalf of any officer, director, employee or agent for any liability arising out of his or her action in that capacity, whether or not Delaware law would otherwise permit indemnification.
In addition, our amended and restated bylaws will also provide that we are required to advance expenses to our directors and officers as incurred in connection with legal proceedings against them for which they may be indemnified and that the rights conferred in the amended and restated bylaws are not exclusive.
We have entered into customary indemnification agreements with each of our directors and executive officers. These agreements, among other things, would require us to indemnify each director and officer to the fullest extent permitted by Delaware law, our amended and restated certificate of incorporation and our amended and restated bylaws for expenses such as, among other things, attorneys' fees, judgments, fines, and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action by or in our right, arising out of the person's services as our director or executive officer or as the director or executive officer of any subsidiary of ours or any other company or enterprise to which the person provides services at our request. In addition, our indemnification agreements also provide that we are required to advance expenses to our directors and officers as incurred in connection with legal proceedings against them for which they may be indemnified and that the rights conferred in the indemnification agreements are not exclusive. We also maintain directors' and officers' liability insurance.
The SEC has taken the position that personal liability of directors for violation of the federal securities laws cannot be limited and that indemnification by us for any such violation is unenforceable. The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder's investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions.
Director compensation for fiscal 2014
Other than as set forth in the table below, directors who are also our employees or who beneficially own, or are employees of entities that beneficially own, our common stock did not receive in fiscal 2014, and do not currently receive, any compensation for their service as a member of our board of directors or any committee of our board of directors other than the reimbursement of their out-of-pocket expenses incurred in connection with that service. Our other directors received only the following compensation in fiscal 2014 for these services:

							
 	
Name	 	Fees earned
or paid
in cash (1)
($)	 	All other
compensation
($)	 	Total
($)	
 	
Greg Bettinelli	 	$30,000	 	$—	 	$30,000	
Peter Starrett	 	$40,000	 	$—	 	$40,000	
 	
(1)    Consists of annual retainer fees
We are currently in the process of determining the appropriate compensation program for our directors for periods following the completion of this offering, but we anticipate that the program will include customary compensation elements such annual cash retainer fees, annual equity grants and the reimbursement of reasonable expenses incurred in connection with the performance of director duties.
99

Table of Contents

 Certain relationships and related party transactions
Other than compensation arrangements with our directors and executive officers, we describe below transactions and series of similar transactions that have occurred this year or during our last three fiscal years to which we were a party or will be a party, in which:
•
the amounts involved exceeded or will exceed $120,000; and 

•
any of our directors, executive officers or holders of more than 5% of our common stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest.
The following persons and entities that participated in the transactions listed in this section were related persons at the time of the transaction:
John Grijalva, the husband of Ms. Grijalva, works as an independent sales representative for Dan Post Boot Company, Sidran, Inc., Kenco Fashion Inc. and Outback Trading Company, LTD. We purchased merchandise from these suppliers in the aggregate approximate amounts of $4.5 million, $9.8 million, $6.8 million and $5.2 million in the thirteen weeks ended June 28, 2014, fiscal 2014, fiscal 2013 and fiscal 2012, respectively. Mr. Grijalva was paid commissions on these sales of approximately $0.2 million, $0.7 million, $0.5 million and $0.4 million, respectively, in these periods, a portion of which were passed on to other sales representatives working for Mr. Grijalva.
Patrick Meany beneficially held more than 5% of Boot Barn Holding Corporation until the Recapitalization and served as our Chief Executive Officer until May 2012. Following his employment, we continued to pay to Mr. Meany his base salary for an additional 18 months following termination in accordance with his employment agreement and we reimbursed a portion of his medical and dental insurance premiums during that period. The aggregate amount of these payments was approximately $0.3 million in fiscal 2013. We lease one store in Paso Robles, California from an entity affiliated with Mr. Meany. The aggregate amount of payments made by us pursuant to that lease was approximately $0.2 million in each of fiscal 2012 and fiscal 2013.
Kenneth Meany is the father of Patrick Meany and beneficially held more than 5% of Boot Barn Holding Corporation until the Recapitalization. We lease six stores from entities affiliated with Mr. Meany. The aggregate amount of payments made by us pursuant to those leases was approximately $1.3 million in fiscal 2012 and $1.3 million in fiscal 2013.
See also "Prospectus summary—Our sponsor", "Management's discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Financing activities" and Note 14 to the audited consolidated financial statements and Note 8 to the condensed consolidated financial statements included elsewhere in this prospectus.
Payments relating to our fiscal 2012 recapitalization
In connection with the Recapitalization in fiscal 2012, Freeman Spogli & Co. received an advisory services fee of $1.3 million for its services provided to us in structuring and arranging the recapitalization. In addition, Mr. Starrett received $125,000 in connection with his services provided to our company in connection with the recapitalization.
100

Table of Contents
Existing stockholders agreement
We are party to a Stockholders Agreement, dated as of December 12, 2011, among us and certain of our stockholders, including Freeman Spogli & Co. and certain of our executive officers. However, upon the completion of this offering, the Stockholders Agreement will be terminated.
Registration rights agreement
Pursuant to the terms of a registration rights agreement, Freeman Spogli & Co. and certain other signatories thereto will be entitled to various rights with respect to the registration of the resale of their shares of our common stock under the Securities Act. Registration of the resale of any of these shares under the Securities Act would result in these shares becoming fully tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased in these resales by affiliates of us.
Demand registration rights
At any time following the expiration of the lock-up period applicable to this offering, subject to certain conditions and restrictions contained in the registration rights agreement, Freeman Spogli & Co. will be able to require us to use our reasonable best efforts to register the resale of its shares of our common stock under the Securities Act. Freeman Spogli & Co. may exercise up to three demand registration rights as long as it requests registration with respect to common stock with a fair market value of at least $20 million in each demand registration.
Piggyback registration rights
After the closing of this offering, in the event of a demand registration, or if we propose to register any of our own securities under the Securities Act in a public offering, we will be required to provide notice to the holders of our common stock with registration rights under the registration rights agreement and provide them with the right to include their shares in the registration statement, subject to certain conditions and exceptions contained in the registration rights agreement.
Expenses
We will be required to bear the registration expenses, other than underwriting fees, discounts and commissions and transfer taxes, associated with any registration of the resale of shares of our common stock held by the holders of our common stock with registration rights under the registration rights agreement.
Indemnification
We have agreed to indemnify each of the stockholders party to the registration rights agreement against certain liabilities in connection with a demand or piggyback registration of shares of common stock, including under the Securities Act.
Indemnification of directors and officers
Our amended and restated bylaws will provide that we will indemnify and advance expenses to our directors and executive officers to the fullest extent permitted by the DGCL. In addition, our amended and restated certificate of incorporation will provide that our directors will not be liable for monetary damages for breach of fiduciary duty, except as otherwise prohibited under the DGCL.
101

Table of Contents
We have entered into customary indemnification agreements with each of our directors and executive officers. The indemnification agreements provide the executive officers and directors with contractual rights to indemnification, expense advancement and reimbursement, to the fullest extent permitted under the DGCL. Our indemnification agreements also provide that we are required to advance expenses to our directors and officers as incurred in connection with legal proceedings against them for which they may be indemnified and that the rights conferred in the indemnification agreements are not exclusive. See "Executive and director compensation—Limitation on liability and indemnification matters".
There is no pending litigation or proceeding involving any of our directors or executive officers to which indemnification is being sought, and we are not aware of any pending litigation that may result in claims for indemnification by any director or executive officer.
Review, approval or ratification of transactions with related persons
Prior to the completion of this offering, our board of directors will adopt a written statement of policy for the evaluation of and the approval, disapproval and monitoring of transactions involving us and "related persons". For the purposes of the policy, "related persons" will include our executive officers, directors and director nominees or their immediate family members, stockholders owning 5% or more of our outstanding common stock or any entity in which any of the foregoing persons is an employee, general partner, principal or holder of a 5% or more ownership interest.
Our related person transactions policy will require:
•
that any transaction in which a related person has a material direct or indirect interest and which exceeds $120,000, which we refer to as a "related person transaction", and any material amendment or modification to a related person transaction, be evaluated and approved or ratified by our audit committee or by the disinterested members of the audit committee, as applicable; and 

•
that any employment relationship or transaction involving an executive officer and any related compensation solely resulting from that employment relationship or transaction must be approved by the compensation committee of our board of directors or recommended by the compensation committee to the board of directors for its approval.
In connection with the review and approval or ratification of a related person transaction:
•
management must disclose to the audit committee or the disinterested members of the audit committee, as applicable, the material terms of the related person transaction, including the approximate dollar value of the amount involved in the transaction, and all the material facts as to the related person's direct or indirect interest in, or relationship to, the related person transaction; 

•
management must advise the audit committee or the disinterested members of the audit committee, as applicable, as to whether the related person transaction complies with the terms of our agreements governing our material outstanding indebtedness; 

•
management must advise the audit committee or the disinterested members of the audit committee, as applicable, as to whether the related person transaction will be required to be disclosed in our SEC filings (to the extent it is required to be disclosed, management must ensure that the related person transaction is disclosed in accordance with SEC rules); and
102

Table of Contents
•
management must advise the audit committee or the disinterested members of the audit committee, as applicable, as to whether the related person transaction constitutes a "personal loan" for purposes of Section 402 of the Sarbanes-Oxley Act.
In addition, the related person transactions policy will provide that the audit committee, in connection with any approval or ratification of a related person transaction involving a non-employee director or director nominee, should consider whether such transaction would compromise the director or director nominee's status as an "independent", "outside" or "non-employee" director, as applicable, under the rules and regulations of the SEC, the NYSE and the Code. In approving or rejecting any related person transaction, the audit committee or the disinterested members of the audit committee, as applicable, is required to consider the material facts of the transaction, including, but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person's interest in the transaction.
Prior to our becoming a public company we will not have any formal written policy regarding related party transactions, but any related party transactions are brought to the attention of our board of directors.
103

Table of Contents

 Principal and selling stockholders
The following table sets forth information known to us with respect to the beneficial ownership of our common stock as of September 1, 2014 by:
•
each person, or group of affiliated persons, known by us to own beneficially more than 5% of our outstanding shares of common stock; 

•
each selling stockholder; 

•
each of our directors; 

•
each of our named executive officers; and 

•
all of our current executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of our common stock subject to options currently exercisable or exercisable within 60 days of September 1, 2014, are deemed outstanding for calculating the percentage of outstanding shares of the person holding these options, but are not deemed outstanding for calculating the percentage of any other person. Percentage of beneficial ownership is based upon shares of our common stock outstanding as of September 1, 2014, and                                         sh ares of our common stock outstanding after this offering. To our knowledge, except as set forth in the footnotes to this table and subject to community property laws where applicable, each person named in the table has sole voting and investment power with respect to the shares set forth opposite such person's name. Except as otherwise indicated, the address of each of the persons in this table is: c/o Boot Barn Holdings, Inc., 15776 Laguna Canyon Road, Irvine, California 92618.

																							
 	 	
 	 	 	 	 	 	Shares beneficially
owned after offering if
underwriters' option is
not exercised	 	Shares
offered if
underwriters'
option is
exercised
in full	 	Share beneficially owned
after offering if
underwriters' option is
exercised in full	 	
 	 	Shares beneficially owned
before offering							 	
Beneficial owner	 	Number	 	Percentage	 	Number	 	Percentage			 	Number	 	Percentage	 	
 	 	
Freeman Spogli & Co. (1)	 	 	710,000	 	 	89.1	%	 	 	 	 	%	 	 	 	 	 	 	 	 	%	 	
Capitala Finance Corp. (2)	 	 	24,000	 	 	3.0	%	 	 	 	 	%	 	 	 	 	 	 	 	 	%	 	
Hartford Financial Services Group Inc. (3)	 	 	11,869	 	 	1.5	%	 	 	 	 	%	 	 	 	 	 	 	 	 	%	 	
Brookside Mezzanine Fund II, L.P. (4)	 	 	13,793	 	 	1.7	%	 	 	 	 	%	 	 	 	 	 	 	 	 	%	 	
Ampex Retirement Master Trust (5)	 	 	1,517	 	 	*	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
JJJ Charitable Foundation (6)	 	 	690	 	 	*	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Patrick Meany (7)	 	 	26,000	 	 	3.3	%	 	 	 	 	%	 	 	 	 	 	 	 	 	%	 	
Greg Bettinelli (8)	 	 	2,070	 	 	*	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Brad J. Brutocao	 	 	—	 	 	*	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Christian B. Johnson	 	 	—	 	 	*	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Brenda I. Morris	 	 	—	 	 	*	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
J. Frederick Simmons	 	 	—	 	 	*	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Peter Starrett (9)	 	 	11,336	 	 	1.4	%	 	 	 	 	%	 	 	 	 	 	 	 	 	%	 	
James G. Conroy (10)	 	 	4,783	 	 	*	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Paul Iacono (11)	 	 	4,945	 	 	*	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Laurie Grijalva (12)	 	 	3,785	 	 	*	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
All directors and executive officers as a group (9 persons)	 	 	26,919	 	 	3.3	%	 	 	 	 	%	 	 	 	 	 	 	 	 	%	 	

104

Table of Contents
(1)    The indicated shares are held of record by FS Equity Partners VI, L.P. and FS Affiliates VI, L.P., or collectively, FSEP VI. FS Capital Partners VI, LLC, as the general partner of FSEP VI, has the sole power to vote and dispose of the shares of our common stock owned by FSEP VI. Messrs. Brad J. Brutocao, Benjamin D. Geiger, Bradford M. Freeman, Todd W. Halloran, Jon D. Ralph, John M. Roth, J. Fredrick Simmons, Ronald P. Spogli and William M. Wardlaw are the managing members of FS Capital Partners VI, LLC, and Messrs. Brutocao, Geiger, Freeman, Halloran, Ralph, Roth, Simmons, Spogli and Wardlaw are the members of Freeman Spogli & Co., and as such may be deemed to be the beneficial owners of the shares of our common stock owned by FSEP VI. Each of Messrs. Brutocao, Geiger, Freeman, Halloran, Ralph, Roth, Simmons, Spogli and Wardlaw disclaims beneficial ownership in the shares except to the extent of his pecuniary interest in them. The business address of FSEP VI and FS Capital Partners VI, LLC is c/o Freeman Spogli & Co., 11100 Santa Monica Boulevard, Suite 1900, Los Angeles, CA 90025.
(2)    The indicated shares are held of record by CapitalSouth Partners Fund II, LP and CapitalSouth SBIC Fund III, LP. CapitalSouth Partners F-II, LLC is the general partner of CapitalSouth Partners Fund II, LP and CapitalSouth Partners SBIC F-III, LLC is the general partner of CapitalSouth SBIC Fund III, LP. Both CapitalSouth Partners F-II, LLC and CapitalSouth Partners SBIC F-III, LLC are wholly owned and managed by Capitala Finance Corp. As such, Capitala Finance Corp. has the power to vote and dispose of the indicated shares. The business address for Capitala Finance Corp. is 4201 Congress Street, Suite 360, Charlotte, NC 28209.
(3)    The indicated shares are held of record by Hartford Accident and Indemnity Company and Hartford Life and Accident Insurance Company. Hartford Financial Services Group, Inc. is the parent company of Hartford Accident and Indemnity Company and Hartford Life and Accident Insurance Company. The business address for Hartford Financial Services Group, Inc. is One Hartford Plaza, Hartford, CT 06155.
(4)   The indicated shares are held of record by Brookside Mezzanine Fund II, L.P. Brookside Mezzanine Partners, LLC, as the general partner of Brookside Mezzanine Fund II, L.P., has the power to vote and dispose of the indicated shares owned by Brookside Mezzanine Fund II, L.P. Messrs. David D. Buttolph, John N. Irwin III, Corey L. Sclar, Phillip L. Fitting, and Raymond F. Weldon are the managing members of Brookside Mezzanine Partners, LLC, and as such, may be deemed to be the beneficial owners of the shares of our common stock owned by Brookside Mezzanine Fund II, L.P. Each of Messrs. Buttolph, Irwin, Sclar, Fitting and Weldon disclaims beneficial ownership in the shares except to the extent of his pecuniary interest in them. The business address for Brookside Mezzanine Partners, LLC is One Stamford Forum, 201 Tresser Boulevard, Suite 330, Stamford, CT 06901.
(5)    The indicated shares are held of record by Ampex Retirement Master Trust. Park AQ Pension Management Inc. is the investment manager of the Ampex Retirement Master Trust and has the power to vote and dispose of the shares of our common stock owned by Ampex Retirement Master Trust. John N. Irwin III is the indirect majority owner of Park AQ Pension Management, Inc. and, as such, has investment and voting power as to these shares. Mr. Irwin has no pecuniary interest in these shares and disclaims beneficial ownership of these shares. The business address of Ampex Retirement Master Trust is c/o Park AQ Pension Management Inc. 201 Tresser Blvd., Suite 300, Stamford, and Connecticut 06901.
(6)   JJJ Charitable Foundation is a charitable foundation. The members of the board of trustees of the JJJ Foundation have the power to vote and dispose of the shares owned by the JJJ Charitable Foundation and, as such, may be deemed to be the beneficial owners of our shares owned by JJJ Charitable Foundation. The members of the board of trustees of JJJ Charitable Foundation are John Irwin, Janet Irwin, Genevieve Irwin (58 Cliffdale Road, Greenwich, Ct. 06831), Anna Irwin (431 Beacon Street, Apt 3W, Boston, MA 02115), and Jane Droppa (11826 Farside Road, Ellicott City, MD 21042). None of such trustees has a pecuniary interest in these shares and each of the trustees disclaims any beneficial interest in these shares. The address of JJJ Charitable Foundation is 201 Tresser Boulevard, Suite 300, Stamford, CT 06901.
(7)    The indicated shares include 10,418 shares held of record by the Patrick Matthew Meany Exempt Trust.
(8)   The indicated shares consist of (i) 500 shares held of record and (ii) 1,570 shares subject to outstanding options which are exercisable within 60 days of September 1, 2014.
(9)   The indicated shares consist of (i) 7,000 shares held of record by the Starrett Family Trust, dated April 11, 1999, and (ii) 4,336 shares subject to outstanding options which are exercisable within 60 days of September 1, 2014.
(10)  The indicated shares consist of 4,783 shares subject to outstanding options which are exercisable within 60 days of September 1, 2014.
(11)  The indicated shares consist of (i) 1,805 shares held of record and (ii) 3,140 shares subject to outstanding options which are exercisable within 60 days of September 1, 2014.
(12)  The indicated shares consist of 3,785 shares subject to outstanding options which are exercisable within 60 days of September 1, 2014.
105

Table of Contents

 Description of capital stock
We have provided below a summary description of our capital stock as it will be in effect upon the completion of this offering. This description is not complete. You should read the full text of our amended and restated certificate of incorporation and amended and restated bylaws, which are filed as exhibits to the registration statement of which this prospectus forms a part, as well as the provisions of applicable Delaware law.
Upon consummation of this offering, our authorized capital stock will consist of                           shares of common stock, par value $              per share. Immediately after the closing of this offering, there will be                           shares of our common stock outstanding. Unless our board of directors determines otherwise, we will issue all shares of our capital stock in uncertificated form.
Common stock
Holders of shares of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Our amended and restated certificate of incorporation does not provide for cumulative voting rights, which means that the holders of a majority of our shares of common stock can elect all of the directors then standing for election.
Holders of shares of our common stock are entitled to receive pro rata dividends when and if declared by our board of directors out of funds legally available therefor, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any series of preferred stock that we may designate in the future.
Upon our dissolution or liquidation or the sale of all or substantially all of our assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of our common stock will be entitled to receive pro rata our remaining assets available for distribution.
Holders of shares of our common stock do not have preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of the holders of shares of our common stock are subject to, and may be adversely affected by, the rights of the holders of any shares of any series of preferred stock that we may designate in the future.
Preferred stock
Our amended and restated certificate of incorporation authorizes our board of directors to issue up to              shares of preferred stock in one or more series (including convertible preferred stock). Unless required by law or by any stock exchange, the authorized shares of preferred stock will be available for issuance without further action by our stockholders. Our board of directors is able to determine, with respect to any series of preferred stock, the terms and rights of that series, including:
•
the designation of the series; 

•
the number of shares of the series, which our board may, except where otherwise provided in the preferred stock designation, increase or decrease, but not below the number of shares of that series then outstanding; 

•
the voting rights, if any, of the holders of the series;
106

Table of Contents
•
whether dividends, if any, will be cumulative or non-cumulative and the dividend rate of the series; 

•
the dates at which dividends, if any, will be payable; 

•
the rights of priority and amounts payable, if any, on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of our company; 

•
the redemption rights and price or prices, if any, for shares of the series; 

•
the terms of any purchase, retirement or sinking fund, if any, provided for shares of the series; 

•
the terms, if any, upon which the shares of the series will be convertible into or exchangeable for shares of any other class, classes or series, or other securities, whether issued by our company or by any other entity; 

•
restrictions, if any, upon issuance of indebtedness of our company so long as any shares of the series are outstanding; and 

•
restrictions, if any, on the issuance of shares of the same series or of any other class or series.
The issuance of preferred stock may adversely affect the rights of holders of our common stock by, among other things:
•
restricting dividends on the common stock; 

•
diluting the voting power of the common stock; 

•
impairing the liquidation rights of the common stock; or 

•
discouraging, delaying or preventing a change in control of our company without further action by the stockholders.
As a result of these or other factors, the issuance of preferred stock could have an adverse impact on the market price of our common stock. We have no present plans to issue any shares of preferred stock.
Authorized but unissued capital stock
The DGCL does not require stockholder approval for any issuance of authorized shares. However, the listing requirements of the NYSE, which would apply so long as the common stock remains listed on the NYSE, require stockholder approval of certain issuances equal to or exceeding 20% of the then outstanding voting power or then outstanding number of shares of common stock. These additional shares may be used for a variety of corporate purposes, including future public offerings, to raise additional capital or to facilitate acquisitions.
Options
See "Executive and director compensation—2011 Equity Incentive Plan and 2007 Stock Incentive Plan" for a summary of the relevant terms of our 2011 Equity Incentive Plan and 2007 Stock Incentive Plan.
Registration rights
In addition to rights of sale under Rule 144, several of our officers, directors and stockholders who will hold an aggregate of                                         sha res of our common stock after this offering will have
107

Table of Contents
registration rights which enable them to include their shares in a registration statement we file to allow for the resale of their shares to the public. In addition, Freeman Spogli & Co. will be able to exercise three demand registration rights, each of which would require us to register for resale under the Securities Act its shares of common stock. If any registration rights are exercised, we will generally be responsible for all registration and offering expenses other than underwriter fees, discounts and commissions. For a description of the new registration rights agreement, see "Certain relationships and related party transactions—Registration rights agreement".
Anti-takeover effects of our amended and restated certificate of incorporation and amended and restated bylaws and provisions of Delaware law
Undesignated preferred stock
As discussed above, the ability to authorize undesignated preferred stock will make it possible for our board of directors to issue preferred stock with super voting, special approval, dividend or other rights or preferences on a discriminatory basis that could impede the success of any attempt to acquire us or otherwise effect a change in control of us. These and other provisions may have the effect of deferring, delaying or discouraging hostile takeovers, or changes in control or management of our company. Such provisions may also impede or discourage transactions that some, or a majority, or our stockholders might believe to be in their best interests, or in which our stockholders might receive a premium for their shares of common stock over the market price for such shares.
Requirements for advance notification of stockholder meetings, nominations and proposals; board vacancies
Our amended and restated bylaws will establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors. In order for any matter to be "properly brought" before a meeting, a stockholder will have to comply with advance notice requirements and provide us with certain information. Additionally, vacancies and newly created directorships may be filled only by a vote of a majority of the directors then in office, even though less than a quorum, and not by the stockholders. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of our company.
Amendments to our amended and restated certificate of incorporation and amended and restated bylaws
The DGCL provides that, unless a corporation's certificate of incorporation provides otherwise, the affirmative vote of holders of shares constituting a majority of the votes of all shares entitled to vote may approve amendments to the certificate of incorporation. Our amended and restated certificate of incorporation will not provide for any different approval requirement.
Our amended and restated certificate of incorporation will authorize our board of directors to adopt, amend, add to, modify or repeal our amended and restated bylaws without stockholder approval.
Limitations on stockholder action by written consent
Our amended and restated bylaws will prohibit the taking of any action of our stockholders by written consent without a meeting, unless that action is taken with regard to a matter that has been approved by our board of directors or requires the approval only of certain classes or series of our stock. This may lengthen the amount of time required to take stockholder action.
108

Table of Contents
Exclusive venue
Our amended and restated certificate of incorporation will require, to the fullest extent permitted by law, that (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (3) any action asserting a claim against us arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws and (4) any action asserting a claim against us governed by the internal affairs doctrine will have to be brought in the Court of Chancery of the State of Delaware unless we consent in writing to an alternative forum. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.
Stockholder meetings
Our amended and restated certificate of incorporation will provide that special meetings of the stockholders may be called only by or at the direction of our board of directors. Our amended and restated bylaws will allow the presiding officer at a meeting of the stockholders to adopt rules and regulations for the conduct of meetings which may have the effect of precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions may have the effect of deferring, delaying or discouraging hostile takeovers, or changes in control or management of our company.
No cumulative voting
The DGCL provides that stockholders are not entitled to the right to cumulate votes in the election of directors unless our amended and restated certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation does not provide for cumulative voting. The absence of cumulative voting makes it more difficult for a minority stockholder to elect a director to our board.
Delaware anti-takeover statute
We have not opted out of, and therefore are subject to, Section 203 of the DGCL. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging, under certain circumstances, in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder unless:
•
prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; 

•
upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding (1) shares owned by persons who are directors and also officers and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or 

•
on or subsequent to the date of the transaction, the business combination is approved by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2 / 3 % of the outstanding voting stock which is not owned by the interested stockholder.
109

Table of Contents
These provisions generally prohibit or delay the accomplishment of mergers, assets or stock sales or other takeover or change-in-control attempts that are not approved by a company's board of directors. Generally, a business combination includes a merger, an asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation's outstanding voting stock. We expect that Section 203 would have an anti-takeover effect with respect to transactions our board of directors does not approve in advance. In such event, we would also anticipate that Section 203 could defer, delay or discourage offers or takeover attempts that might result in a premium over the market price for the shares of common stock held by our stockholders.
The provisions of Section 203 may encourage companies interested in acquiring our company to negotiate in advance with our board of directors because the supermajority stockholder approval requirement would be avoided if our board of directors approves either the business combination or the transaction that results in the stockholder becoming an interested stockholder. These provisions also may make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.
Corporate opportunity
Our amended and restated certificate of incorporation provides that neither Freeman Spogli & Co. nor its affiliates have any duty to refrain from engaging directly or indirectly in a corporate opportunity in the same or similar lines of business in which we now engage or propose to engage. In addition, in the event that Freeman Spogli & Co. acquires knowledge of a potential transaction or other business or employee thereof, it shall not be liable to us nor to any of our stockholders (or any affiliates thereof) for breach of any fiduciary or other duty by engaging in any such activity and we waive and renounce any claim based on such activity. This provision applies even if the business opportunity is one that we might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so.
Limitations of liability and indemnification
See "Executive and director compensation—Limitation on liability and indemnification matters".
Market listing
We intend to apply to have our common stock listed on the NYSE under the symbol "BOOT".
Transfer agent and registrar
Upon the completion of this offering, the transfer agent and registrar for our common stock will be                           .
110

Table of Contents

 Material United States federal income tax consequences to non-U.S. holders of our common stock
The following is a summary of the material U.S. federal income tax consequences of the acquisition, ownership, and disposition of our common stock to a non-U.S. holder that purchases shares of our common stock for cash in this offering. For purposes of this summary, a "non-U.S. holder" means a beneficial owner of our common stock that is, for U.S. federal income tax purposes:
•
a nonresident alien individual; 

•
a foreign corporation (or an entity treated as a foreign corporation for U.S. federal income tax purposes); 

•
a foreign estate; or 

•
a foreign trust.
In the case of a holder that is classified as a partnership for U.S. federal income tax purposes, the tax treatment of a partner in that partnership generally will depend upon the status of the partner and the activities of the partner and the partnership. If you are a partner in a partnership holding our common stock, then you should consult your own tax advisor.
This summary is based upon the provisions of the U.S. Internal Revenue Code of 1986, as amended, which we refer to as the Code, the U.S. Treasury regulations promulgated thereunder, judicial decisions, and published rulings and administrative procedures of the Internal Revenue Service, or the IRS, all as in effect as of the date hereof. These authorities are subject to change and to differing interpretations, possibly with retroactive effect, which could result in U.S. federal income tax consequences different from those summarized below. No ruling has been or will be sought from the IRS with respect to the matters summarized below, and there can be no assurance that the IRS will not take a contrary position regarding the U.S. federal income tax consequences of the acquisition, ownership, or disposition of our common stock, or that any such contrary position would not be sustained by a court.
This summary is not a complete analysis of all of the potential U.S. federal income tax consequences relating to the acquisition, ownership, and disposition of our common stock by non-U.S. holders, nor does it address any U.S. federal estate or gift tax consequences, any tax consequences arising under any state, local, or foreign tax laws, any consequences under the 3.8% Medicare contribution tax or any consequences under other U.S. federal tax laws. In addition, this discussion does not address tax consequences resulting from a non-U.S. holder's particular circumstances or to non-U.S. holders that may be subject to special tax rules, including, without limitation:
•
partnerships, other pass-through entities, or beneficial owners of interests in those entities; 

•
foreign governments or entities they control; 

•
"controlled foreign corporations" and their stockholders; 

•
"passive foreign investment companies" and their stockholders; 

•
corporations that accumulate earnings to avoid U.S. federal income tax; 

•
U.S. expatriates or former long-term residents of the U.S.;
111

Table of Contents
•
banks, insurance companies or other financial institutions; 

•
persons subject to the alternative minimum tax; 

•
tax-exempt pension funds or other tax-exempt organizations; 

•
tax-qualified retirement plans; 

•
traders, brokers, or dealers in securities, commodities, or currencies; 

•
persons that own or have owned, or are deemed to own or have owned, more than 5% of our common stock (except to the extent specifically set forth below); 

•
persons who hold our common stock as a position in a hedging transaction, "straddle", "conversion transaction" or other risk reduction transaction; 

•
persons who hold or receive our common stock pursuant to the exercise of any employee stock option or otherwise as compensation; 

•
persons who do not hold our common stock as a capital asset within the meaning of Section 1221 of the Code (generally, for investment purposes); or 

•
persons deemed to sell our common stock under the constructive sale provisions of the Code.
Prospective investors should consult their tax advisors regarding the particular U.S. federal income tax consequences to them of acquiring, owning, and disposing of our common stock, as well as any tax consequences arising under any state, local, or foreign tax laws and any other U.S. federal tax laws. Prospective investors should also consult their tax advisors regarding the potential impact of any applicable income tax treaty.
Distributions on common stock
If we make a distribution of cash or property (other than certain stock distributions) with respect to our common stock, or effect one of certain redemptions that are treated for tax purposes as distributions with respect to our common stock, any such distributions or redemptions will constitute dividends for U.S. federal tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent such a distribution exceeds both our current and our accumulated earnings and profits, such excess will be allocated ratably among the shares of common stock with respect to which the distribution is made, will constitute a return of capital, and will first be applied against and reduce the non-U.S. holder's adjusted tax basis in those shares of common stock, but not below zero. Distributions in excess of our current and accumulated earnings and profits and in excess of a non-U.S. holder's tax basis in that non-U.S. holder's shares of common stock then will be treated as gain from the sale of that common stock, subject to the tax treatment described below under "Gain on disposition of common stock". A non-U.S. holder's adjusted tax basis in a share of common stock is generally the purchase price of the share, reduced by the amount of any distributions constituting a return of capital with respect to that share.
Any dividend paid to a non-U.S. holder of our common stock generally will be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividend, or such lower rate as may be specified by an applicable income tax treaty. If a non-U.S. holder is eligible for benefits under an income tax treaty and wishes to claim a reduced rate of withholding, the non-U.S. holder generally will be required to provide us or our paying agent with a properly completed IRS Form W-8BEN, Form W-8BEN-E, or other
112

Table of Contents
applicable form, certifying under penalties of perjury the non-U.S. holder's qualification for the reduced rate. This certification must be provided to us or our paying agent prior to the payment of the dividend and may be required to be updated periodically. Special certification requirements apply to non-U.S. holders that hold common stock through certain foreign intermediaries. Non-U.S. holders that do not timely provide the required certifications, but that qualify for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. If we are not able to determine whether or not a distribution will exceed current and accumulated earnings and profits at the time the distribution is made, we may withhold tax on the entire amount of any distribution at the same rate as we would withhold on a dividend. However, a non-U.S. holder may obtain a refund of amounts that we withhold to the extent attributable to the portion of the distribution in excess of our current and accumulated earnings and profits.
If a non-U.S. holder holds our common stock in connection with the conduct of a trade or business in the U.S., and dividends paid on the common stock are effectively connected with the non-U.S. holder's U.S. trade or business (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the U.S., as defined under the applicable treaty), the non-U.S. holder will be exempt from U.S. federal withholding tax on the dividends. To claim the exemption, the non-U.S. holder must furnish a properly executed IRS Form W-8ECI (or other applicable form) prior to the payment of the dividends. Any dividends paid on our common stock that are effectively connected with a non-U.S. holder's U.S. trade or business (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the U.S., as defined under the applicable treaty) generally will be subject to U.S. federal income tax on a net income basis at the regular graduated U.S. federal income tax rates generally applicable to U.S. persons or at such lower rate as may be specified by an applicable income tax treaty. A non-U.S. holder that is treated as a corporation for U.S. federal income tax purposes also may be subject to an additional branch profits tax equal to 30% (or such lower rate as is specified by an applicable income tax treaty) of a portion of its earnings and profits for the taxable year that are effectively connected with a U.S. trade or business, as adjusted for certain items.
Gain on disposition of common stock
Subject to the discussion below regarding backup withholding and foreign accounts, a non-U.S. holder generally will not be subject to U.S. federal income tax on any gain realized upon the sale, exchange, or other taxable disposition of our common stock unless:
•
the gain is effectively connected with the non-U.S. holder's conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, the gain is attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the U.S.), in which case the non-U.S. holder will be required to pay tax on the net gain derived from the sale, exchange, or other taxable disposition (net of certain deductions or credits) under regular graduated U.S. federal income tax rates generally applicable to U.S. persons or at such lower rate as may be specified by an applicable income tax treaty, and in the case of a non-U.S. holder that is treated as a corporation for U.S. federal income tax purposes, such non-U.S. holder may be subject to a branch profits tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty; 

•
the non-U.S. holder is an individual who is present in the U.S. for a period or periods aggregating 183 days or more during the taxable year in which the sale, exchange, or other taxable disposition occurs and certain other conditions are met, in which case the non-U.S. holder will be subject to U.S. federal income tax at a flat 30% rate (or such lower rate as is specified by an applicable income tax
113

Table of Contents
treaty) on the gain derived from the sale, exchange, or other taxable disposition, which gain may be offset by U.S. source capital losses (even though the non-U.S. holder is not considered a resident of the U.S.) provided that the non-U.S. holder has timely filed U.S. federal income tax returns reporting those losses; or
•
our common stock constitutes a "United States real property interest" by reason of (i) our having a status as a "United States real property holding corporation", or USRPHC, for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding the disposition or the non-U.S. holder's holding period for our common stock, and, (ii) in the case where shares of our common stock are regularly traded on an established securities market, the non-U.S. holder having owned, directly or indirectly, more than 5% of our common stock at any time within the shorter of the five-year period preceding the disposition or the non-U.S. holder's holding period for our common stock. In that case, the non-U.S. holder will be required to pay tax on the net gain derived from the sale, exchange, or other taxable disposition (net of certain deductions or credits) under regular graduated U.S. federal income tax rates generally applicable to U.S. persons or at such lower rate as may be specified by an applicable income tax treaty, and the gross proceeds from the applicable transaction may be subject to a 10% withholding tax, which the non-U.S. holder may claim as a credit against the non-U.S. holder's U.S. federal income tax liability. There can be no assurance that our common stock will be treated as regularly traded on an established securities market for this purpose. We believe that we are not currently and will not become a USRPHC. However, because the determination of whether we are a USRPHC at any time depends on the fair market value of our United States real property interests relative to the fair market value of our other business assets, there can be no assurance that we will not become a USRPHC in the future. Generally, we would be a USRPHC if the fair market value of our United States real property interests were to equal or exceed 50% of the sum of the fair market values of our worldwide real property interests and other assets used or held for use in a trade or business, all as determined for U.S. federal income tax purposes.
Information reporting and backup withholding
Generally, we must report annually to the IRS and to each non-U.S. holder the amount of dividends and other distributions paid to the non-U.S. holder and the amount of tax, if any, withheld with respect to those distributions. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in the non-U.S. holder's country of residence.
In addition, a non-U.S. holder may be subject to information reporting requirements and backup withholding with respect to dividends paid on, and the proceeds of disposition of, shares of our common stock, unless, generally, the non-U.S. holder certifies under penalties of perjury (on IRS Form W-8BEN, Form W-8BEN-E or other applicable form) that the non-U.S. holder is not a U.S. person or otherwise establishes an exemption. The backup withholding rate is 28%. Additional rules relating to information reporting requirements and backup withholding with respect to payments of the proceeds from the disposition of shares of our common stock are as follows:
•
If the proceeds are paid to or through the U.S. office of a broker, the proceeds generally will be subject to backup withholding and information reporting, unless the non-U.S. holder certifies under penalties of perjury (on IRS Form W-8BEN, Form W-8BEN-E or other applicable form) that the non-U.S. holder is not a U.S. person or otherwise establishes an exemption.
114

Table of Contents
•
If the proceeds are paid to or through a non-U.S. office of a broker that is not a U.S. person and is not a foreign person with certain specified U.S. connections, which we refer to below as a "U.S.-related person", information reporting and backup withholding generally will not apply. 

•
If the proceeds are paid to or through a non-U.S. office of a broker that is a U.S. person or a U.S.-related person, the proceeds generally will be subject to information reporting (but not to backup withholding), unless the non-U.S. holder certifies under penalties of perjury (on IRS Form W-8BEN, Form W-8BEN-E or other applicable form) that the non-U.S. holder is not a U.S. person.
Backup withholding is not a tax. Any amounts withheld from a non-U.S. holder under the backup withholding rules may be allowed as a refund or a credit against the non-U.S. holder's U.S. federal income tax liability, provided that the non-U.S. holder timely furnishes the required information to the IRS.
FATCA
Legislation generally referred to as "FATCA" imposes a 30% U.S. withholding tax on dividends on our common stock and the gross proceeds from a disposition of our common stock paid to:
(i)     a "foreign financial institution" (as specifically defined for purposes of FATCA) unless the institution enters into an agreement with the U.S. Treasury to collect and disclose information regarding the institution's U.S. account holders (including certain account holders that are foreign entities with U.S. owners) and to withhold on certain payments, or unless it otherwise qualifies for an exemption, and
(ii)    a "non-financial foreign entity" (also as specifically defined for purposes of FATCA) unless the entity provides the payor with a certification that it does not have any substantial direct or indirect U.S. owners or provides information identifying the substantial U.S. owners of the entity (which generally include any U.S. person who directly or indirectly owns more than 10% of the entity), or unless the entity agrees to report that information to the IRS or otherwise qualifies for an exemption.
FATCA withholding would apply to dividends paid after June 30, 2014 (or, in certain circumstances, after later dates) and to gross proceeds from sales or other dispositions of our common stock after December 31, 2016. Where applicable, intergovernmental agreements between the U.S. and other countries with respect to the implementation of FATCA and non-U.S. laws, regulations and other authorities enacted or issued with respect to those intergovernmental agreements may modify the requirements under FATCA described above. You are encouraged to consult with your own tax advisor regarding the possible implications of this legislation on your investment in our common stock.
The summary of material U.S. federal income tax consequences above is included for general information purposes only. Potential purchasers of our common stock are urged to consult their own tax advisors to determine the U.S. federal, state, local and non-U.S. tax considerations of purchasing, owning and disposing of our common stock.
115

Table of Contents

 Shares eligible for future sale
Immediately prior to this offering, there was no public market for our common stock. Although we expect the shares of our common stock to be approved for listing on the NYSE, we cannot assure you that a significant public market for our common stock will develop or be sustained. Future sales of substantial amounts of our common stock in the public market could adversely affect prevailing market prices. Furthermore, since only a limited number of shares will be available for sale shortly after this offering because of the contractual and legal restrictions on resale described below, sales of substantial amounts of common stock in the public market after the restrictions lapse, or the perception that such sales could occur, could adversely affect the prevailing market price for our common stock as well as our ability to raise equity capital in the future.
We may issue shares of our common stock from time to time as consideration for future acquisitions, investments or other corporate purposes. In the event any such acquisition, investment or other transaction is significant, the number of shares of common stock that we issue may in turn be significant. In addition, we may also grant registration rights covering those shares of common stock issued in connection with any such acquisitions or investments.
Sale of restricted securities
Upon the completion of this offering,                                          share s of common stock will be outstanding. In addition, options to acquire                                           shares of our common stock were outstanding as of the date of this prospectus. All of the shares sold in this offering will be freely tradable unless held by an "affiliate" of ours, as that term is defined in Rule 144 promulgated under the Securities Act, which shares will be subject to the volume limitations and other restrictions of Rule 144 described below. The remaining shares of common stock that will be outstanding after this offering will be "restricted securities", as defined in Rule 144. Restricted securities may be resold only after registration under the Securities Act or pursuant to an exemption from such registration, including, among others, the exemptions provided by Rules 144 and 701 under the Securities Act, which rules are summarized below. These remaining shares of common stock upon completion of this offering will be available for sale in the public market, taking into account the provisions of Rules 144 and 701 under the Securities Act, as follows:
•
restricted shares will be eligible for immediate sale upon consummation of this offering; and 

•
restricted shares will be eligible for sale upon the expiration of lock-up agreements 180 days after the date of this offering.
Rule 144
In general, under Rule 144 a person (or persons whose shares are aggregated) who may be deemed our affiliate is entitled to sell within any three-month period a number of restricted securities that does not exceed the greater of
•
1% of the then outstanding shares of common stock; and 

•
the average weekly trading volume during the four calendar weeks preceding each such sale,
provided that at least six months has elapsed since such shares of common stock were acquired from us or any affiliate of ours and certain manner of sale, notice requirements and requirements as to availability of current public information about us are satisfied. Any person who is deemed to be our affiliate must also
116

Table of Contents
comply with such provisions of Rule 144 (other than the six-month holding period requirement) in order to sell shares of common stock which are not restricted securities (such as shares of common stock acquired by affiliates through purchases in the open market following this offering). A person who is not our affiliate, and who has not been our affiliate at any time during the 90 days preceding any sale, is entitled to sell shares of common stock (i) subject only to the requirements as to availability of current public information about us, provided that a period of at least six months has elapsed since the shares of common stock were acquired from us or any affiliate of ours, and (ii) without regard to any requirement of Rule 144, provided that at least one year has elapsed since the shares of common stock were acquired from us or any affiliate of ours.
Rule 701
In general, under Rule 701, any of our employees, directors, officers, consultants or advisors who purchased shares from us in connection with a compensatory stock or option plan or other written agreement before the effective date of this offering, or who purchased shares from us after that date upon the exercise of options granted before that date, are eligible to resell such shares in reliance upon Rule 144 beginning 90 days after we become a reporting company under the Exchange Act. If such person is not an affiliate, the sale may be made under Rule 144 without compliance with its minimum holding period or current public information requirements, but subject to the other Rule 144 restrictions. If such person is an affiliate, the sale may be made under Rule 144 without compliance with its minimum holding period requirements, but subject to the other Rule 144 restrictions.
Lock-up agreements
We, each of our directors and officers and certain of our existing stockholders have agreed to certain restrictions on our ability to sell additional shares of our common stock for a period of 180 days after the date of this prospectus. Specifically, we, each of our directors and officers and certain of our existing stockholders have agreed not to offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock, without the prior written consent of J.P. Morgan Securities, LLC, Piper Jaffray & Co. and Jefferies LLC. The lock-up agreements provide exceptions for (a) sales to the underwriters in connection with this offering, (b) our sales in connection with existing incentive plans and (c) other customary exceptions. Upon the expiration of the lock-up period, substantially all of the shares subject to such lock-up restrictions will become eligible for sale, subject to the limitations discussed above.
Stock options and restricted stock
As soon as practicable after the completion of this offering, we intend to file one or more Form S-8 registration statements under the Securities Act to register shares of our common stock issued or reserved for issuance under our 2007 Stock Incentive Plan, 2011 Equity Incentive Plan or 2014 Equity Incentive Plan. These Form S-8 registration statements will become effective immediately upon filing, and shares covered by these Form S-8 registration statements will thereupon be eligible for sale in the public markets, subject to vesting restrictions, the lock-up agreements described above and Rule 144 limitations applicable to affiliates. For a more complete discussion of our stock plans, see "Executive and director compensation".
117

Table of Contents
Registration rights
Pursuant to the terms of a registration rights agreement to be entered into in connection with this offering, we will be required to use our reasonable best efforts to register under the Securities Act, under certain circumstances and subject to certain restrictions, resales of up to                                         sha res of our common stock. Any such securities registered for resale under any registration statement will be available for sale in the open market unless restrictions apply. See "Certain relationships and related party transactions—Registration rights agreement".
118

Table of Contents

 Underwriting
We are offering the shares of common stock described in this prospectus through a number of underwriters. J.P. Morgan Securities LLC, Piper Jaffray & Co. and Jefferies LLC are acting as joint book-running managers of the offering and as representatives of the underwriters. We and the selling stockholders have entered into an underwriting agreement with the underwriters dated the date of this prospectus. Subject to the terms and conditions of the underwriting agreement, we and the selling stockholders have agreed to sell to the underwriters, and each underwriter has severally agreed to purchase, at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus, the number of shares of common stock listed next to its name in the following table:

			
 	
Name	 	Number of shares	
 	
J.P. Morgan Securities LLC	 	 	
Piper Jaffray & Co. 	 	 	
Jefferies LLC	 	 	
Wells Fargo Securities, LLC	 	 	
Robert W. Baird & Co. Incorporated	 	 	
 	 	 	
Total	 	 	
 	
The underwriters are committed to purchase all the common shares offered by us and the selling stockholders if they purchase any shares. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may also be increased or the offering may be terminated.
The underwriters propose to offer the common shares directly to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $              per share. Any such dealers may resell shares to certain other brokers or dealers at a discount of up to $              per share from the initial public offering price. After the initial public offering of the shares, the offering price and other selling terms may be changed by the underwriters. Sales of shares made outside of the U.S. may be made by affiliates of the underwriters. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters' right to reject any order in whole or in part.
The underwriters have an option to buy up to                                         add itional shares of common stock from the selling stockholders to cover sales of such shares by the underwriters which exceed the number of shares specified in the table above. The underwriters have 30 days from the date of this prospectus to exercise this option to purchase additional shares of common stock. If any shares are purchased with this option to purchase additional shares of common stock, the underwriters will purchase such shares in approximately the same proportion as shown in the table above. If any additional shares of common stock are purchased, the underwriters will offer the additional shares on the same terms as those on which the shares are being offered.
The underwriting fee is equal to the public offering price per share of common stock less the amount paid by the underwriters to us per share of common stock. The underwriting fee is $               per share. The following table shows the per share and total underwriting discounts and commissions to be paid to the
119

Table of Contents
underwriters by us and the selling stockholders assuming both no exercise and full exercise of the underwriters' option to purchase additional shares.

														
 	 	
 	 	Paid by us	 	Paid by the selling stockholders	 	
 	 	Without
exercise of
option to
purchase
additional
shares	 	With full
exercise of
option to
purchase
additional
shares	 	Without
exercise of
option to
purchase
additional
shares	 	With full
exercise of
option to
purchase
additional
shares	 	
 	 	
Per share	 	$	 	 	$	 	 	$	 	 	$	 	 	
Total	 	$	 	 	$	 	 	$	 	 	$	 	 	
 	 	
We estimate that the total expenses of this offering, including registration, filing and listing fees, printing fees, legal and accounting expenses and transfer agent and registrar expenses, but excluding the underwriting discounts and commissions, will be approximately $              .
A prospectus in electronic format may be made available on the web sites maintained by one or more underwriters, or selling group members, if any, participating in the offering. The underwriters may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives of the underwriters and selling group members that may make Internet distributions on the same basis as other allocations.
We have agreed that we will not (a) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, or file with the SEC a registration statement under the Securities Act relating to, any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, or (b) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock or any such other securities (regardless of whether any of these transactions are to be settled by the delivery of shares of common stock or such other securities, in cash or otherwise), in each case without the prior written consent of J.P. Morgan Securities LLC, Piper Jaffray & Co. and Jefferies LLC for a period of 180 days after the date of this prospectus, other than the shares of our common stock to be sold hereunder and any shares of our common stock issued upon the exercise of options granted under our existing management incentive plans.
Our directors and executive officers and the selling stockholders have entered into lock-up agreements with the underwriters prior to the commencement of this offering pursuant to which each of these persons or entities, with limited exceptions, for a period of 180 days after the date of this prospectus, may not, without the prior written consent of J.P. Morgan Securities LLC, Piper Jaffray & Co. and Jefferies LLC, (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock (including without limitation, common stock or such other securities which may be deemed to be beneficially owned by such directors, officers and selling stockholders in accordance with the rules and regulations of the SEC and securities which may be issued upon exercise of a stock option or warrant), or publicly disclose the intention to make any offer, sale, pledge or disposition, (2) enter into any swap or other agreement that transfers, in whole or in part, any of the economic
120

Table of Contents
consequences of ownership of our common stock or such other securities, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of common stock or such other securities, in cash or otherwise, or (3) make any demand for or exercise any right with respect to the registration of any shares of our common stock or any security convertible into or exercisable or exchangeable for our common stock.
We and the selling stockholders have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act.
We intend to apply to have our common stock listed on the NYSE under the symbol "BOOT".
In connection with this offering, the underwriters may engage in stabilizing transactions, which involves making bids for, purchasing and selling shares of common stock in the open market for the purpose of preventing or retarding a decline in the market price of the common stock while this offering is in progress. These stabilizing transactions may include making short sales of the common stock, which involves the sale by the underwriters of a greater number of shares of common stock than they are required to purchase in this offering, and purchasing shares of common stock on the open market to cover positions created by short sales. Short sales may be "covered" shorts, which are short positions in an amount not greater than the underwriters' option to purchase additional shares of our common stock referred to above, or may be "naked" shorts, which are short positions in excess of that amount. The underwriters may close out any covered short position either by exercising their option to purchase additional shares of our common stock, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for purchase in the open market compared to the price at which the underwriters may purchase shares through their option to purchase additional shares of our common stock. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market that could adversely affect investors who purchase in this offering. To the extent that the underwriters create a naked short position, they will purchase shares in the open market to cover the position.
The underwriters have advised us that, pursuant to Regulation M of the Securities Act, they may also engage in other activities that stabilize, maintain or otherwise affect the price of the common stock, including the imposition of penalty bids. This means that if the representatives of the underwriters purchase common stock in the open market in stabilizing transactions or to cover short sales, the representatives of the underwriters can require the underwriters that sold those shares as part of this offering to repay the underwriting discount received by them.
These activities may have the effect of raising or maintaining the market price of the common stock or preventing or retarding a decline in the market price of the common stock, and, as a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time. The underwriters may carry out these transactions on the NYSE, in the over-the-counter market or otherwise.
Prior to this offering, there has been no public market for our common stock. The initial public offering price will be determined by negotiations between us and the representatives of the underwriters. In
121

Table of Contents
determining the initial public offering price, we and the representatives of the underwriters expect to consider a number of factors including:
•
the information set forth in this prospectus and otherwise available to the representatives of the underwriters; 

•
our prospects and the history and prospects for the industry in which we compete; 

•
an assessment of our management; 

•
our prospects for future earnings; 

•
the general condition of the securities markets at the time of this offering; 

•
the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and 

•
other factors deemed relevant by the underwriters and us.
Neither we nor the underwriters can assure investors that an active trading market will develop for our common shares, or that the shares will trade in the public market at or above the initial public offering price.
Selling restrictions
General
Other than in the U.S., no action has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
United Kingdom
This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000, or the FSMA, (Financial Promotion) Order 2005, or the Order, or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order, all such persons together being referred to as "relevant persons". The securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.
122

Table of Contents
Each underwriter has represented and agreed that:
(1)    it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of our common shares in circumstances in which Section 21(1) of the FSMA does not apply to us; and
(2)    it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to our common shares in, from or otherwise involving the United Kingdom.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each of which we refer to as a Relevant Member State, an offer to the public of any shares which are the subject of the offering contemplated by this prospectus, which for purposes of this section we refer to as the Shares, may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any Shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:
(1)    to any legal entity which is a qualified investor as defined in the Prospectus Directive;
(2)    to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives of the underwriters for any such offer; or
(3)    in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of Shares shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an "offer to the public" in relation to any Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Shares to be offered so as to enable an investor to decide to purchase any Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State, and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.
Hong Kong
The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to
123

Table of Contents
shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.
Japan
The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan, or the Financial Instruments and Exchange Law, and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.
Switzerland
The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this document nor any other offering or marketing material relating to the offering, us, the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document
124

Table of Contents
will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority, or FINMA, and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares.
Dubai International Financial Centre
This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority, or DFSA. This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus, you should consult an authorized financial advisor.
Australia
No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission, in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001, or the Corporations Act, and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.
Any offer in Australia of the shares may only be made to persons, which we refer to as Exempt Investors, who are "sophisticated investors" (within the meaning of section 708(8) of the Corporations Act), "professional investors" (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.
The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions.
This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.
Other relationships
The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory,
125

Table of Contents
investment management, investment research, principal investment, hedging, financing and brokerage activities.
Certain of the underwriters and their affiliates have provided in the past to us and our affiliates and may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services for us and such affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. In addition, from time to time, certain of the underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future. In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of the issuer. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
126

Table of Contents

 Legal matters
The validity of the shares of common stock offered hereby will be passed upon for us by Bingham McCutchen LLP, Costa Mesa, California. Certain legal matters in connection with this offering will be passed upon for the underwriters by Cravath, Swaine & Moore LLP. Certain partners of Bingham McCutchen LLP are limited partners in a partnership that is a limited partner of the Freeman Spogli & Co. investment fund that owns equity interests of us.

 Experts
The consolidated financial statements of Boot Barn Holdings, Inc. and subsidiaries as of March 29, 2014 and March 30, 2013, and for each of the two years in the period ended March 29, 2014, for the period from December 12, 2011 to March 31, 2012 and of Boot Barn Holding Corporation for the period from April 3, 2011 to December 11, 2011, included in this prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such consolidated financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

 Where you can find more information
We have filed with the SEC a registration statement on Form S-1 (including exhibits, schedules and amendments) under the Securities Act with respect to the shares of common stock offered by this prospectus. This prospectus does not contain all the information set forth in the registration statement. For further information about us and the shares of common stock to be sold in this offering, you should refer to the registration statement. Statements contained in this prospectus relating to the contents of any contract, agreement or other document are not necessarily complete, and, in each instance, we encourage you to read in its entirety the copy of the contract, agreement or other document filed as an exhibit to the registration statement. Whenever this prospectus refers to any contract, agreement or other document, you should refer to the exhibits that are a part of the registration statement for a copy of the contract, agreement or document.
You may read and copy all or any portion of the registration statement or any other information we file at the SEC's public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information about the operation of the public reference rooms. Our SEC filings, including the registration statement, are also available to you on the SEC's website (http://www.sec.gov).
Upon completion of this offering, we will become subject to the information and periodic reporting requirements of the Exchange Act. Under the Exchange Act, we will file annual, quarterly and current reports, as well as proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the SEC's public reference room and the website of the SEC referred to above. We also maintain a website at www.bootbarn.com. After the completion of this offering, you may access our periodic reports, proxy statements and other information free of charge at our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. The information contained on, or accessible through, our website is not part of this prospectus, and you should not consider it part of this prospectus. We have included our website address only as an inactive textual reference and do not intend it to be an active link to our website.
127

Table of Contents

 Index to audited consolidated financial statements

			
Boot Barn Holdings, Inc. and Subsidiaries	 	 	
Report of independent registered public accounting firm	 	
F-2	
Consolidated balance sheets	 	F-3	
Consolidated statements of operations	 	F-4	
Consolidated statements of stockholders' equity	 	F-5	
Consolidated statements of cash flows	 	F-6	
Notes to consolidated financial statements	 	F-7	

 Index to unaudited condensed consolidated financial statements

			
Boot Barn Holdings, Inc. and Subsidiaries	 	 	
Condensed consolidated balance sheets	 	
F-34	
Condensed consolidated statements of operations	 	F-35	
Condensed consolidated statements of stockholders' equity	 	F-36	
Condensed consolidated statements of cash flows	 	F-37	
Notes to condensed consolidated financial statements	 	F-38	
F-1

Table of Contents

 Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Boot Barn Holdings, Inc.
Irvine, California
We have audited the accompanying consolidated balance sheets of Boot Barn Holdings, Inc. (formerly WW Top Investment Corporation) and subsidiaries (the "Company") as of March 29, 2014 and March 30, 2013, and the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended and for the period from December 12, 2011 to March 31, 2012 and of Boot Barn Holding Corporation (the "Predecessor") for the period from April 3, 2011 to December 11, 2011. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (U.S.). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Boot Barn Holdings, Inc. and subsidiaries as of March 29, 2014 and March 30, 2013, and the results of their operations and their cash flows for the years then ended and for the period from December 12, 2011 to March 31, 2012 and of the Predecessor for the period from April 3, 2011 to December 11, 2011, in conformity with accounting principles generally accepted in the U.S.
/s/ Deloitte & Touche LLP
Costa Mesa, California
June 13, 2014
F-2

Table of Contents

 Boot Barn Holdings, Inc. and Subsidiaries
Consolidated balance sheets
(in thousands except share and per share data)

								
 	 	
 	 	March 29,
2014	 	March 30,
2013	 	
 	 	
Assets	 	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	1,118	 	$	1,190	 	
Accounts receivable	 	 	2,191	 	 	1,078	 	
Inventories	 	 	102,702	 	 	67,995	 	
Prepaid expenses and other current assets	 	 	8,685	 	 	5,311	 	
 	 	 	 	
Total current assets	 	 	114,696	 	 	75,574	 	
Property and equipment, net	 	 	21,450	 	 	10,736	 	
Goodwill	 	 	93,097	 	 	78,033	 	
Intangible assets, net	 	 	59,723	 	 	58,017	 	
Other assets	 	 	2,897	 	 	1,922	 	
 	 	 	 	
Total assets	 	$	291,863	 	$	224,282	 	
 	 	 	 	
Liabilities and stockholders' equity	 	 	

Current liabilities:	 	 	 	 	 	 	 	
Line of credit	 	$	28,624	 	$	18,910	 	
Accounts payable	 	 	36,029	 	 	22,488	 	
Accrued expenses and other current liabilities	 	 	20,763	 	 	14,722	 	
Current portion of notes payable	 	 	1,000	 	 	2,000	 	
 	 	 	 	
Total current liabilities	 	 	86,416	 	 	58,120	 	
Deferred taxes	 	 	19,960	 	 	19,538	 	
Long-term portion of notes payable	 	 	98,500	 	 	17,000	 	
Related party notes payable	 	 	—	 	 	50,500	 	
Other liabilities	 	 	2,412	 	 	1,500	 	
 	 	 	 	
Total liabilities	 	 	207,288	 	 	146,658	 	
Commitments and contingencies (see Note 10)	 	 	

Stockholders' equity:	 	 	

Common stock, $0.001 par value; March 29, 2014 and	 	 	 	 	 	 	 	
March 30, 2013—1,500,000 shares authorized, 757,174 shares	 	 	 	 	 	 	 	
issued and outstanding	 	 	1	 	 	1	 	
Additional paid-in capital	 	 	78,835	 	 	77,544	 	
Retained earnings (accumulated deficit)	 	 	1,652	 	 	(3,725	)	
 	 	 	 	
Total Boot Barn Holdings, Inc. stockholders' equity	 	 	80,488	 	 	73,820	 	
Non-controlling interest	 	 	4,087	 	 	3,804	 	
 	 	 	 	
Total stockholders' equity	 	 	84,575	 	 	77,624	 	
 	 	 	 	
Total liabilities and stockholders' equity	 	$	291,863	 	$	224,282	 	
 	 	
The accompanying notes are an integral part of these consolidated financial statements.
F-3

Table of Contents

 Boot Barn Holdings, Inc. and Subsidiaries
Consolidated statements of operations
(in thousands, except per share data)

														
 	 	
 	 	Fiscal year ended	 	
 	 	March 29,
2014	 	March 30,
2013	 	(Successor)
December 12, 2011
to March 31, 2012	 	(Predecessor)
April 3, 2011 to
December 11, 2011	 	
 	 	
Net sales	 	$	345,868	 	$	233,203	 	$	58,267	 	$	110,429	 	
Cost of goods sold	 	 	231,796	 	 	151,357	 	 	37,313	 	 	72,129	 	
Amortization of inventory fair value adjustment	 	 	867	 	 	9,199	 	 	9,369	 	 	—	 	
 	 	 	 	
Total cost of goods sold	 	 	232,663	 	 	160,556	 	 	46,682	 	 	72,129	 	
 	 	 	 	
Gross profit	 	 	113,205	 	 	72,647	 	 	11,585	 	 	38,300	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	 	 	91,998	 	 	62,609	 	 	12,769	 	 	28,145	 	
Acquisition-related expenses	 	 	671	 	 	1,138	 	 	3,027	 	 	7,336	 	
 	 	 	 	
Total operating expenses	 	 	92,669	 	 	63,747	 	 	15,796	 	 	35,481	 	
 	 	 	 	
Income (loss) from operations	 	 	20,536	 	 	8,900	 	 	(4,211	)	 	2,819	 	
Interest expense, net	 	 	11,594	 	 	7,415	 	 	1,442	 	 	3,684	 	
Other income, net	 	 	39	 	 	21	 	 	5	 	 	70	 	
 	 	 	 	
Income (loss) before income taxes	 	 	8,981	 	 	1,506	 	 	(5,648	)	 	(795	)	
Income tax expense (benefit)	 	 	3,321	 	 	826	 	 	(1,047	)	 	(135	)	
 	 	 	 	
Net income (loss)	 	 	5,660	 	 	680	 	 	(4,601	)	 	(660	)	
 	 	 	 	
Net income (loss) attributed to non-controlling interest	 	 	283	 	 	34	 	 	(230	)	 	—	 	
 	 	 	 	
Net income (loss) attributed to Boot Barn Holdings, Inc. 	 	$	5,377	 	$	646	 	$	(4,371	)	$	(660	)	
 	 	 	 	
Net income (loss) per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic shares	 	$	7.10	 	$	0.86	 	$	(5.87	)	$	(3.82	)	
Diluted shares	 	$	7.01	 	$	0.86	 	$	(5.87	)	$	(3.82	)	
Weighted average shares outstanding:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic shares	 	 	757	 	 	750	 	 	745	 	 	173	 	
Diluted shares	 	 	767	 	 	750	 	 	745	 	 	173	 	
 	 	
The accompanying notes are an integral part of these consolidated financial statements.
F-4

Table of Contents

 Boot Barn Holdings, Inc. and Subsidiaries
Consolidated statements of stockholders' equity
(in thousands, except shares)

																																
 	 	
 	 	 	 	 	 	Preferred stock
Series A	 	Preferred stock
Series B	 	 	 	 	 	 	 	 	 	
 	 	Common stock					 	Additional
paid-in
capital	 	Retained
earnings
(accumulated
deficit)	 	Non-
controlling
interest	 	 	 	
 	 	Shares	 	Amount	 	Shares	 	Amount	 	Shares	 	Amount							 	Total	 	
 	 	
Predecessor balance at April 3, 2011	 	 	172,858	 	$	—	 	 	31,765	 	$	31,765	 	 	1,036	 	$	1,036	 	$	17	 	$	39	 	$	—	 	$	32,857	 	
Net loss	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(660	)	 	 	 	 	(660	)	
 	 	 	 	
Predecessor balance at December 11, 2011	 	 	172,858	 	$	—	 	 	31,765	 	$	31,765	 	 	1,036	 	$	1,036	 	$	17	 	$	(621	)	$	—	 	$	32,197	 	
 	 	 	 	
Successor balance at December 11, 2011	 	 	—	 	$	—	 	 	—	 	$	—	 	 	—	 	$	—	 	$	—	 	$	—	 	$	—	 	$	—	 	
Issuance of stock	 	 	745,305	 	 	1	 	 	 	 	 	 	 	 	 	 	 	 	 	 	74,659	 	 	 	 	 	4,000	 	 	78,660	 	
Stock-based compensation expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	99	 	 	 	 	 	 	 	 	99	 	
Net loss	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(4,371	)	 	(230	)	 	(4,601	)	
 	 	 	 	
Balance at March 31, 2012	 	 	745,305	 	 	1	 	 	—	 	 	—	 	 	—	 	 	—	 	 	74,758	 	 	(4,371	)	 	3,770	 	 	74,158	 	
Issuance of stock	 	 	11,869	 	 	—	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,999	 	 	 	 	 	 	 	 	1,999	 	
Stock-based compensation expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	787	 	 	 	 	 	 	 	 	787	 	
Net income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	646	 	 	34	 	 	680	 	
 	 	 	 	
Balance at March 30, 2013	 	 	757,174	 	 	1	 	 	—	 	 	—	 	 	—	 	 	—	 	 	77,544	 	 	(3,725	)	 	3,804	 	 	77,624	 	
Stock-based compensation expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,291	 	 	 	 	 	 	 	 	1,291	 	
Net income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	5,377	 	 	283	 	 	5,660	 	
 	 	 	 	
Balance at March 29, 2014	 	 	757,174	 	$	1	 	 	—	 	$	—	 	 	—	 	$	—	 	$	78,835	 	$	1,652	 	$	4,087	 	$	84,575	 	
 	 	
The accompanying notes are an integral part of these consolidated financial statements.
F-5

Table of Contents

 Boot Barn Holdings, Inc. and Subsidiaries
Consolidated statements of cash flows
(in thousands)

														
 	 	
 	 	Fiscal year ended	 	 	 	 	 	
 			 	(Successor)
December 12, 2011
to March 31, 2012	 	(Predecessor)
April 3, 2011 to
December 11, 2011	 	
 	 	March 29,
2014	 	March 30,
2013					 	
 	 	
Cash flows from operating activities	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss)	 	$	5,660	 	$	680	 	$	(4,601	)	$	(660	)	
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation	 	 	4,628	 	 	2,662	 	 	656	 	 	1,163	 	
Stock-based compensation	 	 	1,291	 	 	787	 	 	99	 	 	—	 	
Amortization of intangible assets	 	 	3,501	 	 	2,926	 	 	439	 	 	55	 	
Amortization of deferred loan fees	 	 	2,507	 	 	435	 	 	81	 	 	286	 	
Loss on disposal of property and equipment	 	 	1,980	 	 	322	 	 	17	 	 	4	 	
Accretion of above market leases	 	 	(230	)	 	(231	)	 	(63	)	 	(93	)	
Deferred taxes	 	 	(1,874	)	 	(633	)	 	(2,374	)	 	(189	)	
Amortization of inventory fair value adjustment	 	 	867	 	 	9,199	 	 	9,369	 	 	—	 	
Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accounts receivable	 	 	(710	)	 	(209	)	 	629	 	 	(892	)	
Due from related party	 	 	—	 	 	—	 	 	—	 	 	52	 	
Inventories	 	 	(14,100	)	 	(4,821	)	 	3,466	 	 	(9,436	)	
Prepaid expenses and other current assets            	 	 	(871	)	 	(2,490	)	 	(615	)	 	587	 	
Other assets	 	 	104	 	 	199	 	 	278	 	 	26	 	
Accounts payable	 	 	3,190	 	 	4,916	 	 	915	 	 	4,608	 	
Accrued expenses and other current liabilities            	 	 	5,944	 	 	2,494	 	 	(12,385	)	 	10,446	 	
Other liabilities	 	 	893	 	 	(4,312	)	 	52	 	 	165	 	
 	 	 	 	
Net cash provided by (used in) operating activities	 	$	12,780	 	$	11,924	 	$	(4,037	)	$	6,122	 	
 	 	 	 	
Cash flows from investing activities	 	 	 	 	 	 	 	 	 	 	 	 	 	
Purchases of property and equipment	 	$	(11,400	)	$	(3,848	)	$	(698	)	$	(2,055	)	
Proceeds from sales of property and equipment	 	 	24	 	 	61	 	 	—	 	 	4	 	
Purchase of trademark rights	 	 	(200	)	 	—	 	 	—	 	 	—	 	
Acquisition of business, net of cash acquired	 	 	(15,696	)	 	(41,912	)	 	(85,574	)	 	—	 	
 	 	 	 	
Net cash used in investing activities	 	$	(27,272	)	$	(45,699	)	$	(86,272	)	$	(2,051	)	
 	 	 	 	
Cash flows from financing activities	 	 	 	 	 	 	 	 	 	 	 	 	 	
Proceeds from issuance of stock	 	$	—	 	$	1,999	 	$	76,019	 	$	—	 	
Line of credit—net	 	 	9,714	 	 	4,324	 	 	4,567	 	 	101	 	
Proceeds from loan borrowings	 	 	100,000	 	 	10,583	 	 	12,000	 	 	—	 	
Repayments on debt and capital lease obligations	 	 	(70,126	)	 	(1,461	)	 	(294	)	 	(2,204	)	
Proceeds from borrowings—related parties	 	 	—	 	 	25,500	 	 	—	 	 	—	 	
Debt issuance fees	 	 	(3,350	)	 	(1,167	)	 	(1,391	)	 	—	 	
Payment of assumed contingent consideration and debt from acquisitions	 	 	(21,818	)	 	(5,405	)	 	—	 	 	—	 	
 	 	 	 	
Net cash provided by (used in) financing activities	 	$	14,420	 	$	34,373	 	$	90,901	 	$	(2,103	)	
 	 	 	 	
Net increase (decrease) in cash and cash equivalents	 	 	(72	)	 	598	 	 	592	 	 	1,968	 	
Cash and cash equivalents, beginning of year	 	 	1,190	 	 	592	 	 	 	 	 	567	 	
 	 	 	 	
Cash and cash equivalents, end of year	 	$	1,118	 	$	1,190	 	$	592	 	$	2,535	 	
 	 	 	 	
Supplemental disclosures of cash flow information:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash paid for income taxes	 	$	4,849	 	$	3,337	 	$	95	 	$	445	 	
Cash paid for interest	 	$	9,110	 	$	6,275	 	$	966	 	$	2,782	 	
Supplemental disclosure of non-cash activities:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Unpaid purchases of property and equipment	 	$	132	 	$	65	 	$	—	 	$	—	 	
Equipment acquired through capital lease	 	$	28	 	$	—	 	$	—	 	$	41	 	
Exchange of Predecessor shares for Successor shares	 	$	—	 	$	—	 	$	2,641	 	$	—	 	
Net replacement of Predecessor debt with the same lender	 	$	—	 	$	—	 	$	17,000	 	$	—	 	

The accompanying notes are an integral part of these consolidated financial statements.
F-6

Table of Contents

 Boot Barn Holdings, Inc. and Subsidiaries
Notes to consolidated financial statements
1.     Business operations
Boot Barn Holdings, Inc., formerly named WW Top Investment Corporation (the "Company" or "Successor") was formed on November 17, 2011, and is incorporated in the State of Delaware. The equity of the Company consists of 1,500,000 authorized shares and 757,174 outstanding shares of common stock as of each of March 29, 2014 and March 30, 2013 with 710,000 shares of common stock held by Freeman Spogli & Co. as of each of March 29, 2014 and March 30, 2013. The shares of common stock have voting rights of one vote per share.
Boot Barn Holding Corporation (the "Predecessor"), a Delaware corporation, was incorporated on September 28, 2007 and owns 100% of the common stock of Boot Barn, Inc. (together with Predecessor, "Boot Barn"). The Company was formed to effect the purchase of the Predecessor, including the operations of Boot Barn. On December 12, 2011, the Company acquired 94.9% of the outstanding capital stock of the Predecessor, which is referred to as the Recapitalization. During the period from November 17, 2011 through December 11, 2011, there was no material activity of the Company and the Company had no operations prior to the acquisition. In connection with the Recapitalization, management and other investors purchased shares of the Successor's common stock, collectively representing a 9.6% equity interest in Boot Barn Holding Corporation.
As of June 8, 2014, the Company held all of the outstanding shares of common stock of WW Holding Corporation, which held 95.0% of the outstanding shares of common stock of Boot Barn Holding Corporation. On June 9, 2014, WW Holding Corporation was merged with and into the Company and then Boot Barn Holding Corporation was merged with and into the Company. As a result of this reorganization, Boot Barn, Inc. became a direct wholly owned subsidiary of the Company, and the minority stockholders that formerly held 5.0% of Boot Barn Holding Corporation became holders of 5.0% of the Company. On June 10, 2014, the legal name of the Company was changed from WW Top Investment Corporation to Boot Barn Holdings, Inc.
The Company operates specialty retail stores that sell western and work boots and related apparel and accessories. The Company operates retail locations throughout the U.S. and sells its merchandise via the Internet. The Company operated a total of 152 stores in 23 states as of March 29, 2014 and 117 stores in 21 states as of March 30, 2013. As of the fiscal year ending March 29, 2014, all stores operate under the Boot Barn name (other than two stores, which operate under the "American Worker" name).
2.     Summary of significant accounting policies
Basis of presentation
The Company's consolidated financial statements, prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"), include the accounts of the Company and each of its subsidiaries, including WW Holding Corporation, Boot Barn Holding Corporation, Boot Barn, Inc., RCC Western Stores, Inc. ("RCC") and Baskins Acquisition Holdings, LLC ("Baskins"). All intercompany accounts and transactions among the Company and its subsidiaries have been eliminated in consolidation.
F-7

Table of Contents
Fiscal year
The Company reports its results of operations and cash flows on a 52- or 53-week basis, and its fiscal year ends on the Saturday closest to March 31. The years ending March 29, 2014 ("fiscal 2014") and March 30, 2013 ("fiscal 2013") each consisted of 52 weeks. The period from December 12, 2011 to March 31, 2012 (the "Successor Period") consisted of approximately 16 weeks. The period from April 3, 2011 to December 11, 2011 (the "Predecessor Period") consisted of approximately 36 weeks.
Comprehensive income (loss)
The Company does not have any components of other comprehensive income (loss) recorded within its consolidated financial statements and, therefore, does not separately present a statement of comprehensive income (loss) in its consolidated financial statements.
Segment reporting
GAAP has established guidance for reporting information about a company's operating segments, including disclosures related to a company's products and services, geographic areas and major customers. The Company has a single operating and reportable segment, which includes net sales generated from its retail stores and e-commerce website. All of the Company's identifiable assets are in the U.S.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Among the significant estimates affecting the Company's consolidated financial statements are those relating to revenue recognition, inventories, goodwill, intangible and long-lived assets, stock-based compensation and income taxes. Management regularly evaluates its estimates and assumptions based upon historical experience and various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. To the extent actual results differ from those estimates, the Company's future results of operations may be affected.
Cash and cash equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents also include receivables from credit card sales. The carrying amounts of cash and cash equivalents represent their fair values.
Accounts receivable
The Company's accounts receivable consists of amounts due from commercial customers for merchandise sold, as well as receivables from suppliers under co-operative arrangements. The Company has concluded that no allowance for bad debts is required.
Inventories
Inventory consists primarily of purchased merchandise and is valued at the lower of cost or market. Cost is determined on a first-in, first-out basis and includes the cost of merchandise and import related costs, including freight, duty and agent commissions. The Company assesses the recoverability of inventory through a periodic review of historical usage and present demand. When the inventory on hand exceeds the foreseeable demand, the value of inventory that, at the time of the review, is not expected to be sold is written down to its estimated net realizable value.
F-8

Table of Contents
The Company recorded fair value adjustments to reflect the acquired cost of inventory related to its acquisitions of Boot Barn, RCC and Baskins. These amounts were amortized over the period that the related inventory was sold. Amortization of the acquired cost of inventory was $0.9 million, $9.2 million and $9.4 million in the fiscal years ended March 29, 2014 and March 30, 2013, and the Successor Period, respectively.
Deferred loan fees
Deferred loan fees are capitalized and amortized to interest expense over the terms of the applicable loan agreements using the effective interest method. Included in prepaid expenses and other current assets are short-term deferred loan fees of $0.6 million and $0.5 million as of March 29, 2014 and March 30, 2013, respectively. Included in other assets are long-term deferred loan fees of $2.3 million and $1.5 million as of March 29, 2014 and March 30, 2013, respectively.
Property and equipment, net
Property and equipment consists of leasehold improvements, machinery and equipment, furniture and fixtures and vehicles. Property and equipment is subject to depreciation and is recorded at cost less accumulated depreciation. Expenditures for major remodels and improvements are capitalized while minor replacements, maintenance and repairs that do not improve or extend the life of such assets are charged to expense. Gains or losses on disposal of fixed assets, when applicable, are reflected in operations. Depreciation is computed using the straight-line method over the estimated useful lives, ranging from five to seven years. Machinery and equipment is depreciated over five years. Furniture and fixtures are depreciated over five to seven years. Vehicles are depreciated over five years. Leasehold improvements are depreciated over the shorter of the terms of the leases or their estimated useful lives.
Goodwill and indefinite-lived intangible assets
Goodwill is recorded as the difference between the aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets. Goodwill is tested for impairment at least annually or more frequently if indicators of impairment exist. An annual goodwill impairment test is performed as of the first day of the fourth fiscal quarter. In fiscal 2013 and prior, the annual goodwill impairment test was performed as of fiscal year-end. The Company changed the timing of its annual impairment test to provide sufficient time to prepare the analysis and meet reporting deadlines. Management evaluates the fair value of the reporting unit using a market-based analysis to review market capitalization as well as reviewing a discounted cash flow analysis using management's assumptions.
The Company conducts a two-step goodwill impairment test. The first step of the impairment test involves comparing the fair value of the reporting unit with its carrying value. The Company's entire operations represent one reporting unit. The Company determines the fair value of its reporting unit using the income approach and market approach to valuation, as well as other generally accepted valuation methodologies. If the carrying amount of the reporting unit exceeds the reporting unit's fair value, the Company performs the second step of the goodwill impairment test, which involves comparing the implied fair value of the reporting unit's goodwill with the carrying value of that goodwill. The amount by which the carrying value of the goodwill exceeds its implied fair value, if any, will be recognized as an impairment loss. No impairment was recorded during the fiscal years ended March 29, 2014 or March 30, 2013, the Successor Period or the Predecessor Period.
Intangible assets with indefinite lives, which include the Boot Barn trademark, are not amortized but instead are measured for impairment at least annually, or when events indicate that impairment may exist. The Company calculates impairment as the excess of the carrying value of indefinite-lived intangible assets over their estimated fair value. If the carrying value exceeds the estimate of fair value an impairment
F-9

Table of Contents
charge is recorded. No impairment was recorded during the fiscal years ended March 29, 2014, March 30, 2013, the Successor Period or the Predecessor Period.
Definite-lived intangible assets
Definite-lived intangible assets consist of certain trademarks, customer lists, non-compete agreements, and below-market leases. Definite-lived intangible assets are amortized utilizing the straight-line method over the assets' estimated useful lives, with the exception of customer lists, which are amortized based on the estimated attrition rate. The period of amortization for trademarks is six months, for customer lists is five years, for non-compete agreements is four to five years and for below-market leases is two to 17 years.
Long-lived assets
Long-lived assets consist of property and equipment and definite-lived intangible assets. The Company assesses potential impairment of its long-lived assets whenever events or changes in circumstances indicate that an asset or asset group's carrying value may not be recoverable. Factors that are considered important that could trigger an impairment review include a current-period operating or cash flow loss combined with a history of operating or cash flow losses and a projection or forecast that demonstrates continuing losses or insufficient income associated with the use of a long-lived asset or asset group. Other factors include a significant change in the manner of the use of the asset or a significant negative industry or economic trend. This evaluation is performed based on estimated undiscounted future cash flows from operating activities compared with the carrying value of the related assets. If the undiscounted future cash flows are less than the carrying value, an impairment loss is recognized, measured by the difference between the carrying value, and the estimated fair value of the assets, with such estimated fair values determined using the best information available and in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements . The Company has determined that there were no impairments of long-lived assets during the fiscal years ended March 29, 2014 or March 30, 2013, the Successor Period or the Predecessor Period.
Stock-based compensation
Stock-based compensation is accounted for under FASB ASC Topic 718, Compensation—Stock Compensation ("ASC 718"). The Company accounts for all stock-based compensation transactions using a fair-value method and recognizes the fair value of each award as an expense over the service period. The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing model. The use of the Black-Scholes model requires a number of estimates, including the expected option term, the expected volatility in the price of the Company's common stock, the risk-free rate of interest and the dividend yield on the Company's common stock. Judgment is required in estimating the number of share-based awards that the Company expects will ultimately vest upon the fulfillment of service conditions (such as time-based vesting). The consolidated financial statements include amounts that are based on the Company's best estimates and judgments. The Company classifies compensation expense related to these awards in the consolidated statements of operations based on the department to which the recipient reports.
Noncontrolling interest
On December 12, 2011, the Company acquired the majority of the outstanding shares of its consolidated subsidiary Boot Barn Holding Corporation. Certain investors hold approximately 5.0% of the outstanding shares of Boot Barn Holding Corporation. Noncontrolling interests are recorded at the acquisition date fair value plus an allocation of subsidiary earnings (loss) based on the relative ownership interest.
F-10

Table of Contents
Revenue recognition
Revenue is recorded for store sales upon the purchase of merchandise by customers. E-commerce sales are recorded when the customer takes title of the merchandise and assumes risk of loss, collection of the relevant receivable is reasonably assured, persuasive evidence of an arrangement exists and the sales price is fixed or determinable, which generally occurs upon delivery of the product. Shipping and handling revenues are included in total net revenue. Shipping costs incurred by the Company are included as cost of goods sold.
Revenue is recorded net of estimated and actual sales returns and deductions for coupon redemptions, estimated future award redemption and other promotions. The sales return reserve reflects an estimate of sales returns based on projected merchandise returns determined through the use of historical average return percentages. The total reserve for returns was $0.4 million, $0.2 million, $0.2 million and $0.1 million as of March 29, 2014 and March 30, 2013 and the end of the Successor Period and the Predecessor Period, respectively. The following table provides a reconciliation of the activity related to the Company's sales returns reserve:

														
 	 	
 	 	Fiscal year ended	 	
(in thousands)	 	March 29,
2014	 	March 30,
2013	 	(Successor)
December 12, 2011
to March 31, 2012	 	(Predecessor)
April 3, 2011 to
December 11, 2011	 	
 	 	
Beginning balance	 	$	238	 	$	169	 	$	139	 	$	139	 	
Provisions	 	 	15,034	 	 	9,723	 	 	2,821	 	 	3,800	 	
Sales returns	 	 	(14,842	)	 	(9,654	)	 	(2,791	)	 	(3,800	)	
 	 	 	 	
Ending balance	 	$	430	 	$	238	 	$	169	 	$	139	 	
 	 	
The Company maintains a customer loyalty program. Under the program, customers accumulate points based on purchase activity. For customers to maintain their active point balance, they must make a qualifying purchase of merchandise at least once in a 365-day period. Once a loyalty program member achieves a certain point level, the member earns awards that may be redeemed for credits on merchandise purchases. To redeem awards, the member must make a qualifying purchase of merchandise within 60 days of the date the award was granted. Unredeemed awards and accumulated partial points are accrued as unearned revenue and as an adjustment to net sales. The unearned revenue for this program is recorded in accrued expenses and other current liabilities on the consolidated balance sheets and was $2.0 million, $1.3 million, $1.1 million and $0.7 million as of March 29, 2014 and March 30, 2013 and the end of the Successor Period and the Predecessor Period, respectively. The following table provides a reconciliation of the activity related to the Company's customer loyalty program:

														
 	 	
 	 	Fiscal year ended	 	
(in thousands)	 	March 29,
2014	 	March 30,
2013	 	(Successor)
December 12, 2011
to March 31, 2012	 	(Predecessor)
April 3, 2011 to
December 11, 2011	 	
 	 	
Beginning balance	 	$	1,343	 	$	1,124	 	$	741	 	$	270	 	
Provisions	 	 	10,440	 	 	5,644	 	 	1,325	 	 	1,512	 	
Usage	 	 	(9,833	)	 	(5,425	)	 	(942	)	 	(1,041	)	
 	 	 	 	
Ending balance	 	$	1,950	 	$	1,343	 	$	1,124	 	$	741	 	
 	 	
F-11

Table of Contents
Proceeds from the sale of gift cards are deferred until the customers use the cards to acquire merchandise. Gift cards, gift certificates and store credits do not have expiration dates, and unredeemed gift cards, gift certificates and store credits are subject to state escheatment laws. The Company retains the percentage of the value of such unredeemed gift cards, gift certificates and store credits not escheated and recognize these amounts in net sales. The Company defers recognition of a layaway sale and its related profit to the accounting period when the customer receives the layaway merchandise. Income from the redemption of gift cards, gift card breakage, and the sale of layaway merchandise is included in net sales. In fiscal 2014, the Company elected to participate in a voluntary disclosure program with the State of Delaware in order to settle past due unclaimed property obligations. The Company agreed with the State of Delaware to settle all unreported escheatment liabilities in the amount of $0.3 million. These amounts were recorded in accrued expenses and other current liabilities in fiscal 2014 based upon preliminary settlement amounts. The final settlement was reached with, and amounts were paid to, the State of Delaware in May 2014.
Cost of goods sold
Cost of goods sold includes the cost of merchandise, obsolescence and shrink provisions, store and warehouse occupancy costs (including rent, depreciation and utilities), inbound and outbound freight, supplier allowances, occupancy-related taxes, compensation costs for merchandise purchasing and warehouse personnel and other inventory acquisition-related costs.
Store opening costs
Store opening costs consist of costs incurred prior to opening a new store and primarily consist of manager and other employee payroll, travel and training costs, marketing expenses, initial opening supplies and costs of transporting initial inventory and certain fixtures to store locations, as well as occupancy costs incurred from the time that we take possession of a store site to the opening of that store. Occupancy costs are included in cost of goods sold and the other store opening costs are included in SG&A expenses. All of these costs are expensed as incurred.
Advertising costs
Certain advertising costs, including direct mail, television and radio promotions, event sponsorship, in-store photographs and other promotional advertising are expensed when the marketing campaign commences. The Company had prepaid advertising costs of $0.4 million and $0.2 million as of March 29, 2014 and March 30, 2013, respectively. All other advertising costs are expensed as incurred. The Company recognized $11.3 million and $7.1 million in advertising costs during the fiscal years ended March 29, 2014 and March 30, 2013, respectively. Advertising costs of $1.1 million and $3.5 million were recognized for the Successor Period, and the Predecessor Period, respectively.
Leases
The Company recognizes rent expense for operating leases on a straight-line basis (including the effect of reduced or free rent and rent escalations) over the lease term. The difference between the cash paid to the landlord and the amount recognized as rent expense on a straight-line basis is recognized as an adjustment to deferred rent in the consolidated balance sheets. Cash reimbursements received from landlords for leasehold improvements and other cash payments received from landlords as lease incentives are recorded as deferred rent and are amortized using the straight-line method over the lease term as an offset to rent expense. Contingent rent, determined based on a percentage of sales in excess of specified levels, is recognized as rent expense when the achievement of the specified sales that triggers the contingent rent is probable.
F-12

Table of Contents
Income taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes ("ASC 740"), which requires the asset and liability approach for financial accounting and reporting of income taxes. Deferred tax assets and liabilities are attributable to differences between financial statement and income tax reporting. Deferred tax assets, net of any valuation allowances, represent the future tax return consequences of those differences and for operating loss and tax credit carryforwards, which will be deductible when the assets are recovered. Deferred tax assets are reduced by a valuation allowance if it is deemed more likely than not that some or all of the deferred tax assets will not be realized. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
The Company accounts for uncertain tax positions in accordance with ASC 740, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements. It prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Such changes in recognition or measurement might result in the recognition of a tax benefit or an additional charge to the tax provision in the period.
The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense (benefit) line in the consolidated statements of operations. Accrued interest and penalties, if incurred, are included within accrued expenses and other current liabilities in the consolidated balance sheets. There were no accrued interest or penalties for the fiscal years ended March 29, 2014, March 30, 2013, for the Successor Period or the Predecessor Period.
Per share information
Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of outstanding shares of common stock. In computing diluted earnings (loss) per share, the weighted average number of common shares outstanding is adjusted to reflect the effect of potentially dilutive securities such as stock options. In accordance with ASC 718, the Company utilizes the treasury stock method to compute the dilutive effect of stock options.
Fair value of certain financial assets and liabilities
The Company follows FASB ASC Topic 820, Fair Value Measurements and Disclosures , ("ASC 820") which requires disclosure of the estimated fair value of certain assets and liabilities defined by the guidance as financial instruments. The Company's financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable and debt. ASC 820 defines the fair value of financial instruments as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities.
•
Level 1 uses unadjusted quoted prices that are available in active markets for identical assets or liabilities. The Company's Level 1 assets include investments in money market funds.
F-13

Table of Contents
•
Level 2 uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data. 

•
Level 3 uses one or more significant inputs that are unobservable and supported by little or no market activity, and reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation. The Company's Level 3 assets include certain acquired businesses and its Level 3 liability includes contingent consideration.
Cash and cash equivalents, accounts receivable and accounts payable are valued at fair value and are classified according to the lowest level input that is significant to the fair value measurement. As a result, the asset or liability could be classified as Level 2 or Level 3 even though there may be certain significant inputs that are readily observable. The Company believes that the recorded value of its financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or duration.
Although market quotes for the fair value of the outstanding debt arrangements discussed in Note 8 "Revolving credit facilities and long-term debt" are not readily available, the Company believes its carrying value approximates fair value due to the variable interest rates, which are Level 2 inputs. There were no financial assets or liabilities requiring fair value measurements as of March 29, 2014 on a recurring basis.
Concentration of credit risk
Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents. At times, such amounts held at banks may be in excess of Federal Deposit Insurance Corporation insurance limits, and the Company mitigates such risk by utilizing multiple banks.
Supplier concentration risk
We purchase merchandise inventories from several hundred suppliers worldwide. Sales of products from our three largest suppliers totaled approximately 40%, 40%, 39% and 39% of our net sales for fiscal 2014, fiscal 2013, the Successor Period and the Predecessor Period, respectively.
Recent accounting pronouncements
In July 2013, the FASB issued Accounting Standards Update ("ASU") No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force) . The amendments in this ASU provide guidance on the financial statements presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. An unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward with certain exceptions, in which case such an unrecognized tax benefit should be presented in the financial statements as a liability. The amendments in this ASU do not require new recurring disclosures. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Companies may choose to apply this guidance retrospectively to each prior reporting period
F-14

Table of Contents
presented. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.
In May 2014, the FASB and the International Accounting Standard Board ("IASB") jointly issued a new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under GAAP. The revenue recognition standard will allow for the recognition of revenue when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard is effective for public entities for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted under GAAP. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.
3.     Business combinations
In allocating the purchase price of the following acquisitions, the Company recorded all assets acquired and liabilities assumed at fair value. The excess of the purchase price over the aggregate fair values was recorded as goodwill. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value assigned to identifiable intangible assets acquired was based on estimates and assumptions made by management at the time of the acquisitions.
The purchase price of an acquisition is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. To the extent the purchase price exceeds the fair value of the net identifiable tangible and intangible assets acquired and liabilities assumed such excess is allocated to goodwill. The Company determines the estimated fair values after review and consideration of relevant information, including discounted cash flows, quoted market prices and estimates made by management. The Company adjusts the preliminary purchase price allocation, as necessary, during the measurement period of up to one year after the acquisition closing date as it obtains more information as to facts and circumstances existing as of the acquisition date.
Valuations on acquired intangible assets for acquisitions were completed based on Level 3 inputs. The acquired trademarks, customer lists, below-market leases, above-market leases and non-compete agreements are subject to fair value measurements that were based primarily on significant inputs not observable in the market and thus represent Level 3 measurements. The Company recorded the fair values of acquired trademarks using a relief from royalty method. In the relief from royalty method, the fair value of the intangible asset is estimated to be the present value of the royalties saved because the company owns the intangible asset. Revenue projections and estimated useful life were used in estimating the fair value of the trademarks. The non-compete agreements were calculated using the with-or-without method, which utilizes the probability of these employees competing with the Company and revenue projections to calculate the valuation of non-competition agreements. The valuation of the customer list utilized a replacement cost approach, which provides an estimate of the fair value of an asset based on the estimated costs associated with creating a similar asset of like utility. The replacement cost valuation relies on estimates of the average cost to purchase names on a mailing list, as well as response rates. The valuation of the leases below and above market rent were performed using an income approach and were based upon market rent per square foot and market rate inflation.
Baskins Acquisition Holdings, LLC
Effective May 25, 2013, the Company completed the acquisition of 100% of the member interests in Baskins, including 30 stores and an online retail website. Baskins is a specialty western retailer with stores
F-15

Table of Contents
in Texas and Louisiana, and the acquisition expanded the Company's operations into these core markets. The goodwill represents the additional amounts paid in order to expand the Company's geographical presence.
The acquisition-date fair value of the consideration transferred totaled $37.7 million, which consisted of $36.0 million in cash and $1.7 million of contingent consideration. The $36.0 million of cash included $13.7 million paid to the members of Baskins, $2.2 million paid into an escrow account and $20.1 million to repay Baskins' outstanding debt. These payments were partially offset by $1.9 million, which represents the amount of cash on hand immediately prior to the closing of the acquisition. As of March 29, 2014, $1.7 million remained in an escrow account and is not included in the Company's consolidated balance sheet. Claims against the escrow account can be made until November 30, 2014. Due to the nature of the escrow account, the cash portion of the consideration transferred has been determined only provisionally and is subject to change pending the outcome of potential escrow claims.
The Company was obligated to make additional earnout payments, contingent on the achievement of milestones relating to 12-month store sales associated with three new stores for the periods beginning January 24, 2013, January 31, 2013 and February 20, 2013 at each of the three stores. The maximum amount payable upon achievement of the milestones was $2.1 million. Each of the milestones was achieved, and the Company made a cash payment of $2.1 million in the fourth quarter of fiscal 2014. As of the acquisition date, the Company estimated that these earnout payments would be $1.7 million, based on then existing facts and circumstances. The estimated fair value of this earnout was determined by using revenue projections and applying a discount rate to reflect the risk of the underlying conditions not being satisfied such that no payment would be due. The fair value measurement of the earnout was based primarily on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in ASC 820. A total of $0.4 million from the revaluation of contingent consideration was recorded in fiscal 2014 to selling, general and administrative expenses in the Company's consolidated statement of operations.
The total fair value of consideration transferred for the acquisition was allocated to the net tangible and intangible assets based upon their estimated fair values as of the date of the acquisition. The excess of the purchase price over the net tangible and intangible assets was recorded as goodwill. The goodwill is deductible for income tax purposes. Such estimated fair values require management to make estimates and judgments, especially with respect to intangible assets. The following table summarizes the estimated fair
F-16

Table of Contents
values of the assets acquired and liabilities assumed as of the acquisition date based on the preliminary purchase price (in thousands):

					
 	 	
 	 	At May 25, 2013
(Level 3)	 	
 	 	
Assets acquired:	 	 	 	 	
Cash and cash equivalents	 	$	1,935	 	
Current assets	 	 	22,083	 	
Property and equipment, net	 	 	5,850	 	
Intangible assets acquired	 	 	5,006	 	
Goodwill	 	 	15,064	 	
Other assets	 	 	109	 	
 	 	 	 	
Total assets acquired	 	 	50,047	 	
 	 	 	 	
Liabilities assumed:	 	 	 	 	
Other current liabilities	 	 	12,119	 	
Line of credit—current	 	 	10,259	 	
Notes payable—current	 	 	9,819	 	
Contingent consideration	 	 	1,740	 	
Above-market leases	 	 	83	 	
Capital lease obligation	 	 	138	 	
 	 	 	 	
Total liabilities assumed	 	 	34,158	 	
 	 	 	 	
Total purchase price	 	$	15,889	 	
 	 	
Definite-lived intangible assets are recorded at their fair value as of the acquisition date with amortization computed utilizing the straight-line method over the assets' estimated useful lives, with the exception of customer lists, which are amortized based on the estimated attrition rate. The period of amortization for trademarks is six months, non-compete agreements is four to five years, customer lists is five years, and below-market leases is two to 17 years. For leases under market rent, amortization is based on the discounted future benefits from lease payments under market rents.
Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred. Goodwill represents the additional amounts paid in order to expand the Company's geographical presence. The Company incurred $0.7 million of acquisition-related costs in fiscal 2014. The amount of net revenue and net loss of Baskins included in the Company's consolidated statements of operations from the acquisition date to March 29, 2014 were $63.4 million and $0.1 million, respectively.
Acquisitions from prior years
RCC Western Stores, Inc.
On August 31, 2012, the Company acquired 100% of the capital stock of RCC. The primary reason for the acquisition of RCC was to expand its retail operations into 11 additional states. The total purchase price of $43.5 million was paid in cash. The Company acquired $1.5 million in cash as part of the acquisition. Acquisition-related costs totaling $1.1 million are recorded within the consolidated statement of operations for fiscal 2013.
In connection with the acquisition of RCC, the Company entered into certain debt agreements in which loan fees of $1.2 million were incurred and are recorded as prepaid loan fees within other assets in the
F-17

Table of Contents
consolidated balance sheet as of March 30, 2013. In addition, the Company issued 11,869 shares of its common stock in connection with the acquisition for cash proceeds of $2.0 million.
Allocation of the purchase price for the acquisition of RCC was based on the fair value of the net assets that were acquired. As of August 31, 2012, the purchase price was allocated as follows (in thousands):

					
 	 	
 	 	Significant
unobservable
inputs
(Level 3)	 	
 	 	
Current assets	 	$	19,528	 	
Property and equipment	 	 	3,616	 	
Goodwill	 	 	31,103	 	
Intangible assets acquired	 	 	5,002	 	
Other assets	 	 	21	 	
 	 	 	 	
Total assets acquired	 	 	59,270	 	
 	 	 	 	
Current liabilities assumed	 	 	10,252	 	
Line of credit—current	 	 	5,405	 	
Below market lease liability	 	 	154	 	
 	 	 	 	
Total purchase price	 	$	43,459	 	
 	 	
Definite-lived intangible assets acquired include trademarks, customer list, non-compete agreements and below-market leases. The amount of net revenue and net loss of RCC included in the Company's consolidated statements of operations from the acquisition date to March 30, 2013 were $35.5 million and $0.5 million, respectively.
Boot Barn Holding Corporation
Effective December 12, 2011, the Company acquired the Predecessor. The primary reason for the Predecessor acquisition was to monetize the initial investment made by the Predecessor. Of the total purchase price, $88.1 million was paid in cash, and $2.6 million was contributed in the form of equity interests by new investors and former owners of the Predecessor. The Company acquired $2.5 million in cash as part of the transaction. Acquisition-related costs totaled $3.0 million and $7.3 million for the Successor and Predecessor periods, respectively, and are recorded within the fiscal 2012 consolidated statement of operations. All costs were incurred by Boot Barn Holding Corporation in the respective periods.
F-18

Table of Contents
Allocation of the purchase price for the Predecessor is based on estimates of the fair value of net assets acquired. As of December 11, 2011, the purchase price was allocated as follows (in thousands):

					
 	 	
 	 	Significant
unobservable
inputs
(Level 3)	 	
 	 	
Current assets	 	$	71,869	 	
Property and equipment	 	 	6,228	 	
Goodwill	 	 	46,930	 	
Intangible assets acquired	 	 	56,380	 	
Other assets	 	 	336	 	
 	 	 	 	
Total assets acquired	 	 	181,743	 	
 	 	 	 	
Current liabilities assumed	 	 	36,087	 	
Line of credit—current	 	 	21,692	 	
Below market lease liability	 	 	33,214	 	
 	 	 	 	
Total purchase price	 	$	90,750	 	
 	 	
The change in the carrying amount of goodwill is as follows (in thousands):

					
 	 	
Balance as of March 31, 2012	 	$	46,930	 	
Goodwill as a result of the RCC Acquisition	 	 	31,103	 	
 	 	 	 	
Balance as of March 30, 2013	 	 	78,033	 	
Goodwill as a result of the Baskins Acquisition	 	 	15,064	 	
 	 	 	 	
Balance as of March 29, 2014	 	$	93,097	 	
 	 	
Supplemental as adjusted data (unaudited)
The unaudited as adjusted statements of operations data below gives effect to the acquisitions described above, as if they had all occurred as of April 3, 2011. These amounts have been calculated after applying the Company's accounting policies and adjusting the results of Baskins, RCC and the Predecessor to reflect the effects of amortization of purchased intangible assets and acquired inventory valuation step-up, additional financing as of April 3, 2011 in order to complete the acquisitions, income tax expense and other transaction costs directly associated with the acquisitions such as legal, accounting and banking fees. The adjustments are based upon currently available information and certain assumptions that the Company believes are reasonable under the circumstances. Pre-acquisition net sales and net income numbers for acquired entities are derived from their books and records prepared prior to the acquisition. This as adjusted data is presented for informational purposes only and does not purport to be indicative of the
F-19

Table of Contents
results of future operations or of the results that would have occurred had the acquisitions taken place as of the date noted above.

														
 	 	
As adjusted net sales—unaudited
(in thousands)	 	March 29,
2014	 	March 30,
2013	 	(Successor)
December 12, 2011
to March 31, 2012	 	(Predecessor)
April 3, 2011 to
December 12, 2011	 	
 	 	
Net sales (as reported)	 	$	345,868	 	$	233,203	 	$	58,267	 	$	110,429	 	
Baskins	 	 	8,290	 	 	58,058	 	 	18,169	 	 	29,118	 	
RCC	 	 	—	 	 	21,503	 	 	16,595	 	 	31,246	 	
Boot Barn Holding Corporation	 	 	—	 	 	—	 	 	—	 	 	—	 	
 	 	 	 	
As adjusted net sales	 	$	354,158	 	$	312,764	 	$	93,031	 	$	170,793	 	

														
 	 	
As adjusted net income (loss)—unaudited
(in thousands)	 	March 29,
2014	 	March 30,
2013	 	(Successor)
December 12, 2011
to March 31, 2012	 	(Predecessor)
April 3, 2011 to
December 12, 2011	 	
 	 	
Net income (loss) (as reported)	 	$	5,660	 	$	680	 	$	(4,601	)	$	(660	)	
Baskins	 	 	580	 	 	396	 	 	468	 	 	(3,831	)	
RCC	 	 	(1,100	)	 	2,818	 	 	413	 	 	(7,108	)	
Boot Barn Holding Corporation	 	 	3,183	 	 	4,487	 	 	8,125	 	 	(15,794	)	
 	 	 	 	
As adjusted net income (loss)	 	$	8,323	 	$	8,381	 	$	4,405	 	$	(27,393	)	
 	 	
4.    Prepaid expenses and other current assets
Prepaid expenses and other current assets consisted of the following (in thousands):

								
 	 	
 	 	March 29,
2014	 	March 30,
2013	 	
 	 	
Prepaid rent and property taxes	 	$	2,096	 	$	1,331	 	
Prepaid advertsing	 	 	401	 	 	186	 	
Prepaid insurance	 	 	81	 	 	280	 	
Deferred taxes	 	 	4,748	 	 	2,452	 	
Income tax receivable	 	 	—	 	 	31	 	
Deferred loan fees—current	 	 	558	 	 	548	 	
Other	 	 	801	 	 	483	 	
 	 	 	 	
Total prepaid expenses and other current assets	 	$	8,685	 	$	5,311	 	
 	 	
F-20

Table of Contents
5.     Property and equipment, net
Property and equipment, net, consisted of the following (in thousands):

								
 	 	
 	 	March 29,
2014	 	March 30,
2013	 	
 	 	
Leasehold improvements	 	$	12,491	 	$	5,634	 	
Machinery and equipment	 	 	5,964	 	 	3,781	 	
Furniture and fixtures	 	 	9,373	 	 	4,085	 	
Construction in progress	 	 	754	 	 	104	 	
Vehicles	 	 	387	 	 	325	 	
 	 	 	 	
	 	 	28,969	 	 	13,929	 	
Less: Accumulated depreciation	 	 	(7,519	)	 	(3,193	)	
 	 	 	 	
Property and equipment, net	 	$	21,450	 	$	10,736	 	
 	 	
Depreciation expense was $4.6 million, $2.7 million, $0.7 million and $1.2 million for the periods ended March 29, 2014 and March 30, 2013, the Successor Period and the Predecessor Period, respectively. Amortization related to assets under capital lease is included in the above depreciation expense (see Note 11 "Leases").
6.     Intangible assets, net
Net intangible assets consisted of the following (in thousands):

														
 	 	
 	 	March 29, 2014	 	
 	 	Gross
carrying
amount	 	Accumulated
amortization	 	Net	 	Weighted
average
useful life	 	
 	 	
Intangible assets	 	 	 	 	 	 	 	 	 	 	 	 	 	
Trademarks	 	$	2,490	 	$	(2,490	)	$	—	 	 	0.9	 	
Customer list	 	 	7,300	 	 	(2,732	)	 	4,568	 	 	5.0	 	
Non-compete agreements	 	 	1,380	 	 	(500	)	 	880	 	 	4.7	 	
Below-market leases	 	 	5,318	 	 	(1,143	)	 	4,175	 	 	10.4	 	
 	 	 	 	 	 	 	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	
Total definite lived	 	 	16,488	 	 	(6,865	)	 	9,623	 	 	 	 	
Trademarks—indefinite lived	 	 	50,100	 	 	—	 	 	50,100	 	 	 	 	
 	 	 	 	 	 	 	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	
Total intangible assets	 	$	66,588	 	$	(6,865	)	$	59,723	 	 	 	 	

F-21

Table of Contents

														
 	 	
 	 	March 30, 2013	 	
 	 	Gross
carrying
amount	 	Accumulated
amortization	 	Net	 	Weighted
average
useful life	 	
 	 	
Intangible assets	 	 	 	 	 	 	 	 	 	 	 	 	 	
Trademarks	 	$	1,550	 	$	(1,338	)	$	212	 	 	1.1	 	
Customer list	 	 	6,700	 	 	(1,292	)	 	5,408	 	 	5.0	 	
Non-compete agreements	 	 	1,200	 	 	(211	)	 	989	 	 	4.9	 	
Below-market leases	 	 	2,032	 	 	(524	)	 	1,508	 	 	6.7	 	
 	 	 	 	 	 	 	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	
Total definite lived	 	 	11,482	 	 	(3,365	)	 	8,117	 	 	 	 	
Trademarks—indefinite lived	 	 	49,900	 	 	—	 	 	49,900	 	 	 	 	
 	 	 	 	 	 	 	
 ​	​	​	​	​	​	​	​	​	​	​	​	​	​	
Total intangible assets	 	$	61,382	 	$	(3,365	)	$	58,017	 	 	 	 	
 	 	
Amortization expense for intangible assets totaled $3.5 million, $2.9 million, $0.4 million and $0.1 million for the periods ended March 29, 2014 and March 30, 2013, the Successor Period, and the Predecessor Period, respectively, and is included in selling, general and administrative expenses.
As of March 29, 2014, estimated future amortization of intangible assets was as follows (in thousands):

					
 	 	
Fiscal year	 	 	 	
 	 	
2015	 	$	2,308	 	
2016	 	 	2,225	 	
2017	 	 	1,993	 	
2018	 	 	947	 	
2019	 	 	500	 	
Thereafter	 	 	1,650	 	
 	 	 	 	
Total	 	$	9,623	 	
 	 	
7.     Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):

								
 	 	
 	 	March 29,
2014	 	March 30,
2013	 	
 	 	
Accrued compensation	 	$	5,225	 	$	3,780	 	
Deferred revenue—gift cards and layaways	 	 	3,752	 	 	2,645	 	
Sales tax liability	 	 	2,900	 	 	1,816	 	
Accrued interest	 	 	1,738	 	 	1,761	 	
Sales award redemption liability	 	 	1,950	 	 	1,343	 	
Capital leases—short term	 	 	61	 	 	43	 	
Other	 	 	5,137	 	 	3,334	 	
 	 	 	 	
Total accrued expenses	 	$	20,763	 	$	14,722	 	
 	 	
F-22

Table of Contents
8.     Revolving credit facilities and long-term debt
Revolving credit facility (PNC Bank, N.A.)
On December 11, 2011, the Company obtained a collateral-based revolving line of credit with PNC Bank, N.A. (the "PNC Line of Credit"), which the Company amended on August 31, 2012 and May 31, 2013. These amendments increased the borrowing capacity from $35.0 million to $60.0 million as of May 31, 2013 with a Company option to increase the maximum to $70.0 million. The PNC Line of Credit is to be used for working capital and general corporate purposes, and has a maturity date of May 31, 2018. The available borrowing is based on the collective value of eligible inventory and credit card receivables multiplied by specific advance rates, and is recalculated weekly. The obligations under the PNC Line of Credit are secured by substantially all of the Company's assets. The PNC Line of Credit bears interest at a rate equal to the sum of (1) 0.75% if the average utilization (borrowings plus letters of credit) over the prior calendar quarter is less than 60% of the maximum borrowing capacity or 1.00% if the average utilization is greater than 60% of the maximum borrowing capacity, plus (2) the higher of (a) PNC's publicly announced commercial lending rate or the daily federal funds open rate plus 0.50%, or (b) the London Interbank Offered Rate ("LIBOR") for a period of one month plus 1.00%. The Company can also elect to use the Eurodollar (LIBOR) rate for the applicable interest period term (one, two, three or six months as elected by the Company) plus 0.75% if the average utilization is less than 60% of the maximum borrowing capacity or 1.00% if the average utilization is greater than 60% of the maximum borrowing capacity. As of March 29, 2014, a total of $28.6 million was outstanding under the PNC Line of Credit (including letters of credit) and there was $2.8 million of unused availability under the borrowing base formula. The outstanding borrowings as of March 29, 2014 consisted of $25.0 million outstanding at a rate of 1.91% and $3.6 million outstanding at a rate of 4.0%.
The PNC Line of Credit includes certain financial and nonfinancial covenants. The financial covenants include minimum fixed charge coverage ratio only when "excess availability" falls below specified floor levels, while nonfinancial covenants include restrictions on a number of other activities. As of March 29, 2014, the Company was not subject to the financial covenant based on the "excess availability" test.
$100 million term loan due May 2019 (Golub Capital LLC)
The Company entered into a loan and security agreement with Golub Capital LLC on May 31, 2013, as amended by the first amendment to term loan and security agreement dated September 23, 2013 (the "Golub Loan"). The Golub Loan consists of a term loan facility of $100.0 million. As of March 29, 2014, the outstanding balance on the Golub Loan was $99.5 million. The obligations under the Golub Loan are secured by substantially all of the Company's assets. The principal of the Golub Loan is payable in quarterly installments of $250,000 beginning on September 30, 2013 and ending on the maturity date of the term loan, which is May 31, 2019. The balance of the unpaid principal will be paid on the maturity date.
Interest on the Golub Loan is paid quarterly beginning on September 30, 2013. The Golub Loan bears interest calculated on either a base rate or the LIBOR rate. The base rate is a floating interest rate that is the sum of 4.75% plus the higher of (1) the prime rate, (2) the one-month LIBOR Rate plus 1% with a LIBOR floor of 1.25% or (3) the Federal Funds rate, plus 50 basis points. The LIBOR Rate is 5.75%, plus the LIBOR rate for a period of one, two, three, six, or, if available to all lenders, nine or 12 months (with a LIBOR floor of 1.25%), as elected by the Company. Interest is payable quarterly in arrears on the last day of each quarter. Interest charges are computed on the actual principal outstanding. As of March 29, 2014, the interest rate on the Golub Loan was 7.0%. Total interest expense incurred on the Golub Loan was $5.9 million for fiscal 2014.
F-23

Table of Contents
The Golub Loan requires the Company to meet certain financial and non-financial covenants. Financial covenants include a minimum interest coverage ratio and a maximum total leverage ratio. In addition, the term loan agreement also limits the amount that we can spend on capital expenditures per year. The Company was in compliance with all of its financial covenants as of March 29, 2014. The Golub Loan also requires that 50% of the Company's annual excess cash flow be used to make prepayments of outstanding loan amounts. The Company is also subject to early termination fees in certain instances of voluntary prepayments of the Golub Loan in excess of $10.0 million.
If there is an event of default under the Golub Loan, the principal and the interest accrued thereon may be declared immediately due and payable, subject to certain conditions set forth in the Golub Loan. Events of default under the Golub Loan include, but are not limited to, the Company becoming delinquent in making certain payments due under the Golub Loan, the Company incurring events of default with respect to certain other indebtedness or obligations, the Company undergoing a change in control or the Company becoming subject to certain bankruptcy proceedings or orders. As of March 29, 2014, no events of default had occurred.
7.5% term loan (PNC Bank, N.A.)
The Company entered into a loan and security agreement with PNC Bank N.A. on December 11, 2011, as amended by the first amendment to term loan agreement dated August 31, 2012 (the "PNC Term Loan"). The PNC Term Loan consisted of a term loan facility of $20.0 million. Interest accrued on outstanding amounts under the PNC Term Loan at the rate of 7.5% per annum, due monthly. Effective October 1, 2012, monthly principal payments of $166,667 were required. In May 2013, the Company converted all outstanding amounts on the PNC Term Loan to borrowings under the PNC Line of Credit.
12.5% senior subordinated term loans (related party term loans)
On December 11, 2011, the Company obtained senior subordinated term loans from certain subordinated lenders, in the aggregate amount of $25.0 million, bearing interest at the rate of 12.5%, due quarterly. The subordinated lenders are related parties. On August 31, 2012, the Company borrowed an additional $25.5 million from the subordinated lenders. As of March 30, 2013, the outstanding balance of the loans was $50.5 million. See Note 14 "Related party transactions". In connection with the closing of the Golub Loan in May 2013, the Company paid off all outstanding amounts on its senior subordinated term loans.
The Company incurred approximately $3.4 million of deferred loan fees related to the issuance of the Golub Loan and the PNC Line of Credit, which are being amortized to interest expense using the effective interest method over the term of the loan through May 31, 2019. The remaining balance of deferred loan fees as of March 29, 2014 is $2.9 million.
Aggregate contractual maturities for the Company's line of credit and long-term debt as of March 29, 2014 are as follows (in thousands):

					
 	 	
Fiscal year	 	 	 	
 	 	
2015	 	$	1,000	 	
2016	 	 	1,000	 	
2017	 	 	1,000	 	
2018	 	 	1,000	 	
2019	 	 	29,624	 	
Thereafter	 	 	94,500	 	
 	 	 	 	
Total	 	$	128,124	 	
 	 	
F-24

Table of Contents
9.     Stock-based compensation
On January 27, 2012, the Company approved the 2011 Equity Incentive Plan (the "2011 Plan"). The 2011 Plan authorized the Company to issue options to employees, consultants and directors to purchase up to a total of 150,000 shares of common stock. As of March 29, 2014, all awards granted by the Company have been nonqualified stock options. Options granted under the 2011 Plan have a life of 10 years and vest over service periods of five years or in connection with certain events as defined by the 2011 Plan.
For the year ended March 29, 2014, the Company granted certain members of management with options to purchase a total of 12,500 shares of common stock under the 2011 Plan. The total grant date fair value of stock options granted in fiscal years 2014 and 2013 and the Successor Period was $2.1 million, $3.5 million and $4.4 million, respectively, before applying an estimated forfeiture rate, with grant date fair values ranging from $165.97 to $173.05 per share in fiscal 2014, $85.66 to $107.69 per share in fiscal 2013, and $40.04 to $56.43 per share in the Successor Period. There were no stock options granted in the Predecessor Period. The Company is recognizing the expense relating to these stock options, net of estimated forfeitures, on a straight-line basis over the five-year service period of the awards. The exercise prices of these awards range between $100.00 and $280.14 and have a weighted-average fair value of $170.50 per share, $96.66 per share, and $48.23 per share for the fiscal years ended March 2014, March 30, 2013 and the Successor Period, respectively.
The stock option awards discussed above were measured at fair value on the grant date using the Black-Scholes option valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, the expected option term, expected volatility of the Company's stock price over the option's expected term, the risk-free interest rate over the option's expected term and the Company's expected annual dividend yield, if any. The Company's estimate of pre-vesting forfeitures, or forfeiture rate, was based on its internal analysis, which included the award recipients' positions within the Company and the vesting period of the awards. The Company will issue shares of common stock when the options are exercised.
Intrinsic value for stock options is defined as the difference between the market price of the Company's common stock on the last business day of the fiscal quarter and the weighted average exercise price of in-the-money stock options outstanding at the end of each fiscal period. The market value per share was $285.06 and $186.76 at March 29, 2014 and March 30, 2013, respectively. The following table summarizes the stock award activity for the fiscal year ended March 29, 2014 (aggregate intrinsic value in thousands):

														
 	 	
 	 	Stock
options	 	Grant date
weighted
average
exercise price	 	Weighted
average
remaining
contractual
life (in years)	 	Aggregate
intrinsic
value	 	
 	 	
Outstanding at March 30, 2013	 	 	88,100	 	$	177.36	 	 	 	 	 	 	 	
Granted	 	 	12,500	 	$	238.37	 	 	 	 	 	 	 	
Canceled, forfeited or expired	 	 	—	 	$	—	 	 	 	 	 	 	 	
 	 	 	 	
Outstanding at March 29, 2014	 	 	100,600	 	$	184.94	 	 	8.3	 	$	10,072	 	
 	 	 	 	
Vested and expected to vest at March 29, 2014	 	 	100,600	 	$	184.94	 	 	8.3	 	$	10,072	 	
 	 	 	 	
Exerciseable at March 29, 2014	 	 	28,858	 	$	161.34	 	 	7.9	 	$	3,570	 	
 	 	
F-25

Table of Contents
Stock-based compensation expense was $1.3 million, $0.8 million and $0.1 million for the fiscal years ended March 29, 2014 and March 30, 2013 and the Successor Period, respectively. There was no stock-based compensation expense in the Predecessor Period. Stock-based compensation expense of $0.2 million and $0.2 million was recorded as cost of goods sold in the fiscal years ended March 29, 2014 and March 30, 2013, respectively. All other stock-based compensation expense is included in selling, general and administrative expenses. As of March 29, 2014, there was $5.8 million of total unrecognized stock-based compensation expense related to unvested stock options. This cost has a weighted average remaining recognition period of 2.4 years.
The fair values of stock options granted in fiscal years 2014, 2013 and the Successor Period were estimated on the grant dates using the following assumptions:

											
 	 	
 	 	Fiscal year ended	 	
 	 	March 29,
2014	 	March 30,
2013	 	March 31,
2012	 	
 	 	
Expected option term (1)	 	 	6.5 years	 	 	6.5 years	 	 	6.5 years	 	
Expected volatility factor (2)	 	 	56%	 	 	58%	 	 	56%	 	
Risk-free interest rate (3)	 	 	1.91% - 2.03%	 	 	1.01%	 	 	2.37%	 	
Expected annual dividend yield (4)	 	 	0%	 	 	0%	 	 	0%	 	
 	 	
(1)    The Company has limited historical information regarding expected option term. Accordingly, the Company determined the expected life of the options using the simplified method.
(2)    Stock volatility for each grant is measured using the weighted average of historical daily price changes of the Company's competitors' common stock over the most recent period equal to the expected option term of the Company's awards.
(3)    The risk-free interest rate is determined using the rate on treasury securities with the same term as the expected life of the stock option as of the grant date.
(4)   The board of directors paid a dividend to stockholders in April 2014 (See Note 16 "Subsequent events"). The Company's board of directors does not plan to pay cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero.
A summary of the status of non-vested stock options as of March 29, 2014 and changes during fiscal 2014 is presented below:

								
 	 	
 	 	Shares	 	Weighted-
average
grant date
fair value	 	
 	 	
Nonvested at March 30, 2013	 	 	76,605	 	$	38.92	 	
Granted	 	 	12,500	 	$	170.50	 	
Vested	 	 	(17,363	)	$	68.19	 	
Nonvested shares forfeited	 	 	—	 	$	—	 	
 	 	 	 	 	 	 	
 ​	​	​	​	​	​	​	​	
Nonvested at March 29, 2014	 	 	71,742	 	$	88.86	 	
 	 	
10.   Commitments and contingencies
The Company has employment agreements with two key officers of the Company. One of the employment agreements expires in November 2015. This agreement automatically renews for successive one-year terms and will continue to do so unless otherwise terminated. The other employment agreement does not expire. The employee agreements provide for minimum salary levels and incentive bonuses that are payable under certain business conditions, as well as guaranteed payments in the event of termination or employment in
F-26

Table of Contents
certain circumstances. The future amounts payable under these employment agreements have not been recorded in the consolidated financial statements as of March 29, 2014 and March 30, 2013.
The Company is involved, from time to time, in litigation that is incidental to its business. The Company has reviewed these matters to determine if reserves are required for losses that are probable and reasonable to estimate in accordance with FASB ASC Topic 450, Contingencies . The Company evaluates such reserves, if any, based upon several criteria, including the merits of each claim, settlement discussions and advice from outside legal counsel, as well as indemnification of amounts expended by the Company's insurers or others, if any. In management's opinion, none of these legal matters, individually or in the aggregate, will have a material effect on the Company's financial position, results of operations or liquidity.
During the normal course of its business, the Company has made certain indemnifications and commitments under which the Company may be required to make payments for certain transactions. These indemnifications include those given to various lessors in connection with facility leases for certain claims arising from such facility leases, and indemnifications to directors and officers of the Company to the maximum extent permitted under the laws of the State of Delaware. The majority of these indemnifications and commitments do not provide for any limitation of the maximum potential future payments the Company could be obligated to make, and their duration may be indefinite. The Company has not recorded any liability for these indemnifications and commitments in the consolidated balance sheets as the impact is expected to be immaterial.
11.   Leases
Operating leases
The following is a schedule by year of non-cancelable future minimum rental payments under operating leases as of March 29, 2014 (in thousands):

											
 	 	
Fiscal year	 	Related
party (1)	 	Other	 	Total	 	
 	 	
2015	 	$	190	 	$	19,442	 	$	19,632	 	
2016	 	 	195	 	 	16,626	 	 	16,821	 	
2017	 	 	199	 	 	14,088	 	 	14,287	 	
2018	 	 	101	 	 	12,272	 	 	12,373	 	
2019	 	 	—	 	 	9,318	 	 	9,318	 	
Thereafter	 	 	—	 	 	23,971	 	 	23,971	 	
 	 	 	 	
Total	 	$	685	 	$	95,717	 	$	96,402	 	
 	 	
(1)    See Note 14 "Related party transactions".
Minimum rent payments consist primarily of future minimum lease commitments related to store operating leases. Minimum lease payments do not include common area maintenance, insurance or tax payments. Rent expense related to store operating leases was $25.0 million, $17.0 million, $3.9 million and $8.1 million for the fiscal years ended March 29, 2014 and March 30, 2013, the Successor Period and the Predecessor Period, respectively, and includes common area maintenance and contingent rent payments.
F-27

Table of Contents
Capital leases
As of March 29, 2014, the Company had nine non-cancelable capital leases with principal and interest payments due monthly. The gross value of assets under capital lease arrangements totals $0.2 million and is included as property and equipment in the consolidated balance sheets. Accumulated depreciation of these assets totaled $0.1 million as of March 29, 2014. The interest rates range from 0% to 12.0%. As of March 29, 2014, future minimum capital lease payments are as follows (in thousands):

					
 	 	
Fiscal year	 	 	 	
 	 	
2015	 	$	61	 	
2016	 	 	23	 	
2017	 	 	4	 	
 	 	 	 	
Total minimum lease payments	 	 	88	 	
 	 	 	 	
Less: Amount representing interest	 	 	(4	)	
 	 	 	 	
Present value of minimum lease payments	 	 	84	 	
Less: Current portion	 	 	(61	)	
 	 	 	 	
Long-term portion	 	$	23	 	
 	 	
Long-term lease related liabilities are as follows:

								
 	 	
 	 	March 29,
2014	 	March 30,
2013	 	
 	 	
Above-market leases	 	$	266	 	$	412	 	
Deferred rent—long-term	 	 	2,123	 	 	1,043	 	
Long-term portion of capital lease obligation	 	 	23	 	 	45	 	
 	 	 	 	
Total other liabilities	 	$	2,412	 	$	1,500	 	
 	 	
12.   Defined contribution plan
The Boot Barn 401(k) Plan (the "401(k) Plan") is a qualified plan under Section 401(k) of the Internal Revenue Code. The 401(k) Plan covers all employees that work a minimum of 1,000 hours per year and have been employed by the Company for at least one year. Contributions to the plan are based on certain criteria as defined in the agreement, governing the 401(k) Plan. Participating employees are allowed to contribute up to the statutory maximum set by the Internal Revenue Service. The Company provides a safe harbor matching contribution that matches 100% of employee contributions up to 3% of their respective wages and then 50% of further contributions up to 5% of their respective wages. Contributions to the plan and charges to selling, general and administrative expenses were $0.3 million, $0.2 million, $0.1 million and $0.1 million for the fiscal years ended March 29, 2014, March 30, 2013, the Successor Period and the Predecessor Period, respectively.
F-28

Table of Contents
13.   Income taxes
Income tax expense (benefit) consisted of the following:

														
 	 	
 	 	Fiscal year ended	 	
(in thousands)	 	March 29,
2014	 	March 30,
2013	 	(Successor)
December 12, 2011
to March 31, 2012	 	(Predecessor)
April 3, 2011 to
December 11, 2011	 	
 	 	
Current:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Federal	 	$	4,510	 	$	1,148	 	$	2,004	 	$	(17	)	
State	 	 	685	 	 	314	 	 	463	 	 	71	 	
 	 	 	 	
Total current	 	 	5,195	 	 	1,462	 	 	2,467	 	 	54	 	
Deferred:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Federal	 	 	(1,536	)	 	(530	)	 	(2,873	)	 	(102	)	
State	 	 	(338	)	 	(106	)	 	(641	)	 	(87	)	
 	 	 	 	
Total deferred	 	 	(1,874	)	 	(636	)	 	(3,514	)	 	(189	)	
 	 	 	 	
Total income tax expense (benefit)	 	$	3,321	 	$	826	 	$	(1,047	)	$	(135	)	
 	 	
The reconciliation between the Company's effective tax rate on income from operations and the statutory tax rate is as follows:

														
 	 	
 	 	Fiscal year ended	 	
 	 	March 29,
2014	 	March 30,
2013	 	(Successor)
December 12, 2011
to March 31, 2012	 	(Predecessor)
April 3, 2011 to
December 11, 2011	 	
 	 	
Expected provision at statutory U.S. federal tax rate	 	 	34.0%	 	 	34.0%	 	 	34.0%	 	 	34.0%	 	
State and local income taxes, net of federal tax benefit	 	 	4.5	 	 	4.2	 	 	2.0	 	 	1.5	 	
Change in tax rates	 	 	(0.1	)	 	(2.9	)	 	—	 	 	—	 	
State credits	 	 	(1.8	)	 	—	 	 	—	 	 	—	 	
Acquisition costs	 	 	—	 	 	20.0	 	 	(17.4	)	 	(18.7	)	
Other	 	 	0.4	 	 	(0.5	)	 	(0.1	)	 	0.2	 	
 	 	 	 	
Effective tax rate	 	 	37.0%	 	 	54.8%	 	 	18.5%	 	 	17.0%	 	
 	 	
Differences between the effective tax rate and the statutory rate relate primarily to state taxes and acquisition costs.
Deferred taxes reflect the net tax effects of the temporary differences between the carrying amount of assets and liabilities for financial reporting and the amount used for income tax purposes. Significant
F-29

Table of Contents
components of the Company's net deferred tax assets as of March 29, 2014 and March 30, 2013 consisted of the following (in thousands):

								
 	 	
 	 	March 29,
2014	 	March 30,
2013	 	
 	 	
Deferred tax assets:	 	 	 	 	 	 	 	
State taxes	 	$	1,002	 	$	972	 	
Accrued liabilities	 	 	813	 	 	381	 	
Award program liabilities	 	 	787	 	 	542	 	
Deferred revenue	 	 	434	 	 	277	 	
Inventory	 	 	2,997	 	 	1,565	 	
Stock options	 	 	879	 	 	358	 	
Other	 	 	257	 	 	171	 	
 	 	 	 	
Total deferred tax assets	 	 	7,169	 	 	4,266	 	
 	 	 	 	
Deferred tax liabilities:	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	(22,084	)	 	(21,037	)	
Prepaid expenses	 	 	(297	)	 	(315	)	
 	 	 	 	
Total deferred tax liabilities	 	 	(22,381	)	 	(21,352	)	
 	 	 	 	
Deferred income taxes, net	 	$	(15,212	)	$	(17,086	)	
 	 	
Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts expected to be realized. To this end, the Company has considered and evaluated its sources of taxable income, including forecasted future taxable income, and the Company has concluded that at this time no valuation allowance is required. The Company will continue to evaluate the need for a valuation allowance at each period end.
The Company applies ASC 740, which contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments. At March 29, 2014 and March 30, 2013, no amounts were necessary to be recorded for any unrecognized tax liabilities nor any tax benefits.
The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. To the extent that accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period that such determination is made. The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits as of March 29, 2014 and March 30, 2013.
The major jurisdictions in which the Company files income tax returns include the U.S. federal jurisdiction, as well as various state jurisdictions within the U.S. The Company's fiscal years 2010 through 2014 returns are subject to examination by the U.S. federal and various state tax authorities.
F-30

Table of Contents
14.   Related party transactions
Leases and other transactions
The Company has entered into a lease agreement for one of its stores for the fiscal years ended March 29, 2014 and March 30, 2013 and the Successor Period at a location owned by one minority stockholder of the Company. The Company had entered into lease agreements at several locations with several minority stockholders during the Predecessor Period. The Company paid $0.2 million, $0.2 million, $0.1 million and $1.0 million for these leases during the fiscal years ended March 29, 2014 and March 30, 2013, the Successor Period and the Predecessor Period, respectively. These lease payments are included in selling, general and administrative expenses in the consolidated statements of operations.
Related party loans
As of March 30, 2013, the Company had notes payable (see Note 8 "Revolving credit facilities and long-term debt") to the subordinated lenders who own common stock of the Company or its subsidiary, Boot Barn Holding Corporation. These notes were paid in full in May 2013. Interest and early termination fees paid to these entities totaled $3.6 million, $4.5 million, $0.1 million and $2.1 million for the fiscal years ended March 29, 2014 and March 30, 2013, the Successor Period and the Predecessor Period, respectively.
Payments relating to the purchase of Predecessor
In connection with the purchase of Predecessor, Freeman Spogli & Co. received an advisory services fee of $1.3 million for its services provided in structuring and arranging the recapitalization of the Company. In addition, one of our directors received $0.1 million in connection with his services provided to the Company in connection with the Recapitalization.
15.   Earnings (loss) per share
Earnings (loss) per share is computed under the provisions of FASB ASC Topic 260, Earnings Per Share . Basic earnings (loss) per share is computed based on the weighted average number of outstanding shares of common stock during the period. Diluted earnings (loss) per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method, whereby proceeds from such exercise, unamortized compensation and hypothetical excess tax benefits, if any, on share-based awards are assumed to be used by the Company to purchase the common shares at the average market price during the period. Dilutive potential shares of common stock represent outstanding stock options. The dilutive effect of stock options and restricted stock is applicable only in periods of net income.
F-31

Table of Contents
The components of basic and diluted earnings per share of common stock, in aggregate, for the fiscal years ended March 29, 2014, March 30, 2013, Successor Period and the Predecessor Period are as follows (in thousands, except per share amounts):

														
 	 	
 	 	Fiscal year ended	 	
 	 	March 29,
2014	 	March 30,
2013	 	(Successor)
December 12, 2011
to March 31, 2012	 	(Predecessor)
April 3, 2011 to
December 11, 2011	 	
 	 	
Net income (loss) attributed to Boot Barn Holdings, Inc. 	 	$	5,377	 	$	646	 	$	(4,371	)	$	(660	)	
 	 	 	 	
Weighted average basic shares outstanding	 	 	757	 	 	750	 	 	745	 	 	173	 	
Dilutive effect of stock options	 	 	10	 	 	—	 	 	—	 	 	—	 	
 	 	 	 	
Weighted average diluted shares outstanding	 	 	767	 	 	750	 	 	745	 	 	173	 	
 	 	 	 	
Basic earnings (loss) per share	 	$	7.10	 	$	0.86	 	$	(5.87	)	$	(3.82	)	
Diluted earnings (loss) per share	 	$	7.01	 	$	0.86	 	$	(5.87	)	$	(3.82	)	
 	 	
Awards to purchase approximately 42,394 and 88,100 shares of common stock during the fiscal years ended March 29, 2014 and March 30, 2013 were outstanding, but were not included in the computation of weighted average diluted common shares amounts as the effect of doing so would have been anti-dilutive.
Because the Company incurred net losses in the Successor Period, and the Predecessor Period, the potential dilutive effect of the Company's outstanding stock options was not included in the computation of diluted loss per share because these securities were anti-dilutive.
16.   Subsequent events
The accompanying consolidated financial statements were available to be issued on June 13, 2014, and the Company evaluated subsequent events known to it through that date.
Dividend payment
On April 11, 2014, the Company declared and subsequently paid a pro rata cash dividend to its stockholders totaling $39.9 million, made a cash payment of $1.4 million to holders of vested options, and lowered the exercise price of 76,742 unvested options by $50.00 per share. The board of directors of the Company was obligated under the antidilution provisions of the 2011 Equity Incentive Plan to approve the option repricing. Approval took place subsequent to the end of fiscal year ended March 29, 2014 and will be reflected in the consolidated financial statements.
Amended line of credit
On April 15, 2014, the Company amended the PNC Line of Credit to increase the borrowing capacity from $60.0 million to up to $70.0 million. All other material terms of the PNC Line of Credit remain unchanged from the description in Note 8 "Revolving credit facilities and long-term debt".
F-32

Table of Contents
Amended and restated term loan and security agreement (Golub Loan)
On April 14, 2014, the Company entered into an amended and restated term loan and security agreement for the Golub Loan. The amended and restated loan and security agreement increased the borrowings on the Golub Loan from $99.2 million outstanding at April 14, 2014 to $130.0 million. The obligations under the Golub Loan are secured by substantially all of the Company's assets and the Company's guarantors' assets. A provision allowing the Company to conduct an initial public offering was also added to the amended and restated loan and security agreement. The principal on the term loan will be payable in quarterly installments of $0.3 million made each calendar quarter and ending on the maturity date of the Golub Loan, which is May 31, 2019. The balance of the unpaid principal will be paid on the maturity date. All other material terms of the Golub Loan remain unchanged from what is described in Note 8 "Revolving credit facilities and long-term debt". The proceeds of the amendment to the Golub Loan were used to fund a portion of the $39.9 million dividend that was paid in April 2014.
F-33

Table of Contents

 Boot Barn Holdings, Inc. and Subsidiaries
Condensed consolidated balance sheets
(unaudited)
(in thousands, except share and per share data)

								
 	 	
 	 	June 28,
2014	 	March 29,
2014	 	
 	 	
Assets	 	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	 	
Cash and cash equivalents	 	 $	1,115	 	 $	1,118	 	
Accounts receivable	 	 	2,093	 	 	2,191	 	
Inventories	 	 	110,265	 	 	102,702	 	
Prepaid expenses and other current assets	 	 	10,616	 	 	8,685	 	
 	 	 	 	
Total current assets	 	 	124,089	 	 	114,696	 	
Property and equipment, net	 	 	21,877	 	 	21,450	 	
Goodwill	 	 	93,097	 	 	93,097	 	
Intangible assets, net	 	 	59,065	 	 	59,723	 	
Other assets	 	 	3,211	 	 	2,897	 	
 	 	 	 	
Total assets	 	 $	301,339	 	 $	291,863	 	
 	 	 	 	
Liabilities and stockholders' equity	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	
Line of credit	 	 $	42,594	 	 $	28,624	 	
Accounts payable	 	 	40,944	 	 	36,029	 	
Accrued expenses and other current liabilities	 	 	20,216	 	 	20,763	 	
Current portion of notes payable	 	 	1,308	 	 	1,000	 	
 	 	 	 	
Total current liabilities	 	 	105,062	 	 	86,416	 	
Deferred taxes	 	 	20,341	 	 	19,960	 	
Long-term portion of notes payable	 	 	128,692	 	 	98,500	 	
Other liabilities	 	 	2,114	 	 	2,412	 	
 	 	 	 	
Total liabilities	 	 	256,209	 	 	207,288	 	
Commitments and contingencies (see Note 6)	 	 	

Stockholders' equity:	 	 	

Common stock, $0.001 par value; June 28, 2014—1,500,000 shares authorized, 797,174 shares issued and outstanding; March 29, 2014—1,500,000 shares authorized, 757,174 shares issued and outstanding	 	 	1	 	 	1	 	
Additional paid-in capital	 	 	43,720	 	 	78,835	 	
Retained earnings	 	 	1,409	 	 	1,652	 	
 	 	 	 	
Total Boot Barn Holdings, Inc. stockholders' equity	 	 	45,130	 	 	80,488	 	
Non-controlling interest	 	 	—	 	 	4,087	 	
 	 	 	 	
Total stockholders' equity	 	 	45,130	 	 	84,575	 	
 	 	 	 	
Total liabilities and stockholders' equity	 	 $	301,339	 	 $	291,863	 	
 	 	
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-34

Table of Contents

 Boot Barn Holdings, Inc. and Subsidiaries
Condensed consolidated statements of operations
(unaudited)
(in thousands, except per share data)

								
 	 	
 	 	Thirteen weeks ended	 	
 	 	June 28,
2014	 	June 29,
2013	 	
 	 	
Net sales	 	 $	82,497	 	 $	64,574	 	
Cost of goods sold	 	 	55,607	 	 	42,146	 	
Amortization of inventory fair value adjustment	 	 	—	 	 	145	 	
 	 	 	 	
Total cost of goods sold	 	 	55,607	 	 	42,291	 	
 	 	 	 	
Gross profit	 	 	26,890	 	 	22,283	 	
Operating expenses:	 	 	 	 	 	 	 	
Selling, general and administrative expenses	 	 	21,497	 	 	18,845	 	
Acquisition-related expenses	 	 	—	 	 	671	 	
 	 	 	 	
Total operating expenses	 	 	21,497	 	 	19,516	 	
 	 	 	 	
Income from operations	 	 	5,393	 	 	2,767	 	
Interest expense, net	 	 	2,757	 	 	5,078	 	
Other income, net	 	 	18	 	 	8	 	
 	 	 	 	
Income (loss) before income taxes	 	 	2,654	 	 	(2,303	)	
Income tax expense (benefit)	 	 	1,241	 	 	(858	)	
 	 	 	 	
Net income (loss)	 	 	1,413	 	 	(1,445	)	
 	 	 	 	
Net income (loss) attributed to non-controlling interest	 	 	4	 	 	(72	)	
 	 	 	 	
Net income (loss) attributed to Boot Barn Holdings, Inc. 	 	 $	1,409	 	 $	(1,373	)	
 	 	 	 	
Net income (loss) per share:	 	 	 	 	 	 	 	
Basic shares	 	 $	(0.05	)	 $	(1.81	)	
Diluted shares	 	 $	(0.05	)	 $	(1.81	)	
Weighted average shares outstanding:	 	 	 	 	 	 	 	
Basic shares	 	 	766	 	 	757	 	
Diluted shares	 	 	766	 	 	757	 	
 	 	
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-35

Table of Contents

 Boot Barn Holdings, Inc. and Subsidiaries
Condensed consolidated statement of stockholders' equity
(unaudited)
(in thousands, except shares)

																				
 	 	
 	 	Common stock	 	Additional
paid-in
capital	 	Retained
earnings
(accumulated
deficit)	 	 	 	 	 	
 							 	Noncontrolling
interest	 	 	 	
 	 	Shares	 	Amount							 	Total	 	
 	 	
Balance at March 29, 2014	 	 	757,174	 	 $	1	 	 $	78,835	 	 $	1,652	 	 $	4,087	 	 $	84,575	 	
Net income	 	 	—	 	 	—	 	 	—	 	 	1,409	 	 	4	 	 	1,413	 	
Stock-based compensation expense	 	 	—	 	 	—	 	 	442	 	 	—	 	 	—	 	 	442	 	
Dividend paid	 	 	—	 	 	—	 	 	(39,648	)	 	(1,652	)	 	—	 	 	(41,300	)	
Reorganization and issuance of stock	 	 	40,000	 	 	—	 	 	4,091	 	 	—	 	 	(4,091	)	 	—	 	
 	 	 	 	
Balance at June 28, 2014	 	 	797,174	 	 $	1	 	 $	43,720	 	 $	1,409	 	 $	—	 	 $	45,130	 	
 	 	
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-36

Table of Contents

 Boot Barn Holdings, Inc. and Subsidiaries
Condensed consolidated statements of cash flows
(unaudited)
(in thousands)

								
 	 	
 	 	Thirteen weeks ended	 	
 	 	June 28,
2014	 	June 29,
2013	 	
 	 	
Cash flows from operating activities	 	 	 	 	 	 	 	
Net income (loss)	 	 $	1,413	 	 $	(1,445	)	
Adjustments to reconcile net income (loss) to net cash used in operating activities:	 	 	 	 	 	 	 	
Depreciation	 	 	1,400	 	 	841	 	
Stock-based compensation	 	 	442	 	 	210	 	
Amortization of intangible assets	 	 	658	 	 	739	 	
Amortization of deferred loan fees	 	 	194	 	 	2,042	 	
Loss on disposal of property and equipment	 	 	62	 	 	—	 	
Accretion of above market leases	 	 	(48	)	 	51	 	
Deferred taxes	 	 	381	 	 	339	 	
Amortization of inventory fair value adjustment	 	 	—	 	 	145	 	
Changes in operating assets and liabilities:	 	 	 	 	 	 	 	
Accounts receivable	 	 	98	 	 	54	 	
Inventories	 	 	(7,563	)	 	(2,456	)	
Prepaid expenses and other current assets	 	 	(1,931	)	 	(2,118	)	
Other assets	 	 	191	 	 	(17	)	
Accounts payable	 	 	4,830	 	 	(6,066	)	
Accrued expenses and other current liabilities	 	 	(547	)	 	(214	)	
Other liabilities	 	 	(249	)	 	(16	)	
 	 	 	 	
Net cash used in operating activities	 	 	(669	)	 	(7,911	)	
 	 	 	 	
Cash flows from investing activities	 	 	 	 	 	 	 	
Purchases of property and equipment	 	 	(1,803	)	 	(1,909	)	
Acquisition of business, net of cash acquired	 	 	—	 	 	(13,784	)	
 	 	 	 	
Net cash used in investing activities	 	 	(1,803	)	 	(15,693	)	
 	 	 	 	
Cash flows from financing activities	 	 	 	 	 	 	 	
Line of credit—net	 	 	13,970	 	 	17,639	 	
Proceeds from loan borrowings	 	 	30,750	 	 	100,000	 	
Repayments on debt and capital lease obligations	 	 	(269	)	 	(69,512	)	
Debt issuance fees	 	 	(682	)	 	(3,302	)	
Dividends paid	 	 	(41,300	)	 	—	 	
Repayment of debt in connection with acquisition	 	 	—	 	 	(20,078	)	
 	 	 	 	
Net cash provided by financing activities	 	 	2,469	 	 	24,747	 	
 	 	 	 	
Net increase (decrease) in cash and cash equivalents	 	 	(3	)	 	1,143	 	
Cash and cash equivalents, beginning of period	 	 	1,118	 	 	1,190	 	
 	 	 	 	
Cash and cash equivalents, end of period	 	 $	1,115	 	 $	2,333	 	
 	 	 	 	
Supplemental disclosures of cash flow information:	 	 	 	 	 	 	 	
Cash paid for income taxes	 	 $	1,123	 	 $	218	 	
Cash paid for interest	 	 $	2,013	 	 $	4,718	 	
Supplemental disclosure of non-cash activities:	 	 	 	 	 	 	 	
Unpaid purchases of property and equipment	 	 $	218	 	 $	239	 	
 	 	
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-37

Table of Contents

 Boot Barn Holdings, Inc. and Subsidiaries
Notes to condensed consolidated financial statements
(unaudited)
1.     Business operations
Boot Barn Holdings, Inc., formerly named WW Top Investment Corporation (the "Company") was formed on November 17, 2011, and is incorporated in the State of Delaware. The equity of the Company consists of 1,500,000 authorized shares and 797,174 issued and outstanding shares of common stock as of June 28, 2014, with 710,000 shares of common stock held by Freeman Spogli & Co. as of June 28, 2014. The shares of common stock have voting rights of one vote per share.
As of June 8, 2014, the Company held all of the outstanding shares of common stock of WW Holding Corporation, which held 95.0% of the outstanding shares of common stock of Boot Barn Holding Corporation. On June 9, 2014, WW Holding Corporation was merged with and into the Company and then Boot Barn Holding Corporation was merged with and into the Company. As a result of this reorganization, Boot Barn, Inc. became a direct wholly owned subsidiary of the Company, and the minority stockholders that formerly held 5.0% of Boot Barn Holding Corporation became holders of 5.0% of the Company. Net income (loss) attributed to non-controlling interest was recorded for all periods through June 9, 2014. Subsequent to June 9, 2014, there was no non-controlling interest recorded. On June 10, 2014, the legal name of the Company was changed from WW Top Investment Corporation to Boot Barn Holdings, Inc.
The Company operates specialty retail stores that sell western and work boots and related apparel and accessories. The Company operates retail locations throughout the U.S. and sells its merchandise via the internet. The Company operated a total of 155 stores in 24 states as of June 28, 2014 and 152 stores in 23 states as of March 29, 2014. As of June 28, 2014, all stores operate under the Boot Barn name (other than two stores which operate under the "American Worker" name).
2.     Summary of significant accounting policies
Basis of presentation
The Company's condensed consolidated financial statements as of June 28, 2014 and March 29, 2014 and for the thirteen weeks ended June 28, 2014 and June 29, 2013 are prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"), include the accounts of the Company and each of its subsidiaries, including Boot Barn, Inc., RCC Western Stores, Inc. ("RCC") and Baskins Acquisition Holdings, LLC ("Baskins"). All intercompany accounts and transactions among the Company and its subsidiaries have been eliminated in consolidation. Certain information and footnote disclosures normally included in the Company's annual consolidated financial statements have been condensed or omitted.
In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments that are of a normal and recurring nature necessary to fairly present the Company's financial position and results of operations and cash flows in all material respects as of the dates and for the periods presented. The results of operations presented in the interim condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the fiscal year ending March 28, 2015.
F-38

Table of Contents
Fiscal year
The Company reports its results of operations and cash flows on a 52- or 53-week basis, and its fiscal year ends on the Saturday closest to March 31. The years ending March 29, 2014 ("fiscal 2014") and March 30, 2013 ("fiscal 2013") each consisted of 52 weeks. Fiscal quarters contain thirteen weeks, with the exception of the fourth quarter of a 53-week fiscal year, which contains fourteen weeks. The first quarter of fiscal 2015 and fiscal 2014 ended on June 28, 2014 and June 29, 2013, respectively.
Comprehensive income
The Company does not have any components of other comprehensive income (loss) recorded within its condensed consolidated financial statements and, therefore, does not separately present a statement of comprehensive income (loss) in its condensed consolidated financial statements.
Segment reporting
GAAP has established guidance for reporting information about a company's operating segments, including disclosures related to a company's products and services, geographic areas and major customers. The Company operates in a single operating segment, which includes net sales generated from its retail stores and e-commerce website. All of the Company's identifiable assets are in the U.S.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Among the significant estimates affecting the Company's consolidated financial statements are those relating to revenue recognition, inventories, goodwill, intangible and long-lived assets, stock-based compensation and income taxes. Management regularly evaluates its estimates and assumptions based upon historical experience and various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. As of June 28, 2014, the Company had identified no indicators of impairment with respect to its goodwill, intangible and long-lived asset balances. To the extent actual results differ from those estimates, the Company's future results of operations may be affected.
Fair value of certain financial assets and liabilities
The Company follows FASB ASC Topic 820, Fair Value Measurements and Disclosures , ("ASC 820") which requires disclosure of the estimated fair value of certain assets and liabilities defined by the guidance as financial instruments. The Company's financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable and debt. ASC 820 defines the fair value of financial instruments as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants the measurement date. ASC 820 establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities.
•
Level 1 uses unadjusted quoted prices that are available in active markets for identical assets or liabilities. The Company's Level 1 assets include investments in money market funds.
F-39

Table of Contents
•
Level 2 uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similarly assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data. 

•
Level 3 uses one or more significant inputs that are unobservable and supported by little or no market activity, and reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation. The Company's Level 3 assets include certain acquired businesses and its Level 3 liability includes contingent consideration.
Cash and cash equivalents, accounts receivable and accounts payable are valued at fair value and are classified according to the lowest level input that is significant to the fair value measurement. As a result, the asset or liability could be classified as Level 2 or Level 3 even though there may be certain significant inputs that are readily observable. The Company believes that the recorded value of its financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or duration.
Although market quotes for the fair value of the outstanding debt arrangements discussed in Note 4 "Revolving credit facilities and long-term debt" are not readily available, the Company believes its carrying value approximates fair value due to the variable interest rates, which are Level 2 inputs. There were no financial assets or liabilities requiring fair value measurements as of June 28, 2014 on a recurring basis.
Recent accounting pronouncements
In July 2013, the FASB issued Accounting Standards Update ("ASU") No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). The amendments in this ASU provide guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. An unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward with certain exceptions, in which case such an unrecognized tax benefit should be presented in the financial statements as a liability. The amendments in this ASU do not require new recurring disclosures. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Companies may choose to apply this guidance retrospectively to each prior reporting period presented. The Company adopted this ASU on March 30, 2014, and the adoption of this guidance did not have a material impact on its consolidated financial statements.
In April 2014, the Financial Accounting Standards Board ("FASB") issued amended guidance on the presentation of financial statements and reporting discontinued operations and disclosures of disposals of components of an entity within property, plant and equipment. This guidance amends the definition of a discontinued operation and requires entities to disclose additional information about disposal transactions that do not meet the discontinued-operations criteria. The effective date is for disposals that occur in annual periods (and interim periods therein) beginning on or after December 15, 2014. Early adoption is permitted, and the Company intends to early adopt.
F-40

Table of Contents
In May 2014, the FASB and the IASB jointly issued a new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under GAAP. The revenue recognition standard will allow for the recognition of revenue when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard is effective for public entities for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted under GAAP. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.
In August 2014, the FASB issued a new accounting standard which requires management to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company expects to adopt this new standard for the fiscal year ending March 31, 2018 and the Company will continue to assess the impact on its consolidated financial statements.
3.     Business combinations
Baskins Acquisition Holdings, LLC
Effective May 25, 2013, the Company completed the acquisition of 100% of the member interests in Baskins, including 30 stores and an online retail website. Baskins is a specialty western retailer with stores in Texas and Louisiana, and the acquisition expanded the Company's operations into these core markets. The goodwill represents the additional amounts paid in order to expand the Company's geographical presence.
The acquisition-date fair value of the consideration transferred totaled $37.7 million, which consisted of $36.0 million in cash and $1.7 million of contingent consideration. The $36.0 million of cash included $13.7 million paid to the members of Baskins, $2.2 million paid into an escrow account and $20.1 million to repay Baskins' outstanding debt. These payments were partially offset by $1.9 million, which represents the amount of cash on hand immediately prior to the closing of the acquisition. As of June 28, 2014, $1.7 million remained in an escrow account and is not included in the Company's condensed consolidated balance sheet. Claims against the escrow account can be made until November 30, 2014. Due to the nature of the escrow account, the cash portion of the consideration transferred has been determined only provisionally and is subject to change pending the outcome of potential escrow claims.
The Company was obligated to make additional earnout payments, contingent on the achievement of milestones relating to 12-month store sales associated with three new stores for the periods beginning January 24, 2013, January 31, 2013 and February 20, 2013 at each of the three stores. The maximum amount payable upon achievement of the milestones was $2.1 million. Each of the milestones was achieved, and the Company made a cash payment of $2.1 million in the fourth quarter of fiscal 2014. As of the acquisition date, the Company estimated that these earnout payments would be $1.7 million, based on then existing facts and circumstances. The estimated fair value of this earnout was determined by using revenue projections and applying a discount rate to reflect the risk of the underlying conditions not being satisfied, such that no payment would be due. The fair value measurement of the earnout was based primarily on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in ASC 820. A total of $0.4 million from the revaluation of contingent consideration was recorded in the fourth quarter of fiscal 2014 to selling, general and administrative expenses in the Company's consolidated statement of operations.
F-41

Table of Contents
The total fair value of consideration transferred for the acquisition was allocated to the net tangible and intangible assets based upon their estimated fair values as of the date of the acquisition. The excess of the purchase price over the net tangible and intangible assets was recorded as goodwill. The goodwill is deductible for income tax purposes. Such estimated fair values require management to make estimates and judgments, especially with respect to intangible assets. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date based on the purchase price (in thousands):

					
 	 	
 	 	At May 25, 2013
(Level 3)	 	
 	 	
Assets acquired:	 	 	 	 	
Cash and cash equivalents	 	 $	1,935	 	
Current assets	 	 	22,083	 	
Property and equipment, net	 	 	5,850	 	
Intangible assets acquired	 	 	5,006	 	
Goodwill	 	 	15,064	 	
Other assets	 	 	109	 	
 	 	 	 	
Total assets acquired	 	 	50,047	 	
 	 	 	 	
Liabilities assumed:	 	 	 	 	
Other current liabilities	 	 	12,119	 	
Line of credit—current	 	 	10,259	 	
Notes payable—current	 	 	9,819	 	
Contingent consideration	 	 	1,740	 	
Above-market leases	 	 	83	 	
Capital lease obligation	 	 	138	 	
 	 	 	 	
Total liabilities assumed	 	 	34,158	 	
 	 	 	 	
Total purchase price	 	 $	15,889	 	
 	 	
Definite-lived intangible assets are recorded at their fair value as of the acquisition date with amortization computed utilizing the straight-line method over the assets' estimated useful lives, with the exception of customer lists, which are amortized based on the estimated attrition rate. The period of amortization for trademarks is six months, non-compete agreements is four to five years, customer lists is five years, and below-market leases is two to 17 years. For leases under market rent, amortization is based on the discounted future benefits from lease payments under market rents.
Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred. Goodwill represents the additional amounts paid in order to expand the Company's geographical presence. The Company incurred $0.7 million of acquisition-related costs during the thirteen weeks ended June 29, 2013. The amount of net revenue and net loss of Baskins included in the Company's condensed consolidated statements of operations from the acquisition date to June 29, 2013 were $4.4 million and $0.2 million, respectively.
Supplemental as adjusted data (unaudited)
The unaudited as adjusted statements of operations data below gives effect to the acquisitions described above, as if they had all occurred as of March 30, 2013. These amounts have been calculated after applying the Company's accounting policies and adjusting the results of Baskins, RCC Western Stores, Inc.
F-42

Table of Contents
and Boot Barn Holding Corporation to reflect the effects of amortization of purchased intangible assets and acquired inventory valuation step-up, additional financing as of April 3, 2011 in order to complete the acquisitions, income tax expense and other transaction costs directly associated with the acquisitions such as legal, accounting and banking fees. The adjustments are based upon currently available information and certain assumptions that the Company believes are reasonable under the circumstances. Pre-acquisition net sales and net income numbers for acquired entities are derived from their books and records prepared prior to the acquisition. This as adjusted data is presented for informational purposes only and does not purport to be indicative of the results of future operations or of the results that would have occurred had the acquisitions taken place as of the date noted above.
As adjusted net sales—unaudited

					
 	 	
(in thousands)	 	Thirteen weeks ended
June 29, 2013	 	
 	 	
Net sales (as reported)	 	 $	64,574	 	
Baskins	 	 	8,290	 	
 	 	 	 	
As adjusted net sales	 	 $	72,864	 	
 	 	
As adjusted net income—unaudited

					
 	 	
(in thousands)	 	Thirteen weeks ended
June 29, 2013	 	
 	 	
Net loss (as reported)	 	 $	(1,445	)	
Baskins	 	 	418	 	
RCC	 	 	(290	)	
Boot Barn Holding Corporation	 	 	1,320	 	
 	 	 	 	
As adjusted net income	 	 $	3	 	
 	 	
4.    Revolving credit facilities and long-term debt
Revolving credit facility (PNC Bank, N.A.)
On December 11, 2011, the Company obtained a collateral-based revolving line of credit with PNC Bank, N.A. (the "PNC Line of Credit"), which the Company amended on August 31, 2012 and May 31, 2013. On April 15, 2014, the Company amended the PNC Line of Credit to increase the borrowing capacity from $60.0 million to up to $70.0 million. All other material terms of the PNC Line of Credit remained unchanged. The PNC Line of Credit is to be used for working capital and general corporate purposes, and has a maturity date of May 31, 2018. The available borrowing under the PNC Line of Credit is based on the collective value of eligible inventory and credit card receivables multiplied by specific advance rates, and is recalculated weekly. The PNC Line of Credit bears interest at (1) 0.75% if the amount of borrowings are less than 60% of the maximum borrowing capacity or 1.00% if the total borrowings are greater than 60% of the maximum borrowing capacity, plus (2) the higher of the bank's public lending rate, federal funds open rate plus 0.50%, or daily LIBOR plus 1.00%. The Company can also elect to use the Eurodollar rate plus 0.75% if the amount of borrowings is less than 60% of the maximum borrowing capacity or 1.00% if the total borrowings are greater than 60% of the maximum borrowing capacity. As of June 28, 2014, the total amount available to borrow was $25.4 million and the outstanding balance was $42.6 million. The
F-43

Table of Contents
outstanding borrowings as of June 28, 2014 consisted of $41.0 million outstanding at a rate of 1.90% and $1.6 million outstanding at a rate of 4.0%.
The PNC Line of Credit includes certain financial and nonfinancial covenants. The financial covenants include minimum fixed charge coverage ratio only when "excess availability" falls below specified floor levels, while nonfinancial covenants include restrictions on a number of other activities. The Company was in compliance with its financial covenants as of June 28, 2014.
$130 million term loan due May 2019 (Golub Capital LLC)
The Company entered into a loan and security agreement with Golub Capital LLC on May 31, 2013, as amended by the first amendment to term loan and security agreement dated September 23, 2013 (the "Golub Loan"). On April 14, 2014, the Company entered into an amended and restated term loan and security agreement for the Golub Loan. The amended and restated loan and security agreement increased the borrowings on the Golub Loan from $99.2 million to $130.0 million. The obligations under the Golub Loan are secured by substantially all of the Company's assets and the Company's guarantors' assets. A provision allowing the Company to conduct an initial public offering was also added to the amended and restated loan and security agreement. The principal on the Golub Loan will be payable in quarterly installments of $327,000 made each calendar quarter and ending on the maturity date of the Golub Loan, which is May 31, 2019. The balance of the unpaid principal will be paid on the maturity date. All other material terms of the Golub Loan remain unchanged from the May 31, 2013 Golub Loan. The proceeds of the amendment to the Golub Loan were used to fund a portion of the $39.9 million dividend that was paid in April 2014 See Note 5, "Stock-based compensation". The outstanding balance of the Golub Loan was $130.0 million at June 28, 2014.
Interest on the Golub Loan is paid quarterly and is calculated on either a base rate or LIBOR. The base rate is a floating interest rate that is 4.75% plus the higher of (1) the prime rate, (2) the one-month London Interbank Offered Rate ("Published LIBOR") plus 1% with a Published LIBOR floor of 1.25% or (3) the Federal Funds rate, plus 50 basis points. LIBOR is 5.75%, plus the higher of 1.25% or Published LIBOR. Interest is payable quarterly in arrears on the last day of each quarter. Interest charges are computed on the actual principal outstanding. As of June 28, 2014, the interest rate on the Golub Loan was 7.0%. Total interest expense incurred on the Golub Loan for the three months ended June 28, 2014 was $2.2 million.
The Golub Loan requires the Company to meet certain financial and non-financial covenants. Financial covenants include a minimum interest coverage ratio and a maximum total leverage ratio. In addition, the term loan agreement also limits the amount that the Company can spend on capital expenditures per year. The Company was in compliance with all of its financial covenants as of June 28, 2014. The Golub Loan also requires that 50% of the Company's excess cash flow receipts be used to make prepayments of outstanding loan amounts. The Company is also subject to early termination fees in certain instances of voluntary prepayments of the Golub Loan in excess of $10.0 million.
If there is an event of default under the Golub Loan, the principal and the interest accrued thereon may be declared immediately due and payable, subject to certain conditions set forth in the amended and restated term loan and security agreement. Events of default under the Golub Loan include, but are not limited to, the Company becoming delinquent in making certain payments due under the Golub Loan, the Company incurring certain events of default with respect to other indebtedness or obligations, the Company undergoing a change in control or the Company becoming subject to certain bankruptcy proceedings or orders. As of June 28, 2014, no events of default had occurred.
F-44

Table of Contents
$20 million term loan (PNC Bank, N.A.)
The Company entered into a loan and security agreement with PNC Bank N.A. on December 11, 2011, as amended by the first amendment to term loan agreement dated August 31, 2012 (the "PNC Term Loan"). The PNC Term Loan included a term loan facility of $20.0 million. Interest accrued on outstanding amounts under the PNC Term Loan at the rate of 7.5% per annum, due monthly. Effective October 1, 2012, monthly principal payments of $166,667 were required. In connection with the closing of the Golub Loan in May 2013, the Company converted all outstanding amounts on the PNC Term Loan to borrowings under the PNC Line of Credit.
Senior subordinated term loans (related party term loans)
On December 11, 2011, the Company obtained senior subordinated term loans from certain subordinated lenders, in the aggregate amount of $25.0 million, bearing interest at the rate of 12.5%, due quarterly. The subordinated lenders were related parties. On August 31, 2012, the Company borrowed an additional $25.5 million from the subordinated lenders. See Note 9, "Related party transactions". In connection with the closing of the Golub Loan in May 2013, the Company paid off all outstanding amounts on its senior subordinated term loans.
The Company incurred approximately $4.0 million of deferred loan fees related to the issuance of the Golub Loan and the PNC Line of Credit, which are being amortized to interest expense using the effective interest method over the term of the loan through May 31, 2019. The remaining balance of deferred loan fees as of June 28, 2014 is $3.4 million.
Aggregate contractual maturities for the Company's line of credit and long-term debt as of June 28, 2014 are as follows (in thousands):

					
 	 	
Fiscal year	 	 	 	
 	 	
2015	 	 $	981	 	
2016	 	 	1,308	 	
2017	 	 	1,308	 	
2018	 	 	1,308	 	
2019	 	 	43,902	 	
Thereafter	 	 	123,787	 	
 	 	 	 	
Total	 	 $	172,594	 	
 	 	
5.     Stock-based compensation
On January 27, 2012, the Company approved the 2011 Equity Incentive Plan (the "2011 Plan"). The 2011 Plan authorized the Company to issue options to employees, consultants and directors to purchase up to a total of 150,000 shares of common stock. As of June 28, 2014, all awards granted by the Company have been nonqualified stock options. Options granted under the 2011 Plan have a life of 10 years and vest over service periods of five years or in connection with certain events as defined by the 2011 Plan.
On April 11, 2014, the Company declared and subsequently paid a pro rata cash dividend to its stockholders totaling $39.9 million, made a cash payment of $1.4 million to holders of vested options, and lowered the exercise price of 76,742 unvested options by $50.00 per share. The cash payments totaling $41.3 million reduced retained earnings to zero and reduced additional paid-in capital by $39.7 million. The Company's 2011 Equity Incentive Plan has nondiscretionary antidilution provisions that require the fair value of the option awards to be equalized in the event of an equity restructuring. Consequently, the board of directors of the Company was obligated under the antidilution provisions to approve the reduction of the exercise price on the unvested options and make the cash payment to the holders of vested options. No incremental stock-based compensation expense was recognized for the dividend for the vested options or reduction in exercise price for the unvested options.
F-45

Table of Contents
During the thirteen weeks ended June 28, 2014, the Company granted certain members of management options to purchase a total of 9,500 shares of common stock under the 2011 Plan. The total grant date fair value of stock options granted in the thirteen weeks ended June 28, 2014 was $1.5 million, before applying an estimated forfeiture rate, with grant date fair values per share ranging from $155.04 to $158.92. The Company is recognizing the expense relating to these stock options, net of estimated forfeitures, on a straight-line basis over the five-year service period of the awards. The exercise prices of these awards range between $278.55 and $285.06. No stock options were granted during the thirteen weeks ended June 29, 2013.
The fair values of stock options granted during the thirteen weeks ended June 28, 2014 were estimated on the grant dates using the following assumptions:

			
 	
 	 	Thirteen weeks ended
June 28, 2014	
 	
Expected option term (1)	 	6.5 years	
Expected volatility factor (2)	 	56%	
Risk-free interest rate (3)	 	2.03% - 1.97%	
Expected annual dividend yield (4)	 	0%	
 	
(1)    The Company has limited historical information regarding expected option term. Accordingly, the Company determined the expected life of the options using the simplified method.
(2)    Stock volatility for each grant is measured using the weighted average of historical daily price changes of the Company's competitors' common stock over the most recent period equal to the expected option term of the Company's awards.
(3)    The risk-free interest rate is determined using the rate on treasury securities with the same term
(4)   The board of directors paid a dividend to stockholders in April 2014. The Company's board of directors does not plan to pay cash dividends in the foreseeable future. Consequently, the Company used an expected dividend yield of zero.
The stock option awards discussed above were measured at fair value on the grant date using the Black-Scholes option valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, the expected option term, expected volatility of the Company's stock price over the option's expected term, the risk-free interest rate over the option's expected term and the Company's expected annual dividend yield, if any. The Company's estimate of pre-vesting forfeitures, or forfeiture rate, was based on its internal analysis, which included the award recipients' positions within the Company and the vesting period of the awards. The Company will issue shares of common stock when the options are exercised.
Intrinsic value for stock options is defined as the difference between the market price of the Company's common stock on the last business day of the fiscal quarter and the weighted average exercise price of in-the-money stock options outstanding at the end of each fiscal period. The estimated market value per share was $278.55 and $285.06 at June 28, 2014 and March 29, 2014, respectively. The decrease in market value between June 28, 2014 and March 29, 2014 was due to return of capital resulting from the dividend paid to stockholders and option holders during the thirteen weeks ended June 28, 2014, as discussed
F-46

Table of Contents
above. The following table summarizes the stock award activity for the thirteen weeks ended June 28, 2014 (aggregate intrinsic value in thousands):

														
 	 	
 	 	Stock
options	 	Grant date
weighted-
average
exercise
price (1)	 	Weighted
average
remaining
contractual
life (in years)	 	Aggregate
intrinsic
value	 	
 	 	
Outstanding at March 29, 2014	 	 	100,600	 	 $	149.28	 	 	 	 	 	 	 	
Granted	 	 	9,500	 	 $	255.66	 	 	 	 	 	 	 	
Canceled, forfeited or expired	 	 	—	 	 $	—	 	 	 	 	 	 	 	
 	 	 	 	
Outstanding at June 28 2014	 	 	110,100	 	 $	158.46	 	 	8.2	 	 $	13,222	 	
 	 	 	 	
Vested and expected to vest at June 28 2014	 	 	110,100	 	 $	158.46	 	 	8.2	 	 $	13,222	 	
 	 	 	 	
Exerciseable at June 28 2014	 	 	28,858	 	 $	161.34	 	 	7.6	 	 $	3,382	 	
 	 	
(1)    The grant date weighted-average exercise price reflects the reduction of the exercise price by $50.00 per share for the 76,742 unvested options that were part of the April 2014 dividend discussed above.
Stock-based compensation expense was $0.4 million and $0.2 million for the thirteen weeks ended June 28, 2014 and June 29, 2013, respectively. Stock-based compensation expense of $0.1 million and less than $0.1 million was recorded in cost of goods sold in the condensed consolidated statements of operations for the thirteen weeks ended June 28, 2014 and June 29, 2013, respectively. All other stock-based compensation expense is included in selling, general and administrative expenses in the condensed consolidated statements of operations. As of June 28, 2014, there was $6.9 million of total unrecognized stock-based compensation expense related to unvested stock options. This cost has a weighted-average remaining recognition period of 2.3 years.
A summary of the status of non-vested stock options as of June 28, 2014 and changes during the thirteen weeks ended June 28, 2014 is presented below:

								
 	 	
 	 	Shares	 	Weighted-
average
grant date
fair value	 	
 	 	
Nonvested at March 29, 2014	 	 	71,742	 	 $	88.86	 	
Granted	 	 	9,500	 	 $	157.08	 	
Vested	 	 	—	 	 $	—	 	
Nonvested shares forfeited	 	 	—	 	 $	—	 	
 	 	 	 	 	 	 	
 ​	​	​	​	​	​	​	​	
Nonvested at June 28, 2014	 	 	81,242	 	 $	96.84	 	
 	 	
6.     Commitments and contingencies
The Company has employment agreements with three key officers of the Company. One of the employment agreements expires in November 2015. This agreement automatically renews for successive one-year terms and will continue to do so unless otherwise terminated. The two other employment agreement do not expire. The employee agreements provide for minimum salary levels and incentive bonuses that are payable under certain business conditions, as well as guaranteed payments in the event of termination of employment in certain circumstances. The future amounts payable under these employment agreements
F-47

Table of Contents
have not been recorded in the condensed consolidated financial statements as of June 28, 2014 and March 29, 2014.
The Company is involved, from time to time, in litigation that is incidental to its business. The Company has reviewed these matters to determine if reserves are required for losses that are probable and reasonable to estimate in accordance with FASB ASC Topic 450, Contingencies . The Company evaluates such reserves, if any, based upon several criteria, including the merits of each claim, settlement discussions and advice from outside legal counsel, as well as indemnification of amounts expended by the Company's insurers or others, if any. In management's opinion, none of these legal matters, individually or in the aggregate, will have a material effect on the Company's financial position, results of operations, cash flows or liquidity.
During the normal course of its business, the Company has made certain indemnifications and commitments under which the Company may be required to make payments for certain transactions. These indemnifications include those given to various lessors in connection with facility leases for certain claims arising from such facility leases, and indemnifications to directors and officers of the Company to the maximum extent permitted under the laws of the State of Delaware. The majority of these indemnifications and commitments do not provide for any limitation of the maximum potential future payments the Company could be obligated to make, and their duration may be indefinite. The Company has not recorded any liability for these indemnifications and commitments in the condensed consolidated balance sheets, statements of operations or cash flows as the impact is expected to be immaterial.
7.     Income taxes
Income tax expense (benefit) for interim periods is based on an estimate of the annual effective tax rate adjusted to reflect the impact of discrete items. Significant management judgment is required in projecting ordinary income (loss) to estimate the Company's annual effective tax rate. The expected annual effective income tax rate was 40.1% and 37.3% for the thirteen weeks ended June 28, 2014 and June 29, 2013, respectively. The effective tax rate for the thirteen weeks ended June 29, 2013 reflects a discrete item related primarily to state taxes and acquisition costs.
8.     Related party transactions
Leases and other transactions
The Company has a lease agreement for one of its stores at a location owned by one minority stockholder of the Company. The Company paid less than $0.1 million for these leases during each of the thirteen weeks ended June 28, 2014 and June 29, 2013. These lease payments are included in selling, general and administrative expenses in the consolidated statements of operations.
Related party loans
As of March 30, 2013, the Company had notes payable (see Note 5, "Revolving credit facilities and long-term debt") to the subordinated lenders who own common stock of the Company. These notes were paid in full in May 2013. Interest and early termination fees paid to these entities totaled $3.6 million in the thirteen weeks ended June 29, 2013.
F-48

Table of Contents
9.     Earnings (loss) per share
Earnings (loss) per share is computed under the provisions of FASB ASC Topic 260, Earnings Per Share . Basic earnings (loss) per share is computed based on the weighted average number of outstanding shares of common stock during the period. Diluted earnings (loss) per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method, whereby proceeds from such exercise, unamortized compensation and hypothetical excess tax benefits, if any, on share-based awards are assumed to be used by the Company to purchase the common shares at the average market price during the period. Dilutive potential shares of common stock represent outstanding stock options. The dilutive effect of stock options and restricted stock is applicable only in periods of net income.
As discussed in Note 5, "Stock-based compensation", holders of vested stock options received a cash payment of $1.4 million, which the Company deducted from net income for purposes of the earnings per share calculation to determine the net income available to common shareholders. This resulted in a net loss available to common shareholders of $34,630 for the thirteen weeks ended June 28, 2014, which represents a basic loss per share of $0.05. Because all earnings were distributed, the impact of any potentially dilutive shares are antidilutive and therefore excluded from the weighted average diluted shares outstanding. Potentially dilutive options of 21,594 are therefore excluded from the weighted average diluted shares outstanding.
The components of basic and diluted loss per share of common stock, in aggregate, for the thirteen weeks ended June 28, 2014 and June 29, 2013 are as follows (in thousands, except per share amounts):

								
 	 	
 	 	Thirteen weeks ended	 	
 	 	June 28,
2014	 	June 29,
2013	 	
 	 	
Net income (loss) attributed to Boot Barn Holdings, Inc. 	 	 $	1,409	 	 $	(1,373	)	
Weighted average basic shares outstanding	 	 	766	 	 	757	 	
Dilutive effect of stock options	 	 	—	 	 	—	 	
 	 	 	 	
Weighted average diluted shares outstanding	 	 	766	 	 	757	 	
 	 	 	 	
Basic loss per share	 	 $	(0.05	)	 $	(1.81	)	
Diluted loss per share	 	 $	(0.05	)	 $	(1.81	)	
 	 	
Awards to purchase 33,957 shares and 23,826 shares of common stock during the thirteen weeks ended June 28, 2014 and June 29, 2013, respectively, were outstanding, but were not included in the computation of weighted average diluted common shares amounts as the effect of doing so would have been anti-dilutive.
10.   Subsequent events
The Company has evaluated subsequent events through September 17, 2014, the date these condensed consolidated financial statements were issued.
F-49

Table of Contents

                    shares

Common stock
Prospectus

					
J.P. Morgan	 	Piper Jaffray	 	Jefferies	

			
Wells Fargo Securities	 	Baird	
                       , 2014
Through and including                                             , 2014 (the 25th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Table of Contents

 Part II
Information not required in prospectus
Item 13.    Other expenses of issuance and distribution
The following table sets forth the fees and expenses (other than the underwriting discount) payable in connection with the issuance and distribution of the securities being registered. Except as otherwise noted, we will pay all of those amounts. All amounts are estimates except for the Securities and Exchange Commission, or SEC, registration fee and the Financial Industry Regulatory Authority, or FINRA, filing fee, and the New York Stock Exchange, or NYSE, listing fee.

					
 	 	
SEC registration fee	 	$	11,109	 	
FINRA filing fee	 	 	 	 	
NYSE listing fee	 	 	 	 	
Advisory fees	 	 	 	 	
Accounting fees and expenses	 	 	 	 	
Legal fees and expenses	 	 	 	 	
Printing and engraving expenses	 	 	 	 	
Transfer agent and registrar expenses	 	 	 	 	
Miscellaneous	 	 	 	 	
 	 	 	 	
Total	 	$	 	 	
 	 	
Item 14.    Indemnification of directors and officers
As permitted by Section 102 of the Delaware General Corporation Law, or the DGCL, our amended and restated certificate of incorporation, attached as Exhibit 3.1 hereto, provides that, to the fullest extent permitted by Delaware law, no director will be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director. Pursuant to Delaware law such protection would be unavailable for liability:
•
for any breach of a duty of loyalty to us or our stockholders; 

•
for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; 

•
for an act or omission for which the liability of a director is expressly provided by an applicable statute, including unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or 

•
for any transaction from which the director derived an improper benefit.
Our amended and restated certificate of incorporation also provides that if Delaware law is amended after the approval by our stockholders of the amended and restated certificate of incorporation to authorize corporate action further limiting or eliminating the personal liability of directors, then the liability of our directors will be limited or eliminated to the fullest extent permitted by Delaware law.
Section 145 of the DGCL authorizes a corporation's board of directors to grant, and authorizes a court to award, indemnity to officers, directors and other corporate agents. Our amended and restated bylaws, attached as Exhibit 3.2 hereto, further provide that we must indemnify our directors and officers to the fullest extent permitted by Delaware law. The amended and restated bylaws also authorize us to indemnify any of our employees or agents and permit us to secure insurance on behalf of any officer, director,
II-1

Table of Contents
employee or agent for any liability arising out of his or her action in that capacity, whether or not Delaware law would otherwise permit indemnification.
In addition, our amended and restated bylaws provide that we are required to advance expenses to our directors and officers as incurred in connection with legal proceedings against them for which they may be indemnified and that the rights conferred in the amended and restated bylaws are not exclusive.
The underwriters are obligated, under certain circumstances, pursuant to the underwriting agreement, a form of which is filed as Exhibit 1.1 hereto, to indemnify us and our directors and officers against certain liabilities under the Securities Act of 1933, as amended, or the Securities Act.
At present, there is no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.
We intend to enter into indemnification agreements with each of our directors and executive officers. These agreements, among other things, would require us to indemnify and advance expenses to each director and executive officer to the fullest extent permitted by Delaware law, the amended and restated certificate of incorporation and amended and restated bylaws, for expenses such as, among other things, attorneys' fees, judgments, fines, and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action by or in our right, arising out of the person's services as our director or executive officer or as the director or executive officer of any subsidiary of ours or any other company or enterprise to which the person provides services at our request. We also maintain directors' and officers' liability insurance.
The SEC has taken the position that personal liability of directors for violation of the federal securities laws cannot be limited and that indemnification by us for any such violation is unenforceable. The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder's investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions.
Item 15.    Recent sales of unregistered securities
Set forth below is information regarding securities sold by us within the past three years that were not registered under the Securities Act:
During the past three years, we have granted options to employees and directors under our 2011 Equity Incentive Plan to purchase an aggregate of 143,563 shares of our common stock at exercise prices ranging from $100.00 to $285.06 per share. During this period, none of these options were exercised. We were not subject to the reporting requirements of the Exchange Act at the time of issuance of any of these options, and the amount of options issued in any consecutive twelve-month period did not exceed $5.0 million and did not exceed the greater of 15% of our total assets or 15% of the outstanding amount of our common stock, each of which was greater than $1.0 million at the time of such issuances. Our 2011 Equity Incentive Plan, a copy of which was delivered to each recipient of options, constitutes a "written compensatory benefit plan". Accordingly, the issuance of these securities was deemed to be exempt from registration under the Securities Act in reliance on Rule 701 promulgated under Section 3(b) of the Securities Act as
II-2

Table of Contents
transactions by an issuer pursuant to benefit plans and contracts relating to compensation as provided under Rule 701.
On December 12, 2011, we issued 745,305 shares of our common stock in connection with our acquisition of Boot Barn Holding Corporation in the transaction that we refer to as the Recapitalization. These shares were issued to Freeman Spogli & Co. and other investors for cash in the amount of $100 per share and to certain holders of Boot Barn Holding Corporation in exchange for their shares of Boot Barn Holding Corporation with an aggregate value equal to the aggregate value (based on the same $100 per-share value) of the number of shares of our common stock issued to them. These shares were issued to a limited number of investors, all of which (other than Freeman Spogli & Co. and its related parties) had an existing relationship with the Boot Barn business, and all of which had sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment. All investors had adequate access to information regarding the business and represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof. There was no general solicitation of investors or advertising, and we did not pay or give, directly or indirectly, any commission or other remuneration, in connection with the offering of these shares. The certificates representing the securities contain a restrictive legend that prohibits transfers without registration or an applicable exemption. Accordingly, the issuance of these securities was deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act as transactions by an issuer not involving any public offering.
On August 31, 2012, we issued 11,869 shares of our common stock to entities affiliated with the Hartford Financial Services Group for cash in the amount of $168.50 per share. These shares were issued to a limited number of investors, all of which had an existing relationship with us, and all of which had sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment. All investors had adequate access to information regarding the business and represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof. There was no general solicitation of investors or advertising, and we did not pay or give, directly or indirectly, any commission or other remuneration, in connection with the offering of these shares. The certificates representing the securities contain a restrictive legend that prohibits transfers without registration or an applicable exemption. Accordingly, the issuance of these securities was deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act as transactions by an issuer not involving any public offering.
On June 9, 2014, we issued 40,000 shares of our common stock to the holders of common stock of Boot Barn Holding Corporation other than us in connection with the merger of Boot Barn Holding Corporation with and into us in the transaction that we refer to as the Reorganization. These shares were issued to a limited number of investors, all of which held shares of a wholly owned subsidiary holding company of ours that held all of the Boot Barn business, and all of which had sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment. The issued shares were exchanged on a pro rata basis for those subsidiary holding company shares, so the issued shares represented the same investment in the Boot Barn business already held by such investors, but in a different form. There was no general solicitation of investors or advertising, and we did not pay or give, directly or indirectly, any commission or other remuneration, in connection with the offering of these shares. The certificates representing the securities contain a restrictive legend that prohibits transfers without registration or an applicable exemption. Accordingly, the issuance of these securities was deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act as transactions by an issuer not involving any public offering.
II-3

Table of Contents
Item 16.    Exhibit and financial statement schedules
(a) Exhibits

				
 	
Number	 	Description	
 	
 	  1.1*	 	Form of Underwriting Agreement	
 	  3.1*	 	Second Amended and Restated Certificate of Incorporation of the Registrant	
 	  3.2*	 	Amended and Restated Bylaws of the Registrant	
 	  4.1*	 	Specimen Common Stock Certificate	
 	  4.2	 	Form of Registration Rights Agreement, by and among Boot Barn Holdings, Inc. and the stockholders listed therein	
 	  5.1*	 	Opinion of Bingham McCutchen LLP	
 	10.1*†	 	Boot Barn Holdings, Inc. 2014 Equity Incentive Plan	
 	10.2†	 	Boot Barn Holdings, Inc. 2011 Equity Incentive Plan	
 	10.3†	 	Boot Barn Holdings, Inc. 2007 Stock Incentive Plan	
 	10.4†	 	Employment Agreement, dated November 12, 2012, by and between Boot Barn, Inc. and James G. Conroy	
 	10.5†	 	Continued Employment Agreement, dated January 2, 2014, by and between Boot Barn, Inc. and Paul Iacono	
 	10.6†	 	Employment Agreement, effective as of May 11, 2014, by and between Boot Barn, Inc. and Laurie Grijalva	
 	10.7	 	Form of Director Indemnification Agreement	
 	10.8	 	Lease, dated June 25, 2010, by and between Boot Barn, Inc. and The Irvine Company LLC, in respect to the Company's Irvine, California headquarters	
 	10.9	 	First Amendment to Lease, dated March 29, 2013, by and between Boot Barn, Inc. and The Irvine Company LLC, in respect to the Company's Irvine, California headquarters	
 	10.10	 	Second Amended and Restated Revolving Credit and Security Agreement, dated May 31, 2013, by and among Boot Barn, Inc., Boot Barn Holdings, Inc., PNC Bank, National Association, and the lenders party thereto (the "Revolving Credit Agreement")	
 	10.11	 	First Amendment to the Revolving Credit Agreement, dated September 23, 2013	
 	10.12	 	Second Amendment to the Revolving Credit Agreement, dated April 15, 2014	
 	10.13	 	Amended and Restated Term Loan and Security Agreement, dated April 15, 2014, by and among Golub Capital LLC, Boot Barn, Inc., Boot Barn Holdings, Inc. and the lenders party thereto	
 	10.14	 	NSB Software as a Service Master Agreement, dated February 26, 2008, by and between Boot Barn, Inc. and NSB Retail Solutions Inc.	
 	10.15+	 	Carrier Agreement P720025535, effective as of September 30, 2013, by and between Boot Barn, Inc. and United Parcel Service Inc., including all Addendums thereto	
 	10.16+	 	Carrier Agreement P780025560, effective as of September 30, 2013, by and between Boot Barn, Inc. and United Parcel Service Inc., including all Addendums thereto	
 	21.1	 	List of Subsidiaries	
 	23.1*	 	Consent of Bingham McCutchen LLP (included in Exhibit 5.1)	
 	23.2	 	Consent of Deloitte & Touche LLP	
 	23.3	 	Consent of Mōd Advisors LLC	
 	24.1	 	Powers of Attorney (included in the signature page to this registration statement)	
 	
*      To be filed by amendment.
**     Previously filed.
†      Indicates management contract or compensation plan.
+      Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment and the omitted portions have been filed separately with the SEC.
II-4

Table of Contents
(b) Financial statement schedules
All schedules have been omitted because they are not required or because the required information is given in the financial statements or notes to those statements.
Item 17.    Undertakings
The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1)    For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2)    For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
II-5

Table of Contents

 Signatures
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Irvine, State of California, on September 29, 2014.

					
 	 	BOOT BARN HOLDINGS, INC.	

 	
By:	
 	
/s/ JAMES G. CONROY

James G. Conroy
 President, Chief Executive Officer and Director	

 Power of attorney
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Paul Iacono and Christian B. Johnson his true and lawful attorney-in-fact and agent with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to sign any registration statement for the same offering covered by the registration statement that is to be effective upon filing pursuant to Rule 462(b) promulgated under the Securities Act of 1933, as amended, and all post-effective amendments thereto, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

					
Name 	 	Title 	 	Date 	

 	

 	
/s/ JAMES G. CONROY

James G. Conroy	 	President, Chief Executive Officer and Director
(Principal Executive Officer)	 	September 29, 2014	

/s/ PAUL IACONO

Paul Iacono	
 	
Chief Financial Officer and Secretary
(Principal Financial Officer)	
 	
September 29, 2014	

/s/ CLEMENT H. PORTER

Clement H. Porter	
 	
Corporate Controller
(Principal Accounting Officer)	
 	
September 29, 2014	
II-6

Table of Contents

					
Name 	 	Title 	 	Date 	

 	

 	
/s/ GREG BETTINELLI

Greg Bettinelli	 	Director	 	September 29, 2014	

/s/ BRAD J. BRUTOCAO

Brad J. Brutocao	
 	
Director	
 	
September 29, 2014	

/s/ CHRISTIAN B. JOHNSON

Christian B. Johnson	
 	
Director	
 	
September 29, 2014	

/s/ BRENDA I. MORRIS

Brenda I. Morris	
 	
Director	
 	
September 29, 2014	

/s/ J. FREDERICK SIMMONS

J. Frederick Simmons	
 	
Director	
 	
September 29, 2014	

/s/ PETER STARRETT

Peter Starrett	
 	
Director	
 	
September 29, 2014	
II-7

Table of Contents

 Exhibit index

				
 	
Number	 	Description	
 	
 	  1.1*	 	Form of Underwriting Agreement	
 	  3.1*	 	Second Amended and Restated Certificate of Incorporation of the Registrant	
 	  3.2*	 	Amended and Restated Bylaws of the Registrant	
 	  4.1*	 	Specimen Common Stock Certificate	
 	  4.2	 	Form of Registration Rights Agreement, by and among Boot Barn Holdings, Inc. and the stockholders listed therein	
 	  5.1*	 	Opinion of Bingham McCutchen LLP	
 	10.1*†	 	Boot Barn Holdings, Inc. 2014 Equity Incentive Plan	
 	10.2†	 	Boot Barn Holdings, Inc. 2011 Equity Incentive Plan	
 	10.3†	 	Boot Barn Holdings, Inc. 2007 Stock Incentive Plan	
 	10.4†	 	Employment Agreement, dated November 12, 2012, by and between Boot Barn, Inc. and James G. Conroy	
 	10.5†	 	Continued Employment Agreement, dated January 2, 2014, by and between Boot Barn, Inc. and Paul Iacono	
 	10.6†	 	Employment Agreement, effective as of May 11, 2014, by and between Boot Barn, Inc. and Laurie Grijalva	
 	10.7	 	Form of Director Indemnification Agreement	
 	10.8	 	Lease, dated June 25, 2010, by and between Boot Barn, Inc. and The Irvine Company LLC, in respect to the Company's Irvine, California headquarters	
 	10.9	 	First Amendment to Lease, dated March 29, 2013, by and between Boot Barn, Inc. and The Irvine Company LLC, in respect to the Company's Irvine, California headquarters	
 	10.10	 	Second Amended and Restated Revolving Credit and Security Agreement, dated May 31, 2013, by and among Boot Barn, Inc., Boot Barn Holdings, Inc., PNC Bank, National Association, and the lenders party thereto (the "Revolving Credit Agreement")	
 	10.11	 	First Amendment to the Revolving Credit Agreement, dated September 23, 2013	
 	10.12	 	Second Amendment to the Revolving Credit Agreement, dated April 15, 2014	
 	10.13	 	Amended and Restated Term Loan and Security Agreement, dated April 15, 2014, by and among Golub Capital LLC, Boot Barn, Inc., Boot Barn Holdings, Inc. and the lenders party thereto	
 	10.14	 	NSB Software as a Service Master Agreement, dated February 26, 2008, by and between Boot Barn, Inc. and NSB Retail Solutions Inc.	
 	10.15+	 	Carrier Agreement P720025535, effective as of September 30, 2013, by and between Boot Barn, Inc. and United Parcel Service Inc., including all Addendums thereto	
 	10.16+	 	Carrier Agreement P780025560, effective as of September 30, 2013, by and between Boot Barn, Inc. and United Parcel Service Inc., including all Addendums thereto	
 	21.1	 	List of Subsidiaries	
 	23.1*	 	Consent of Bingham McCutchen LLP (included in Exhibit 5.1)	
 	23.2	 	Consent of Deloitte & Touche LLP	
 	23.3	 	Consent of Mōd Advisors LLC	
 	24.1	 	Powers of Attorney (included in the signature page to this registration statement)	
 	
*      To be filed by amendment.
**     Previously filed.
†      Indicates management contract or compensation plan.
+      Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment and the omitted portions have been filed separately with the SEC.

Exhibit 4.2
 
REGISTRATION RIGHTS AGREEMENT
 
by and among
 
BOOT BARN HOLDINGS, INC.
 
AND THE STOCKHOLDERS LISTED HEREIN

 

1.	DEFINITIONS	1	
 	 	 	
2.	REGISTRATION RIGHTS	4	
 	 	 	
3.	COPY OF AGREEMENT	15	
 	 	 	
4.	GOVERNING LAW	15	
 	 	 	
5.	WAIVER OF JURY TRIAL	15	
 	 	 	
6.	REPRESENTATIONS AND WARRANTIES	15	
 	 	 	
7.	SUCCESSORS AND ASSIGNS; NO WAIVERS; AMENDMENTS	15	
 	 	 	
8.	INTERPRETATION	16	
 	 	 	
9.	NOTICES	16	
 	 	 	
10.	FURTHER ASSURANCES	17	
 	 	 	
11.	INJUNCTIVE RELIEF; DISPUTES	17	
 	 	 	
12.	SEVERABILITY	17	
 	 	 	
13.	ENTIRE AGREEMENT	18	
 	 	 	
14.	COUNTERPARTS	18	
 	 	 	
Schedule 1            Addresses of Stockholders for Notice	 	

 
REGISTRATION RIGHTS AGREEMENT
 
THIS REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”) is made and entered into as of [ · ], by and among Boot Barn Holdings, Inc. (the “ Company ”) and the stockholders of the Company set forth on Exhibit A attached hereto and the signature pages to this Agreement (the “ Stockholders ”).
 
R E C I T A L S
 
A.    The Company and the Stockholders are parties to that certain Stockholders Agreement, dated December 12, 2011 (the “ Original Agreement ”).
 
B.    The Company and the Stockholders desire to replace the Original Agreement with this Agreement.
 
C.    The Company and the Stockholders desire to enter into this Agreement to establish certain registration rights relating to the shares of common stock of the Company.
 
A G R E E M E N T
The parties hereto agree as follows:
 
1.             Definitions .  As used in this Agreement, the following capitalized terms shall have the following meanings:
“ Affiliate ” means, with respect to any Person, any individual, corporation, general partnership, limited partnership, limited liability partnership, joint venture, association, limited liability company, joint stock company, trust, or unincorporated organization, that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with such Person; provided that, the Company and its Subsidiaries shall not be considered Affiliates of any FS Entity.  For the purposes of this definition, the term “control” when used with respect to any specified Person, shall mean the power to direct or cause the direction of the operation or management of such Person, directly or indirectly, whether through the ownership of voting securities, by contract, status as director, officer or other position, or otherwise; and the terms “controlling” and “controlled” have meanings correlative of the foregoing.
 
“ Agreement ” has the meaning set forth in the preamble.
 
“ Association ” has the meaning set forth in Section 12.
 
“ Board ” means the Board of Directors of the Company.
 
“Company ” has the meaning set forth in the preamble.
 
“ Company Stockholder ” shall mean each Stockholder that owns Common Stock.

 
“ Common Stock ” means the Company’s common stock, par value $[ · ] per share.
 
“ Demand Registration ” has the meaning set forth in Section 2.1 .
 
“ Excess Amount ” means, with respect to an underwritten offering, the number of Registrable Securities requested by a Stockholder or Stockholders to be sold pursuant to Section 2.1 or Section 2.2 which the managing Underwriter(s) determine exceeds the largest number of Registrable Securities which can successfully be sold in an orderly manner in such offering within a price range acceptable to holders of a majority of the Registrable Securities proposed to be sold in such underwritten offering.
 
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
 
“ FS Affiliates ” means FS Affiliates VI, L.P.
 
“ FS Entities ” means FSEP VI, FS Affiliates and their Permitted Transferees.
 
“ FS Group ” means FS Entities and their Affiliates (including related funds) and their respective related management companies, general partners, portfolio companies, and the officers, directors, employees, agents or representatives of the foregoing.
 
“ FS Principals ” means Brad J. Brutocao, Bradford M. Freeman, Benjamin D. Geiger, Todd W. Halloran, Jon D. Ralph, John M. Roth, J. Frederick Simmons, Ronald P. Spogli and William M. Wardlaw.
 
“ FSEP VI ” means FS Equity Partners VI, L.P.
 
“ Indemnified Party ” has the meaning set forth in Section 2.8 .
 
“ Indemnified Person ” has the meaning set forth in Section 2.6(a) .
 
“ Indemnifying Party ” has the meaning set forth in Section 2.8 .
 
“ Initial Public Offering ” means an underwritten public offering of common stock of the Company or any of its Subsidiaries which results in aggregate proceeds from the offering in excess of $50,000,000, but shall not include an offering registered on Form S-4 or Form S-8 (or any substitute form that is adopted by the Securities and Exchange Commission).
 
“ Inspectors ” has the meaning set forth in Section 2.4(g) .
 
“ Other Registration Rights Holders ” means any Persons who hereafter purchase Common Stock from the Company and enter into an agreement with the Company allowing such persons to join in the Demand Registrations and Piggy-Back Registrations hereunder.
 
2 

 
“ Other Stockholders ” means the Stockholders other than FSEP VI and FS Affiliates.
 
“ Permitted Transferee ” means (i) with respect to FSEP VI and the FS Entities, (A) any Affiliate of the FS Entities, (B) any investment fund or partnership that is organized and controlled by any of the FS Principals, (C) any limited or general partner in or employee of a fund or partnership referred to in subclause (B) or a member or manager of such a fund or partnership or any management company of such a fund or partnership, (D) any general or limited partner or employee of an FS Entity or any Permitted Transferee of an FS Entity, or (E) any member of the immediate family or to any family trust of any Person described in subclause (C) or (D), (ii) with respect to each of the Other Stockholders that is a natural person, (A) child (adopted or natural), grandchild or spouse of such Other Stockholder, or (B) any partnership, trust or other entity wholly owned by, or for the account or benefit of, such Other Stockholder or any child (adopted or natural), grandchild or spouse of such Other Stockholder, or the executor of such Other Stockholder’s estate, but only if the transferor retains the full, complete and irrevocable authority to act for or on behalf of such transferee with respect to transferred interests, including all voting and dispositive power, and (iii) with respect to each of the Other Stockholders who are not natural persons, to one or more of its Affiliates; provided any Permitted Transferee under clause (ii) or (iii) shall specifically agree that, notwithstanding anything contained in this Agreement to the contrary, such Permitted Transferee shall not further transfer their ownership interests to any other Person other than a Permitted Transferee of the original Other Stockholder.
 
“ Person ” shall mean any individual, corporation, general partnership, limited partnership, limited liability partnership, joint venture, association, limited liability company, joint stock company, trust, unincorporated organization or other entity.
 
“ Piggy-Back Registration ” shall have the meaning set forth in Section 2.2 .
 
“ Pro Rata Share ” of a Stockholder shall be a fraction, (i) the numerator of which shall be the total number of shares of Common Stock then held by the Stockholder and (ii) the denominator of which shall be the total number of shares of Common Stock then held by all Stockholders and Other Registration Rights Holders participating in the offering.
 
“ Records ” has the meaning set forth in Section 2.4(g) .
 
“ Register ,” “ Registered ” and “ Registration ” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement by the SEC.
 
“ Registrable Securities ” means (a) any Common Stock owned by a Stockholder as of the date hereof and (b) any securities issued or issuable with respect to such Common Stock referred to in clause (a) by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or reorganization.  As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (i) a registration statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities have been disposed of in accordance with
 
3 

 
such registration statement, (ii) such securities shall have been sold pursuant to Rule 144 or are otherwise eligible for sale under Rule 144 without any volume or manner of sale restriction, (iii) such securities have been transferred to any Person who is not a Permitted Transferee of the transferor, or (iv) such securities shall have ceased to be outstanding.
 
“ Requisite Share Number ” means the number of shares of Common Stock representing not less than Twenty Million Dollars ($20,000,000) in fair market value as determined in good faith by the Board.
 
“ Rule 144 ” means Rule 144 promulgated under the Securities Act, and any successor to or modification of such rule.
 
“ SEC ” shall mean the Securities and Exchange Commission.
 
“ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
 
“ Selling Holder ” means a Person who is selling or proposing to sell Registrable Securities pursuant to an effective registration statement filed under the Securities Act as contemplated by Section 2 .
 
“ Stockholders ” has the meaning set forth in the preamble.
 
“ Subsidiary ” means with respect to any Person, another Person in which such first Person owns, directly or indirectly, an amount of the voting securities, other voting ownership or voting partnership interests which is sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of such Person).
 
“ Suspension Period ” has the meaning set forth in Section 2.4 .
 
“ Underwriter ” means a securities dealer who purchases any Registrable Securities as principal in an underwritten offering and not as part of such dealer’s market-making activities.
 
“ Underwriting Agreement ” means the underwriting agreement, dated [•], 2014, by and among the Company, J.P. Morgan Securities LLC, Piper Jaffray & Co. and Jefferies & Company, Inc., as representatives of the several underwriters named in Schedule 1 thereto, and the Selling Stockholders (as defined in the Underwriting Agreement).
 
“ Withdrawal Election ” has the meaning set forth in Section 2.3(b) .
 
2.             Registration Rights .
 
2.1          Demand Registration .
 
(a)           Request for Registration .  At any time or from time to time after the date that is 180 days after the date hereof (or such earlier date (i) as would permit the
 
4 

 
Company to cause any filings required hereunder to be filed on the 180th day after the date hereof or (ii) as is permitted by waiver of the lock up provisions of the Underwriting Agreement), FSEP VI, on behalf of the FS Entities then owning, individually or in the aggregate, at least the Requisite Share Number, may make a written request to the Company for registration under the Securities Act of all or part of its or their Registrable Securities (a “ Demand Registration ”); provided , however , that FSEP VI must request that at least the Requisite Share Number of shares of the FS Entities be registered in such Demand Registration; and provided , further , that the Company shall not be obligated to effect more than three (3) Demand Registrations requested by FSEP VI on behalf of the FS Entities.  Only FSEP VI may initiate a Demand Registration on behalf of the FS Entities under this Section 2.1(a) and all actions to be taken in connection with such a Demand Registration shall be determined by FSEP VI in its sole discretion.  Any request for a Demand Registration permitted hereunder shall specify the number of shares of Registrable Securities proposed to be sold by the requesting party or parties and will also specify the intended method of disposition thereof.  The Company shall give written notice of such request for Demand Registration within ten (10) days after the receipt thereof to all Stockholders (and their Permitted Transferees) other than those who initiated such request.  If FSEP VI requests a Demand Registration meeting all of the foregoing requirements, each other Stockholder (and its Permitted Transferees) and each of the Other Registration Rights Holders shall be entitled to submit to the Company, within ten (10) days after receipt of the Company’s notice regarding the request for a Demand Registration, a written request to join in such Demand Registration, and if such a follow-on request is made, thereupon such other Stockholders (and their Permitted Transferees) or Other Registration Rights Holders who made such a follow-on request shall be entitled to include their Registrable Securities in such Demand Registration on a pro rata basis, determined based on the Pro Rata Share then held by the FS Entities (including Permitted Transferees thereof), the Other Stockholders (including Permitted Transferees thereof) and the Other Registration Rights Holders up to the number of Registrable Securities proposed to be sold in such Demand Registration, in each case subject to Section 2.3 .  The Company shall not have any right to sell securities for its own account in a Demand Registration.
 
(b)           Effective Registration .  A registration will not count as a Demand Registration (or request therefor) until the registration statement filed under the Securities Act with respect thereto has been declared effective by the SEC.
 
(c)           Underwritten Offering .  Unless the Company in its discretion determines otherwise, the offering of Registrable Securities pursuant to a Demand Registration shall be in the form of a firm commitment underwritten offering.  The Company and FSEP VI shall jointly select one or more nationally recognized firms of investment bankers to act as the managing Underwriter(s) in connection with such offering and shall jointly select any additional managers to be engaged in connection with the offering.
 
(d)           Required Delays .  Notwithstanding anything contained in this Section 2.1 to the contrary, if any request for Demand Registration is delivered at a time when (i) the Company has determined or is currently planning (and the Board has approved such determination or plan) to file a registration statement under the Securities Act with respect to an underwritten primary offering of Common Stock by the Company (so long as a registration statement under the Securities Act is filed with respect thereto within sixty (60) days of FSEP VI’s request for a Demand Registration), the Company may require FSEP VI to postpone
 
5 

 
such request until the expiration of the 90-day period following the effective date of such registration statement, or (ii) if the Board determines that such registration would adversely affect a material transaction to which the Company is or is proposed to be a party, or otherwise materially and adversely affect the Company or the public market for the Common Stock (it being understood that the ordinary effect of a Demand Registration on the market for securities does not meet the foregoing standard) (a “ Material Event Postponement ”), the Company, with the prior authorization of the Board, may require the requesting holders to postpone such request for an appropriate period ( provided , that all such postponements shall not collectively exceed ninety (90) days in any twelve (12) month period).  In the event of a Material Event Postponement, the Company shall deliver a certificate signed by its Chief Executive Officer, President or Chairman of the Board certifying the Company’s reasons for postponing the registration and shall effect such registration as promptly as practicable thereafter (subject in each instance to the limitation on the aggregate duration of such postponements provided in the preceding sentence).
 
2.2          Piggy-Back Registration .  If the Company proposes to file a registration statement under the Securities Act with respect to an offering by the Company for its own account or for the account of any of its security holders of any security of the same class as the Registrable Securities (other than a registration statement on Form S-4 or S-8 (or, in each case, any substitute or successor forms that may be adopted by the SEC), or a registration statement filed in connection with an exchange offer or offering of securities solely to the Company’s existing security holders), which registration and applicable law would permit the inclusion of such Registrable Securities pursuant to this Section 2.2 then, the Company shall give written notice of such proposed filing to the Stockholders (and their Permitted Transferees) as soon as practicable, and such notice shall offer such Stockholders (and their Permitted Transferees) the opportunity to register such number of shares of Registrable Securities as each such Stockholder (or Permitted Transferees) may request in writing within ten (10) days of receipt of such notice (which request shall specify the Registrable Securities intended to be disposed of by such Stockholder (or Permitted Transferee) and the intended method of distribution thereof), in each case subject to Section 2.3 (a “ Piggy-Back Registration ”).  The Company shall use reasonable best efforts to cause the managing Underwriter(s) of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration to be included on the same terms and conditions as any similar securities of the Company included therein to permit the sale or other disposition of such Registrable Securities in accordance with the intended method of distribution thereof.  Subject to Section 2.3(b) , any Stockholder shall have the right to withdraw its request for inclusion of its Registrable Securities in any Piggy-Back Registration by giving written notice to the Company of its request to withdraw within ten (10) days of its request for inclusion; provided , however , that the registration statement including such shares (a “ Piggy Back Registration Statement ”) has not yet been declared effective by the SEC.  The Company may withdraw a Piggy-Back Registration Statement at any time prior to the time it is declared effective by the SEC.
 
2.3          Reduction of Offering .
 
(a)           Notwithstanding anything contained herein, if the managing Underwriter(s) of an offering described in Section 2.1 or Section 2.2 determine that the size of the offering that the Stockholders, the Company or any other Persons intend to make is such that
 
6 

 
the success of the offering or the price at which the offering would reasonably be expected to occur would be significantly and adversely affected by inclusion of the full amount of Registrable Securities requested to be included, then (i) with respect to a Demand Registration, the Company shall not be required to include in such registration an amount of Registrable Securities requested to be included in such offering equal to the Excess Amount, and Registrable Securities shall be included in such Demand Registration as follows (A) first, all the Registrable Securities requested to be registered by the FS Entities shall be included, with the Registrable Securities requested by the Stockholders within the FS Entity group reduced by the same proportion, if necessary and (B) second, if additional Registrable Securities may be included in the Demand Registration, then any Registrable Securities requested to be included by any other Persons with registration rights under this Section 2 or otherwise, shall be included with all such Persons treated on a Pro Rata Basis (based on the number of Registrable Securities held by such other Persons), and (ii) in the case of a Piggy-Back Registration, if securities are being offered for the account of other Persons as well as the Company (other than pursuant to a Demand Registration), the securities the Company seeks to include shall have priority over securities sought to be included by any other Person (including the Stockholders) and, with respect to the Registrable Securities intended to be offered by Stockholders or Other Registration Rights Holders (other than in the case of a demand registration by such other Persons), the proportion by which the amount of such class of securities intended to be offered by Stockholders or Other Registration Rights Holders is reduced shall not exceed the proportion by which the amount of such class of securities intended to be offered by such other Persons is reduced (it being understood that with respect to the Stockholders, Other Registration Rights Holders and third parties, such reduction may be all of such class of securities).  The Company shall promptly provide written notice to the participating Stockholders of the managing Underwriter(s)’ determination of such a reduction in the size of the applicable offering and the effects thereof on such Stockholders.
 
(b)           If, as a result of the application of the proration provisions of Section 2.3(a) , any Stockholder shall not be entitled to include all Registrable Securities in a Demand Registration or Piggy-Back Registration that such Stockholder has requested to be included, such Stockholder may elect to withdraw its request to include all or any portion of its Registrable Securities in such registration by delivering written notice thereof to the Company within ten (10) days after its receipt of notice from the Company regarding the effects thereof on such Stockholder (a “ Withdrawal Election ”); provided , however , that a Withdrawal Election shall be irrevocable upon its delivery to the Company and, after making a Withdrawal Election, a Stockholder shall no longer have any right to include Registrable Securities in the registration as to which such Withdrawal Election was made.
 
2.4          Filings; Information .  Whenever any FS Entity requests that any Registrable Securities be registered pursuant to Section 2.1 , the Company shall use reasonable best efforts to effect the registration of such Registrable Securities in accordance with the
 
7 

 
intended method of disposition thereof as quickly as practicable, and in connection with any such request:
 
(a)           The Company shall, subject to Section 2.1(d) , as applicable, as expeditiously as possible prepare and file with the SEC a registration statement on any form for which the Company then qualifies and which form shall be available for the sale of the Registrable Securities to be registered thereunder in accordance with the intended method of distribution thereof, use reasonable best efforts to cause such filed registration statement to be declared effective as expeditiously as possible thereafter, and use reasonable best efforts to cause such registration statement to remain effective until the earlier of (i) ninety (90) days from the date such registration statement was declared effective or (ii) the date on which the sale of all Registrable Securities included therein has been completed.  If the Company receives multiple requests for registration in accordance with this Section 2 , then, except as provided in Section 2.1(a) , such requests shall be given priority based upon the order in which they were received.
 
(b)           The Company shall, prior to filing any registration statement, prospectus, or any amendment or supplement thereto as contemplated by this Section 2 , furnish to each Selling Holder, and each Underwriter, if any, of the Registrable Securities covered thereby, copies of each such document as proposed to be filed, together with exhibits thereto, which documents will be subject to review and approval by the foregoing, and thereafter furnish to such Selling Holder and Underwriter, if any, such number of copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such Selling Holder or Underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Selling Holder pursuant to such registration statement.
 
(c)           After the filing of the applicable registration statement, the Company shall promptly notify each Selling Holder of Registrable Securities covered by such registration statement of any stop order issued or threatened by the SEC and promptly take all reasonable actions required to prevent the entry of such stop order or to remove it if entered.
 
(d)           The Company shall use reasonable best efforts to (i) register or qualify the Registrable Securities under such other securities or blue sky laws of such jurisdictions in the United States as any Selling Holder reasonably (in light of such Selling Holder’s intended plan of distribution) requests and (ii) cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities in the United States as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be reasonably necessary or advisable to enable such Selling Holder to consummate the disposition of the Registrable Securities owned by such Selling Holder; provided , however , that the Company shall not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (d), (B) subject itself to taxation in any such jurisdiction or (C) consent to general service of process in any such jurisdiction where it would not otherwise be required to qualify but for this paragraph (d).
 
8 

(e)           The Company shall immediately notify each Selling Holder of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of any event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and promptly make available to each Selling Holder copies of any such supplement or amendment.
 
(f)            The Company shall enter into customary agreements (including, if applicable, an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities.
 
(g)           The Company shall deliver promptly to each Selling Holder of such Registrable Securities and each Underwriter, if any, subject to restrictions imposed by the United States federal government or any agency or instrumentality thereof, copies of all correspondence between the SEC and the Company, its counsel or auditors and all memoranda relating to discussions with the SEC or its staff with respect to the registration statement and make available for inspection by any Selling Holder of such Registrable Securities, any Underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other professional retained by any such Selling Holder or Underwriter (collectively, the “ Inspectors ”), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “ Records ”), subject to restrictions imposed by applicable law, as shall be reasonably necessary to enable them to conduct a reasonable due diligence investigation, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any Inspectors in connection with such registration statement.  Records which the Company determines, in good faith, to be confidential and which it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in such registration statement or (ii) the disclosure or release of such Records is requested or required pursuant to oral questions, interrogatories, requests for information or documents or a subpoena or other order from a court of competent jurisdiction or other process; provided , however , that prior to any disclosure or release pursuant to clause (ii), the Inspectors shall provide the Company with prompt notice of any such request or requirement so that the Company may seek an appropriate protective order or waive such Inspectors’ obligation not to disclose such Records; and provided , further , that if failing the entry of a protective order or the waiver by the Company permitting the disclosure or release of such Records, the Inspectors, upon advice of counsel, are compelled to disclose such Records, the Inspectors may disclose that portion of the Records which counsel has advised the Inspectors that the Inspectors are compelled to disclose. Each Selling Holder of such Registrable Securities agrees that information obtained by it solely as a result of such inspections (not including any information obtained from a third party who, insofar as is known to the Selling Holder after reasonable inquiry, is not prohibited from providing such information by a contractual, legal or fiduciary obligation to the Company) shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company or its Affiliates unless and until such is made available to the public in a manner compliant with Regulation FD under the Securities Act.  Each Selling Holder of such
 
9 

 
Registrable Securities further agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential.
 
(h)           The Company shall otherwise use reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering a period of twelve (12) months, beginning within three (3) months after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act.
 
(i)            The Company shall use reasonable best efforts to cause all such Registrable Securities to be listed on each national securities exchange or automated quotation system on which the same class of securities issued by the Company are then traded, listed or quoted (if any).
 
(j)            The Company may require each Selling Holder of Registrable Securities to promptly furnish in writing to the Company such information regarding the plan of distribution of the Registrable Securities as the Company may from time to time reasonably request and such other information as may be legally required in connection with such registration.
 
(k)           The Chairman of the Board of Directors of the Company, the Chief Executive Officer of the Company and other members of the management of the Company shall cooperate fully in any offering of Registrable Securities pursuant to Section 2.1 , including, without limitation, participation in meetings with potential investors, preparation of all materials for such investors, and making management of the Company available for “road show” presentations and similar selling efforts.
 
Each Selling Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.4(e) hereof, such Selling Holder will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Selling Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 2.4(e) hereof (such period during which a Selling Holder is required to refrain from disposition of Registrable Securities, a “ Suspension Period ”), and, if so directed by the Company, such Selling Holder will deliver to the Company all copies, other than permanent file copies then in such Selling Holder’s possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice.  In the event the Company shall give such notice, the Company shall extend the period during which such registration statement shall be maintained effective (including the period referred to in Section 2.4(a) hereof) by the number of days during the period from and including the date of the giving of notice pursuant to Section 2.4(e) hereof to the date when the Company shall make available to the Selling Holders of Registrable Securities covered by such registration statement a prospectus supplemented or amended to conform with the requirements of Section 2.4(e) hereof.
 
10 

 
2.5          Registration Expenses .  In connection with any Demand Registration pursuant to Section 2.1 and any registration statement filed pursuant to Section 2.2 , the Company shall pay the following registration expenses incurred in connection with the registration thereunder, whether or not such registration becomes effective:  (i) all registration and filing fees, (ii) all fees and expenses of compliance with securities or blue sky laws (including fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities), (iii) all printing expenses, (iv) all of the Company’s internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), (v) all fees and expenses, if any, incurred in connection with the listing of the Registrable Securities as provided in Section 2.4(i) , (vi) all fees and disbursements of counsel for the Company and all fees and expenses of the Company’s independent registered public accounting firm and other auditors retained by the Company, (vii) all fees and expenses of any special experts retained by the Company in connection with such registration, and (viii) with respect to a Demand Registration, the reasonable fees and expenses of one counsel (who shall be reasonably acceptable to the Company) for all of the Selling Holders (in addition to counsel for the Company), with such counsel selected by FSEP VI.  The Company shall have no obligation to pay any underwriting fees, discounts or commissions attributable to the sale of Registrable Securities by the Selling Holders, or any other out-of-pocket expenses of the Selling Holders.
 
2.6          Indemnification by the Company .
 
(a)           The Company agrees to indemnify and hold harmless each Selling Holder, its officers, directors and agents, and each Person, if any, who controls such Selling Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, an “ Indemnified Person ”) from and against any loss, claim, damage or liability and any action in respect thereof to which such Indemnified Person may become subject under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus (including free writing prospectus) relating to the Registrable Securities (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or arises out of, or is based upon, any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse upon demand each Indemnified Person for any legal and other expenses reasonably incurred by that Indemnified Person in investigating or defending or preparing to defend against any such loss, claim, damage, liability or action.  The Company also agrees to indemnify any Underwriters of the Registrable Securities, their officers and directors and each Person who controls such Underwriters on substantially the same basis as that of the indemnification of the Selling Holders provided in this Section 2.6 .
 
(b)           The indemnity agreement contained in Section 2.6(a) shall not apply to amounts paid in settlement of any such loss, claim, damage or liability and any action in respect thereof if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld, conditioned or delayed), nor shall the Company be liable in any such case for any loss, claim, damage, liability and any action in respect thereof to the extent that it arises from or is based upon written information relating to the Indemnified Person furnished expressly for use in connection with such registration by such Person, nor shall the
 
11 

 
Company be liable to any Person for any such loss, claim, damage or liability and any action in respect thereof to the extent it arises from or is based upon (a) any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus relating to the Registrable Securities delivered by such Person after such Person had received written notice from the Company pursuant to Section 2.4(e) that such registration statement or prospectus contained such untrue statement or alleged untrue statement of a material fact and stating specifically that a Suspension Period is then in effect, (b) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading after such Person has received written notice from the Company pursuant to Section 2.4(e) that such registration statement or prospectus contained such omission or alleged omission and stating specifically that a Suspension Period is then in effect, or (c) the failure of such Person to deliver any preliminary or final prospectus, or any amendments or supplements thereto, required under applicable securities laws, including the Securities Act, to be so delivered, provided that a sufficient number of copies thereof had been provided by the Company to such Person.
 
2.7          Indemnification by Selling Holders .  Each Selling Holder agrees, severally but not jointly, to indemnify and hold harmless the Company, its officers, directors and agents and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Selling Holder, but only with reference to information related to such Selling Holder furnished in writing by such Selling Holder or on such Selling Holder’s behalf expressly for use in any registration statement or prospectus relating to the Registrable Securities, or any amendment or supplement thereto, or any preliminary prospectus.  Each Selling Holder also agrees to indemnify and hold harmless Underwriters of the Registrable Securities, their officers and directors and each Person who controls such Underwriters on substantially the same basis as that of the indemnification of the Company provided in this Section 2.7 .  In no event, however, shall any indemnity obligation under this Section 2.7 exceed the net proceeds from the offering received by such Selling Holder.
 
2.8          Conduct of Indemnification Proceedings .  Promptly after receipt by any Person in respect of which indemnity may be sought pursuant to Section 2.6 or Section 2.7 (an “ Indemnified Party ”) of notice of any claim or the commencement of any action, the Indemnified Party shall, if a claim in respect thereof is to be made against the person against whom such indemnity may be sought (an “ Indemnifying Party ”) notify the Indemnifying Party in writing of the claim or the commencement of such action provided that the failure to notify the Indemnifying Party shall not relieve it from any liability which it may have to an Indemnified Party except to the extent of any actual prejudice resulting therefrom.  If any such claim or action shall be brought against an Indemnified Party, and it shall notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled to participate therein, and, to the extent that it wishes, jointly with any other similarly notified Indemnifying Party, to assume the defense thereof with counsel satisfactory to the Indemnified Party.  After notice from the Indemnifying Party to the Indemnified Party of its election to assume the defense of such claim or action, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided , however , that the Indemnified Party shall have the right to employ separate counsel to represent the Indemnified Party and its controlling Persons who may
 
12 

 
be subject to liability arising out of any claim in respect of which indemnity may be sought by the Indemnified Party against the Indemnifying Party, but the fees and expenses of such counsel shall be for the account of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) based upon the advice of counsel of such Indemnified Party representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them.  The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent (which consent shall not be unreasonably withheld, conditioned or delayed), but if settlement is made with such consent or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify the Indemnified Party from and against any loss, claim, damage, or liability by reason of such settlement or judgment.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any claim or pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding.
 
2.9          Contribution .  If the indemnification provided for in Sections 2.6 , 2.7 , 2.8 or 2.9 is unavailable to, or is insufficient to hold harmless, the Indemnified Parties in respect of any losses, claims, damages or liabilities referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages or liabilities (i) as between the Company and the Selling Holders on the one hand and the Underwriters, if any, on the other, in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Holders on the one hand and the Underwriters on the other from the offering of the Registrable Securities, or if such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits but also the relative fault of the Company and the Selling Holders on the one hand and of the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations and (ii) as between the Company on the one hand and each Selling Holder on the other, or as among the Selling Holders, as the case may be, in such proportion as is appropriate to reflect the relative fault of the Company and of each Selling Holder in connection with such statements or omissions, as well as any other relevant equitable considerations; provided , however , that no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) by a court of competent jurisdiction shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.  The relative benefits received by the Company and the Selling Holders on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total proceeds from the offering (net of underwriting discounts and commissions but before deducting expenses) received by the Company and the Selling Holders bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the prospectus.  The relative fault of the Company and the Selling Holders on the one hand and of the Underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Selling Holders or by the Underwriters.  The relative fault of the Company on the one hand and of each Selling Holder on the other, and with respect to the Selling Holders
 
13 

 
among themselves, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
 
The Company and the Selling Holders agree that it would not be just and equitable if contribution pursuant to this Section 2.9 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph.  The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages or liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 2.9 , no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and no Selling Holder shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities of such Selling Holder were offered to the public (less underwriting discounts and commissions) exceeds the amount of any damages which such Selling Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.  Each Selling Holder’s obligations to contribute pursuant to this Section 2.9 are several in that proportion which the net proceeds of the offering received by such Selling Holder bears to the total net proceeds of the offering received by all the Selling Holders, and not joint.
 
2.10        Participation in Underwritten Registrations .  No Person may participate in any underwritten registration hereunder unless such Person (a) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and this Section 2 .
 
2.11        Rule 144 .  The Company covenants that it shall use reasonable best efforts to file any reports required to be filed by it under the Exchange Act and that it shall take such further action as any Stockholder (or Permitted Transferee) may reasonably request, all to the extent reasonably required from time to time to enable Stockholders (and Permitted Transferees) to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144, as such rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC.  Upon the request of any Stockholder (or Permitted Transferee), the Company shall deliver to such Stockholder (or Permitted Transferee) a written statement as to whether it has complied with such requirements.
 
14 

 
2.12        Holdback Agreements .
 
(a)           Each Stockholder agrees not to effect any sale or distribution of the security being registered or of a similar security of the Company, or any securities convertible into or exchangeable or exercisable for such securities, including a sale pursuant to Rule 144, during the 14 days prior to, and during such period as is required by a managing underwriter beginning on and continuing after the effective date of the registration statement filed by the Company (except as part of such registration) in the case of an underwritten public offering, which period shall be 180 days after the closing of an Initial Public Offering, or such other lesser period as is required by the managing underwriter(s) thereof.
 
(b)           With respect to a Demand Registration effected pursuant to Section 2.1 , the Company agrees (i) not to effect any sale or distribution of any securities similar to those being registered in accordance with Section 2.1 , or any securities convertible into or exchangeable or exercisable for such securities, during the 14 days prior to, and during such period as is required by a managing underwriter beginning on and continuing after the effective date of any registration statement (except as part of a registration statement where the Stockholder making such Demand Registration consents) or the commencement of a public distribution of Registrable Securities; and (ii) that any agreement entered into after the date hereof pursuant to which the Company issues or agrees to issue any privately placed securities shall contain a provision under which holders of such securities agree not to effect any sale or distribution of any such securities during the periods described in (a) above, in each case including a sale pursuant to Rule 144 (except as part of any such registration, if permitted); provided , however , that the provisions of this paragraph (b) shall not prevent the conversion or exchange of any securities pursuant to their terms into or for other securities and shall not prevent the issuance of securities by the Company under any employee benefit, stock option or stock subscription plans or in private placements.
 
3.             Copy of Agreement .  A copy of this Agreement and all amendments hereto shall be kept at the principal executive offices of the Company.
 
4.             Governing Law .  This Agreement shall be construed in accordance with and governed by the law of the State of Delaware, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction.
 
5.             Waiver of Jury Trial .  The parties hereto waive, to the fullest extent permitted by law, all right to trial by jury.
 
6.             Representations and Warranties .  Each Stockholder represents and warrants (a) that such Stockholder has full power, capacity, right and authority, and any requisite approvals or consents to enter into and perform this Agreement; (b) that this Agreement and the performance of its obligations hereunder have been duly authorized, and that this Agreement has been duly executed and delivered by such Stockholder and is a valid and binding agreement, enforceable against such Stockholder in accordance with its terms, subject to applicable bankruptcy, insolvency and other similar laws affecting the enforceability of creditors’ rights generally, general equitable principles and the discretion of courts in granting equitable remedies; and (c) that such Stockholder owns beneficially and of record the shares of Common
 
15 

 
Stock set forth opposite its name on Exhibit A hereto, free and clear of any lien, claim, charge, option, security interest, restriction or encumbrance except as provided by this Agreement.
 
7.             Successors and Assigns; No Waivers; Amendments .
 
7.1          Successors and Assigns .  This Agreement, and all obligations and rights hereunder, shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided , however , that without the prior consent of the Company, no rights of any Stockholder under this Agreement may be assigned to any Person other than to a Permitted Transferee of such Stockholder, and no such Permitted Transferee shall be allowed to further transfer or assign such rights to any third Person; and provided , further , that prior to (and as a condition precedent to the effectiveness of) any assignment or other transfer from a Stockholder to a Permitted Transferee thereof, such Permitted Transferee shall enter into a written agreement with such Stockholder and the Company (which shall also be for the benefit of the other parties hereto and all other Permitted Transferees), in form and substance reasonably satisfactory to the Company, agreeing to be bound by all terms and conditions of this Agreement which are applicable to such Stockholder.  This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
 
7.2          No Waivers .  No failure or delay by any party in exercising any right, power, or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
 
7.3          Amendments .  This Agreement may be amended, modified or supplemented, and compliance with any provision hereof may be waived, with the written consent of the Company and FSEP VI together, and without the consent of any other Stockholder, except to the extent that any of the other Stockholders’ (or their Permitted Transferees’) rights would be disproportionately prejudiced thereby, in which case any such amendment, modification, supplement or waiver shall also require the written consent of other Stockholders (or their Permitted Transferees) holding a majority of the shares of Registrable Securities then held by the other Stockholders (and their Permitted Transferees).  Any such amendment, modification or supplement so consented to in writing shall be binding upon the parties hereto and their successors and Permitted Transferees and assigns (if any).  The parties hereby expressly agree that the Company’s grant of additional demand and piggy back registration rights in the future that do not apply to the FS Entities differently than they apply to the other Stockholders shall not constitute an amendment or modification of, or a supplement to, this Agreement.
 
8.             Interpretation .  The headings of the Sections contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not affect the meaning or interpretation of this Agreement. Any words imparting the singular number only shall include the plural and vice versa.  The words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which
 
16 

 
such words appear unless the context otherwise requires.  The words “include” or “including” or any variation thereof shall be deemed followed by the words “without limitation” and such words shall not be construed to limit any general statement to the specific or similar items or matters immediately following such words.  The parties to this Agreement have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by such parties and no presumption or burden of proof shall arise favoring or disfavoring any such party by virtue of the purported authorship of any provision of this Agreement.
 
9.             Notices .  All notices, requests, demands and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given and received  (i) on the date of delivery if delivered personally, (ii) on the date of confirmation of receipt (or the first business day following if such date is not a business day) if sent by overnight courier (providing proof of delivery) or (iii) on the date of confirmation of receipt (or the first business day following if such date is not a business day) if sent via facsimile (providing proof of receipt), addressed to the parties or their permitted assigns at the addresses set forth on Schedule 1 (or at such other address or number as is given in writing by either party to the other).
 
10.          Further Assurances .  The Stockholders shall exercise, or cause to be exercised, voting rights with respect to securities held of record or beneficially owned by them in a manner so that, and shall otherwise take any necessary actions in order that, the covenants and understandings of the parties set forth in this Agreement shall be implemented.  Each party hereto agrees to perform any further acts and execute and deliver any documents which may be reasonably necessary to carry out the intent of this Agreement and to make appropriate changes to the procedures set forth herein to implement such rights to the extent necessary to conform to the Delaware General Corporation Law or other applicable law.
 
11.          Injunctive Relief; Disputes .
 
(a)           It is acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties hereto fail to comply with any of the obligations herein imposed on them and that, in the event of any such failure, an aggrieved party hereto will be irreparably damaged and will not have an adequate remedy at law.  Any such party shall, therefore, be entitled to injunctive relief, including specific performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.
 
(b)           If any dispute arises under this Agreement, the parties shall seek to resolve any such dispute between them, first, by negotiating promptly with each other in good faith in face-to-face negotiations.  If the parties are unable to resolve such dispute between them within twenty (20) business days after notice of such dispute is given by a party to the other party or parties (or such period as the parties shall otherwise agree) through these face-to-face negotiations, then the parties shall, within twenty (20) business days following the termination of the parties’ face-to-face negotiations (or such other period and place as the parties shall agree), seek to resolve any such dispute between them through non-binding mediation in New York,
 
17 

 
New York in accordance with the Commercial Mediation Procedures of the American Arbitration Association (the “ Association ”) in effect on the date that the demand for mediation is given.  If the parties are unable to resolve such dispute through mediation, the parties shall resolve such dispute by arbitration in New York City, New York, subject to Section 11(a) and Section 4 hereof, pursuant to the rules then in effect of the American Arbitration Association.  Any award shall be final, binding and conclusive upon the parties, and a judgment rendered thereon may be entered in a United States District Court located in the State of New York or any New York state court having jurisdiction over the subject matter of the dispute or matter.
 
12.          Severability .  If any term or other provision of this Agreement or any exhibit or schedule hereto is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement, and the exhibits and schedules hereto, shall nevertheless remain in full force and effect to the maximum extent permitted by applicable law.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement, and any exhibit or schedule hereto, so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that this Agreement, and its exhibits and schedules be enforced as originally contemplated to the greatest extent possible.
 
13.          Entire Agreement .  This Agreement constitutes the entire agreement and understanding among the parties pertaining to the subject matter hereof and supersede any and all prior agreements, whether written or oral, relating hereto.  The Original Agreement hereby is terminated and superseded by this Agreement.
 
14.          Counterparts .  This Agreement may be executed in two or more counterparts and by facsimile, each of which shall be deemed an original but all of which shall constitute one and the same instrument.
 
[ Remainder of page intentionally left blank ]
 
18 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 	COMPANY :	
 	 	
 	BOOT BARN HOLDINGS, INC.	

 	By:	 	
 	 	Name:	
 	 	Title:	

 	FS ENTITIES :	
 	 	
 	FS EQUITY PARTNERS VI, L.P.	
 	 	
 	By:  FS Capital Partners VI, LLC	
 	Its:  General Partner	
 	 	
 	 	By:	 	
 	 	 	Name:	
 	 	 	Title:  Managing Member	

 	FS AFFILIATES VI, L.P.	
 	 	
 	By:  FS Capital Partners VI, LLC	
 	Its:  General Partner	
 	 	
 	 	By:	 	
 	 	 	Name:	
 	 	 	Title:  Managing Member	

 
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 	OTHER STOCKHOLDERS :	
 	 	
 	[             ]	

 	By:	 	
 	 	Name:	
 	 	Title:	

 
EXHIBIT A
 
STOCKHOLDERS
 
[Pending]

 
SCHEDULE 1
 
Addresses
 
For any of the FS Group:
 
c/o Freeman Spogli & Co., VI, LLC
11100 Santa Monica Boulevard, Suite 1900
Los Angeles, California 90025
Attn:  Brad Brutocao
Facsimile:  (310) 444-1870
 
For any of the Meany Stockholders:
 
c/o Patrick Meany
30592 Hilltop Way
San Juan Capistrano, CA 92675
Facsimile: (949) 488-7924
 
Other Stockholders:
 
For The Starrett Family Trust, Dated 4-11-99:
 
Peter Starrett
1765 Alta Mura Road
Pacific Palisades, CA 90272
Facsimile: (310) 444-1870
Email: pstarrett@freemanspogli.com
 
[PENDING]

Exhibit 10.2
 
BOOT BARN HOLDINGS, INC.
 
2011 EQUITY INCENTIVE PLAN

 
TABLE OF CONTENTS

 	 	Page	
 	 	 	
1.	PURPOSE	1	
 	 	 	
2.	DEFINITIONS	1	
 	 	 	
3.	TERM OF THE PLAN	3	
 	 	 	
4.	STOCK SUBJECT TO THE PLAN	3	
 	 	 	
5.	ADMINISTRATION	3	
 	 	 	
6.	AUTHORIZATION OF GRANTS	4	
 	 	 	
7.	SPECIFIC TERMS OF AWARDS	4	
 	 	 	
8.	ADJUSTMENT AND RELATED PROVISIONS	8	
 	 	 	
9.	SETTLEMENT OF AWARDS	10	
 	 	 	
10.	RESERVATION OF STOCK	12	
 	 	 	
11.	NO SPECIAL EMPLOYMENT OR OTHER RIGHTS	12	
 	 	 	
12.	NONEXCLUSIVITY OF THE PLAN	13	
 	 	 	
13.	TERMINATION AND AMENDMENT OF THE PLAN	13	
 	 	 	
14.	NOTICES AND OTHER COMMUNICATIONS	13	
 	 	 	
15.	NO GUARANTEE OF TAX CONSEQUENCES	14	
 	 	 	
16.	GOVERNING LAW	14	
 
i 

 
BOOT BARN HOLDINGS, INC.
 
2011 EQUITY INCENTIVE PLAN
 
1.                                       Purpose
 
This Plan is intended to encourage ownership of Stock by employees, consultants and directors of the Company and its Affiliates and to provide additional incentive for them to promote the success of the Company’s business. The Plan is intended to be an incentive stock option plan within the meaning of Section 422 of the Code, but not all Awards are required to be Incentive Options.
 
2.                                       Definitions
 
As used in this Plan, the following terms shall have the following meanings:
 
2.1.                             Accelerate , Accelerated , and Acceleration , when used with respect to an Option, means that as of the time of reference the Option will become exercisable with respect to some or all of the shares of Stock for which it was not then otherwise exercisable by its terms, and, when used with respect to Restricted Stock, means that the Risk of Forfeiture otherwise applicable to the Stock shall expire with respect to some or all of the shares of Restricted Stock then still otherwise subject to the Risk of Forfeiture.
 
2.2.                             Affiliate means any corporation, partnership, limited liability company, business trust, or other entity controlling, controlled by or under common control with the Company.
 
2.3.                             Award means any grant or sale pursuant to the Plan of Options, Restricted Stock or Stock Grants.
 
2.4.                             Award Agreement means an agreement between the Company and the recipient of an Award, setting forth the terms and conditions of the Award, and any applicable provisions with respect to restrictions upon the transfer of shares of Stock, the repurchase of Stock or on the exercise of rights appurtenant thereto (including but not limited to voting rights, drag-along rights and tag-along rights).
 
2.5.                             Board means the Company’s Board of Directors.
 
2.6.                             Code means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto, and any regulations issued from time to time thereunder.
 
2.7.                             Committee means any committee of the Board delegated responsibility by the Board for the administration of the Plan, as provided in Section 5 of this Plan. For any period during which no such committee is in existence “Committee” shall mean the Board and all authority and responsibility assigned to the Committee under the Plan shall be exercised, if at all, by the Board.
 
2.8.                             Company   means Boot Barn Holdings, Inc., a corporation organized under the laws of the State of Delaware.
 
2.9.                             Grant Date means the date as of which an Option is granted, as determined under Section 7.1(a) .
 
1 

 
2.10.                      Incentive Option means an Option which by its terms is to be treated as an “incentive stock option” within the meaning of Section 422 of the Code.
 
2.11.                      Market Value means the value of a share of Stock on any date as determined by the Committee in good faith based on the reasonable application of a reasonable valuation method based on all relevant facts and circumstances as of such date, consistent with the principles of Treas. Reg. 1.409A-1(b)(5)(iv).
 
2.12.                      Nonstatutory Option means any Option that is not an Incentive Option.
 
2.13.                      Option means an option to purchase shares of Stock.
 
2.14.                      Optionee means a Participant to whom an Option shall have been granted under the Plan.
 
2.15.                      Participant means any holder of an outstanding Award under the Plan.
 
2.16.                      Plan means this 2011 Equity Incentive Plan of the Company, as amended from time to time, and including any attachments or addenda hereto.
 
2.17.                      Restricted Stock means a grant or sale of shares of Stock to a Participant subject to a Risk of Forfeiture.
 
2.18.                      Restriction Period means the period of time, established by the Committee in connection with an Award of Restricted Stock, during which the shares of Restricted Stock are subject to a Risk of Forfeiture described in the applicable Award Agreement.
 
2.19.                      Risk of Forfeiture means a limitation on the right of the Participant to retain Restricted Stock, including a right in the Company to reacquire the Stock at less than its then Market Value, arising because of the occurrence or non-occurrence of specified events or conditions.
 
2.20.                      Stock means common stock, par value $0.001 per share, of the Company and such other securities as may be substituted for Stock pursuant to Section 8 .
 
2.21.                      Stock Grant means the grant of shares of Stock not subject to restrictions or other forfeiture conditions.
 
2.22.                      Stockholders Agreement means any agreement by and among the holders of at least a majority of the outstanding voting securities of the Company and setting forth, among other provisions, restrictions upon the transfer of shares of Stock or on the exercise of rights appurtenant thereto (including but not limited to voting rights, drag-along rights and tag-along rights).
 
2.23.                      Ten Percent Owner means a person who owns, or is deemed within the meaning of Section 422(b)(6) of the Code to own, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company (or any parent or subsidiary corporations of the Company, as defined in Sections 424(e) and (f), respectively, of the Code). Whether a person is a Ten Percent Owner shall be determined with respect to an Option based on the facts existing immediately prior to the Grant Date of the Option.
 
2 

 
3.                                       Term of the Plan
 
Unless the Plan shall have been earlier terminated by the Board, Awards may be granted under this Plan at any time in the period commencing on the date of approval of the Plan by the Board and ending immediately prior to the tenth anniversary of the earlier of the adoption of the Plan by the Board or approval of the Plan by the Company’s stockholders. Awards granted pursuant to the Plan within that period shall not expire solely by reason of the termination of the Plan. Awards of Incentive Options granted prior to stockholder approval of the Plan are expressly conditioned upon such approval, but in the event of the failure of the stockholders to approve the Plan shall thereafter and for all purposes be deemed to constitute Nonstatutory Options.
 
4.                                       Stock Subject to the Plan
 
At no time shall the number of shares of Stock issued pursuant to or subject to outstanding Awards granted under the Plan (including pursuant to Incentive Options), nor the number of shares of Stock issued pursuant to Incentive Options, exceed 150,000 shares of Stock; subject, however , to the provisions of Section 8 of the Plan. For purposes of applying the foregoing limitation, settlement of any Award shall not count against the foregoing limitations except to the extent settled in the form of Stock and, without limiting the generality of the foregoing: (a) if any Option expires, terminates, or is cancelled for any reason without having been exercised in full, or if any Award of Restricted Stock is forfeited by the recipient or repurchased at less than its Market Value, the shares of Stock not purchased by the Optionee or forfeited by the recipient or repurchased shall again be available for Awards to be granted under the Plan and (b) if any Option is exercised by delivering previously owned shares of Stock in payment of the exercise price therefor, only the net number of shares, that is, the number of shares of Stock issued minus the number received by the Company in payment of the exercise price, shall be considered to have been issued pursuant to an Award granted under the Plan. Shares of Stock issued pursuant to the Plan may be either authorized but unissued shares or shares held by the Company in its treasury.
 
5.                                       Administration
 
The Plan shall be administered by the Committee; provided, however , that at any time and on any one or more occasions the Board may itself exercise any of the powers and responsibilities assigned the Committee under the Plan and when so acting shall have the benefit of all of the provisions of the Plan pertaining to the Committee’s exercise of its authorities hereunder; and provided further, however, that the Committee may delegate to an executive officer or officers the authority to grant Awards hereunder to employees who are not officers, and to consultants, in accordance with such guidelines as the Committee shall set forth at any time or from time to time. Subject to the provisions of the Plan, the Committee shall have complete authority, in its discretion, to make or to select the manner of making all determinations with respect to each Award to be granted by the Company under the Plan including the employee, consultant or director to receive the Award and the form of Award.  In making such determinations, the Committee may take into account the nature of the services rendered by the respective employees, consultants, and directors, their present and potential contributions to the success of the Company and its Affiliates, and such other factors as the Committee in its discretion shall deem relevant. Subject to the provisions of the Plan, the Committee shall also have complete authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, to Accelerate the vesting or exercisability of any Award, to determine the terms and provisions of the respective Award Agreements (which need not be identical), and to make all other determinations necessary or advisable for the administration of the Plan. The
 
3 

 
Committee’s determinations made in good faith on matters referred to in the Plan shall be final, binding and conclusive on all persons having or claiming any interest under the Plan or an Award made pursuant hereto.
 
6.                                       Authorization of Grants
 
6.1.                             Eligibility .  The Committee may grant from time to time and at any time prior to the termination of the Plan one or more Awards, either alone or in combination with any other Awards, to any employee of or consultant to one or more of the Company and its Affiliates or to any non-employee member of the Board or of any board of directors (or similar governing authority) of any Affiliate. However, only employees of the Company, and of any parent or subsidiary corporations of the Company, as defined in Sections 424(e) and (f), respectively, of the Code, shall be eligible for the grant of an Incentive Option. Further, if the Company’s common stock is required to be registered under Section 12 of the Securities Exchange Act of 1934, as amended, then in no event shall the number of shares of Stock covered by (a) Options or (b) Options together with other Awards granted to any one person in any one calendar year exceed 100% of the aggregate number of shares of Stock subject to the Plan.
 
6.2.                             General Terms of Awards .   Each grant of an Award shall be subject to all applicable terms and conditions of the Plan (including but not limited to any specific terms and conditions applicable to that type of Award set out in the following Section), and such other terms and conditions, not inconsistent with the terms of the Plan, as the Committee may prescribe. No prospective Participant shall have any rights with respect to an Award, unless and until such Participant shall have complied with the applicable terms and conditions of such Award (including if applicable delivering a fully executed copy of an Award Agreement evidencing an Award to the Company).
 
6.3.                             Non-Transferability of Awards .   Except as otherwise provided in this Section, Awards shall not be transferable, and no Award or interest therein may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. All of a Participant’s rights in any Award may be exercised during the life of the Participant only by the Participant or the Participant’s legal representative. However, the Committee may, at or after the grant of an Award of a Nonstatutory Option, or shares of Restricted Stock, provide that such Award may be transferred by the recipient to an immediate family member; provided, however , that any such transfer is without payment of any consideration whatsoever and that no transfer shall be valid unless first approved by the Committee, acting in its sole discretion. For this purpose, an “immediate family member” means any child, stepchild, grandchild, parent, stepparent, spouse, former spouse, sibling, a trust in which the foregoing persons have all of the beneficial interests, a foundation in which the foregoing persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own all of the voting interests.
 
7.                                       Specific Terms of Awards
 
7.1.                             Options .
 
(a)                                  Date of Grant .  The granting of an Option shall take place at the time specified in the Award Agreement. Only if expressly so provided in the applicable Award Agreement shall the Grant Date be the date on which the Award Agreement shall have been duly executed and delivered by the Company and the Optionee.
 
4 

 
(b)                                  Exercise Price .   The price at which shares of Stock may be acquired under each Incentive Option shall be not less than 100% of the Market Value of Stock on the Grant Date, or not less than 110% of the Market Value of Stock on the Grant Date if the Optionee is a Ten Percent Owner. The price at which shares of Stock may be acquired under each Nonstatutory Option shall not be so limited solely by reason of this Section.
 
(c)                                   Option Period .   No Incentive Option may be exercised on or after the tenth anniversary of the Grant Date, or on or after the fifth anniversary of the Grant Date if the Optionee is a Ten Percent Owner. The Option period under each Nonstatutory Option shall not be so limited solely by reason of this Section.
 
(d)                                  Exercisability . An Option may be immediately exercisable or become exercisable in such installments, cumulative or non-cumulative, as the Committee may determine. In the case of an Option not otherwise immediately exercisable in full, the Committee may Accelerate such Option in whole or in part at any time; provided, however, that in the case of an Incentive Option, any such Acceleration of the Option would not cause the Option to fail to comply with the provisions of Section 422 of the Code or the Optionee consents to the Acceleration.
 
(e)                                   Termination of Association with the Company .  Unless the Committee shall provide otherwise with respect to any Option, if the Optionee’s employment or other association with the Company and its Affiliates ends for any reason, including because of the Optionee’s employer ceasing to be an Affiliate, any outstanding Option of the Optionee shall cease to be exercisable in any respect not later than 90 days following that event and, for the period it remains exercisable following that event, shall be exercisable only to the extent exercisable at the date of that event. Military or sick leave or other bona fide leave shall not be deemed a termination of employment or other association, provided that it does not exceed the longer of ninety (90) days or the period during which the absent Optionee’s reemployment rights, if any, are guaranteed by statute or by contract.
 
(f)                                    Method of Exercise .   An Option may be exercised by the Optionee giving written notice, in the manner provided in Section 14 , specifying the number of shares of Stock with respect to which the Option is then being exercised.  The notice shall be accompanied by payment in the form of cash or check payable to the order of the Company in an amount equal to the exercise price of the shares of Stock to be purchased or, subject in each instance to the Committee’s approval, acting in its sole discretion, and to such conditions, if any, as the Committee may deem necessary to avoid adverse accounting effects to the Company,
 
(i)                                      by delivery to the Company of shares of Stock having a Market Value equal to the exercise price of the shares to be purchased, or
 
(ii)                                   by surrender of the Option as to all or part of the shares of Stock for which the Option is then exercisable in exchange for shares of Stock having an aggregate Market Value equal to the difference between (1) the aggregate Market Value of the shares of Stock for which the surrendered portion of the Option is exercisable, and (2) the aggregate exercise price under the Option for the surrendered portion of the Option, or
 
(iii)                                by delivery to the Company of the Optionee’s executed promissory note in the principal amount equal to the exercise price of the shares of Stock to be purchased and otherwise in such form as the Committee shall have approved.
 
5 

 
If the Stock becomes traded on an established market, payment of any exercise price may also be made through and under the terms and conditions of any formal cashless exercise program authorized by the Company entailing the sale of the Stock subject to an Option in a brokered transaction (other than to the Company).  Receipt by the Company of such notice and payment in any authorized or combination of authorized means shall constitute the exercise of the Option. Within thirty (30) days thereafter but subject to the remaining provisions of the Plan, the Company shall deliver or cause to be delivered to the Optionee or his agent a certificate or certificates for the number of shares then being purchased.  Such shares of Stock shall be fully paid and nonassessable.
 
The permitted method or methods of payment of the amounts payable upon exercise of an Option may be subject to such conditions as the Committee deems appropriate.
 
(g)        Limit on Incentive Option Characterization .  An Incentive Option shall be considered to be an Incentive Option only to the extent that the number of shares of Stock for which the Option first becomes exercisable in a calendar year do not have an aggregate Market Value (as of the date of the grant of the Option) in excess of the “current limit”. The current limit for any Optionee for any calendar year shall be $100,000 minus the aggregate Market Value at the date of grant of the number of shares of Stock available for purchase for the first time in the same year under each other Incentive Option previously granted to the Optionee under the Plan, and under each other incentive stock option previously granted to the Optionee under any other incentive stock option plan of the Company and its Affiliates.  Any shares of Stock which would cause the foregoing limit to be violated shall be deemed to have been granted under a separate Nonstatutory Option, otherwise identical in its terms to those of the Incentive Option.
 
(h)        Notification of Disposition .    Each person exercising any Incentive Option granted under the Plan shall be deemed to have covenanted with the Company to report to the Company any disposition of the shares of Stock issued upon such exercise prior to the expiration of the holding periods specified by Section 422(a)(1) of the Code and, if and to the extent that the realization of income in such a disposition imposes upon the Company federal, state, local or other withholding tax requirements, or any such withholding is required to secure for the Company an otherwise available tax deduction, to remit to the Company an amount in cash sufficient to satisfy those requirements.
 
(i)         Rights Pending Exercise .  No person holding an Option shall be deemed for any purpose to be a stockholder of the Company with respect to any of the shares of Stock issuable pursuant to his Option, except to the extent that the Option shall have been exercised with respect thereto and, in addition, a certificate shall have been issued therefor and delivered to such holder or his agent.
 
7.2.                             Restricted Stock .
 
(a)                                  Purchase Price . Shares of Restricted Stock shall be issued under the Plan for such consideration, in cash, other property or services, or any combination thereof, as is determined by the Committee.
 
(b)                                  Issuance of Certificates .  Each Participant receiving a Restricted Stock Award, subject to subsection (c)  below, shall be issued a stock certificate in respect of such shares of Restricted Stock. Such certificate shall be registered in the name of such Participant, and, if applicable, shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award substantially in the following form:
 
6 

 
The shares evidenced by this certificate are subject to the terms and conditions of the Boot Barn Holdings, Inc. 2011 Equity Incentive Plan and an Award Agreement entered into by the registered owner and Boot Barn Holdings, Inc. , copies of which will be furnished by the Company to the holder of the shares evidenced by this certificate upon written request and without charge.
 
(c)        Escrow of Shares .  The Committee may require that the stock certificates evidencing shares of Restricted Stock be held in custody by a designated escrow agent (which may but need not be the Company) until the restrictions thereon shall have lapsed, and that the Participant deliver a stock power, endorsed in blank, relating to the Stock covered by such Award.
 
(d)        Restrictions and Restriction Period .    During the Restriction Period applicable to shares of Restricted Stock, such shares shall be subject to limitations on transferability and a Risk of Forfeiture arising on the basis of such conditions related to the performance of services, Company or Affiliate performance or otherwise as the Committee may determine and provide for in the applicable Award Agreement. Any such Risk of Forfeiture may be waived or terminated, or the Restriction Period shortened, at any time by the Committee on such basis as it deems appropriate.
 
(e)        Rights Pending Lapse of Risk of Forfeiture or Forfeiture of Award . Except as otherwise provided in the Plan or the applicable Award Agreement, at all times prior to lapse of any Risk of Forfeiture applicable to, or forfeiture of, an Award of Restricted Stock, the Participant shall have all of the rights of a stockholder of the Company, including the right to vote, and the right to receive any dividends with respect to, the shares of Restricted Stock (but any dividends or other distributions payable in shares of Stock or other securities of the Company shall constitute additional Restricted Stock, subject to the same Risk of Forfeiture as the shares of Restricted Stock in respect of which such shares of Stock or other securities are paid). The Committee, as determined at the time of Award, may permit or require the payment of cash dividends to be deferred and, if the Committee so determines, reinvested in additional Restricted Stock to the extent shares of Stock are available under Section 4 .
 
(f)         Termination of Association with the Company .  Unless the Committee shall provide otherwise for any Award of Restricted Stock, upon termination of a Participant’s employment or other association with the Company and its Affiliates for any reason during the Restriction Period, including because of the Participant’s employer ceasing to be an Affiliate during the Restriction Period, all shares of Restricted Stock still subject to Risk of Forfeiture shall be forfeited or otherwise subject to return to or repurchase by the Company on the terms specified in the Award Agreement; provided, however , that military or sick leave or other bona fide leave shall not be deemed a termination of employment or other association, if it does not exceed the longer of ninety (90) days or the period during which the absent Participant’s reemployment rights, if any, are guaranteed by statute or by contract.
 
(g)        Lapse of Restrictions . If and when the Restriction Period expires without a prior forfeiture of the Restricted Stock, the certificates for such shares shall be delivered to the Participant promptly if not theretofore so delivered.
 
7.3.         Stock Grants .  Stock Grants shall be awarded solely in recognition of significant contributions to the success of the Company or its Affiliates, in lieu of compensation otherwise already due and in such other limited circumstances as the Committee deems appropriate. Stock Grants shall be made without forfeiture conditions of any kind.
 
7 

 
7.4.       Awards to Participants Outside the United States .  The Committee may modify the terms of any Award under the Plan granted to a Participant who is, at the time of grant or during the term of the Award, resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that the Award shall conform to laws, regulations, and customs of the country in which the Participant is then resident or primarily employed, or so that the value and other benefits of the Award to the Participant, as affected by foreign tax laws and other restrictions applicable as a result of the Participant’s residence or employment abroad, shall be comparable to the value of such an Award to a Participant who is resident or primarily employed in the United States. The Committee may establish supplements to, or amendments, restatements, or alternative versions of the Plan for the purpose of granting and administrating any such modified Award. No such modification, supplement, amendment, restatement or alternative version may increase the share limit of Section 4 .
 
8.                                       Adjustment and Related Provisions
 
8.1.       Adjustment for Corporate Actions .  All of the share numbers set forth in the Plan reflect the capital structure of the Company as of December 12, 2011. If subsequent to that date the outstanding shares of Stock (or any other securities covered by the Plan by reason of the prior application of this Section) are increased, decreased, or exchanged for a different number or kind of shares or other securities, or if additional shares or new or different shares or other securities are distributed with respect to shares of Stock, as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar distribution with respect to such shares of Stock, an appropriate and proportionate adjustment will be made in (i) the maximum numbers and kinds of shares provided in Section 4 , (ii) the numbers and kinds of shares or other securities subject to the then outstanding Awards, (iii) the exercise price for each share or other unit of any other securities subject to then outstanding Options (without change in the aggregate purchase price as to which such Options remain exercisable), and (iv) the repurchase price of each share of Restricted Stock then subject to a Risk of Forfeiture in the form of a Company repurchase right.
 
8.2.       Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events .  In the event of any corporate action not specifically covered by the preceding Section, including but not limited to an extraordinary cash distribution on Stock, a corporate separation or other reorganization or liquidation, the Committee shall make such adjustment of outstanding Awards and their terms, if any, as it, in its sole discretion, deems equitable and appropriate in the circumstances.
 
8.3.       Related Matters . Any adjustment in Awards made pursuant to Sections 8.1 or 8.2 shall be determined and made, if at all, by the Committee acting in its sole discretion and shall include any correlative modification of terms, including of Option exercise prices, rates of vesting or exercisability, Risks of Forfeiture and applicable repurchase prices for Restricted Stock, which the Committee may deem necessary or appropriate so as to ensure the rights of the Participants in their respective Awards are not substantially diminished nor enlarged as a result of the adjustment and corporate action other than as expressly contemplated in this Section 8 . The Committee, in its discretion, may determine that no fraction of a share of Stock shall be purchasable or deliverable upon exercise, and in that event if any adjustment hereunder of the number of shares of Stock covered by an Award would cause such number to include a fraction of a share of Stock, such number of shares of Stock shall be adjusted to the nearest smaller whole number of shares.  No adjustment of an Option exercise price per share pursuant to Sections 8.1 or 8.2 shall result in an exercise price which is less than the par value of the Stock.
 
8 

8.4.                             Transactions .
 
(a)                                  Definition of Transaction .   In this Section 8.4 , “ Transaction ” means (1) any merger or consolidation of the Company with or into another entity as a result of which the Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled, (2) any sale or exchange of Stock of the Company for cash, securities or other property in a single or series of related transactions if as a result securities possessing more than 50% of the total combined voting power of the survivor’s or acquirer’s outstanding securities (or the securities of any parent thereof) cease to be held by a person or persons who held securities possessing more than 50% of the total combined voting power of the Company’s outstanding securities immediately prior to that transaction, (3) any sale, transfer, or other disposition of all or substantially all of the Company’s assets to one or more other persons in a single transaction or series of related transactions or (4) any liquidation or dissolution of the Company.
 
(b)                                  Treatment of Options .   In a Transaction, the Committee may take any one or more of the following actions as to all or any (or any portion of) outstanding Options.
 
(1)                                  Provide that such Options shall be assumed, or substantially equivalent options shall be provided in substitution therefor, by the acquiring or succeeding entity (or an affiliate thereof).
 
(2)                                  Upon written notice to the holders, provide that the holders’ unexercised Options will terminate immediately prior to the consummation of such Transaction without the payment of any consideration therefor unless exercised within a specified period following the date of such notice.
 
(3)                                  Provide that outstanding Options shall become exercisable in whole or in part prior to or upon the Transaction.
 
(4)                                  Provide for cash payments, net of applicable tax withholdings, to be made to holders equal to the excess, if any, of (A) the acquisition price times the number of shares of Stock subject to an Option (to the extent the exercise price does not exceed the acquisition price) over (B) the aggregate exercise price for all such shares of Stock subject to the Option, in exchange for the termination of such Option; provided that if the acquisition price does not exceed the exercise price of any such Option, the Committee may cancel that Option without the payment of any consideration therefor prior to or upon the Transaction.  For this purpose, “ acquisition price ” means the amount of cash, and market value of any other consideration, received in payment for a share of Stock surrendered in a Transaction.
 
(5)                                  Provide that, in connection with a liquidation or dissolution of the Company, Options shall convert into the right to receive liquidation proceeds net of the exercise price thereof and any applicable tax withholdings.
 
(6)                                  Any combination of the foregoing.
 
For purposes of paragraph (1) above, an Option shall be considered assumed, or a substantially equivalent option shall be considered to have been provided in substitution therefor, if following consummation of the Transaction the Option confers the right to purchase, for each share of Stock subject to the Option immediately prior to the consummation of the Transaction, the
 
9 

 
consideration (whether cash, securities or other property) received as a result of the Transaction by holders of Stock for each share of Stock held immediately prior to the consummation of the Transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Stock); provided, however , that if the consideration received as a result of the Transaction is not solely common stock (or its equivalent) of the acquiring or succeeding entity (or an affiliate thereof), the Committee may provide for the consideration to be received upon the exercise of Options to consist solely of common stock (or its equivalent) of the acquiring or succeeding entity (or an affiliate thereof) equivalent in value to the per share consideration received by holders of outstanding shares of Stock as a result of the Transaction.
 
(c)                                   Treatment of Restricted Stock .  As to outstanding Awards in the form of Restricted Stock, upon the occurrence of a Transaction other than a liquidation or dissolution of the Company which is not part of another form of Transaction, the repurchase and other rights of the Company under each outstanding Restricted Stock Award shall inure to the benefit of the Company’s successor and shall, unless the Committee determines otherwise, apply to the cash, securities or other property which the Stock was converted into or exchanged for pursuant to such Transaction in the same manner and to the same extent as they applied to the Restricted Stock Award. Upon the occurrence of a Transaction involving a liquidation or dissolution of the Company which is not part of another form of Transaction, except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock Award or any other agreement between a Participant and the Company, all Risks of Forfeiture on all Restricted Stock Awards then outstanding shall automatically be deemed terminated or satisfied.
 
(d)                                  Related Matters .    In taking any of the actions permitted under this Section 8.4 , the Committee shall not be obligated to treat all Awards, all Awards held by a Participant, or all Awards of the same type, identically. Any determinations required to carry out the foregoing provisions of this Section 8.4 , including but not limited to the market value of other consideration received by holders of Stock in a Transaction and whether substantially equivalent options have been substituted, shall be made by the Committee acting in its sole discretion.
 
9.                                       Settlement of Awards
 
9.1.                             Violation of Law .    Notwithstanding any other provision of the Plan or the relevant Award Agreement, if, at any time, in the reasonable opinion of the Company, the issuance of shares of Stock covered by an Award may constitute a violation of law, then the Company may delay such issuance and the delivery of a certificate for such shares until (i) approval shall have been obtained from such governmental agencies, other than the Securities and Exchange Commission, as may be required under any applicable law, rule, or regulation and (ii) in the case where such issuance would constitute a violation of a law administered by or a regulation of the Securities and Exchange Commission, one of the following conditions shall have been satisfied:
 
(a)                          the shares of Stock are at the time of the issue of such shares effectively registered under the Securities Act of 1933, as amended; or
 
(b)                          the Company shall have determined, on such basis as it deems appropriate (including an opinion of counsel in form and substance satisfactory to the Company) that the sale, transfer, assignment, pledge, encumbrance or other disposition of such shares does not require registration under the Securities Act of 1933, as amended or any applicable State securities laws.
 
10 

 
The Company shall make all reasonable efforts to bring about the occurrence of said events.
 
9.2.                             Corporate and Contractual Restrictions on Rights in Stock .   Any Stock to be issued pursuant to Awards granted under the Plan shall be subject to all restrictions upon the transfer thereof which may be now or hereafter imposed by the charter, certificate or articles, and by-laws, of the Company or the applicable Award Agreement. Whenever Stock is to be issued pursuant to an Award, if the Committee so directs at or after grant, the Company shall be under no obligation to issue such shares until such time, if ever, as the recipient of the Award (and any person who exercises any Option, in whole or in part), shall have become a party to and bound by the Stockholders Agreement, if any. In the event of any conflict between the provisions of this Plan and the provisions of the Stockholders Agreement or any applicable Award Agreement, the provisions of the Stockholders Agreement or such applicable Award Agreement shall control except as required to fulfill the intention that this Plan constitute an incentive stock option plan within the meaning of Section 422 of the Code, but insofar as possible the provisions of the Plan and such Agreement shall be construed so as to give full force and effect to all such provisions.
 
9.3.                             Investment Representations .  The Company shall be under no obligation to issue any shares of Stock covered by any Award unless the shares to be issued pursuant to Awards granted under the Plan have been effectively registered under the Securities Act of 1933, as amended, or the Participant shall have made such written representations to the Company (upon which the Company believes it may reasonably rely) as the Company may deem necessary or appropriate for purposes of confirming that the issuance of such shares will be exempt from the registration requirements of that Act and any applicable state securities laws and otherwise in compliance with all applicable laws, rules and regulations, including but not limited to that the Participant is acquiring the shares for his or her own account for the purpose of investment and not with a view to, or for sale in connection with, the distribution of any such shares.
 
9.4.                             Registration .   If the Company shall deem it necessary or desirable to register under the Securities Act of 1933, as amended, or other applicable statutes any shares of Stock issued or to be issued pursuant to Awards granted under the Plan, or to qualify any such shares of Stock for exemption from the Securities Act of 1933, as amended or other applicable statutes, then the Company shall take such action at its own expense. The Company may require from each recipient of an Award, or each holder of shares of Stock acquired pursuant to the Plan, such information in writing for use in any registration statement, prospectus, preliminary prospectus or offering circular as is reasonably necessary for that purpose and may require reasonable indemnity to the Company and its officers and directors from that holder against all losses, claims, damage and liabilities arising from use of the information so furnished and caused by any untrue statement of any material fact therein or caused by the omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made. In addition, the Company may require of any such person that he or she agree that, without the prior written consent of the Company or the managing underwriter in any public offering of shares of Stock, he or she will not sell, make any short sale of, loan, grant any option for the purchase of, pledge or otherwise encumber, or otherwise dispose of, any shares of Stock during the 180 day period commencing on the effective date of the registration statement relating to the underwritten public offering of securities. Without limiting the generality of the foregoing provisions of this Section 9.4 , if in connection with any underwritten public offering of securities of the Company the managing underwriter of such offering requires that the Company’s directors and officers enter into a lock-up agreement containing provisions that are more restrictive than the provisions set forth in the preceding sentence, then (a) each holder of shares of Stock acquired pursuant to the Plan (regardless of whether such person has complied or complies with the provisions of clause (b) below) shall be
 
11 

 
bound by, and shall be deemed to have agreed to, the same lock-up terms as those to which the Company’s directors and officers are required to adhere; and (b) at the request of the Company or such managing underwriter, each such person shall execute and deliver a lock-up agreement in form and substance equivalent to that which is required to be executed by the Company’s directors and officers.
 
9.5.                             Placement of Legends; Stop Orders; etc .   Each share of Stock to be issued pursuant to Awards granted under the Plan may bear a reference to the investment representation made in accordance with Section 9.3 in addition to any other applicable restriction under the Plan, the terms of the Award and if applicable under the Stockholders Agreement and to the fact that no registration statement has been filed with the Securities and Exchange Commission in respect to such shares of Stock. All certificates for shares of Stock or other securities delivered under the Plan shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of any stock exchange upon which the Stock is then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
 
9.6.                             Tax Withholding .  Whenever shares of Stock are issued or to be issued pursuant to Awards granted under the Plan, the Company shall have the right to require the recipient to remit to the Company an amount sufficient to satisfy federal, state, local or other withholding tax requirements if, when, and to the extent required by law (whether so required to secure for the Company an otherwise available tax deduction or otherwise) prior to the delivery of any certificate or certificates for such shares. The obligations of the Company under the Plan shall be conditional on satisfaction of all such withholding obligations and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the recipient of an Award. However, in such cases Participants may elect, subject to the approval of the Committee, acting in its sole discretion, to satisfy an applicable withholding requirement, in whole or in part, by having the Company withhold shares of Stock to satisfy their tax obligations. Participants may only elect to have shares of Stock withheld having a Market Value on the date the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction. All elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee deems appropriate.
 
10.                                Reservation of Stock
 
The Company shall at all times during the term of the Plan and any outstanding Options granted hereunder reserve or otherwise keep available such number of shares of Stock as will be sufficient to satisfy the requirements of the Plan (if then in effect) and the Options and shall pay all fees and expenses necessarily incurred by the Company in connection therewith.
 
11.                                No Special Employment or Other Rights
 
Nothing contained in the Plan or in any Award Agreement shall confer upon any recipient of an Award any right with respect to the continuation of his or her employment or other association with the Company (or any Affiliate), or interfere in any way with the right of the Company (or any Affiliate), subject to the terms of any separate employment or consulting agreement or provision of law or corporate charter, certificate or articles, or by-laws, to the contrary, at any time to terminate such employment or consulting agreement or to increase or decrease, or otherwise adjust, the other terms and conditions of the recipient’s employment or other association with the Company and its Affiliates.
 
12 

 
12.                                Nonexclusivity of the Plan
 
Neither the adoption of the Plan by the Board nor the submission of the Plan to the stockholders of the Company shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including without limitation, the granting of stock options and restricted stock other than under the Plan, and such arrangements may be either applicable generally or only in specific cases.
 
13.                                Termination and Amendment of the Plan
 
The Board may at any time terminate the Plan or make such modifications of the Plan as it shall deem advisable. Unless the Board otherwise expressly provides, no amendment of the Plan shall affect the terms of any Award outstanding on the date of such amendment.
 
The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, provided that the Award as amended is consistent with the terms of the Plan. Also within the limitations of the Plan, the Committee may modify, extend or assume outstanding Awards or may accept the cancellation of outstanding Awards or of outstanding stock options or other equity-based compensation awards granted by another issuer in return for the grant of new Awards for the same or a different number of shares of Stock and on the same or different terms and conditions (including but not limited to the exercise price of any Option). Furthermore, the Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Award previously granted or (b) authorize the recipient of an Award to elect to cash out an Award previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.
 
No amendment or modification of the Plan by the Board, or of an outstanding Award by the Committee, shall impair the rights of the recipient of any Award outstanding on the date of such amendment or modification or such Award, as the case may be, without the Participant’s consent; provided, however, that no such consent shall be required if (i) the Board or Committee, as the case may be, determines in its sole discretion that such amendment or alteration either is required or advisable in order for the Company, the Plan or the Award to satisfy any law or regulation, including without limitation the provisions of Section 409A of the Code, or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard; provided however, that any such amendment or alteration shall maintain, to the maximum extent practicable, the original intent of the applicable Award, or (ii) the Board or Committee, as the case may be, determines in its sole discretion that such amendment or alteration will not significantly diminish the benefits provided under the Award, or that any such diminution has been adequately compensated.
 
14.                                Notices and Other Communications
 
Any notice, demand, request or other communication hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or duly sent by first class registered, certified or overnight mail, postage prepaid, or telecopied with a confirmation copy by regular, certified or overnight mail, addressed or telecopied, as the case may be, (i) if to the recipient of an Award, at his or her residence address last filed with the Company and (ii) if to the Company, at its principal place of business, addressed to the attention
 
13 

 
of its Treasurer, or to such other address or telecopier number, as the case may be, as the addressee may have designated by notice to the addressor. All such notices, requests, demands and other communications shall be deemed to have been received: (i) in the case of personal delivery, on the date of such delivery; (ii) in the case of mailing, when received by the addressee; and (iii) in the case of facsimile transmission, when confirmed by facsimile machine report.
 
15.                                No Guarantee of Tax Consequences
 
Neither the Company nor any director, officer, agent, representative or employee of the Company guarantees to a Participant or any other person any particular tax consequences as a result of the grant of, vesting of, exercise of rights under, or payment in respect of, an Award granted hereunder, including but not limited to that an Option granted as an Incentive Option has or will qualify as an “incentive stock option” within the meaning of Section 422 of the Code or that the provisions and penalties of Section 409A of the Code, pertaining to nonqualified plans of deferred compensation, will or will not apply.
 
16.                                Governing Law
 
The Plan and all Award Agreements and actions taken thereunder shall be governed, interpreted and enforced in accordance with the laws of the State of Delaware, without regard to the conflict of laws principles thereof.
 
14 

 
ATTACHMENT A
 
Provisions Applicable to Award Recipients
Resident in California
 
Until such time as the Company’s Stock has been effectively registered under the Securities Act of 1933, as amended, and if required by any applicable law, the following additional terms shall apply to Awards, and Stock issued pursuant to such Awards, granted under the Plan to persons resident in California as of the date of grant of the Award (each such person, a “ California Recipient ”).  Capitalized terms not defined in this Attachment shall have the respective meanings set forth in the Plan.
 
1.                                       No Option or other right to acquire Stock pursuant to an Award issued to any California Recipient, that is otherwise transferable pursuant to the terms of the Plan, shall be transferable other than by gift or domestic relations order to an immediate family member as that term is defined under applicable California and Federal securities law or to a revocable trust (or by will or the laws of descent and distribution).
 
2.                                       The following limitations shall apply to the early expiration of Options granted California Recipients on account of termination of employment (unless employment is terminated for cause as defined by applicable law):
 
(a)                                  Subject to Section 2(b) below, in the event the employment or other association with the Company and its Affiliates of an Optionee who is a California Resident is terminated, whether voluntary or otherwise and including on account of an entity ceasing to be an Affiliate of the Company, such California Recipient shall have at least 30 days after the date of such termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement) to exercise such Option to the extent exercisable as of the date of such termination.
 
(b)                                  In the event that the employment or association with the Company and its Affiliates of an Optionee who is a California Resident is terminated as a result of death or disability, such California Recipient shall have at least 6 months after the date of such termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement) to exercise such Option to the extent exercisable as of the date of such termination.
 
3.                                       The Plan must be approved by a majority of the outstanding securities entitled to vote within 12 months before or after the later of (i) the date the Plan is adopted by the Company and (ii) the date on which any Option or other Award is granted to a California Recipient.
 
15 

Exhibit 10.3
 
BOOT BARN HOLDINGS, INC.
 
2007 STOCK INCENTIVE PLAN AS AMENDED

 	As assumed by Boot Barn Holdings, Inc. and amended by resolution of the Board of	
 	Directors of Boot Barn Holdings, Inc. on December 11,	
 	2011.	

 
BOOT BARN HOLDINGS, INC.
2007 STOCK INCENTIVE PLAN

 
Plan Document

 
1.                                       Establishment, Purpose, and Types of Awards
 
Boot Barn Holdings, Inc. (the “Company”) hereby establishes this equity-based incentive compensation plan to be known as the “Boot Barn Holdings, Inc. 2007 Stock Incentive Plan” (hereinafter referred to as the “Plan”), in order to provide incentives and awards to select employees, directors, consultants, and advisors of the Company and its Affiliates. The Plan permits, but does not require, the granting of the following types of awards (“Awards”), according to the Sections of the Plan listed here:
 
Section 6                                               Options
Section 7                                               Share Appreciation Rights
Section 8                                               Restricted Shares, Restricted Share Units, and Unrestricted Shares
Section 9                                               Deferred Share Units
Section 10                                        Performance Awards
 
The Plan is not intended to affect and shall not affect any stock options, equity-based compensation, or other benefits that the Company or its Affiliates may have provided, or may separately provide in the future pursuant to any agreement, plan, or program that is independent of this Plan.
 
2.                                       Defined Terms
 
Terms in the Plan that begin with an initial capital letter have the defined meaning set forth in Appendix A , unless defined elsewhere in this Plan or the context of their use clearly indicates a different meaning.
 
3.                                       Shares Subject to the Plan
 
Subject to the provisions of Section 13 of the Plan, the maximum number of Shares that the Company may issue for all Awards is 45,000 Shares; provided, however, that the maximum number of Shares that are issued for ISOs shall not exceed 15,000 Shares. For all Awards, the Shares issued pursuant to the Plan may be authorized but unissued Shares, Shares that the Company has reacquired or otherwise holds in treasury, or Shares held in a trust.
 
Shares that are subject to an Award that for any reason expires, is forfeited, is cancelled, or becomes unexercisable, and Shares that are for any other reason not paid or delivered under this Plan shall again, except to the extent prohibited by Applicable Law, be available for subsequent Awards under the Plan.  In addition, the Committee may make future Awards with respect to (i) shares surrendered in payment of the exercise price of an Option, (ii) shares withheld in order to satisfy the withholding or employment taxes due upon grant, exercise, vesting or distribution of an Award, (iii) shares of Common Stock acquired on the open market, and (iv) shares issued or purchased under the Plan and forfeited back to the Plan.

 
4.                                       Administration
 
(a)                                  General . The Committee shall administer the Plan in accordance with its terms, provided that the Board may act in lieu of the Committee on any matter. The Committee shall hold meetings at such times and places as it may determine and shall make such rules and regulations for the conduct of its business as it deems advisable. In the absence of a duly appointed Committee, the Board shall function as the Committee for all purposes of the Plan.
 
(b)                                  Committee Composition . The Board shall appoint the members of the Committee. If and to the extent permitted by Applicable Law, the Committee may authorize one or more Reporting Persons (or other officers) to make Awards to Eligible Persons who are not Reporting Persons (or other officers whom the Committee has specifically authorized to make Awards). The Board may at any time appoint additional members to the Committee, remove and replace members of the Committee with or without Cause, and fill vacancies on the Committee however caused.
 
(c)                                   Powers of the Committee . Subject to the provisions of the Plan, the Committee shall have the authority, in its sole discretion:
 
(i)                                      to grant awards and to determine Eligible Persons to whom Awards shall be granted from time to time and the number of Shares, units, or dollars to be covered by each Award;
 
(ii)                                   to determine, from time to time, the Fair Market Value of Shares;
 
(iii)                                to determine, and to set forth in Award Agreements, the terms and conditions of all Awards, including any applicable exercise or purchase price, the installments and conditions under which an Award shall become vested (which may be based on performance), terminated, expired, cancelled, or replaced, and the circumstances for vesting acceleration or waiver of forfeiture restrictions, and other restrictions and limitations;
 
(iv)                               to approve the forms of Award Agreements and all other documents, notices and certificates in connection therewith which need not be identical either as to type of Award or among Participants;
 
(v)                                  to construe and interpret the terms of the Plan and any Award Agreement, to determine the meaning of their terms, and to prescribe, amend, and rescind rules and procedures relating to the Plan and its administration;
 
(vi)                               in order to fulfill the purposes of the Plan and without amending the Plan, to modify, to cancel, or to waive the Company’s rights with respect to any Awards, to adjust or to modify Award Agreements for changes in Applicable Law, and to recognize differences in foreign law, tax policies, or customs; and
 
(vii)                            to make all other interpretations and to take all other actions that the Committee may consider necessary or advisable to administer the Plan or to effectuate its purposes.
 
2 

 
Subject to Applicable Law and the restrictions set forth in the Plan, the Committee may delegate administrative functions to individuals who are Reporting Persons, officers, or Employees of the Company or its Affiliates.
 
(d)                                  Deference to Committee Determinations . The Committee shall have the discretion to interpret or construe ambiguous, unclear, or implied (but omitted) terms in any fashion it deems to be appropriate in its sole discretion, and to make any findings of fact needed in the administration of the Plan or Award Agreements. The Committee’s prior exercise of its discretionary authority shall not obligate it to exercise its authority in a like fashion thereafter. The Committee’s interpretation and construction of any provision of the Plan, or of any Award or Award Agreement, shall be final, binding, and conclusive. The validity of any such interpretation, construction, decision or finding of fact shall not be given de novo review if challenged in court, by arbitration, or in any other forum, and shall be upheld unless clearly made in bad faith or materially affected by fraud.
 
(e)                                   No Liability; Indemnification . Neither the Board nor any Committee member, nor any Person acting at the direction of the Board or the Committee, shall be liable for any act, omission, interpretation, construction or determination made in good faith with respect to the Plan, any Award or any Award Agreement. The Company and its Affiliates shall pay or reimburse any member of the Committee, as well as any Director, Employee, or Consultant who takes action on behalf of the Plan, for all expenses incurred with respect to the Plan, and to the full extent allowable under Applicable Law shall indemnify each and every one of them for any claims, liabilities, and costs (including reasonable attorney’s fees) arising out of their good faith performance of duties on behalf of the Plan. The Company and its Affiliates may, but shall not be required to, obtain liability insurance for this purpose.
 
5.                                       Eligibility
 
(a)                                  General Rule . Subject to the express provisions of the Plan, the Committee shall determine from the class of Eligible Persons those individuals to whom Awards under the Plan may be granted, the number of Shares subject to each Award, the price (if any) to be paid for the Shares or the Award and, in the case of Performance Awards, in addition to the matters addressed in Section 10 below, the specific objectives, goals and performance criteria that further define the Performance Award. The Committee may grant ISOs only to Employees (including officers who are Employees) of the Company or any Affiliate that is a “parent corporation” or “subsidiary corporation” within the meaning of Section 424 of the Code, and may grant all other Awards to any Eligible Person. A Participant who has been granted an Award may be granted an additional Award or Awards if the Committee shall so determine, if such person is otherwise an Eligible Person and if otherwise in accordance with the terms of the Plan.
 
(b)                                  Documentation of Awards . Each Award shall be evidenced by an Award Agreement signed by the Company and, if required by the Committee, by the Participant. The Award Agreement shall set forth the material terms and conditions of the Award established by the Committee, and each Award shall be subject to the terms and conditions set forth in Sections 25, 26, and 27 unless otherwise specifically provided in an Award Agreement.
 
(c)                                   Replacement Awards . Subject to Applicable Laws (including any associated Shareholder approval requirements), the Committee may, in its sole discretion and upon such terms as it deems appropriate, require as a condition of the grant of an Award to a Participant that the
 
3 

 
Participant surrender for cancellation some or all of the Awards that have previously been granted to the Participant under this Plan or otherwise. An Award that is conditioned upon such surrender may or may not be the same type of Award, may cover the same (or a lesser or greater) number of Shares as such surrendered Award, may have other terms that are determined without regard to the terms or conditions of such surrendered Award, and may contain any other terms that the Committee deems appropriate.
 
6.                                       Option Awards
 
(a)                                  Types; Documentation . Subject to Section 5(a), the Committee may in its discretion grant Options pursuant to Award Agreements that are delivered to Participants. Each Option shall be designated in the Award Agreement as an ISO or a Non-ISO, and the same Award Agreement may grant both types of Options. At the sole discretion of the Committee, any Option may be exercisable, in whole or in part, immediately upon the grant thereof, or only after the occurrence of a specified event, or only in installments, which installments may vary. Options granted under the Plan may contain such terms and provisions not inconsistent with the Plan that the Committee shall deem advisable in its sole and absolute discretion.
 
(b)                                  ISO $100,000 Limitation . To the extent that the aggregate Fair Market Value of Shares with respect to which Options designated as ISOs first become exercisable by a Participant in any calendar year (under this Plan and any other plan of the Company or any Affiliate) exceeds $100,000, such excess Options shall be treated as Non-ISOs. For purposes of determining whether the $100,000 limit is exceeded, the Fair Market Value of the Shares subject to an ISO shall be determined as of the Grant Date. In reducing the number of Options treated as ISOs to meet the $100,000 limit, the most recently granted Options shall be reduced first. In the event that Section 422 of the Code is amended to alter the limitation set forth therein, the limitation of this Section 6(b) shall be automatically adjusted accordingly.
 
(c)                                   Term of Options . Each Award Agreement shall specify a term at the end of which the Option automatically expires, subject to earlier termination provisions contained in Section 6(h) hereof; provided, that, the term of any Option may not exceed ten years from the Grant Date. In the case of an ISO granted to an Employee who is a Ten Percent Holder on the Grant Date, the term of the ISO shall not exceed five years from the Grant Date.
 
(d)                                  Exercise Price . The exercise price of an Option shall be determined by the Committee in its sole discretion and shall be set forth in the Award Agreement, provided that —
 
(i)                                      if an ISO is granted to an Employee who is a Ten Percent Holder on the Grant Date, the per Share exercise price shall not be less than 110% of the Fair Market Value per Share on the Grant Date, and
 
(ii)                                   for all other Options, such per Share exercise price shall not be less than 100% of the Fair Market Value per Share on the Grant Date.
 
(e)                                   Exercise of Option . The times, circumstances and conditions under which an Option shall be exercisable shall be determined by the Committee in its sole discretion and set forth in the Award Agreement. The Committee shall have the discretion to determine whether and to what extent the vesting of Options shall be tolled during any unpaid leave of absence; provided, however, that in the absence of such determination, vesting of Options shall be tolled during any such leave approved by the Company.
 
4 

 
(f)                                    Minimum Exercise Requirements . An Option may not be exercised for a fraction of a Share. The Committee may require in an Award Agreement that an Option be exercised as to a minimum number of Shares, provided that such requirement shall not prevent a Participant from purchasing the full number of Shares as to which the Option is then exercisable.
 
(g)                                   Methods of Exercise . Prior to its expiration pursuant to the terms of the applicable Award Agreement, and subject to the times, circumstances and conditions for exercise contained in the applicable Award Agreement, each Option may be exercised, in whole or in part (provided that the Company shall not be required to issue fractional shares), by delivery of written notice of exercise to the secretary of the Company accompanied by the full exercise price of the Shares being purchased. In the case of an ISO, the Committee shall determine the acceptable methods of payment on the Grant Date and it shall be included in the applicable Award Agreement. The methods of payment that the Committee may in its discretion accept or commit to accept in an Award Agreement include:
 
(i)                                      cash or check payable to the Company (in U.S. dollars);
 
(ii)                                   other Shares that (A) are owned by the Participant who is purchasing Shares pursuant to an Option, (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which the Option is being exercised, (C) were not acquired by such Participant pursuant to the exercise of an Option, unless such Shares have been owned by such Participant for at least six months or such other period as the Committee may determine, (D) are all, at the time of such surrender, free and clear of any and all claims, pledges, liens and encumbrances, or any restrictions which would in any manner restrict the transfer of such shares to or by the Company (other than such restrictions as may have existed prior to an issuance of such Shares by the Company to such Participant), and (E) are duly endorsed for transfer to the Company;
 
(iii)                                by a cashless exercise whereby the Participant elects, by providing written notice to the Committee, to exercise any vested portion of the Option by receiving the number of shares equal to (x) the difference between (A) the aggregate Fair Market Value of the shares for which the Option is exercised on the date of exercise by the Participant and (B) the aggregate exercise price, divided by (y) the per share Fair Market Value of the shares on the date of exercise by the Participant; or
 
(iv)                               any combination of the foregoing methods of payment.
 
The Company shall not be required to deliver Shares pursuant to the exercise of an Option until payment of the full exercise price therefor is received by the Company and the Company has received sufficient funds to cover all applicable taxes required to be withheld by the Company by reason of such exercise.
 
(h)                                  Termination of Continuous Service . The Committee may establish and set forth in the applicable Award Agreement the terms and conditions on which an Option shall remain exercisable, if at all, following termination of a Participant’s Continuous Service. The Committee may waive or
 
5 

 
modify these provisions at any time. To the extent that a Participant is not entitled to exercise an Option at the date of his or her termination of Continuous Service, or if the Participant (or other person entitled to exercise the Option) does not exercise the Option to the extent so entitled within the time specified in the Award Agreement or below (as applicable), the Option shall terminate and the Shares underlying the unexercised portion of the Option shall revert to the Plan and become available for future Awards. In no event may any Option be exercised after the expiration of the Option term as set forth in the Award Agreement.
 
The following provisions shall apply to the extent an Award Agreement does not specify the terms and conditions upon which an Option shall terminate when there is a termination of a Participant’s Continuous Service:
 
(i)                                      Termination other than Upon Disability or Death or for Cause . In the event of termination of a Participant’s Continuous Service (other than as a result of Participant’s death, disability, retirement after the Participant attains age 65 or termination for Cause), the Participant shall have the right to exercise an Option at any time within three months following such termination to the extent the Participant was entitled to exercise such Option at the date of such termination or such earlier date on which the Option expires.
 
(ii)                                   Disability . In the event of termination of a Participant’s Continuous Service as a result of his or her being Disabled, the Participant shall have the right to exercise an Option at any time within one year following such termination to the extent the Participant was entitled to exercise such Option at the date of such termination or such earlier date on which the Option expires.
 
(iii)                                Retirement . In the event of termination of a Participant’s Continuous Service as a result of Participant’s retirement, the Participant shall have the right to exercise the Option at any time within three months following such termination to the extent the Participant was entitled to exercise such Option at the date of such or such earlier date on which the Option expires.
 
(iv)                               Death . In the event of the death of Participant during the period of Continuous Service since the Grant Date of an Option, or within thirty days following termination of Participant’s Continuous Service, the Option may be exercised, at any time within one year following the date of Participant’s death, by the Participant’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent the right to exercise the Option had vested at the date of death or, if earlier, the date the Participant’s Continuous Service terminated.
 
(v)                                  Cause . If the Committee determines that a Participant’s Continuous Service terminated due to Cause or that the Company had Cause to terminate the Participant’s Continuous Service or would have had Cause if the Company had then known all of the relevant facts, the Participant shall forfeit the right to exercise any Option as of the time that the Committee determines that Cause first existed, and it shall be considered immediately null and void.
 
If there is a Securities and Exchange Commission blackout period that prohibits the buying or selling or Shares during any part of the ten (10) day period before the expiration of any Option
 
6 

 
based on the termination of a Participant’s Continuous Service (as described above), the period for exercising the Options shall be extended until ten (10) days beyond when such blackout period ends. Notwithstanding any provision hereof or within an Award Agreement, no Option shall ever be exercisable after the expiration date of its original term as set forth in the Award Agreement.
 
(i)                                      Reverse Vesting . The Committee in its sole discretion may allow a Participant to exercise unvested Non-ISOs, in which case the Shares then issued shall be Restricted Shares having analogous vesting restrictions to the unvested Non-ISOs.
 
(j)                                     Buyout . The Committee may at any time offer to buy out an Option, in exchange for a payment in cash or Shares, based on such terms and conditions as the Committee shall establish and communicate to the Participant at the time that such offer is made. In addition, but subject to any Shareholder approval requirement of Applicable Law, if the Fair Market Value for Shares subject to an Option is more than 33% below their exercise price for more than 30 consecutive business days, the Committee may unilaterally terminate and cancel the Option either (i) by paying the Participant, in cash or Shares, an amount not less than the Black-Scholes value of the vested portion of the Option, (ii) by irrevocably committing to grant, on any date the Committee designates, a new Award other than an Option or SAR, or (iii) by irrevocably committing to grant a new Option on substantially the same terms as the cancelled Option, provided that the per Share exercise price for the new Option shall equal the per Share Fair Market Value of a Share on the date the new grant occurs.
 
7.                                       Share Appreciation Rights (SARs)
 
(a)                                  Grants . The Committee may in its discretion grant Share Appreciation Rights to any Eligible Person in any form described below. At the sole discretion of the Committee, any SAR may be exercisable, in whole or in part, immediately on the grant thereof, or only after the occurrence of a specified event, or only in installments, which installments may vary. SARs granted under the Plan may contain such terms and provisions not inconsistent with the Plan that the Committee shall deem advisable in its sole and absolute discretion.
 
(i)                                      SARs related to Options . The Committee may grant SARs either concurrently with the grant of an Option or with respect to an outstanding Option, in which case the SAR shall extend to all or a portion of the Shares covered by the related Option. An SAR shall entitle the Participant who holds the related Option, upon exercise of the SAR and surrender of the related Option, or portion thereof, to the extent the SAR and related Option each were previously unexercised, to receive payment of an amount determined pursuant to Section 7(e) below. Any SAR granted in connection with an ISO will contain such terms as may be required to comply with the provisions of Section 422 of the Code and the regulations promulgated thereunder.
 
(ii)                                   SARs Independent of Options . The Committee may grant SARs which are independent of any Option subject to such conditions as the Committee may in its discretion determine and set forth in the applicable Award Agreement.
 
(iii)                                Limited SARs . The Committee may grant SARs exercisable only upon or in respect of a Change in Control or any other specified event, and such limited SARs may relate to or operate in tandem or combination with or substitution for Options or other
 
7 

 
SARs, or on a stand-alone basis, and may be payable in cash or Shares based on the spread between the exercise price of the SAR, and (A) a price based upon or equal to the Fair Market Value of the Shares during a specified period, at a specified time within a specified period before, after or including the date of such event, or (B) a price related to consideration payable to Company’s shareholders generally in connection with the event.
 
(b)                                  Exercise Price . The per Share exercise price of an SAR shall be determined in the sole discretion of the Committee, shall be set forth in the applicable Award Agreement, and shall be no less than 100% of the Fair Market Value of one Share on the Grant Date. The exercise price of an SAR related to an Option shall be the same as the exercise price of the related Option.
 
(c)                                   Exercise of SARs . An SAR may not have a term exceeding ten years from its Grant Date. Unless the Award Agreement otherwise provides, an SAR related to an Option will be exercisable at such time or times, and to the extent, that the related Option will be exercisable; provided that the Award Agreement shall not provide for an exercise period for the exercise of the SAR that is more favorable to the Participant than the exercise period for the related Option. An SAR granted independently of any other Award will be exercisable pursuant to the terms of the Award Agreement. Whether an SAR is related to an Option or is granted independently, the SAR may only be exercised when the Fair Market Value of the Shares underlying the SAR exceeds the exercise price of the SAR. Each Award Agreement shall specify a term at the end of which the SAR automatically expires, subject to earlier termination provisions contained in Section 7(g) hereof; provided, that, the term of any SAR may not exceed ten years from the Grant Date.
 
(d)                                  Effect on Available Shares . All SARs that may be settled in Shares shall be counted in full against the number of Shares available for awards under the Plan, regardless of the number of Shares actually issued upon settlement of the SARs.
 
(e)                                   Payment . Upon exercise of an SAR related to an Option and the attendant surrender of an exercisable portion of any related Award, the Participant will be entitled to receive payment of an amount determined by multiplying —
 
(i)                                      the excess of the Fair Market Value of a Share on the date of exercise of the SAR over the exercise price per Share of the SAR, by
 
(ii)                                   the number of Shares with respect to which the SAR has been exercised.
 
(iii)                                Notwithstanding the foregoing, an SAR granted independently of an Option (x) may limit the amount payable to the Participant to a percentage, specified in the Award Agreement but not exceeding one-hundred percent (100%), of the amount determined pursuant to the preceding sentence, and (y) shall be subject to any payment or other restrictions that the Committee may at any time impose in its discretion, including restrictions intended to conform the SARs with Section 409A of the Code.
 
(f)                                    Form and Terms of Payment . Unless otherwise provided in an Award Agreement, all SARs shall be settled in Shares as soon as practicable after exercise. Subject to Applicable Law, the Committee may, in its sole discretion, provide in an Award Agreement that the amount determined under Section 7(e) above shall be settled solely in cash, solely in Shares (valued at their Fair Market Value on the date of exercise of the SAR), or partly in cash and partly in Shares, with cash paid in lieu of fractional shares.
 
8 

 
(g)                                   Termination of Employment or Consulting Relationship . The Committee shall establish and set forth in the applicable Award Agreement the terms and conditions under which an SAR shall remain exercisable, if at all, following termination of a Participant’s Continuous Service. The provisions of Section 6(h) above shall apply to the extent an Award Agreement does not specify the terms and conditions upon which an SAR shall terminate when there is a termination of a Participant’s Continuous Service.
 
8.                                       Restricted Shares, Restricted Share Units, and Unrestricted Shares
 
(a)                                  Grants . The Committee may in its sole discretion grant restricted shares (“Restricted Shares”) to any Eligible Person and shall evidence such grant in an Award Agreement that is delivered to the Participant and that sets forth the number of Restricted Shares, the purchase price for such Restricted Shares (if any), and the terms upon which the Restricted Shares may become vested. In addition, the Company may in its discretion grant to any Eligible Person the right to receive Shares after certain vesting requirements are met (“Restricted Share Units”), and shall evidence such grant in an Award Agreement that is delivered to the Participant which sets forth the number of Shares (or formula, that may be based on future performance or conditions, for determining the number of Shares) that the Participant shall be entitled to receive upon vesting and the terms upon which the Shares subject to a Restricted Share Unit may become vested. The Committee may condition any Award of Restricted Shares or Restricted Share Units to a Participant on receiving from the Participant such further assurances and documents as the Committee may require to enforce the restrictions. In addition, the Committee may grant Awards hereunder in the form of unrestricted shares (“Unrestricted Shares”), which shall vest in full upon the date of grant or such other date as the Committee may determine or which the Committee may issue pursuant to any program under which one or more Eligible Persons (selected by the Committee in its sole discretion) elect to pay for such Shares or to receive Unrestricted Shares in lieu of cash bonuses that would otherwise be paid.
 
(b)                                  Vesting and Forfeiture . The Committee shall set forth in an Award Agreement granting Restricted Shares or Restricted Share Units, the terms and conditions under which the Participant’s interest in the Restricted Shares or the Shares subject to Restricted Share Units will become vested and non-forfeitable. Except as set forth in the applicable Award Agreement or the Committee otherwise determines, upon termination of a Participant’s Continuous Service for any reason, the Participant shall forfeit his or her Restricted Shares and Restricted Share Units to the extent the Participant’s interest therein has not vested on or before such termination date; provided that if a Participant purchases the Restricted Shares and forfeits them for any reason, the Company shall return the purchase price to the Participant only if and to the extent set forth in an Award Agreement.
 
(c)                                   Issuance of Restricted Shares Prior to Vesting . The Company shall issue stock certificates that evidence Restricted Shares pending the lapse of applicable restrictions, and that bear a legend making appropriate reference to such restrictions. Except as set forth in the applicable Award Agreement or as the Committee otherwise determines, the Company or a third party that the Company designates shall hold such Restricted Shares and any dividends that accrue with respect to Restricted Shares pursuant to Section 8(e) below.
 
9 

(d)           Issuance of Shares upon Vesting . As soon as practicable after vesting of a Participant’s Restricted Shares (or of the right to receive Shares underlying Restricted Share Units) and the Participant’s satisfaction of applicable tax withholding requirements, the Company shall release to the Participant, free from the vesting restrictions, one Share for each vested Restricted Share (or issue one Share free of the vesting restriction for each vested Restricted Share Unit), unless an Award Agreement provides otherwise. No fractional shares shall be distributed, and cash shall be paid in lieu thereof.
 
(e)           Dividends Payable on Vesting . Whenever Shares are released to a Participant or duly-authorized transferee pursuant to Section 8(d) above as a result of the vesting of Restricted Shares or the Shares underlying Restricted Share Units are issued to a Participant pursuant to Section 8(d) above, such Participant or duly authorized transferee shall also be entitled to receive (unless otherwise provided in the Award Agreement), with respect to each Share released or issued a number of Shares equal to the sum of (i) any stock dividends, which were declared and paid to the holders of Shares between the Grant Date and the date such Share is released from the vesting restrictions in the case of Restricted Shares or issued in the case of Restricted Share Units, and (ii) a number of Shares equal to the Shares that the Participant could have purchased at Fair Market Value on the payment date of any cash dividends if the Participant had received such cash dividends with respect to each Restricted Share or Share subject to a Restricted Share Unit Award between its Grant Date and the date such Share is released or issued.
 
(f)            Section 83(b) Elections . A Participant may make an election under Section 83(b) of the Code (the “Section 83(b) Election”) with respect to Restricted Shares. If a Participant who has received Restricted Share Units promptly provides the Committee with written notice of his or her intention to make a Section 83(b) Election with respect to the Shares subject to such Restricted Share Units, the Committee may in its discretion convert the Participant’s Restricted Share Units into Restricted Shares, on a one-for-one basis, in full satisfaction of the Participant’s Restricted Share Unit Award. The Participant may then make a Section 83(b) Election with respect to those Restricted Shares. Shares with respect to which a Participant makes a Section 83(b) Election shall not be eligible for deferral pursuant to Section 9 below.
 
(g)           Deferral Elections . At any time within the thirty-day period (or other shorter or longer period that the Committee selects in its sole discretion) in which a Participant who is a member of a select group of management or highly compensated employees (within the meaning of ERISA) receives an initial Award of either Restricted Shares or Restricted Share Units that has a vesting condition tied to the Participant’s Continued Service, the Committee may permit the Participant to irrevocably elect, on a form provided by and acceptable to the Committee, to defer the receipt of all or a percentage of the Shares that would otherwise be transferred to the Participant upon the vesting of such Award, provided the election is made at least 12 months in advance of the earliest date that the Restricted Shares or Restricted Share Units may vest.
 
9.             Deferred Share Units
 
(a)           Elections to Defer . The Committee may permit any Eligible Person who is a Director, Consultant or member of a select group of management or highly compensated employees (within the meaning of ERISA) to irrevocably elect, on a form provided by and acceptable to the Committee (the “Election Form”), to forego the receipt of cash or other compensation (including the Shares deliverable pursuant to any Award other than Restricted Shares for which a Section 83(b)
 
10 

 
Election has been made), and in lieu thereof to have the Company credit to an internal Plan account (the “Account”) a number of deferred share units (“Deferred Share Units”) having a Fair Market Value equal to the Shares and other compensation deferred. In general, subject to Section 8(g) regarding deferral of Restricted Shares and Restricted Share Units and to Section 10(e) regarding deferral of Performance Awards, Election Forms must be submitted to the Committee no later than December 31st of the calendar year preceding the calendar year in which the Eligible Person first performs the services that are attributable to the compensation being deferred. Notwithstanding the foregoing, any Eligible Person who first becomes eligible to defer compensation under the Plan and is not eligible to defer or otherwise accrue an amount of deferred compensation under any other plan or arrangement that (i) is maintained by the Company or any other Affiliate that would be considered a single employer with the Company pursuant to Code Sections 414(b) or 414(c) and (ii) constitutes a single plan under Treasury Regulation §1.409A-1(c)(2)(A), may submit his or her Election Form to the Committee no later than 30 days after the date the Eligible Person first becomes eligible to defer compensation under the Plan; however, the Election Form may relate only to compensation that is to be paid for services performed after the date the Election Form is submitted to the Committee. The Committee may reject any Election Form that it determines in its sole discretion does not satisfy the requirements of this paragraph. The Committee may unilaterally make Awards in the form of Deferred Share Units, regardless of whether or not the Participant foregoes other compensation.
 
(b)           Vesting . Unless an Award Agreement expressly provides otherwise, each Participant shall be 100% vested at all times in any Shares subject to Deferred Share Units.
 
(c)           Issuances of Shares . The Company shall provide a Participant with one Share for each Deferred Share Unit in five substantially equal annual installments that are issued before the last day of each of the five calendar years that end after the date on which the Participant incurs a “separation from service” within the meaning of Treasury Regulations §1.409A-1(h) (“Separation from Service”), unless —
 
(i)            the Participant has properly elected a different form of distribution, on a form approved by the Committee, that permits the Participant to select any combination of a lump sum and annual installments that are triggered by and completed within ten years following the Participant’s Separation from Service, and
 
(ii)           the Company received the Participant’s distribution election form at the time the Participant elects to defer the receipt of cash or other compensation pursuant to Section 9(a), provided that such election may be changed through any subsequent election that (i) is delivered to the Company at least one year before the date on which distributions are otherwise scheduled to commence pursuant to the Participant’s election, and (ii) defers the commencement of distributions by at least five years from the originally scheduled commencement date.
 
Fractional shares shall not be issued, and instead shall be paid out in cash.
 
(d)           Crediting of Dividends . Unless otherwise provided in an Award Agreement, whenever Shares are issued to a Participant pursuant to Section 9(c) above, such Participant shall also be entitled to receive, with respect to each Share issued, a number of Shares equal to the sum of (i) any stock dividends, which were declared and paid to the holders of Shares between the Grant Date and
 
11 

 
the date such Share is issued, and (ii) a number of Shares equal to the Shares that the Participant could have purchased at Fair Market Value on the payment date of any cash dividends if the Participant had received such cash dividends between the Grant Date and the date such Share is issued.
 
(e)           Emergency Withdrawals . In the event a Participant suffers an unforeseeable emergency within the contemplation of this Section and Section 409A of the Code, the Participant may apply to the Company for an immediate distribution of all or a portion of the Participant’s Deferred Share Units. The unforeseeable emergency must result from a sudden and unexpected illness or accident of the Participant, the Participant’s spouse, or a dependent (within the meaning of Section 152(a) of the Code) of the Participant, casualty loss of the Participant’s property, or other similar extraordinary and unforeseeable conditions beyond the control of the Participant. Examples of purposes which are not considered unforeseeable emergencies include post-secondary school expenses or the desire to purchase a residence. In no event will a distribution be made to the extent the unforeseeable emergency could be relieved through reimbursement or compensation by insurance or otherwise, or by liquidation of the Participant’s nonessential assets to the extent such liquidation would not itself cause a severe financial hardship. The amount of any distribution hereunder shall be limited to the amount necessary to relieve the Participant’s unforeseeable emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution. The Committee shall, in its sole and absolute discretion, determine whether a Participant has a qualifying unforeseeable emergency and the amount which qualifies for distribution, if any. The Committee may require evidence of the purpose and amount of the need, and may establish such application or other procedures as it deems appropriate.
 
(f)            Unsecured Rights to Deferred Compensation . A Participant’s right to Deferred Share Units shall at all times constitute an unsecured promise of the Company to pay benefits as they come due. The right of the Participant or the Participant’s duly-authorized transferee to receive benefits hereunder shall be solely an unsecured claim against the general assets of the Company. Neither the Participant nor the Participant’s duly-authorized transferee shall have any claim against or rights in any specific assets, shares, or other funds of the Company.
 
10.          Performance Awards
 
(a)           Performance Units . Subject to the limitations set forth in paragraph (c) hereof, the Committee may in its discretion grant Performance Units to any Eligible Person and shall evidence such grant in an Award Agreement that is delivered to the Participant which sets forth the terms and conditions of the Award.
 
(b)           Performance Compensation Awards . Subject to the limitations set forth in paragraph (c) hereof, the Committee may, at the time of grant of a Performance Unit, designate such Award as a “Performance Compensation Award” (payable in cash or Shares) in order that such Award constitutes “qualified performance-based compensation” under Code Section 162(m), in which event the Committee shall have the power to grant such Performance Compensation Award upon terms and conditions that qualify it as “qualified performance-based compensation” within the meaning of Code Section 162(m). With respect to each such Performance Compensation Award, the Committee shall establish, in writing within the time required under Code Section 162(m), a “Performance Period,” “Performance Measure(s)”, and “Performance Formula(e)” (each such term being hereinafter defined). Once established for a Performance Period, the Performance Measure(s)
 
12 

 
and Performance Formula(e) shall not be amended or otherwise modified to the extent such amendment or modification would cause the compensation payable pursuant to the Award to fail to constitute qualified performance-based compensation under Code Section 162(m).
 
A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that the Performance Measure(s) for such Award is achieved and the Performance Formula(e) as applied against such Performance Measure(s) determines that all or some portion of such Participant’s Award has been earned for the Performance Period. As soon as practicable after the close of each Performance Period, the Committee shall review and certify in writing whether, and to what extent, the Performance Measure(s) for the Performance Period have been achieved and, if so, determine and certify in writing the amount of the Performance Compensation Award to be paid to the Participant and, in so doing, may use negative discretion to decrease, but not increase, the amount of the Award otherwise payable to the Participant based upon such performance.
 
(c)           Limitations on Awards . The Committee shall have the discretion to provide in any Award Agreement that any amounts earned in excess of these limitations will either be credited as Deferred Share Units, or as deferred cash compensation under a separate plan of the Company (provided in the latter case that such deferred compensation either bears a reasonable rate of interest or has a value based on one or more predetermined actual investments). Any amounts for which payment to the Participant is deferred pursuant to the preceding sentence shall be paid to the Participant in a future year or years not earlier than, and only to the extent that, the Participant is either not receiving compensation in excess of these limits for a Performance Period, or is not subject to the restrictions set forth under Section 162(b) of the Code.
 
(d)           Definitions.
 
(i)            “Performance Formula” means, for a Performance Period, one or more objective formulas or standards established by the Committee for purposes of determining whether or the extent to which an Award has been earned based on the level of performance attained or to be attained with respect to one or more Performance Measure(s). Performance Formulae may vary from Performance Period to Performance Period and from Participant to Participant and may be established on a stand-alone basis, in tandem or in the alternative.
 
(ii)           “Performance Measure” means one or more of the following selected by the Committee to measure Company, Affiliate, and/or business unit performance for a Performance Period, whether in absolute or relative terms (including, without limitation, terms relative to a peer group or index): basic, diluted, or adjusted earnings per share; sales or revenue; earnings before interest, taxes, and other adjustments (in total or on a per share basis); basic or adjusted net income; returns on equity, assets, capital, revenue or similar measure; debt repayment; economic value added; working capital; total shareholder return; and product development, product market share, research, licensing, litigation, human resources, information services, mergers, acquisitions, sales of assets of Affiliates or business units. Each such measure shall be, to the extent applicable, determined in accordance with generally accepted accounting principles as consistently applied by the Company (or such other standard applied by the Committee) and, if so determined by the Committee, and in the case of a Performance Compensation Award, to the extent permitted under Code
 
13 

 
Section 162(m), adjusted to omit the effects of extraordinary items, gain or loss on the disposal of a business segment, unusual or infrequently occurring events and transactions and cumulative effects of changes in accounting principles. Performance Measures may vary from Performance Period to Performance Period and from Participant to Participant, and may be established on a stand-alone basis, in tandem or in the alternative.
 
(iii)          “Performance Period” means one or more periods of time (of not less than one fiscal year of the Company), as the Committee may designate, over which the attainment of one or more Performance Measure(s) will be measured for the purpose of determining a Participant’s rights in respect of an Award.
 
(e)           Deferral Elections . At any time prior to the date that is at least six months before the close of a Performance Period (or shorter or longer period that the Committee selects) with respect to an Award of either Performance Units or Performance Compensation, the Committee may permit a Participant who is a member of a select group of management or highly compensated employees (within the meaning of ERISA) to irrevocably elect, on a form provided by and acceptable to the Committee, to defer the receipt of all or a percentage of the cash or Shares that would otherwise be transferred to the Participant upon the vesting of such Award. If the Participant makes this election, the cash or Shares subject to the election, and any associated interest and dividends, shall be credited to an account established pursuant to Section 9 hereof on the date such cash or Shares would otherwise have been released or issued to the Participant pursuant to Section 10(a) or Section 10(b) above.
 
11.          Taxes
 
(a)           General . As a condition to the issuance or distribution of Shares pursuant to the Plan, the Participant (or in the case of the Participant’s death, the person who succeeds to the Participant’s rights) shall make such arrangements as the Company may require for the satisfaction of any applicable federal, state, local or foreign withholding tax obligations that may arise in connection with the Award and the issuance of Shares. The Company shall not be required to issue any Shares until such obligations are satisfied, and may unilaterally withhold Shares for this purpose. If the Committee allows or effectuates the withholding or surrender of Shares to satisfy a Participant’s tax withholding obligations, the Committee shall not allow Shares to be withheld in an amount that exceeds the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes.
 
(b)           Default Rule for Employees . In the absence of any other arrangement authorized by the Committee or set forth in the Award Agreement, and to the extent permitted under Applicable Law, each Participant shall be deemed to have elected to have the Company withhold from the Shares or cash to be issued pursuant to an Award that number of Shares having a Fair Market Value determined as of the applicable Tax Date (as defined below) or cash equal to the minimum applicable tax withholding and employment tax obligations associated with an Award. The Company may also satisfy any required withholding through withholding from cash compensation otherwise payable to the Participant. For purposes of this Section 11, the Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined under the Applicable Law (the “Tax Date”).
 
14 

 
(c)           Surrender of Shares . If permitted by the Committee, in its discretion, a Participant may satisfy the minimum applicable tax withholding and employment tax obligations associated with an Award by surrendering Shares to the Company (including Shares that would otherwise be issued pursuant to the Award) that have a Fair Market Value determined as of the applicable Tax Date equal to the amount required to be withheld. In the case of Shares previously acquired from the Company that are surrendered under this Section 11, such Shares must have been owned by the Participant for more than six months on the date of surrender (or such longer period of time the Company may in its discretion require).
 
(d)           Income Taxes and Deferred Compensation . Participants are solely responsible and liable for the satisfaction of all taxes and penalties that may arise in connection with Awards (including any taxes arising under Section 409A of the Code), and the Company shall not have any obligation to indemnify or otherwise hold any Participant harmless from any or all of such taxes. The Committee shall have the discretion to organize any deferral program, to require deferral election forms, and to grant or to unilaterally modify any Award in a manner (i) that conforms with the requirements of Section 409A of the Code with respect to compensation that is deferred and/or that vests after December 31, 2004, (ii) that voids any Participant election to the extent it would violate Section 409A of the Code, and (iii) for any distribution election that would violate Section 409A of the Code, to make distributions pursuant to the Award at the earliest to occur of a distribution event that is allowable under Section 409A of the Code or any distribution event that is both allowable under Section 409A of the Code and is elected by the Participant, subject to any valid second election to defer, provided that the Committee permits second elections to defer in accordance with Section 409A(a)(4)(C). The Committee shall have the sole discretion to interpret the requirements of the Code, including Section 409A, for purposes of the Plan and all Awards.
 
12.          Non-Transferability of Awards
 
(a)           General . Except as set forth in this Section 12, or as otherwise approved by the Committee, Awards may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution. The designation of a beneficiary by a Participant will not constitute a transfer. An Award may be exercised, during the lifetime of the holder of an Award, only by such holder, the duly-authorized legal representative of a Participant who is Disabled, or a transferee permitted by this Section 12
 
(b)           Limited Transferability Rights . Notwithstanding anything else in this Section 12, the Committee may in its discretion permit an Award in the form of a Non-ISO, Share-settled SAR, Restricted Shares, or Performance Shares to be transferred, on such terms and conditions as the Committee deems appropriate, either (i) by instrument to the Participant’s “Immediate Family” (as defined below), (ii) by instrument to an inter vivos or testamentary trust (or other entity) in which the Award is to be passed to the Participant’s designated beneficiaries, or (iii) by gift to charitable institutions. Any transferee of the Participant’s rights shall succeed and be subject to all of the terms of the applicable Award Agreement and the Plan. “Immediate Family” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive relationships.
 
15 

 
13.          Adjustments Upon Changes in Capitalization, Merger or Certain Other Transactions
 
(a)           Changes in Capitalization . The Committee shall equitably adjust the number of Shares covered by each outstanding Award, and the number of Shares that have been authorized for issuance under the Plan but as to which no Awards have yet been granted or that have been returned to the Plan upon cancellation, forfeiture, or expiration of an Award, as well as the price per Share covered by each such outstanding Award, to reflect any increase or decrease in the number of issued Shares resulting from a stock-split, reverse stock-split, stock dividend, combination, recapitalization or reclassification of the Shares, merger, consolidation, change in form of organization, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company. In the event of any such transaction or event, the Committee may provide in substitution for any or all outstanding Awards under the Plan such alternative consideration (including securities of any surviving entity) as it may in good faith determine to be equitable under the circumstances and may require in connection therewith the surrender of all Awards so replaced. In any case, such substitution of securities shall not require the consent of any person who is granted Awards pursuant to the Plan. Except as expressly provided herein, or in an Award Agreement, if the Company issues for consideration shares of stock of any class or securities convertible into shares of stock of any class, the issuance shall not affect, and no adjustment by reason thereof shall be required to be made with respect to the number or price of Shares subject to any Award.
 
(b)           Dissolution or Liquidation . In the event of the dissolution or liquidation of the Company other than as part of a Change in Control, each Award will terminate immediately prior to the consummation of such action, subject to the ability of the Committee to exercise any discretion authorized in the case of a Change in Control.
 
(c)           Change in Control . In the event of a Change in Control, the Committee may in its sole and absolute discretion and authority, without obtaining the approval or consent of the Company’s shareholders or any Participant with respect to his or her outstanding Awards, take one or more of the following actions:
 
(i)            arrange for or otherwise provide that each outstanding Award shall be assumed or a substantially similar award shall be substituted by a successor corporation or a parent or subsidiary of such successor corporation (the “Successor Corporation”);
 
(ii)           accelerate the vesting of Awards so that Awards shall vest (and, to the extent applicable, become exercisable) as to the Shares that otherwise would have been unvested and provide that repurchase rights of the Company with respect to Shares issued upon exercise of an Award shall lapse as to the Shares subject to such repurchase right;
 
(iii)          arrange or otherwise provide for the payment of cash or other consideration to Participants in exchange for the satisfaction and cancellation of outstanding Awards;
 
(iv)          terminate Awards upon the consummation of the transaction, provided that the Committee may in its sole discretion provide for vesting of all or some outstanding Awards in full as of a date immediately prior to consummation of the Change in Control. To the extent that an Award is not exercised prior to consummation of a transaction in which the Award is not being assumed or substituted, such Award shall terminate upon such consummation; or
 
16 

 
(v)           make such other modifications, adjustments or amendments to outstanding Awards or this Plan as the Committee deems necessary or appropriate, subject however to the terms of Section 15(a) below.
 
(d)           Certain Distributions . In the event of any distribution to the Company’s shareholders of securities of any other entity or other assets (other than dividends payable in cash or stock of the Company) without receipt of consideration by the Company, the Committee may, in its discretion, appropriately adjust the price per Share covered by each outstanding Award to reflect the effect of such distribution.
 
14.          Time of Granting Awards
 
The date of grant (“Grant Date”) of an Award shall be the date on which the Committee makes the determination granting such Award or such other date as is determined by the Committee, provided that in the case of an ISO, the Grant Date shall be the later of the date on which the Committee makes the determination granting such ISO or the date of commencement of the Participant’s employment relationship with the Company.
 
15.          Modification of Awards and Substitution of Options
 
(a)           Modification, Extension, and Renewal of Awards . Within the limitations of the Plan, the Committee may modify an Award to accelerate the rate at which an Option or SAR may be exercised (including without limitation permitting an Option or SAR to be exercised in full without regard to the installment or vesting provisions of the applicable Award Agreement or whether the Option or SAR is at the time exercisable, to the extent it has not previously been exercised), to accelerate the vesting of any Award, to extend or renew outstanding Awards or to accept the cancellation of outstanding Awards to the extent not previously exercised. Notwithstanding the foregoing provision, no modification of an outstanding Award shall materially and adversely affect such Participant’s rights thereunder, unless either (i) the Participant provides written consent, or (ii) before a Change in Control, the Committee determines in good faith that the modification is not materially adverse to the Participant.
 
(b)           Substitution of Options . Notwithstanding any inconsistent provisions or limits under the Plan, in the event the Company or an Affiliate acquires (whether by purchase, merger or otherwise) all or substantially all of outstanding capital stock or assets of another corporation or in the event of any reorganization or other transaction qualifying under Section 424 of the Code, the Committee may, in accordance with the provisions of that Section, substitute Options for options under the plan of the acquired company provided (i) the excess of the aggregate fair market value of the shares subject to an option immediately after the substitution over the aggregate option price of such shares is not more than the similar excess immediately before such substitution and (ii) the new option does not give persons additional benefits, including any extension of the exercise period.
 
16.          Term of Plan
 
The Plan shall continue in effect for a term of ten (10) years from its effective date as determined under Section 20 below, unless the Plan is sooner terminated under Section 17 below.
 
17 

 
17.          Amendment and Termination of the Plan
 
(a)           Authority to Amend or Terminate . Subject to Applicable Laws, the Board may from time to time amend, alter, suspend, discontinue, or terminate the Plan.
 
(b)           Effect of Amendment or Termination . No amendment, suspension, or termination of the Plan shall materially and adversely affect Awards already granted unless either it relates to an adjustment pursuant to Section 13 or modification pursuant to Section 15(a) above, or it is otherwise mutually agreed between the Participant and the Committee, which agreement must be in writing and signed by the Participant and the Company. Notwithstanding the foregoing, the Committee may amend the Plan to comply with changes in tax or securities laws or regulations, or in the interpretation thereof.
 
(c)           Special Code Section 409A . Notwithstanding the foregoing provisions of this Section 17, with respect to any Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Code Section 409A, termination of this Plan shall not result in an acceleration or deferral of income taxation except to the extent permissible within Code Section 409A’s rules and regulations relating to plan terminations.
 
18.          Conditions Upon Issuance of Shares
 
Notwithstanding any other provision of the Plan or any agreement entered into by the Company pursuant to the Plan, the Company shall not be obligated, and shall have no liability for failure, to issue or deliver any Shares under the Plan unless such issuance or delivery would comply with Applicable Law, with such compliance determined by the Company in consultation with its legal counsel.
 
19.          Reservation of Shares
 
The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.
 
20.          Effective Date
 
This Plan shall become effective on the date which it has received approval by a vote of a majority of the votes cast at a duly held meeting of the Company’s shareholders (or by such other shareholder vote that the Committee determines to be sufficient for the issuance of Shares or stock options according to the Company’s governing documents and applicable state law).
 
21.          Controlling Law
 
All disputes relating to or arising from the Plan shall be governed by the internal substantive laws (and not the laws of conflicts of laws) of the State of Delaware, to the extent not preempted by United States federal law. If any provision of this Plan is held by a court of competent jurisdiction to be invalid and unenforceable, the remaining provisions shall continue to be fully effective.
 
18 

 
22.          Laws and Regulations
 
(a)           U.S. Securities Laws . This Plan, the grant of Awards, and the exercise of Options and SARs under this Plan, and the obligation of the Company to sell or deliver any of its securities (including, without limitation, Options, Restricted Shares, Restricted Share Units, Unrestricted Shares, Deferred Share Units, and Shares) under this Plan shall be subject to all Applicable Law. In the event that the Shares are not registered under the Securities Act of 1933, as amended (the “Act”), or any applicable state securities laws prior to the delivery of such Shares, the Company may require, as a condition to the issuance thereof, that the persons to whom Shares are to be issued represent and warrant in writing to the Company that such Shares are being acquired by him or her for investment for his or her own account and not with a view to, for resale in connection with, or with an intent of participating directly or indirectly in, any distribution of such Shares within the meaning of the Act, and a legend to that effect may be placed on the certificates representing the Shares.
 
(b)           Other Jurisdictions . To facilitate the making of any grant of an Award under this Plan, the Committee may provide for such special terms for Awards to Participants who are foreign nationals or who are employed by the Company or any Affiliate outside of the United States of America as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. The Company may adopt rules and procedures relating to the operation and administration of this Plan to accommodate the specific requirements of local laws and procedures of particular countries. Without limiting the foregoing, the Company is specifically authorized to adopt rules and procedures regarding the conversion of local currency, taxes, withholding procedures and handling of stock certificates which vary with the customs and requirements of particular countries. The Company may adopt sub-plans and establish escrow accounts and trusts as may be appropriate or applicable to particular locations and countries.
 
23.          No Shareholder Rights
 
Neither a Participant nor any transferee of a Participant shall have any rights as a shareholder of the Company with respect to any Shares underlying any Award until the date of issuance of a share certificate to a Participant or a transferee of a Participant for such Shares in accordance with the Company’s governing instruments and Applicable Law. Prior to the issuance of Shares pursuant to an Award, a Participant shall not have the right to vote or to receive dividends or any other rights as a shareholder with respect to the Shares underlying the Award, notwithstanding its exercise in the case of Options and SARs. No adjustment will be made for a dividend or other right that is determined based on a record date prior to the date the stock certificate is issued, except as otherwise specifically provided for in this Plan.
 
24.          No Employment Rights
 
The Plan shall not confer upon any Participant any right to continue an employment, service or consulting relationship with the Company, nor shall it affect in any way a Participant’s right or the Company’s right to terminate the Participant’s employment, service, or consulting relationship at any time, with or without Cause. By accepting any Award under this Plan a Participant confirms his or her at-will status (except as otherwise provided in a written employment or consulting agreement signed by an officer of the Company or an authorized designee of an officer of the Company) and that such relationship only can be changed by a written agreement signed by an officer of the Company or an authorized designee of an officer of the Company.
 
19 

25.                                Termination, Rescission and Recapture of Awards
 
(a)                                  Each Award under the Plan is intended to align the Participant’s long-term interest with those of the Company.  If the Participant engages in certain activities discussed below, either during employment or after employment with the Company terminates for any reason, the Participant is acting contrary to the long-term interests of the Company.  Accordingly, but only to the extent expressly provided in an Award Agreement, the Company may terminate any outstanding, unexercised, unexpired, unpaid, or deferred Awards (“Termination”), rescind any exercise, payment or delivery pursuant to the Award (“Rescission”), or recapture any Common Stock (whether restricted or unrestricted) or proceeds from the Participant’s sale of Shares issued pursuant to the Award (“Recapture”), if the Participant does not comply with the conditions of subsections (b), (c) and (e) hereof (collectively, the “Conditions”).
 
(b)                                  A Participant shall not, without the Company’s prior written authorization, disclose to anyone outside the Company, or use in other than the Company’s business, any proprietary or confidential information or material, as those or other similar terms are used in any applicable patent, confidentiality, inventions, secrecy, or other agreement between the Participant and the Company with regard to any such proprietary or confidential information or material.
 
(c)                                   Pursuant to any agreement between the Participant and the Company with regard to intellectual property (including but not limited to patents, trademarks, copyrights, trade secrets, inventions, developments, improvements, proprietary information, confidential business and personnel information), a Participant shall promptly disclose and assign to the Company or its designee all right, title, and interest in such intellectual property, and shall take all reasonable steps necessary to enable the Company to secure all right, title and interest in such intellectual property in the United States and in any foreign country.
 
(d)                                  Upon exercise, payment, or delivery of cash or Common Stock pursuant to an Award, the Participant shall certify on a form acceptable to the Company that he or she is in compliance with the terms and conditions of the Plan and, if a severance of Continuous Service has occurred for any reason, shall state the name and address of the Participant’s then-current employer or any entity for which the Participant performs business services and the Participant’s title, and shall identify any organization or business in which the Participant owns a greater-than-five-percent equity interest.
 
(e)                                   If the Company determines, in its sole and absolute discretion, that (i) a Participant has violated any of the Conditions or (ii) during his or her Continuous Service, or within two years after its termination for any reason, a Participant (x) has rendered services to or otherwise directly or indirectly engaged in or assisted, any organization or business that, in the judgment of the Company in its sole and absolute discretion, is or is working to become competitive with the Company; (y) has solicited any non-administrative employee of the Company to terminate employment with the Company; or (z) has engaged in activities which are materially prejudicial to or in conflict with the interests of the Company, including any breaches of fiduciary duty or the duty of loyalty, then the Company may, in its sole and absolute discretion, impose a Termination, Rescission, and/or Recapture with respect to any or all of the Participant’s relevant Awards, Shares, and the proceeds
 
20 

 
thereof.  It shall not be a basis for Termination, Rescission or Recapture if after termination of a Participant’s Continuous Service, the Participant purchases, as an investment or otherwise, stock or other securities of such an organization or business, so long as (i) such stock or other securities are listed upon a recognized securities exchange or traded over-the-counter, and (ii) such investment does not represent more than a five percent (5%) equity interest in the organization or business.
 
(f)                                    Within ten days after receiving notice from the Company of any such activity described in Section 25(e) above, the Participant shall deliver to the Company the Shares acquired pursuant to the Award, or, if Participant has sold the Shares, the gain realized, or payment received as a result of the rescinded exercise, payment, or delivery; provided, that if the Participant returns Shares that the Participant purchased pursuant to the exercise of an Option (or the gains realized from the sale of such Common Stock), the Company shall promptly refund the exercise price, without earnings, that the Participant paid for the Shares. Any payment by the Participant to the Company pursuant to this Section 25 shall be made either in cash or by returning to the Company the number of Shares that the Participant received in connection with the rescinded exercise, payment, or delivery.
 
(g)                                   Notwithstanding the foregoing provisions of this Section, the Company has sole and absolute discretion not to require Termination, Rescission and/or Recapture, and its determination not to require Termination, Rescission and/or Recapture with respect to any particular act by a particular Participant or Award shall not in any way reduce or eliminate the Company’s authority to require Termination, Rescission and/or Recapture with respect to any other act or Participant or Award. Nothing in this Section shall be construed to impose obligations on the Participant to refrain from engaging in lawful competition with the Company after the termination of employment that does not violate subsections (b), (c) or (e) of this Section, other than any obligations that are part of any separate agreement between the Company and the Participant or that arise under Applicable Law.
 
(h)                                  All administrative and discretionary authority given to the Company under this Section shall be exercised by the most senior human resources executive of the Company or such other person or committee (including without limitation the Committee) as the Committee may designate from time to time.
 
(i)                                      Notwithstanding any provision of this Section, if any provision of this Section is determined to be unenforceable or invalid under any Applicable Law, such provision will be applied to the maximum extent permitted by Applicable Law, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under Applicable Law.  Furthermore, if any provision of this Section is illegal under any Applicable Law, such provision shall be null and void to the extent necessary to comply with Applicable Law.
 
26.                                Recoupment of Awards
 
Unless otherwise specifically provided in an Award Agreement, and to the extent permitted by Applicable Law, the Committee may in its sole and absolute discretion, without obtaining the approval or consent of the Company’s shareholders or any Participant with respect to his or her outstanding Awards, require that each Participant agrees to reimburse the Company for all or any portion of any Awards granted under this Plan (“Reimbursement”), or the Committee may require the Termination or Rescission of, or the Recapture associated with, any Award, if:
 
21 

 
(a)                                  the granting, vesting, or payment of such Award was predicated upon the achievement of certain financial results that were subsequently the subject of a material financial restatement;
 
(b)                                  in the Committee’s view the Participant engaged in fraud or misconduct that caused or partially caused the need for a material financial restatement by the Company or any Affiliate; and
 
(c)                                   a lower granting, vesting, or payment of such Award would have occurred based upon the restated financial results.
 
In each instance, the Committee will, to the extent practicable and allowable under Applicable Laws, require Reimbursement, Termination or Rescission of, or Recapture relating to, any such Award granted to a Participant, including reimbursement for any gains realized on the exercise of Options or SARs attributable to such Awards, plus a reasonable rate of interest, effecting the cancellation of Restricted Shares, Restricted Share Units, Unrestricted Shares, Deferred Share Units, Performance Awards, and outstanding Options and SARs; provided that the Company will not seek Reimbursement, Termination or Rescission of, or Recapture relating to, any such Awards that were paid or vested more than three years prior to the date the applicable restatement is disclosed.
 
27.                                Pre-IPO Provisions
 
Subject to any contrary terms set forth in any Award Agreement, for any period preceding the date of an initial public offering, this Section shall be applicable to any Shares subject to or issued pursuant to Awards.  The provisions set forth below shall become null and void upon the occurrence of an initial public offering.
 
(a)                                  Shareholders’ Agreement .  As a condition for the delivery of any Shares pursuant to any Award, the Committee may require the Participant to execute and be bound by any agreement that generally exists between the Company and similarly-situated Shareholders.
 
(b)                                  Repurchase Rights . At any time before an initial public offering, the Company may repurchase any Shares acquired pursuant to an Award for their then Fair Market Value as determined by the Committee in good faith; provided that if a Participant’s Continuous Service is terminated by the Company for Cause, the repurchase price shall be the lower of the purchase price the Participant paid for the Shares, if any, or the Shares’ Fair Market Value. The Company shall not exercise its repurchase right until the Shares have been held by the Participant for at least six months, unless (i) the Company’s independent auditors have advised the Committee that an earlier repurchase will not trigger adverse accounting consequences or (ii) the Committee determines that any adverse accounting consequences are acceptable to the Company. The Company shall pay the repurchase price to the Participant in a lump sum or in equal monthly installments up to 60 months, as determined by the Company in its sole discretion. Notwithstanding the foregoing, to the extent required by Section 260.140.8 of Title 10 of the California Code of Regulations and to the extent compliance with such section is required for the Shares subject to the Award to be exempt from registration in California, any such repurchase right granted prior to the date on which the Shares become publicly-traded to a person who is not an Officer, Director or Consultant shall be upon the following terms:
 
22 

 
(i)                                      if the repurchase option gives the Company the right to repurchase the shares upon termination of Continuous Service at not less than the Fair Market Value of the Shares to be purchased on the date of termination of Continuous Service, and
 
(1)                                  the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares within six (6) months of termination of Continuous Service (or in the case of shares issued upon exercise of Options or SARs after such date of termination, within six (6) months after the date of the exercise), and
 
(2)                                  the right terminates when the shares become publicly traded; or
 
(ii)                                   if the repurchase option gives the Company the right to repurchase the Shares upon termination of the Participant’s Continuous Service at the original purchase price for such Shares, and
 
(1)                                  the right to repurchase at the original purchase price shall lapse at the rate of at least twenty percent (20%) of the Shares per year over five (5) years from the Grant Date (without respect to the date the Option or SAR was exercised or became exercisable), and
 
(2)                                  the right to repurchase must be exercised for cash or cancellation of purchase money indebtedness for the Shares within six (6) months of termination of Continuous Service (or, in the case of shares issued upon exercise of Options or SARs, after such date of termination, within six (6) months after the date of the exercise) or such longer period as may be agreed to by the Company and the Participant.
 
(c)                                   Market Stand-Off . In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the federal securities laws, including the Company’s initial public offering, Participants shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired pursuant to Awards without the prior written consent of the Company or its underwriters. Such restriction (the “ Market Stand-Off ”) shall be in effect for such period of time, not exceeding one hundred eighty (180) days, following the date of the final prospectus for the offering as may be requested by the Company or such underwriters. The Market Stand-Off shall in any event terminate two (2) years after the date of the Company’s initial public offering. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to such Market Stand- Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions
 
23 

 
with respect to the Shares acquired pursuant to Awards until the end of the applicable stand-off period.  The Company and its underwriters shall be beneficiaries of the agreement set forth in this Section 27(c).  Participants who are not Directors or Officers shall be subject to this Section 27(c) only if Directors and officers of the Company are subject to it.
 
24 

 
BOOT BARN HOLDINGS, INC.
2007 STOCK INCENTIVE PLAN

 
Appendix A: Definitions

 
As used in the Plan, the following definitions shall apply:
 
“ Affiliate ” means, with respect to any Person (as defined below), any other Person that directly or indirectly controls or is controlled by or under common control with such Person.  For the purposes of this definition, “control,” when used with respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person or the power to elect directors, whether through the ownership of voting securities, by contract or otherwise; and the terms “affiliated,” “controlling” and “controlled” have meanings correlative to the foregoing.
 
“ Applicable Law ” means the legal requirements relating to the administration of options and share-based plans under applicable U.S. federal and state laws, the Code, any applicable stock exchange or automated quotation system rules or regulations (to the extent the Committee determines in its discretion that compliance with such rules or regulations is desirable) and the Applicable Laws of any other country or jurisdiction where Awards are granted, or that apply to the Company’s or a Participant’s rights and obligations under this Plan or any Award Agreement, as such laws, rules, regulations and requirements shall be in place from time to time.
 
“ Award ” means any award made pursuant to the Plan, including awards made in the form of an Option, an SAR, a Restricted Share, a Restricted Share Unit, an Unrestricted Share, a Deferred Share Unit, and a Performance Award, or any combination thereof, whether alternative or cumulative, authorized by and granted under this Plan.
 
“ Award Agreement ” means any written document setting forth the terms of an Award that has been authorized by the Committee. The Committee shall determine the form or forms of documents to be used, and may change them from time to time for any reason.
 
“ Board ” means the Board of Directors of the Company.
 
“ Cause ” for termination of a Participant’s Continuous Service will have the meaning set forth in any unexpired employment agreement between the Company and the Participant. In the absence of such an agreement, “Cause” will exist if the Participant is terminated from employment or other service with the Company or an Affiliate for any of the following reasons: (i) the Participant’s willful failure to substantially perform his or her duties and responsibilities to the Company or deliberate violation of a material Company policy; (ii) the Participant’s commission of any material act or acts of fraud, embezzlement, dishonesty, or other willful misconduct; (iii) the Participant’s material unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (iv) Participant’s willful and material breach of any of his or her obligations under any written agreement or covenant with the Company.

 
The Committee shall in its discretion determine whether or not a Participant is being terminated for Cause.  The Committee’s determination shall be final and binding on the Participant, the Company, and all other affected persons.  The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time, and the term “Company” will be interpreted herein to include any Affiliate or successor thereto, if appropriate.
 
“ Change in Control ” means any of the following:
 
(i)                                      Acquisition of Controlling Interest. Any Person (other than Persons who are Employees at any time more than one year before a transaction) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities. In applying the preceding sentence, (i) securities acquired directly from the Company or its Affiliates by or for the Person shall not be taken into account, and (ii) an agreement to vote securities shall be disregarded unless its ultimate purpose is to cause what would otherwise be Change in Control, as reasonably determined by the Board.
 
(ii)                                   Merger . The Company consummates a merger, or consolidation of the Company with any other corporation unless: (a) the voting securities of the Company outstanding immediately before the merger or consolidation would continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; and (b) no Person (other than Persons who are Employees at any time more than one year before a transaction) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities.
 
(iii)                                Sale of Assets .  The stockholders of the Company approve an agreement for the sale or disposition by the Company of all, or substantially all, of the Company’s assets.
 
(iv)                               Liquidation or Dissolution .  The stockholders of the Company approve a plan or proposal for liquidation or dissolution of the Company.
 
Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.
 
“ Code ” means the U.S. Internal Revenue Code of 1986, as amended.
 
“ Committee ” means one or more committees or subcommittees of the Board appointed by the Board to administer the Plan in accordance with Section 4 above.  With respect to any decision involving an Award intended to satisfy the requirements of Section 162(m) of the Code, the Committee shall consist of two or more Directors of the Company who are “outside directors”
 
2 

 
within the meaning of Section 162(m) of the Code.  With respect to any decision relating to a Reporting Person, the Committee shall consist solely of two or more Directors who are disinterested within the meaning of Rule 16b-3.
 
“ Company ” means Boot Barn Holdings, Inc., a Delaware corporation; provided, however, that in the event the Company reincorporates to another jurisdiction, all references to the term “Company” shall refer to the Company in such new jurisdiction.
 
“ Consultant ” means any person, including an advisor, who is engaged by the Company or any Affiliate to render services and is compensated for such services.
 
“ Continuous Service ” means the absence of any interruption or termination of service as an Employee, Director, or Consultant. Continuous Service shall not be considered interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other leave of absence approved by the Committee, provided that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to Company policy adopted from time to time; (iv) changes in status from Director to advisory director or emeritus status; or (iv) in the case of transfers between locations of the Company or between the Company, its Affiliates or their respective successors. Changes in status between service as an Employee, Director, and a Consultant will not constitute an interruption of Continuous Service unless the Committee determines that the individual has not continued or will not continue to perform bona fide services for the Company or determines that the relationship will or may result in adverse accounting consequences.
 
“ Deferred Share Units ” mean Awards pursuant to Section 9 of the Plan.
 
“ Director ” means a member of the Board, or a member of the board of directors of an Affiliate.
 
“ Disabled ” means a condition under which a Participant—
 
(a)                                  is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or
 
(b)                                  has, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, received income replacement benefits for a period of not less than 3 months under an accident or health plan covering employees of the Company.
 
“ Eligible Person ” means any Consultant, Director or Employee and includes non- Employees to whom an offer of employment has been or is being extended.
 
“ Employee ” means any person whom the Company or any Affiliate classifies as an employee (including an officer) for employment tax purposes, whether or not that classification is correct. The payment by the Company of a director’s fee to a Director shall not be sufficient to constitute “employment” of such Director by the Company.
 
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
 
3 

 
“ Fair Market Value ” as of any date (the “Determination Date”) means: (i) the closing price of a Share on the New York Stock Exchange or the American Stock Exchange (collectively, the “Exchange”), on the Determination Date, or, if shares were not traded on the Determination Date, then on the nearest preceding trading day during which a sale occurred; or (ii) if such stock is not traded on the Exchange but is quoted on NASDAQ or a successor quotation system, (A) the last sales price (if the stock is then listed as a National Market Issue under The NASDAQ National Market System) or (B) the mean between the closing representative bid and asked prices (in all other cases) for the stock on the Determination Date as reported by NASDAQ or such successor quotation system; or (iii) if such stock is not traded on the Exchange or quoted on NASDAQ but is otherwise traded in the over-the-counter, the mean between the representative bid and asked prices on the Determination Date; or (iv) if subsections (i)-(iii) do not apply, the fair market value established in good faith by the Board.
 
“ Grant Date ” has the meaning set forth in Section 14 of the Plan.
 
“ Incentive Share Option or ISO ” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code, as designated in the applicable Award Agreement.
 
“ Non-ISO ” means an Option not intended to qualify as an ISO, as designated in the applicable Award Agreement.
 
“ Option ” means any stock option granted pursuant to Section 6 of the Plan.
 
“ Participant ” means any holder of one or more Awards, or the Shares issuable or issued upon exercise of such Awards, under the Plan.
 
“ Performance Awards ” mean Performance Units and Performance Compensation Awards granted pursuant to Section 10.
 
“ Performance Compensation Awards ” mean Awards granted pursuant to Section 10(b) of the Plan.
 
“ Performance Unit ” means Awards granted pursuant to Section 10(a) of the Plan which may be paid in cash, in Shares, or such combination of cash and Shares as the Committee in its sole discretion shall determine.
 
“ Person ” means any natural person, association, trust, business trust, cooperative, corporation, general partnership, joint venture, joint-stock company, limited partnership, limited liability company, real estate investment trust, regulatory body, governmental agency or instrumentality, unincorporated organization or organizational entity.
 
“ Plan ” means this Boot Barn Holdings, Inc. 2007 Stock Incentive Plan.
 
“ Reporting Person ” means an officer, Director, or greater than ten percent shareholder of the Company within the meaning of Rule 16a-2 under the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under the Exchange Act.
 
4 

 
“ Restricted Shares ” mean Shares subject to restrictions imposed pursuant to Section 8 of the Plan.
 
“ Restricted Share Units ” mean Awards pursuant to Section 8 of the Plan.
 
“ Rule 16b-3 ” means Rule 16b-3 promulgated under the Exchange Act, as amended from time to time, or any successor provision.
 
“ SAR ” or “ Share Appreciation Right ” means Awards granted pursuant to Section 7 of the Plan.
 
“ Separation from Service ” has the meaning set forth in Section 9 of the Plan.
 
“ Share ” means a share of common stock of the Company, as adjusted in accordance with Section 13 of the Plan.
 
“ Ten Percent Holder ” means a person who owns stock representing more than ten percent (10%) of the combined voting power of all classes of stock of the Company or any Affiliate.
 
“ Unrestricted Shares ” mean Shares awarded pursuant to Section 8 of the Plan.
 
5 

Exhibit 10.4
 
EMPLOYMENT AGREEMENT
 
This EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of November 12, 2012 (the “Effective Date”), by and between Boot Barn, Inc., a Delaware corporation (the “Company”), and James G. Conroy (“Executive”). (The Company and Executive are referred to herein as the “parties.”)
 
RECITALS
 
WHEREAS, the Company wishes to employ Executive as the President and Chief Executive Officer of the Company, and Executive wishes to be employed by the Company on the terms and conditions set forth herein.
 
NOW, THEREFORE, in consideration of the promises and obligations set forth below and for other good and valuable consideration, the receipt of which is hereby acknowledged by the parties, the Company and Executive agree and intend to be legally bound, as follows:
 
AGREEMENT
 
1.            POSITION AND DUTIES .
 
(a)       Position .   The Company agrees to employ Executive during the Term as the President and Chief Executive Officer of the Company, reporting to the Company’s Board of Directors (“Board”).  Executive shall have such responsibilities and duties consistent with such positions and as determined from time to time by the Board. During the Term, Executive shall serve as a member of the Board without additional compensation. If requested by the Board, Executive will serve as an officer of and/or provide services to Boot Barn Holding Corporation, a Delaware corporation (Boot Barn Holding Corporation along with WW Top Investment Corporation (“TopCo”) shall be referred to herein as the “Parents”), and/or any subsidiary or affiliate of the Company without additional compensation.
 
(b)       Location .  During the Term, Executive shall perform his duties at the Company’s corporate offices located in Orange County, California subject to customary travel as reasonably required.
 
2.               BEST EFFORTS .  During the Term, Executive shall devote his full business time and best efforts to the faithful and loyal performance of his duties to the Company (except for permitted vacation periods and reasonable periods of illness or other incapacity). Executive shall not, directly or indirectly, provide employment, consultant or other services to any other person or entity other than the Parents or a subsidiary or affiliate thereof if so requested by the Board. Executive shall not, directly or indirectly, engage or participate in any outside activity that would, or may be perceived to, conflict with the best interests of the Company or his duties to the Company.  Notwithstanding the foregoing, nothing herein shall preclude Executive from: (i) serving, with the prior written consent of the Board, as a member of the board of directors or advisory board (or their equivalents in the case of a non-corporate entity) of a non-competing business or a non-competing entity engaged in charitable activities and community

 
affairs; (ii) engaging in charitable activities and community affairs; or (iii) managing his personal investments and affairs; provided however, that the activities set out in clauses (i)-(iii) shall be limited by Executive so as not to interfere, individually or in the aggregate, with the performance of his duties and responsibilities hereunder.  Nothing in this Agreement shall prohibit Executive from owning, as a passive investment, less than 2% of capital stock of any corporation listed on the national securities exchange or publicly traded in the over-the-counter.
 
3.            TERM .  This Agreement shall commence on the Effective Date and continue until the third anniversary of the Effective Date, unless earlier terminated pursuant to Section 6; provided, however, that commencing on the third anniversary of the Effective Date and on each anniversary date thereafter, this Agreement shall be automatically renewed for an additional one year period unless, not later than 90 calendar days prior to such date, the Board or Executive provide the other party written notice that such party does not wish to renew the term (the initial term and any renewed term shall be referred to herein as the “Term”). Executive’s post-termination obligations pursuant to Sections 7-10, 11(a) and 12(d) of this Agreement (“Continuing Obligations”) shall survive the non-renewal or termination of this Agreement and/or Executive’s employment, however caused.
 
4.            COMPENSATION AND BENEFITS .
 
(a)            Base Salary .  During the Term, the Company shall pay Executive a base salary in the amount of Six Hundred Thousand Dollars ($600,000.00) (the “Base Salary”), less applicable withholdings under state and federal law in accordance with the Company’s normal payroll practices.
 
(b)            Incentive Bonus .  For the fiscal year ending March 30, 2013, Executive will receive a guaranteed bonus of One Hundred Fifty Thousand Dollars ($150,000.00), less applicable deductions. For each subsequent fiscal year, Executive shall be eligible to receive a bonus of 60% of the Base Salary if the Company achieves its budget (as established by the Board), with an opportunity to receive a maximum aggregate bonus of up to 120% of the Base Salary if the Company achieves additional performance targets established by the Board, in each case subject to the terms of the Company’s senior management bonus plan in force and as amended from time to time.  The Company shall pay the bonus, if any, to Executive following the end of the fiscal year to which the bonus relates but no later than 120 days following the end of such fiscal year, provided that, subject to Section 6, Executive is employed on the bonus payment date.  Subject to Section 6, no bonus or prorated bonus will be payable to Executive to the extent Executive is not employed on the bonus payment date.
 
(a)           Equity . On the Effective Date, Executive will be granted 11,776 options to purchase the common stock of TopCo, at a strike price of the fair market value as of the Effective Date (“FMV”), and 11,776 options at a strike price of 150% of the FMV. These options will vest in five equal annual installments beginning on the first anniversary of the grant date and ending on the fifth anniversary of the grant date.  In addition to the forgoing, Executive will receive an option to purchase for cash 5,000 shares of the common stock of TopCo FMV, which option shall expire on February 28, 2013.  All options provided hereunder will be subject to the terms of the Company’s stock option plan and form of option agreement as amended and in force from time to time.
 
2 

 
(b)           Vacation/Sick Leave/Holidays . During the Term, Executive shall be entitled to accrue four weeks of paid vacation per calendar year (prorated for partial years worked). Vacation may be carried over from one calendar year to the next for a maximum of six weeks of paid vacation (“Vacation Cap”).  Once Executive reaches the Vacation Cap, he will not be entitled to accrue any additional paid vacation days until he uses his vacation days so as to fall below the Vacation Cap.  Any vacation shall be taken at the reasonable and mutual convenience of the Company and Executive.  In addition, Executive will be provided the same sick leave and holiday benefits provided to other similarly-situated officers of the Company. The amount, eligibility and extent of these benefits shall be governed by the Company’s applicable policy in effect and as amended from time to time and in compliance with applicable law.
 
(c)           Benefits .  During the Term, Executive shall be eligible to participate in any Company-sponsored health and welfare benefit plans or programs in effect from time to time and available to other similarly-situated officers of the Company. The amount, eligibility and extent of the benefits shall be governed by the applicable benefit plan or program of the Company as in force from time to time.
 
5.            EXPENSES .
 
(a)          General .  During the Term, the Company shall reimburse Executive for all reasonable business expenses of types authorized by the Company and reasonably and necessarily incurred or paid for by Executive in the performance of his duties, responsibilities, and authorities hereunder. Executive shall provide the Company with reasonable documentation and receipts establishing the amount and nature of such expenses. Executive shall comply with such reasonable budget limitations and approval and reporting requirements with respect to expenses as the Company or the Board may establish from time to time.
 
(b)          Relocation .   The Company shall reimburse Executive for expenses reasonably and necessarily incurred by him in connection with Executive’s relocation from Chicago, Illinois to Orange County, California, which shall include the following: weekly round-trip coach tickets for Executive to/from Chicago, Illinois until his family is fully relocated to California, up to a maximum of 12 trips; rent for temporary corporate housing up to a maximum of six months; the actual sales commission paid by Executive to a real estate broker, up to maximum of 5.25%, in connection with the sale of Executive’s current residence; and the actual moving costs incurred by Executive.  In addition, the Company will reimburse Executive for 50% of the actual loss incurred by him (if any) in connection with the sale of Executive’s current residence provided that, such reimbursement shall not exceed Two Hundred Thousand Dollars ($200,000.00). Executive shall provide the Company with reasonable documentation and receipts establishing the amount and nature of such expenses in accordance with the Company’s standard reimbursement procedures.  Any expenses paid or reimbursed pursuant to this Section 5(b) shall be grossed up to the extent taxable as determined by the Company’s independent accountants.
 
3 

 
(c)           Attorneys’ Fees . The Company shall reimburse Executive for attorneys’ fees actually incurred by him in connection with the negotiation and drafting of this Agreement, up to a maximum of Five Thousand Dollars ($5,000.00), provided Executive submits to the Company reasonable documentation establishing the amount of said fees.  Any such expenses pursuant to this Section 5(c) shall be grossed up to the extent taxable as determined by the Company’s independent accountants.
 
(d)           Taxable Reimbursements .   Notwithstanding the foregoing, any taxable reimbursement of business or other expenses provided for under this Agreement shall be subject to the following conditions: (i) the expenses eligible for reimbursement in one taxable year shall not affect the expenses eligible for reimbursement in any other taxable year; (ii) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (iii) the right to reimbursement shall not be subject to liquidation or exchange for another benefit.
 
6.            TERMINATION . Upon termination of Executive’s employment or non- renewal of this Agreement, Executive is entitled to no other payments, compensation, severance or benefits upon termination except as expressly stated in this Section 6.
 
(a)          Termination Without Cause .   The Company may terminate Executive’s employment without Cause (other than as a result of Executive’s death or disability or due to non-renewal of this Agreement) at any time during the Term by providing Executive 30 days’ written notice (the “Notice Period”) (which termination date can be accelerated in the Company’s discretion provided the Company pays Executive his Base Salary during the Notice Period.) If Executive’s employment is terminated by the Company without Cause prior to a Change of Control (defined in Section 6(h)(iii)), the Company shall pay Executive: (i) the Accrued Obligations (defined in Section 6(h)(i)) and (ii) the Severance Payment (defined in Section 6(h)(vi)).  If Executive’s employment is terminated by the Company without Cause within one year following a Change of Control, in addition to the foregoing payments, the Company shall pay Executive the Bonus Payment (defined in Section 6(h)(ii)).  Executive will only be entitled to the Severance Payment and the Bonus Payment (if applicable), if he executes, delivers and does not revoke a general waiver and release of all claims in favor of the Company, its Parents, subsidiaries and affiliates in a form provided to Executive by the Company (the “Release”) within 60 days after his termination date, and he complies with his Continuing Obligations.
 
If Executive’s employment is terminated pursuant to this Section 6(a), then except as set forth in this Section 6(a), the Company shall have no further obligation to Executive or liability under this Agreement by way of compensation or otherwise.
 
(b)          Death or Disability . Executive’s employment during the Term shall terminate upon the death of Executive or, in the Company’s discretion, in the event of Executive’s disability, upon 30 days’ written notice to Executive. Executive shall be deemed disabled if an independent medical doctor (selected by the Company’s health insurer and reasonably acceptable to Executive or his legal representative) certifies that Executive, for 90 consecutive days or 120 non-consecutive days in any 12-month period, has been unable to perform the essential functions of his job duties with or without reasonable accommodation.
 
4 

 
Executive agrees to cooperate in submitting to a reasonable medical examination for the purpose of certifying disability under this Section 6(b) if requested by the Company.  If Executive’s employment is terminated for death or disability, Executive (or his legal heirs) shall not be entitled to receive any severance, bonus or other payments, except the Accrued Obligations, and the Company shall have no further obligation to Executive (or his legal heirs) or liability under this Agreement by way of compensation or otherwise.  If Executive’s employment is terminated due to his disability, Executive shall continue to be fully bound by his Continuing Obligations.
 
(c)            Termination For Cause .  During the Term, the Company may terminate Executive’s employment immediately for Cause (as defined in Section 6(h)(iv)) upon written notice.
 
If Executive’s employment is terminated pursuant to this Section 6(c), Executive shall not be entitled to receive any severance, bonus or other payments, except the Accrued Obligations, and the Company shall have no further obligation to Executive or liability under this Agreement by way of compensation or otherwise. If Executive’s employment is terminated pursuant to this Section 6(c), Executive shall continue to be fully bound by his Continuing Obligations.
 
(d)           Resignation By Executive without Good Reason . Executive may resign his employment at any time during the Term without Good Reason (defined in Section 6(h)(v)) by providing the Company 30 days’ written notice. If Executive resigns his employment without Good Reason, Executive shall not be entitled to receive any severance, bonus or other payments, except the Accrued Obligations, and the Company shall have no further obligation to Executive or liability under this Agreement by way of compensation or otherwise. If Executive’s employment is terminated pursuant to this Section 6(d), Executive shall continue to be fully bound by his Continuing Obligations.
 
(e)           Resignation by Executive For Good Reason . Executive may resign his employment during the Term for Good Reason but only if the condition giving rise to the existing Good Reason is disclosed in writing by Executive to the Company within 60 days after the occurrence of such condition and then is not cured by the Company within 60 days after the Company receives such written notice. If Executive resigns his employment for Good Reason pursuant to this Section 6(e), Executive shall be entitled to receive the Accrued Obligations and the Severance Payment, provided that, Executive shall only be entitled to the Severance Payment if signs, delivers and does not revoke the Release within 60 days after his termination date, and he complies with his Continuing Obligations. If Executive resigns his employment for Good Reason pursuant to this Section 6(e), then except as set forth in this Section 6(e), the Company shall have no further obligation to Executive or liability under this Agreement by way of compensation or otherwise.
 
(f)            Non-Renewal of Term .   Executive’s employment shall terminate upon the non-renewal of the Term as set forth in Section 3.  If Executive’s employment terminates pursuant to this Section 6(f) due to the Company providing Executive notice of non-renewal pursuant to Section 3, then Executive shall be entitled to receive the Accrued Obligations and the Severance Payment, provided that, Executive shall only be entitled to the Severance Payment if signs, delivers and does not revoke the Release within 60 days after his
 
5 

 
termination date, and he complies with his Continuing Obligations.  If Executive’s employment terminates pursuant to this Section 6(f) due to Executive providing the Company notice of non-renewal pursuant to Section 3, then Executive shall not be entitled to receive any severance, bonus or other payments, except the Accrued Obligations, and the Company shall have no further obligation to Executive or liability under this Agreement by way of compensation or otherwise and Executive shall continue to be fully bound by his Continuing Obligations.
 
(g)       Board Resignation . Upon termination or resignation of Executive’s employment for any reason, whether initiated by the Company or Executive, or upon non-renewal of this Agreement, Executive agrees to resign as of the date of such termination from the Board and/or any committees thereof and any service he is providing to the Parents or any subsidiary or affiliate of the Company shall terminate as of the date of such termination.
 
(h)        Certain Definitions . For purposes of this Agreement:
 
(i)           “Accrued Obligations” shall mean: (A) the amount of any accrued but unpaid Base Salary, less applicable withholdings and deductions, due and owing to Executive as of the date of termination; (B) any accrued and unused vacation, less applicable withholdings and deductions, through the date of termination; and (C) reimbursement of expenses incurred by Executive in accordance with Section 5 of this Agreement and not previously reimbursed through the date of termination.
 
(ii)          “Bonus Payment” shall mean an amount equivalent to 60% of Executive’s Base Salary, less applicable deductions, payable to Executive following the end of the fiscal year to which the bonus relates but no later than 120 days following the end of such fiscal year, provided that, Executive has executed and delivered the Release and the Release is irrevocable as of such date.
 
(iii)         “Change of Control” shall mean: (A) any sale or exchange of stock of the Company or TopCo for cash, securities or other property in a single or series of related transactions if as a result securities possessing more than 50% of the total combined voting power of the survivor’s or acquirer’s outstanding securities (or the securities of any parent thereof) cease to be held by a person or persons who held securities possessing more than 50% of the total combined voting power of the Company or TopCo’s outstanding securities immediately prior to that transaction, or (B) any sale, transfer, or other disposition of all or substantially all of the Company’s or TopCo’s assets to one or more unaffiliated other persons in a single transaction or series of related transactions. For avoidance of doubt, a public offering of stock by TopCo or its stockholders shall not constitute a Change of Control.
 
(iv)         “Cause” shall mean:
 
(A)         Executive’s intentional refusal or intentional failure to perform his duties and responsibilities under this Agreement or to follow any reasonable instruction issued by the Company or the Board; provided however, that prior to any termination pursuant to Section 6(c), the Company must give written notice to Executive within 60 days of any event triggering this Section 6(i)(iv)(A) and Executive shall thereafter have the right to
 
6 

 
remedy the condition, if such condition can be remedied, within 30 days of the date Executive received the written notice from the Company. If Executive does not remedy the condition within the 30-day cure period to the reasonable satisfaction of the Board, then the Board may deliver a notice of termination for Cause at any time within 30 days following the expiration of such cure period, in which case termination will be effective upon delivery of such notice;
 
(B)          Executive’s failure to comply in any material respect with any written policies or procedures of the Company or the Board (including, but not limited to, the Company’s anti-discrimination and harassment policies and the Company’s drug and alcohol policy);
 
(C)          Executive’s engagement in any act or omission involving willful misfeasance or nonfeasance by Executive of his assigned duties, which includes, without limitation, the intentional refusal by Executive to follow the directions of the Board or any committee thereof or the intentional refusal by Executive to perform his assigned duties in any material respect;
 
(D)          Executive’s engagement in any act of theft, fraud, embezzlement, falsification of Company documents, misappropriation of funds or other assets of the Company or in any misconduct which is materially damaging to the goodwill, business or reputation of the Company;
 
(E)          Executive’s conviction by a court of competent jurisdiction of, or his pleading guilty or nolo contendere to, any felony or crime involving moral turpitude that is damaging to the reputation of the Company; or
 
(F)           Executive’s material breach of any of his obligations contained in this Agreement, including Sections 7-10.
 
(v)          “Good Reason” shall mean the occurrence of any of the following events without Executive’s consent: (A) any material diminution in Executive’s Base Salary; (B) any material and continuing diminution in Executive’s authority or responsibilities; (C) changing the geographic location at which Executive provides services to the Company to a location more than 35 miles from that location; or (D) requiring Executive to report to someone other than the Board.
 
(vi)         “Severance Payment” shall mean Executive’s Base Salary in effect on the termination date for a period of 12 months from the termination date, payable as salary continuation payments in accordance with the Company’s normal payroll practices, the first installment of which shall be made on the 60th day following the termination date (and will include any Severance Payment installment that would have otherwise been paid during the period following the termination date thorough the date of the first Severance Payment installment); provided that, Executive has executed and delivered the Release and the Release is irrevocable as of such date. Any Severance Payment shall be subject to Section 6(i).
 
(i)         Mitigation .  Notwithstanding any provision in this Section 6, if Executive becomes employed or retained by another employer or entity as an employee or a consultant (including self-employment or engaging in an enterprise as a sole proprietor or
 
7 

 
partner) during the period in which Executive is receiving any Severance Payment pursuant to Section 6, the amount of such Severance Payment to which Executive would otherwise be entitled shall be reduced by the amount of compensation and benefits earned and/or received by Executive due to such other employment or consulting arrangement. Executive shall have an obligation to promptly and completely report such employment, compensation and/or benefits to the Company.
 
7.             CONFIDENTIAL INFORMATION .
 
(a)          Company Information . Executive recognizes that the services to be performed by him hereunder are special, unique and extraordinary in that, by reason of his employment hereunder, he will acquire and have access to, or has acquired and has had access to, the Company’s Confidential Information (defined in this Section 7(a)) concerning the operations of the Company and the Parents, and their subsidiaries and affiliates, the use or disclosure of which could cause the Company substantial loss and damages which could not be readily calculated and for which no remedy at law would be adequate. Executive agrees that at all times during the Term and at all times thereafter, Executive will hold in strictest confidence and safeguard, and will not destroy, use or disclose to any person or entity except as absolutely necessary to perform his job duties hereunder, any confidential, proprietary or trade secret information of or belonging to the Company, the Parents, subsidiaries or affiliates. “Confidential Information” shall include, but is not limited to: (i) confidential and proprietary matters relating to actual or prospective customers and the sales operations of the Company or the Parents, or any subsidiary or affiliate thereof, including, but not limited to, sales methods; pricing information; merchandising and marketing plans and strategies; proprietary information relating to services, products, processes and know-how; descriptions and information concerning prospective and actual customers, suppliers or vendors; lists of actual or potential customers, suppliers or vendors and any information about or provided by such customer, supplier or vendor; and product specifications; (ii) confidential and proprietary matters relating to the business and operations of the Company or the Parents, or any subsidiary or affiliate thereof, including, but not limited to, financial data and plans; budgets and financial statements; business plans and strategies; research and development plans; product or service plans; training materials developed by the Company or the Parents, or any subsidiary or affiliate thereof; techniques and materials; methods of distribution; assets and liabilities; past, present or proposed business operations, mergers or acquisitions or projects; business opportunities for new or developing business; recruiting methodology; and personnel information concerning Company employees other than Executive; (iii) confidential and proprietary data, information and materials related to the Company or the Parents, or any subsidiary or affiliate thereof, including, but not limited to, products; services; concepts; ideas; proposals; Inventions (defined in Section 10(a)); formulas; know-how; technology; improvements; discoveries; developments; modifications; processes; data; techniques; software programs; and proposed trademarks and trade names; and (iv) any trade secret of the Company or the Parents, or any subsidiary or affiliate thereof. Executive understands and agrees that the rights and obligations set forth in this Section 7(a) are perpetual and shall extend beyond Executive’s employment. Notwithstanding the foregoing, the restrictions of this Agreement on the use and disclosure of Confidential Information shall not apply (w) to information that becomes publicly known through no fault of Executive subsequent
 
8 

 
to the time of the Company’s communication thereof to Executive; (x) if the information is rightfully obtained by Executive from a third party authorized to make such disclosure without restriction; (y) if the information is identified by the Board in writing as no longer proprietary or confidential; or (z) if the information is required in response to a legal summons, subpoena or other lawful court order, provided that, Executive shall promptly notify the Company in writing of any such legal requirement and assist the Company or its designee in seeking a protective order or in objecting to such request, provided further, that any such assistance will be at the sole cost and expense of the Company. If Executive produces any Confidential Information pursuant to clause (z), Executive shall disclose only that portion of the Confidential Information that he is legally compelled to disclose and provide a copy of same to the Company.
 
(b)           Former Employer Information .   Executive agrees that he will not improperly use or disclose any confidential, proprietary or trade secret information of or belonging to any former employer, person or entity, and that he will not bring onto the premises of the Company or use on behalf of the Company, the Parents, or any subsidiary or affiliate thereof, any unpublished document or confidential or proprietary information belonging to any such former employer, person or entity unless consented to in writing by such person or entity.
 
(c)           Third Party Information .  Executive recognizes that the Company has received and in the future will receive confidential and/or proprietary information from third parties, including the Company’s customers, vendors or suppliers, subject to a duty on the Company’s part to maintain the confidentiality of and safeguard such information, and to use such information only for certain limited purposes. Executive agrees to hold all such confidential and proprietary information in the strictest confidence and not to disclose it to any person or entity, destroy it, or use it except as necessary in carrying out his duties for the Company and consistent with the Company’s agreement with such third party.
 
(d)           Exclusive Property . Executive agrees that the Confidential Information belongs exclusively to the Company or the Parents or any subsidiary or affiliate thereof.  Executive agrees that, at the time of Executive’s separation from the Company for any reason, whether initiated by Executive or the Company, he will return to the Company all Confidential Information and any other property, equipment, materials or information belonging to the Company, and he will not keep in his possession, recreate, duplicate, destroy, or deliver to any person or entity, any Confidential Information.
 
8.            NON-SOLICITATION . During the Term and for a period of 12 months immediately following Executive’s separation from the Company, however caused, Executive shall not, directly or indirectly, either for or on behalf of himself or any other person or entity, solicit or induce or attempt to solicit or induce any employee, consultant, independent contractor, agent or representative of the Company, the Parents or any subsidiary or affiliate thereof, to discontinue employment or engagement with the Company or the Parents, or any subsidiary or affiliate thereof; or otherwise interfere or attempt to interfere with the relationship between the Company, the Parents, or any subsidiary or affiliate thereof, and their employees, consultants, independent contractors, agents or representatives.
 
9.            NON-DISPARAGEMENT . During the Term and thereafter, Executive shall not make to any person or entity, including but not limited to competitors, customers or
 
9 

 
vendors of the Company or the Parents, or any subsidiary or affiliate thereof, any statement that disparages the Company or the Parents, or any subsidiary or affiliate thereof, or which reflects negatively upon the Company or the Parents, or any subsidiary or affiliate thereof, including but not limited to disparaging statements regarding the Company’s financial condition, the Board or the officers or employees of the Company or the Parents, or any subsidiary or affiliate thereof. Notwithstanding the foregoing, nothing in this Agreement shall preclude Executive from making truthful statements required by applicable law, regulation or legal process, or in connection with any action, suit or other proceeding to enforce his rights under this Agreement.
 
10.             INVENTIONS .
 
(a)          Assignment .   Executive agrees to assign and hereby irrevocably assigns to the Company, without further consideration, all right, title, and interest that he may presently have or acquire (throughout the United States and in all foreign countries), free and clear of all liens and encumbrances, in and to each Invention (as defined herein), which Invention shall be the sole property of the Company, whether or not patentable.  “Invention” as used herein shall mean all ideas, processes, trademarks, service marks, inventions, technology, computer programs, original works of authorship, designs, formulas, discoveries, patents, copyrights, moral rights (including but not limited to rights to attribution or integrity) and all improvements, rights, and claims related to the foregoing that are conceived, created, developed, or reduced to practice by Executive alone or with others during the course of employment with the Company. In addition, to the extent not assigned, Executive hereby irrevocably waives any moral rights (including rights of attribution and integrity) that he may have with respect to the Inventions. Executive acknowledges that all original works of authorship which are made by him (solely or jointly with others) during the term of and which are protectable by copyright are “Works Made For Hire” Agreement as defined in the United States Copyright Act (17 USCA, § 101) and are included in the definition of Inventions.
 
(b)           Prior Inventions .  Executive has attached hereto on Exhibit A , a list describing all Inventions made or developed by Executive prior to the date of this Agreement which relate to the Company’s business or proposed business, products, services or research and development, and which are not assigned to the Company hereunder (collectively referred to as “Prior Inventions”).  If no such list is attached, Executive represents that no such Prior Inventions exist or that any such Prior Invention has already been assigned to the Company by Executive.  If, during the course of employment with the Company, Executive incorporates into a Company product, process or machine a Prior Invention owned by Executive, or in which Executive has an interest, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make, have made, reproduce, modify, adapt, distribute, display, perform, use, import, offer to sell and sell such Prior Invention as part of or in connection with such product, process or machine.
 
(c)           Patent and Copyright Registrations .  Executive agrees to assist the Company, or its designee, at the Company’s expense, in securing the Company’s rights in and to the Inventions and any copyrights, patents, trademarks, service marks, mask work rights or other intellectual property rights relating thereto in any and all countries. Such assistance shall include the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other
 
10 

instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, trademarks, service marks, mask work rights or other intellectual property rights relating thereto.  Executive further agrees that his obligation to execute or cause to be executed, when it is in his power to do so, any such instrument or papers shall continue after the termination of his employment, however caused.  If the Company is unable, for any reason, to secure Executive’s signature to apply for or to pursue any application for any United States or foreign intellectual property rights including patents or copyright registrations covering Inventions or original works of authorship assigned to the Company as provided herein, then Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive’s agent and attorney in fact, to act for and on Executive’s behalf to execute and file any such applications, and to do all other lawfully permitted acts to further the prosecution and issuance of such intellectual property rights, including letters patent or copyright registrations thereon, with the same legal force and effect as if executed by Executive.  Executive hereby irrevocably assigns to the Company any and all claims of any nature that Executive now or hereafter has for past, present or future infringement of all proprietary or intellectual property rights assigned to the Company.
 
(d)           Records .  Executive agrees to maintain adequate and current written records on the development of all Inventions and to disclose promptly to the Company all Inventions and relevant records, which records will remain the sole property of the Company. The records will be in the form of notes, sketches, drawings, and any other format that may be specified by the Company.  Executive further agrees that all information and records pertaining to any idea, process, trademark, service mark, invention, discovery, improvement, technology, computer program, original work of authorship, design formula, discovery, patent, or copyright that Executive does not believe to be an Invention, but is conceived, developed, or reduced to practice by Executive (alone or with others) during the course of his employment with the Company shall be promptly disclosed to the Company (such disclosure to be received in confidence).
 
(e)           Exclusions .  Executive knows of no existing agreement to which he is a party that would conflict with this Section 10.  Executive understands and acknowledges that he has been advised, pursuant to Section 2872 of the California Labor Code, that the provisions of this Agreement requiring the assignment of inventions do not apply to any invention that qualifies fully under Section 2870 of the California Labor Code, which provides:
 
“(a)                            Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:
 
(1)                                   Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or
 
11 

 
(2)                                   Result from any work performed by the employee for the employer.”
 
11.           ENFORCEMENT/REMEDIES .
 
(a)       Arbitration .   In consideration of the Company employing Executive, and the salary and benefits provided under this Agreement, Executive and the Company agree that all claims arising out of or relating to his employment, including its termination shall be resolved by binding arbitration.  This Agreement expressly does not prohibit either party from filing an application for a provisional remedy to prevent actual or threatened irreparable harm in accordance with California law. The dispute will be arbitrated in accordance with the rules of the American Arbitration Association (“AAA”) under its existing Employment Arbitration Rules which may be found at http://www.adr.org/sp.asp?id=32904. Executive acknowledges that he has been provided a copy of the AAA rules contemporaneously herewith. The Company shall pay the arbitration administrative costs and the arbitrator’s fees in accordance with California law and the AAA rules.  Each party in the arbitration shall bear his/its own attorneys’ fees and legal costs.  The parties agree to file any demand for arbitration within the time limit established by the applicable statute of limitations for the asserted claims.  Failure to demand arbitration within the prescribed time period shall result in waiver of said claims.  The parties agree that the arbitration will be held in Orange County, California. EXECUTIVE UNDERSTANDS AND AGREES THAT HE IS WAIVING HIS RIGHTS TO BRING SUCH CLAIMS TO COURT, INCLUDING THE RIGHT TO A JURY TRIAL.
 
(b)       Rights Cumulative .   Each party recognizes that nothing in this Agreement is intended to limit any remedy available to it/him under state and federal laws in the event of actual or threatened irreparable harm.  The rights and remedies provided herein are cumulative, and the exercise of any right or remedy, whether pursuant hereto, to any other agreement, or to law, shall not preclude or waive the right to exercise any or all other rights and remedies.
 
12.           GENERAL .
 
(a)       Severability .  Wherever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any part, clause, or condition of this Agreement is held to be partially or wholly invalid, unenforceable, or inoperative for any reason whatsoever, such invalid provision shall not affect any other provision or portion hereof, which shall continue to be effective as though such invalid, unenforceable or inoperative part, clause or condition had not been made.
 
(b)       Representations and Warranties .   Executive represents and warrants that: (i) his employment with the Company does not and will not breach any agreements with or duties to any third party; (ii) he has no obligations or commitments inconsistent with the terms of this Agreement or with undertaking an employment relationship
 
12 

 
with the Company; and (iii) he will not enter into any agreement or engage in any activity which would conflict with this Agreement or which would otherwise materially interfere with his duties hereunder and/or the best interests of the Company or the Parents, or any subsidiary or affiliate thereof.
 
(c)            Survival of Obligations . Termination of Executive’s employment, however caused, or non-renewal of this Agreement shall not affect Executive’s Continuing Obligations.  Executive agrees that after leaving the employ of the Company for any reason, whether initiated by Executive or the Company, the Company may notify Executive’s new employer about his Continuing Obligations.
 
(d)           Cooperation . Following Executive’s termination of employment and subject to the Company reimbursing Executive for any reasonable out-of-pocket expenses, Executive agrees to cooperate in good faith with the Company in connection with any defense, prosecution or investigation by the Company including regarding any internal investigation, actual or potential litigation, administrative or regulatory proceeding, or other such like proceeding, in which the Company may be involved as a party or non-party from time to time, including without limitation, Executive being available to the Company upon reasonable notice for interviews and factual investigations, Executive appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, and Executive providing the Company all pertinent information and documents, at reasonable times and pursuant to reasonable schedules.
 
(e)           Notices .   All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or if mailed by overnight courier with receipt signature or sent by facsimile (with “answerback” confirmation of transmission), to the relevant address set forth below, or to such other address as the recipient of such notice or communication shall have specified to the other party hereto in accordance with this Section 12(e):
 
If to the Company:
 
Boot Barn, Inc.
c/o WW Top Investment Corporation
11100 Santa Monica Boulevard, Suite 1900
Los Angeles, CA 90025
Fax: 310.444.1870
 
Attention: Brad Brutocao
 
With a copy to (which copy shall not constitute notice):
 
Bingham McCutchen LLP
355 South Grand Avenue
Suite 4400
Los Angeles, CA 90071
Fax: 213.680.6499
 
Attention Cynthia Dunnett, Esq.
 
If to Executive:
 
James G. Conroy
1655 Pheasant Trail
Inverness, IL 60067
 
13 

 
Any such notice shall be deemed effective: (i) if delivered personally, when received; (ii) if sent by overnight courier, when receipted for; or (iii) if sent by facsimile during normal business hours on any business day, pending generation of a transmission report by the machine from which the facsimile was sent indicating the date and time that the facsimile was sent and “answerback” confirmation of transmission.
 
(f)           Waivers/Construction .   Unless otherwise set forth in this Agreement, no delay or omission by either party hereto in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.  The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.
 
(g)           Withholding .   All compensation (including bonuses and severance, if applicable) payable by the Company to Executive hereunder shall be reduced prior to the delivery of such payment to Executive by an amount sufficient to satisfy any applicable federal, state, local or other tax withholding requirements, and in accordance with the Company’s normal payroll practices.
 
(h)           Successors and Assigns; Assignment .   Executive shall not assign this Agreement and any attempt by him to do so will be deemed null and void; provided that, Executive’s rights to payments hereunder shall, upon his death or incapacity, inure to the benefit of his personal or legal representatives, executors, administrators, heirs, devisees and legatees.  This Agreement will be binding upon and inure to the benefit of the Company, its successors and assigns.  This Agreement may be assigned by the Company to the Parents or any subsidiary or affiliate thereof, or to a person or entity which is a successor in interest to substantially all of the business operations or assets of the Company.
 
(i)            Entire Agreement; No Oral Modification .   This Agreement contains the entire understanding of the parties with respect to the terms and conditions of Executive’s employment with the Company, and supersedes any and all prior and contemporaneous agreements, negotiations and understandings relating to Executive’s employment with the Company. This Agreement cannot be amended or modified except pursuant to a written instrument signed by Executive and the Chairman of the Board of Directors.
 
14 

 
(j)             Governing Law .   This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of California without giving effect to its conflicts or choice of law principles.  The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and not strict construction shall be applied against any party.
 
(k)            Executive Acknowledgment/No Inducements . Executive acknowledges that he has had the opportunity to consult legal counsel and a tax advisor of his own choosing in regard to his employment with the Company and this Agreement, and that he has read and understands this Agreement.  Executive has entered into this Agreement with the Company knowingly and voluntarily, based on his own judgment and not on any representations, inducements or promises other than those contained in this Agreement.
 
(l)             Section Headings .  The section and subsection heading of this Agreement are included for purposes of convenience only, and shall not affect the construction or interpretation of any of its provisions.
 
(m)          Counterparts .  This Agreement may be executed by facsimile or pdf signature and in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
 
13.           409A .
 
(a)           Compliance .   It is intended that compensation paid or delivered to Executive pursuant to this Agreement is either paid in compliance with, or is exempt from, Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations promulgated thereunder (together, “Section 409A”), and this Agreement shall be interpreted and administered accordingly.  However, the Company does not warrant to Executive that all amounts paid or delivered to him will be exempt from, or paid in compliance with, Section 409A.  Executive understands and agrees that he bears the entire risk of any adverse federal, state or local tax consequences and penalty taxes which may result from payment on a basis contrary to the provisions of Section 409A or comparable provisions of any applicable state or local income tax laws.  Executive acknowledges that he has been advised to seek the advice of a tax advisor with respect to the tax consequences of all payments pursuant to this Agreement, including any adverse tax consequence under Section 409A and applicable state tax law.
 
(b)           Amounts Payable On Account of Termination .  If and to the extent necessary to comply with Section 409A, for the purposes of determining when amounts otherwise payable on account of Executive’s termination of employment under this Agreement will be paid, “terminate”, “terminated” or “termination” or words of similar import relating to Executive’s employment with the Company, as used in this Agreement, shall be construed as the date that Executive first incurs a “separation from service” within the meaning of Section 409A from the Company.
 
(c)           Interpretative Rules .  In applying Section 409A to amounts paid pursuant to this Agreement, any right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.
 
15 

 
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Employment Agreement to be duly executed as of the date and year written below.

 	BOOT BARN, INC.	
 	a Delaware corporation	
 	 	
Dated: 11/1/12	By:	/s/ Brad Brutocao	
 	 	Name: Brad Brutocao	
 	 	Title: Director	

 	EXECUTIVE	
 	 	
Dated: 11/1/12	By:	/s/ James G. Conroy	
 	 	James G. Conroy	

 
Exhibit  A
 
PRIOR INVENTIONS
 
[No items are listed on this Exhibit.]

Exhibit 10.5
 
January 2, 2014
 
Paul Iacono
10401 Santa Elise
Cypress, CA 90630
 
RE: Continued Employment Agreement
 
Dear Paul:
 
This letter shall confirm the terms of your continued employment with Boot Barn, Inc. (the “ Company ”).  The terms of this agreement shall take effect on January 6, 2014.
 
Previous Agreement : The parties agree that the Employment Agreement between the Company and you, effective December 12, 2011 (the “ Previous Agreement ”) has been terminated effective December 12, 2013 and is of no further force or effect except for the Continuing Obligations (defined therein).
 
Duties : You will continue to serve as the Chief Financial Officer of the Company, reporting to the President and Chief Executive Officer (“ CEO ”).  You will continue to have such duties consistent with your position and as assigned to you from time to time by the Company.  You agree to devote your full business time attention and energies to, and perform faithfully, professionally and to the best of your ability, the duties and responsibilities of your position.
 
Base Salary/Bonus :  You will receive an annual salary of $261,363.00, less applicable deductions.  You will continue to be eligible to participate in the Company’s key bonus plan pursuant to the terms, targets and goals (e.g., achieving revenue targets, etc.) established by the Board of Directors from time to time. You will continue to be eligible to earn a target bonus of 50% of your base salary, payable in accordance with the Company’s bonus program and provided you are employed in good standing on the last day of the fiscal year to which the bonus relates except as stated herein.
 
Equity :  You will continue to be eligible to participate in the WW Top Investment Corporation 2011 Equity Incentive Plan pursuant to the terms and conditions of the plan as amended from time to time.
 
Benefits :  You will continue to accrue four weeks of paid time off (“ PTO ”) each year with a PTO cap of eight weeks (provided that any PTO accrued pursuant to the Previous Agreement will be credited against your four week annual accrual). You also remain eligible to participate in the Company’s benefit plans and programs subject to the terms and conditions of such plan or program in force from time to time.
 
Employment Policies and Confidential Information : You will comply with the Company’s standard policies and work rules, including as set forth in the Employee Handbook as amended from time to time. As a condition of your continued employment, you also must sign, return and comply with the Company’s Confidential and Proprietary Information Agreement (“ Confidential Information Agreement ”).

 
At Will Employment : Your employment with the Company is “at will.” This means that either the Company or you may terminate your employment at any time, with or without cause and with or without prior notice.  The Company may also change your job duties, title, reporting level, location, compensation and benefits, as well as the Company’s personnel policies, prospectively, at any time its sole discretion, subject to the terms of this agreement.
 
Severance : In the event your employment terminates by the Company without Cause (as defined herein), by you for Good Reason (as defined herein) or due to your death or Disability (as defined herein), the Company will pay you the Severance Payment and the Bonus Payment each as defined herein, provided that you (or in the case of your death, your estate) timely sign and not revoke (if applicable) a general release of all claims against the Company and its parents, affiliates and subsidiaries in a form provided to you by the Company (the “ Release ”) within sixty (60) days of the termination date.
 
“ Bonus Payment ” as used herein shall mean a prorated bonus based on the bonus you would have been paid for the fiscal year to which the bonus relates had you remain employed through the last day of the fiscal year to which the bonus relates, and calculated by multiplying the bonus by a fraction, the numerator of which is the number of days in the fiscal year which you were employed and the denominator of which is 365, payable in accordance with the Company’s bonus program and provided the Release is irrevocable as of such payment date.
 
“ Cause ” as used herein shall mean: (i) your refusal or failure to substantially perform the duties of your position or follow the reasonable instructions of the Company or the Board; (ii) your failure to comply in any material respect with any written policies or procedures of the Company or the Board (including, but not limited to, the Company’s drug policy, policies prohibiting discrimination and harassment, etc.); (iii) your engagement in any act of theft, fraud, embezzlement, willful misfeasance, falsification of Company documents, misappropriation of funds or other assets of the Company, or committing any act which is materially damaging to the goodwill, business or reputation of the Company; (iv) your conviction or pleading guilty or nolo contendere to any felony or crime involving moral turpitude; or (v) your material breach of your obligations to the Company or the Confidential Information Agreement.
 
“ Disability ” as used herein shall mean your inability due to mental or physical incapacity to perform the essential functions of your job duties, with or without reasonable accommodation, for 90 consecutive days or 120 non-consecutive days in any 12 month period.
 
“ Good Reason ” as used herein shall mean the occurrence of any of the following events without your consent: (i) any material diminution in your base salary, other than a diminution that was in conjunction with a salary reduction program for similarly situated employees of the Company or its affiliates; (ii) any material and continuing diminution in your authority or responsibilities; (iii) changing the geographic location at which you provide services to the Company to a location more than thirty-five (35) miles from the then existing location and further from your residence; or (iv) requiring you to report to someone other than the CEO.

 
“ Severance Payment ” as used herein shall mean (i) in the case of termination by the Company without Cause or resignation by you for Good Reason, the Company agrees to continue to pay you your base salary in effect on the termination date for a period of nine months from the termination date, and (ii) in the case of termination due to your death or Disability (defined herein), the Company agrees to continue to pay you your base salary in effect on the termination date for a period of three months from the termination date. The Severance Payment shall be paid as salary continuation payments in accordance with the Company’s normal payroll practices, the first installment of which shall be paid to you on the first regular payroll period following the sixtieth (60th) after the termination date (and will include any severance installment that would have otherwise been paid during the period following the termination date through the date of the first installment) provided the Release is irrevocable as of such date.
 
You shall not be entitled to any severance, bonus or other post-termination benefits (other than as mandated by law) if the Company terminates your employment for Cause or you resign for any reason that does not constitute Good Reason.  Upon termination of your employment, however caused, your position(s) as a director or officer of any parent, affiliate or subsidiary of the Company shall automatically terminate.
 
Entire Agreement :   You confirm that no promises or statements that are contrary to the terms of this agreement, including our at-will relationship, have been made to you by any Company representative.  This agreement (together with the Confidential Information Agreement) contains our complete agreement regarding the terms and conditions of your continued employment with the Company and supersedes all prior and contemporaneous agreements relating to the subject matter herein, including specifically the Previous Agreement (except for your Continuing Obligations as defined therein).
 
For avoidance of doubt, nothing in this agreement or the referenced Confidential Information Agreement shall in any way impact, supersede or affect any provision contained in or your obligations under the Agreement and Plan of Merger (the “ Merger Agreement ”), dated November 23, 2011, among Boot Barn Holding Corporation (“ BBHC ”), WW Top Investment Corporation (“ Topco ”), WW Holding Corporation (“ Holdco ”), WW Acquisition Corporation (“ Merger Sub ”) and Marwit Investment Management, LLC or any agreements or documents entered into in connection with the transactions contemplated by the Merger Agreement, including, without limitation; (i) the Support Agreement dated November 23, 2011, among Topco, Holdco, Merger Sub, BBHC and Iacono; (ii) the Holder Letter, dated December 2, 2011 between Iacono and Holdco; (iii) the Transaction Bonus Plan Letter and Release between Iacono and BBHC; (iv) the Stockholders Agreement among FS Equity Partners VI, L.P., FS Affiliates VI, L.P. and the other parties thereto, dated December 12, 2011, as amended; and (v) the Share Exchange Agreement, dated December 12, 2011, among BBHC, Topco, Iacono and the other parties thereto.
 
If the terms of your employment set forth herein are acceptable to you, please sign this letter and return the additional copy to me. On behalf of Boot Barn, Inc., we look forward to continuing to work with you.

 	Regards,	

 	/s/ James G. Conroy	
 	James G. Conroy	
 	President and Chief Executive Officer	
 
AGREED AND ACCEPTED:

/s/ Paul Iacono	 	 	
Paul Iacono	 	Date: 1/2/2014	

Exhibit 10.6
 
EMPLOYMENT AGREEMENT
 
This EMPLOYMENT AGREEMENT (the “ Agreement ”) is entered into on the date executed below, by and between Boot Barn, Inc., (the “ Company ”), and Laurie Grijalva (“ Executive ”) and is deemed effective on, May 11, 2014 (the “ Effective Date ”).
 
RECITALS
 
WHEREAS, the Company wishes to continue to employ Executive as its Vice President Buying and Merchandising, and Executive wishes to be so employed by the Company on the terms and conditions set forth herein.
 
NOW, THEREFORE, in consideration of the promises and obligations set forth below and for other good and valuable consideration, the Company and Executive agree and intend to be legally bound hereby as follows:
 
AGREEMENT
 
1.                                       POSITION AND DUTIES .
 
(a)                                 Position .  The Company hereby agrees to continue to employ Executive as the Vice President of Buying and Merchandising of the Company, reporting to the Company’s Chief Executive Officer (the “ CEO ”).  Executive shall have such responsibilities and duties consistent with this position and as determined from time-to-time by the Company.  If requested by the Company or the CEO, Executive will provide services as an officer to WW Top Investment Corporation, a Delaware corporation (the “ Parent ”), and/or any affiliate or subsidiary of the Company without additional compensation.
 
(b)                                 Location .  Executive shall perform her duties at the Company’s corporate office located in Orange County, California subject to customary travel as reasonably required.
 
2.                                       BEST EFFORTS .  Executive agrees to devote her full business time and best efforts to the faithful and loyal performance of her duties to the Company (except for permitted vacation periods and reasonable periods of illness or other incapacity).  Executive shall not, directly or indirectly, provide employment, consulting or other services or advice to any other person or entity other than the Parent or an affiliate or subsidiary of the Company as directed by the Company.  Executive shall not, directly or indirectly, engage or participate in any outside activity that would, or may be perceived to, conflict with the best interests of the Company.
 
3.                                       TERM .         This Agreement shall commence on the Effective Date and continue until Executive’s separation of employment as set forth in Section 6.
 
4.                                       COMPENSATION AND BENEFITS .
 
(a)                                 Base Salary .  The Company shall continue to pay Executive an annualized base salary in the amount of Two Hundred Forty-five Thousand Dollars.  ($245,000), less applicable withholdings under state and federal law (the “ Base Salary ”) in accordance with the Company’s normal payroll practices.  Executive’s performance and any salary adjustments will be subject to annual review in accordance with Company practices and in the discretion of the Company.
 
(b)                                 Bonus .  Executive shall continue to be eligible to participate in the Company’s bonus (“bonus”) plan pursuant to the terms and conditions of that plan.  Executive’s potential target bonus compensation will continue to be 30% of Executive’s Base Salary each year, and will be based upon goals (including, without limitation, achieving revenue and EBITDA targets) established by the Company.  The actual bonus amount earned will be dependent upon the achievement of a combination of Company and personal annual performance objectives established by the Company and/or set forth in the annual plan.  Accordingly, depending on whether such objectives are under-or over-achieved, the actual amount payable to Executive, if any, as an annual performance bonus may be less than, equal, or greater to the
 
1 

 
target specified above.  Subject to Executive’s continued employment with the Company through the date on which such bonuses are paid, any bonus payable pursuant to this Section 4(b) shall be paid at the same time as bonuses are payable to other executive officers of the Company and in accordance with the provisions of the bonus plan generally applicable to the Company’s executive officers in effect from time to time, but no later than 120 days following the end of the Company’s fiscal year to which the bonus relates.
 
(c)                                  Equity .   Executive’s previously granted options of WW Top Investment Corporation common stock, to be purchased at a strike price determined by the Board of Directors of the Company, will remain as granted.  All options provided will be subject to the terms of the WW Top Investment Corporation 2011 Equity Incentive Plan and standard option agreement which will be provided to Executive, in force and as amended from time to time.
 
(d)                                 Paid Time Off .  Executive shall now be eligible to accrue 6 weeks of paid time off (“ PTO ”) (prorated to reflect partial years worked) each calendar year.  Executive may carry over accrued and unused PTO to the next calendar year, provided that, Executive shall accrue no more than 8 weeks of PTO (the “ PTO Cap ”).  If Executive reaches the PTO Cap, Executive shall not accrue any additional PTO until he uses her PTO so that the balance falls below the PTO Cap.  Any PTO used for vacation shall be taken at the reasonable and mutual convenience of the Company and Executive.  Any accrued and unused PTO shall be paid to Executive upon termination.  In addition, Executive shall receive certain paid holidays as set forth in the employee handbook.
 
(e)                                  Benefits .  Executive shall continue to be eligible to participate in any Company-sponsored health and welfare benefit plans or programs of the Company in effect from time to time and available to other similarly-situated officers of the Company.  The amount, eligibility and extent of the benefits shall be governed by the applicable benefit plan or program of the Company as in force and amended from time to time.
 
5.                                       EXPENSES . The Company shall reimburse Executive for all reasonable business expenses of types authorized by the Company and reasonably and necessarily incurred or paid for by Executive in the performance of her duties, responsibilities, and authorities hereunder. Executive shall provide the Company with reasonable documentation and receipts establishing the amount and nature of such expenses.   Executive shall comply with such reasonable budget limitations and approval and reporting requirements with respect to expenses as the Company may establish from time to time.
 
6.                                       TERMINATION .  Executive and the Company may terminate this Agreement for any reason or no reason, at any time, as set forth in this Section 6.  Upon termination of Executive’s employment for any reason, Executive is entitled to no other payments, compensation, severance or benefits except as expressly stated in this Section 6.
 
(a)                                 Termination Without Cause . The Company may terminate Executive’s employment without Cause (defined in Section 6(c)(ii)), other than as a result of Executive’s death or disability, by providing Executive written notice.  If Executive’s employment is terminated by the Company without Cause, the Company shall pay Executive: (i) the Accrued Obligations (defined in Section 6(c)(i)) and (ii) the Severance Payment (defined in Section 6(c)(iii)), provided that, Executive will only be entitled to receive the Severance Payment if she executes, delivers and does not revoke (if applicable) a general waiver and release of all claims against the Company, the Parent and their affiliates and subsidiaries no later than sixty (60) days after her termination date, in a form to be provided by the Company (the “ Release ”), and she complies with her continuing obligations as set forth in Section 7 of this Agreement.
 
If Executive’s employment is terminated pursuant to this Section 6(a), then except as set forth in this Section 6(a), the Company shall have no further obligation to Executive or liability under this Agreement by way of compensation or otherwise.
 
(b)                                 Other Terminations .  If Executive’s employment terminates for any reason other than as set forth in Section 6(a), including for Cause, due to her death or disability, or if Executive resigns
 
2 

 
her employment for any reason, Executive will be entitled to receive only the Accrued Obligations; she will not receive the Severance Payment or any other post-termination severance or other benefits, and the Company shall have no further obligation to Executive or liability under this Agreement by way of compensation or otherwise.
 
(c)                                   Certain Definitions .  For purposes of this Agreement:
 
(i)                            “ Accrued Obligations ” shall mean: (1) the amount of any accrued but unpaid Base Salary, less applicable withholdings and deductions, due and owing to Executive as of the date of termination; (2) any accrued and unused paid time off, less applicable withholdings and deductions, through the date of termination and/or other vested benefit to which Executive is entitled under any Company plan or program; and (3) reimbursement of expenses incurred by Executive in accordance with this Agreement and not previously reimbursed through the date of termination.
 
(ii)                                  “ Cause ” shall mean, each by the Company:
 
(A)          Executive’s refusal or failure to perform her duties and responsibilities under this Agreement, to follow any instruction issued by the Company or the CEO, or to comply with any written policies or procedures of the Company (including, but not limited to, the Company’s policies prohibiting discrimination and harassment, drug policy, etc.);
 
(B)       Executive’s engagement in any act of misfeasance or nonfeasance of her assigned duties, theft, fraud, embezzlement, falsification of Company documents, misappropriation of funds or other assets of the Company or in any conduct which is damaging to the goodwill, business or reputation of the Company;
 
(C)      Executive’s conviction by a court of competent jurisdiction of, or her pleading guilty or nolo contendere to any felony or crime involving moral turpitude that is damaging to the reputation of the Company; or
 
(D)     Executive’s breach of any of her obligations contained in this Agreement or the Confidential Information Agreement (defined below).
 
(iii)                               “ Severance Payment ” shall mean Executive’s Base Salary in effect on the termination date payable for a period of six (6) months from the termination date, as salary continuation payments in accordance with the Company’s normal payroll practices, the first installment of which shall be made on the first regular payroll period following the sixtieth (60th) day after the termination date (and will include any Severance Payment installment that would have otherwise been paid during the period following the termination date through the date of the first Severance Payment installment); provided that Executive has executed and delivered the Release and the Release is irrevocable as of such date.
 
7.                                       CONFIDENTIAL INFORMATION AND NON-SOLICITATION .   As a condition of employment, Executive shall be required to execute, deliver and comply with the Company’s Confidential and Proprietary Information Agreement (“ Confidential Information Agreement ”) provided to Executive contemporaneously herewith.   Termination of Executive’s employment with the Company, however caused, shall not affect Executive’s continuing obligations under the Company’s Confidential Information Agreement.
 
8.                                       GENERAL .
 
(a)                                             Severability .  Wherever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any part, clause, or condition of this Agreement is held to be partially or wholly invalid, unenforceable, or inoperative for any reason whatsoever, such invalid provision shall not affect any other provision or portion hereof, which shall continue to be effective as though such invalid, unenforceable or inoperative part, clause or condition had not been made.
 
3 

 
(b)                                 Representation and Warranties .  Executive represents and warrants that: (i) her employment with the Company does not and will not breach any agreements with or duties to any third party; (ii) she has no obligations or commitments inconsistent with the terms of this Agreement or with undertaking an employment relationship with the Company; (iii) she will not enter into any agreement or engage in any activity which would conflict with this Agreement or which would otherwise materially interfere with her duties hereunder and/or the best interests of the Company, the Parent, or any subsidiary or affiliate thereof; (iv) she has had the opportunity to consult legal counsel and a tax advisor of her own choosing in regard to this Agreement, and (v) she knowingly and voluntarily has entered into this Agreement, based on her own judgment, and not on any representations, inducements or promises other than those expressly contained in this Agreement.
 
(c)                                  Waivers/Construction .  No delay or omission by either party hereto in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.  The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.
 
(d)                                 Withholding .  All compensation (including bonuses and severance, if applicable) payable by the Company to Executive hereunder shall be reduced prior to the delivery of such payment to Executive by an amount sufficient to satisfy any applicable federal, state, local or other tax withholding requirements.
 
(e)                                  Successors and Assigns; Assignment .  Executive shall not assign this Agreement and any attempt by her to do so will be deemed null and void.  This Agreement will be binding upon and inure to the benefit of the Company, its successors and assigns, and may be assigned by the Company to the Parent or any subsidiary or affiliate thereof, or to a person or entity which is a successor in interest to substantially all of the business operations or assets of the Company.
 
(f)                                   Entire Agreement: No Oral Modification .  This Agreement contains the entire understanding of the parties with respect to Executive’s employment with the Company, and supersedes any and all prior or contemporaneous agreements and understandings relating to Executive’s employment with the Company.  This Agreement cannot be amended or modified except pursuant to a written instrument signed by Executive and the CEO.
 
(g)                                  Governing Law .  This Agreement shall be construed in accordance with the laws of the State of California.
 
(h)                                 Section Headings .  The section and subsection heading of this Agreement are included for purposes of convenience only, and shall not affect the construction or interpretation of any of its provisions.
 
(i)                                     Counterparts .  This Agreement may be executed by facsimile or pdf signature and in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
 
9.                                       409A .  It is intended that compensation paid or delivered to Executive pursuant to this Agreement is either paid in compliance with, or is exempt from, Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (“ Section 409A ”), and this Agreement shall be interpreted and administered accordingly.  However, the Company does not warrant to Executive that all amounts paid or delivered to her will be exempt from, or paid in compliance with, Section 409A, and Executive should seek the advice of a tax advisor.  If and to the extent necessary to comply
 
4 

 
with Section 409A, for the purposes of determining when amounts otherwise payable on account of Executive’s termination of employment under this Agreement will be paid, “terminate”, “terminated” or “termination” or words of similar import relating to Executive’s employment with the Company, as used in this Agreement, shall be construed as the date that Executive first incurs a “separation from service” from the Company within the meaning of Section 409A.   In addition, any right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.
 
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Employment Agreement to be duly executed as of the date and year written below.

Dated:  5/28/2014	BOOT BARN, INC.	
 	By:	/s/ James G.  Conroy	
 	 	James G.  Conroy	
 	 	Chief Executive Officer	

 	EXECUTIVE	
 	By:	/s/ Laurie Grijalva	
Dated:  5/27/2014	 	 	Laurie Grijalva	

5 

Exhibit 10.7
 
FORM OF
AMENDED AND RESTATED INDEMNIFICATION AGREEMENT
 
This Amended and Restated Indemnification Agreement (this “ Agreement ”) is made as of                         , 2014, by and between Boot Barn Holdings, Inc., a Delaware corporation (the “ Company ”), and                                  (“ Indemnitee ”).
 
RECITALS
 
WHEREAS, highly competent persons have become more reluctant to serve corporations as directors or officers unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;
 
WHEREAS, directors, officers and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself;
 
WHEREAS, the Board of Directors of the Company (the “ Board ”) has determined that, in order to attract and retain qualified individuals as directors and officers, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities;
 
WHEREAS, the Bylaws of the Company (the “ Bylaws ”) require indemnification of the directors and officers of the Company and Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“ DGCL ”);
 
WHEREAS, the Bylaws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification;
 
WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;
 
WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;
 
WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

 
WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws of the Company and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;
 
WHEREAS, Indemnitee does not regard the protection available under the Company’s Bylaws and insurance as adequate in the present circumstances, and may not be willing to serve or continue to serve as director or officer without adequate protection, and the Company desires Indemnitee to serve or continue to serve in such capacity.  Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified;
 
[WHEREAS, Indemnitee and the Company previously entered into an Indemnification Agreement dated                  (the “ Original Indemnification Agreement ”) and wish to amend and restate the Original Indemnification Agreement so that this Agreement shall apply with respect to all indemnifiable events under this Agreement arising on or after the date of the Original Indemnification Agreement]; and
 
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
 
1.                                       Services to the Company and other Enterprises.   Indemnitee agrees to serve as a director or officer of the Company.  Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in such position.  This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries or any Enterprise (as defined below)) and Indemnitee.  Indemnitee specifically acknowledges that Indemnitee’s employment with the Company (or any of its subsidiaries or any Enterprise), if any, is at will, and the Indemnitee may be discharged at any time for any reason, with or without cause, except as may be otherwise provided in any written employment contract between Indemnitee and the Company (or any of its subsidiaries or any Enterprise), other applicable formal severance policies duly adopted by the Board, or, with respect to service, at the request of the Company, as a director or officer of the Company’s subsidiaries and/or Affiliates, by the Bylaws and the DGCL.  The foregoing notwithstanding, this Agreement shall continue in force after Indemnitee has ceased to serve as a director or officer of the Company, its subsidiaries or any other Enterprise for which Indemnitee may agree to serve as a director or officer, or in any other capacity, at the request of the Company.
 
2.                                       Definitions.   As used in this Agreement:
 
a.                                       “ Agent ” means any person who is or was a director, officer, or employee of the Company or a subsidiary of the Company or other person authorized by the Company to act for the Company, to include such person serving in such capacity as a director, officer, employee, fiduciary or other official of another corporation, partnership, limited liability company, joint venture, trust or other enterprise at the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the Company.
 
2 

 
b.                                       A “ Change in Control ” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:
 
i.                                           Acquisition of Stock by Third Party .  Any Person (as defined below) other than FS Equity Partners VI, L.P. (“ Investor ”), FS Affiliates VI, L.P. or their Affiliates (as defined below), is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing at least a majority of the combined voting power of the Company’s then outstanding securities unless the change in relative Beneficial Ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors;
 
ii.                                        Change in Board of Directors .  During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(b)(i) , 2(b)(iii)  or 2(b)(iv) ) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;
 
iii.                                     Corporate Transactions .  The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;
 
iv.                                    Liquidation .  The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and
 
v.                                       Other Events .  There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.
 
For purposes of this Section 2(b) , the following terms shall have the following meanings:
 
(A)                                “ Affiliate ” shall have the meaning given to such term pursuant to Rule 12b-2 promulgated under the Exchange Act (as defined below) and, with respect to the Investor, shall include any investment fund or partnership that is organized and controlled by one or more of the FS Principals.
 
3 

 
(B)                                “ Beneficial Owner ” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.
 
(C)                                “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.
 
(D)                                “ FS Principals ” shall mean Brad J. Brutocao, Bradford M. Freeman, Benjamin D. Geiger, Todd W. Halloran, Jon D. Ralph, John M. Roth, J. Frederick Simmons, Ronald P. Spogli and William M. Wardlaw.
 
(E)                                 “ Person ” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.
 
c.                                        “ Corporate Status ” describes the status of a person who is or was a director, officer, employee or agent of the Company or of any other corporation, limited liability company, partnership or joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company.
 
d.                                       “ Disinterested Director ” means a director of the Company who is not and was not a party to, nor an officer, director or partner of a party to, the Proceeding in respect of which indemnification is sought by Indemnitee.
 
e.                                        “ Enterprise ” shall mean the Company and any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, employee, agent or fiduciary, including (without limitation) the subsidiaries of the Company.
 
f.                                         “ Expenses ” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts and other professionals, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding.  Expenses also shall include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including
 
4 

 
without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, (ii) any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, and ERISA excise taxes and penalties, (iii) all interest, assessments and other charges paid or payable in connection with or in respect of the Expenses, and (iv) for purposes of Section 13(d)  only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise.  The parties agree that for the purposes of any advancement of Expenses for which Indemnitee has made written demand to the Company in accordance with this Agreement, all Expenses included in such demand that are certified by affidavit of Indemnitee’s counsel as being reasonable in the good faith judgment of such counsel shall be presumed conclusively to be reasonable.  Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
 
g.                                        “ Independent Counsel ” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent:  (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.  The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.
 
h.                                       The term “ Proceeding ” shall include any threatened, pending or completed action, suit, claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative, legislative or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is or will be involved as a party, a potential party, non-party witness or otherwise by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action taken by Indemnitee (or a failure to take action by Indemnitee) or of any action (or failure to act) on Indemnitee’s part while acting pursuant to Indemnitee’s Corporate Status, in each case whether or not serving in such capacity at the time any liability or Expense is incurred for which indemnification, reimbursement, or advancement of Expenses can be provided under this Agreement.  If the Indemnitee believes in good faith that a given situation may lead to or culminate in the institution of a Proceeding, this shall be considered a Proceeding under this paragraph.
 
i.                                           Reference to “any other Enterprise” shall include employee benefit plans; references to “fines” shall include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves
 
5 

 
services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a Person who acted in good faith and in a manner he reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in manner “not opposed to the best interests of the Company” as referred to in this Agreement.
 
3.                                       Indemnity in Proceedings.   The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding (other than a Proceeding governed by Section 4 ) by reason of Indemnitee’s Corporate Status.  Pursuant to this Section 3 , Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses, losses, liabilities, judgments, fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of any such Expenses, losses, liabilities, judgments, fines, penalties or amounts paid in settlement) actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding had no reasonable cause to believe that his conduct was unlawful.  The parties hereto intend that this Agreement shall provide to the fullest extent permitted by law for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the By-laws, vote of its stockholders or disinterested directors or applicable law.
 
4.                                       Indemnity in Proceedings by or in the Right of the Company.   The Company shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor by reason of Indemnitee’s Corporate Status.  Pursuant to this Section 4 , Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company.  No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent that the Chancery Court of the State of Delaware (“ Delaware Court ”) or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.
 
5.                                       Indemnification for Expenses of a Party Who is Wholly or Partly Successful .  Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify
 
6 

 
Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with or related to each successfully resolved claim, issue or matter.  If the Indemnitee is not wholly successful in such Proceeding, the Company also shall indemnify Indemnitee against all Expenses reasonably incurred in connection with a claim, issue or matter related to any claim, issue, or matter on which the Indemnitee was successful.  For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
 
6.                                       Indemnification For Expenses of a Witness.   Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.
 
7.                                       Additional Indemnification .
 
a.                                       Partial Indemnification.   If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.
 
b.                                       Notwithstanding any limitation in Sections 3 , 4 , or 5 , the Company shall indemnify Indemnitee to the fullest extent permitted by applicable law if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) by reason of Indemnitee’s Corporate Status.
 
c.                                        For purposes of Section 7(b) , the meaning of the phrase “to the fullest extent permitted by applicable law” shall include, but not be limited to:
 
i.                                           to the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL, and
 
ii.                                        to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.
 
8.                                       Exclusions.   Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnification payment or to advance expenses in connection with any claim involving Indemnitee:
 
a.                                       for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; provided that the foregoing shall not affect the rights of Indemnitee or any equity holder of the Company or any Affiliate thereof set forth in Section 14 (e)  of this Agreement; or
 
7 

 
b.                                       for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as defined in Section 2(b)  hereof), or similar provisions of state statutory law or common law, (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act) or (iii) any reimbursement of the Company by Indemnitee of any compensation pursuant to any compensation recoupment or clawback policy adopted by the Board or the compensation committee of the Board, including but not limited to any such policy adopted to comply with stock exchange listing requirements implementing Section 10D of the Exchange Act; or
 
c.                                        except as provided in Section 13(d)  hereof, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.
 
9.                                       Advances of Expenses.   Notwithstanding any provision of this Agreement to the contrary (other than Section 13(d) ), the Company shall advance, to the extent not prohibited by law, the Expenses incurred by Indemnitee in connection with any Proceeding (or any part of any Proceeding) not initiated by Indemnitee or any Proceeding initiated by Indemnitee with the prior approval of the Board as provided in Section 8(c)  or under Section 13(d) , and such advancement shall be made within 30 days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding.  Advances shall be unsecured and interest free.  Advances shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement.  In accordance with Section 13(d) , advances shall include any and all reasonable Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed.  The Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement, which shall constitute an undertaking providing that the Indemnitee undertakes to repay the amounts advanced (without interest) to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company.  No other form of undertaking shall be required other than the execution of this Agreement.  This Section 9 shall not apply to any claim made by Indemnitee for which indemnification is excluded pursuant to Section 8 .
 
10.                                Procedure for Notification and Defense of Claim .
 
a.                                       To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine
 
8 

 
whether and to what extent Indemnitee is entitled to indemnification.  The delay or omission to notify the Company will not relieve the Company from any liability which it may have to Indemnitee under this Agreement or otherwise, and any omission or delay in so notifying the Company shall not constitute a waiver by Indemnitee of any rights under this Agreement.  The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.
 
b.                                       The Company will be entitled to participate in the Proceeding at its own expense.
 
11.                                Procedure Upon Application for Indemnification .
 
a.                                       Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 10(a) , a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case:  (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum, (B) by a committee of two or more Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (C) if there are not at least two such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee or (D) if so directed by the Board, by the stockholders of the Company and, if it is so determined that Indemnitee is entitled to indemnification, payment of all amounts to which Indemnitee is entitled hereunder shall be made within ten (10) days after such determination.  The Company promptly will advise Indemnitee in writing with respect to any determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied.
 
b.                                       In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 11(a)  hereof, the Independent Counsel shall be selected as provided in this Section 11(b) .  If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board, and the Company shall give written notice to Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected.  If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected.  In either event, Indemnitee or the Company, as the case may be, may, within 10 days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided , however , that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the person so selected shall act as Independent Counsel.  If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless
 
9 

and until such objection is withdrawn or the Delaware Court has determined that such objection is without merit.  If, within 20 days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 10(a)  hereof and the final disposition of the Proceeding, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Delaware Court for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 11(a)  hereof.  Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 13(a)  of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).
 
c.                                        Indemnitee shall cooperate with the person, persons or entity making the determination with respect to Indemnitee’s entitlement to indemnification, including providing to such Person or Persons upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination.  Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the Person or Persons making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
 
12.                                Presumptions and Effect of Certain Proceedings .
 
a.                                       In making a determination with respect to entitlement to indemnification hereunder, the Person or Persons making such determination shall, to the fullest extent not prohibited by law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a)  hereof, and the Company shall, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption in connection with the making by any Person or Persons of any determination contrary to that presumption.  Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
 
b.                                       Subject to Section 13(e) , if the Person or Persons empowered or selected under Section 11 hereof to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection
 
10 

 
with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the Person or Persons making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 12(b)  shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 11(a)  hereof and if (A) within fifteen (15) days after receipt by the Company of the request for such determination the Board has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 11(a)  hereof.
 
c.                                        The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
 
d.                                       Reliance as Safe Harbor .  For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser, financial advisor or other expert selected with reasonable care by or on behalf of the Enterprise.  The provisions of this Section 12(d)  shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.
 
e.                                        Actions of Others .  The knowledge and/or actions, or failure to act, of any director, officer, trustee, partner, managing member, fiduciary, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.
 
13.                                Remedies of Indemnitee .
 
a.                                       Subject to Section 13(e) , in the event that (i) a determination is made pursuant to Section 11 hereof that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 9 hereof, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 11(a)  hereof within 90 days after receipt by the Company of the request for
 
11 

 
indemnification, (iv) payment of indemnification is not made pursuant to Section 5 or 6 or the last sentence of Section 11(a)  hereof within ten (10) days after receipt by the Company of a written request therefor, (v) payment of indemnification pursuant to Section 3 , 4 or 7 hereof is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to the Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of Indemnitee’s entitlement to such indemnification or advancement of Expenses.  Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association.  Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 13(a) ; provided , however , that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce Indemnitee’s rights under Section 5 hereof.  The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.
 
b.                                       In the event that a determination shall have been made pursuant to Section 11(a)  hereof that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 13 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination.  In any judicial proceeding or arbitration commenced pursuant to this Section 13 the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.
 
c.                                        If a determination shall have been made pursuant to Section 11(a)  hereof that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 13 , absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.
 
d.                                       The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 13 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.  It is the intent of the Company that, to the fullest extent permitted by law, the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder.  The Company shall, to the fullest extent permitted by law, indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefor) advance, to the extent not prohibited by law, such Expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advancement of Expenses from the Company under this
 
12 

 
Agreement or under any directors and officers’ liability insurance policies maintained by the Company, if, in the case of indemnification, Indemnitee is wholly successful on the underlying claims; if Indemnitee is not wholly successful on the underlying claims, then such indemnification shall be only to the extent Indemnitee is successful on such underlying claims or otherwise as permitted by law, whichever is greater.
 
e.                                        Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement of Indemnitee to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.
 
14.                                Non-exclusivity; Survival of Rights; Insurance; Subrogation .
 
a.                                       The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Company’s Certificate of Incorporation, the Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal.  To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Company’s Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
 
b.                                       To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents of the Company, its subsidiaries or other Enterprise, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies.  If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such claim or of the commencement of such Proceeding, as the case may be, to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.
 
c.                                        In the event of any payment under this Agreement, the Company shall, except as provided in clause (iii) of Section 14(e)  below, be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.  In the event of payment by any equity holder of the Company or any Affiliate of any such equity holder (other than the
 
13 

 
Company) under any other agreement or instrument of any indemnification payments or advances to Indemnitee in respect of any Expenses, losses, liabilities, judgments, fines, penalties or amounts paid in settlement for which the Company would also be obligated pursuant to this Agreement, ( i ) such equity holder or Affiliate shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee under this Agreement, who shall execute such documents and do such acts as such equity holder or Affiliate may reasonably request and cooperate with such equity holder or Affiliate, in each case to the extent necessary to secure such rights and to enable such equity holder or Affiliate to effectively bring suit to enforce such rights and ( ii ) the Company shall reimburse such equity holder or Affiliate in full on demand in accordance with the last sentence of Section 14(e) .
 
d.                                       Except as provided in Section 14(e) , the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or for which advancement is provided hereunder) hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
 
e.                                        To the extent that Indemnitee is entitled to be indemnified by the Company under this Agreement and by any equity holder of the Company or any Affiliate of any such equity holder (other than the Company) under any other agreement or instrument, or by any insurer under a policy maintained by any such equity holder or Affiliate, ( i ) the obligations of the Company hereunder shall be primary, and the obligations of such equity holder, Affiliate or insurer secondary, ( ii ) Indemnitee shall proceed first against the Company and any insurer under any policy maintained by the Company, second, if indemnification is not provided by the Company or any such insurer on a timely basis, against any insurer under a policy maintained by any such equity holder or Affiliate, and third, if indemnification is not provided by the Company, any insurer under a policy maintained by the Company and any insurer under a policy maintained by any such equity holder or Affiliate on a timely basis, against any equity holder or Affiliate of such equity holder for whose benefit Indemnitee holds his or her Corporate Status, and ( iii ) the Company shall not be entitled to contribution or indemnification from or subrogation against any such equity holder, Affiliate or insurer under a policy maintained by any such equity holder or Affiliate.  In the event that any such equity holder or Affiliate makes indemnification payments or advances to Indemnitee in respect of any Expenses, losses, liabilities, judgments, fines, penalties or amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of any such Expenses, losses, liabilities, judgments, fines, penalties or amounts paid in settlement) for which the Company would also be obligated pursuant to this Agreement, the Company shall indemnify, reimburse and hold harmless such equity holder or Affiliate in full on demand.
 
f.                                         The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, fiduciary, employee or agent for an Enterprise other than the Company shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other Enterprise.
 
15.                                Duration of Agreement; Successors and Assigns.   This Agreement shall continue until and terminate upon the later of: (a) 10 years after the date that Indemnitee shall have ceased to serve as a director or officer of the Company, any subsidiary or other Enterprise, or (b) one (1)
 
14 

 
year after the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 13 hereof relating thereto.  This Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or of any other Enterprise, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, heirs, assigns, executors, devisees and administrators and other legal representatives.  The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.
 
16.                                Severability.   If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
 
17.                                Enforcement .
 
a.                                       The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve, or continue to serve, as a director or officer of the Company, its subsidiaries, and any other Enterprise for which Indemnitee may agree to serve as a director or officer at the request of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving, or continuing to serve, as a director or officer of the Company its subsidiaries, and any other Enterprise for which Indemnitee may agree to serve as a director or officer at the request of the Company.
 
b.                                       This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate of Incorporation of the Company, the Bylaws of the Company and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.
 
15 

 
18.                                Modification and Waiver.   No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.
 
19.                                Notice by Indemnitee.   Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder.  The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise.
 
20.                                Notices.   All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (b) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, (c) mailed by reputable overnight courier and receipted for by the party to whom said notice or other communication shall have been directed or (d) sent by facsimile transmission, with receipt of oral confirmation that such transmission has been received:
 
a.                                       If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide to the Company.
 
b.                                       If to the Company to
 
Boot Barn Holdings, Inc.
15776 Laguna Canyon Road
Irvine, CA 92618
Attention:                                          Chief Executive Officer
Facsimile:                                          (      )
 
or to any other address as may have been furnished to Indemnitee by the Company.
 
21.                                Contribution.   To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
 
22.                                Applicable Law and Consent to Jurisdiction.   This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules.  Except with
 
16 

 
respect to any arbitration commenced by Indemnitee pursuant to Section 13(a)  hereof, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court, and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
 
23.                                Third Party Beneficiaries .  The equity holders of the Company and any Affiliate of any such equity holder (other than the Company) are express third-party beneficiaries of this Agreement, are entitled to rely upon this Agreement, and may specifically enforce the Company’s obligations hereunder (including but not limited to the obligations specified in Sections 14(c)  and 14(e)  of this Agreement).
 
24.                                Identical Counterparts.   This Agreement may be executed in one or more counterparts, including by facsimile or pdf, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.  Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
 
25.                                Miscellaneous.   Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.  The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
 
[ Signature Page Follows ]
 
17 

 
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

BOOT BARN HOLDINGS, INC.	 	INDEMNITEE	

 	 	 	
By:	 	 	 	
Name:	 	 	Name:	 	
Office:	 	 	Address:	 	

 

Exhibit 10.8
 
BROKER’S COPY
 
FULLY-EXECUTED
 
LEASE
 
(SINGLE TENANT)
 
BETWEEN
 
THE IRVINE COMPANY LLC
 
AND
 
BOOT BARN, INC.

 
LEASE
 
THIS LEASE is made as of the 25 th  day of June, 2010, by and between THE IRVINE COMPANY LLC, a Delaware limited liability company, hereinafter called “Landlord,” and BOOT BARN, INC., a Delaware corporation, hereafter called “Tenant.”
 
ARTICLE 1. BASIC LEASE PROVISIONS
 
Each reference in this Lease to the “Basic Lease Provisions” shall mean and refer to the following collective terms, the application of which shall be governed by the provisions in the remaining Articles of this Lease.
 
1.               Tenant’s Trade Name: Boot Barn, Inc.
 
2.               Premises:  The Premises are more particularly described in Section 2.1.
 
Address of Building:  15776 Laguna Canyon Road, Irvine, CA
 
Project Description:  Laguna Canyon (as shown on Exhibit Y to this Lease)
 
3.               Use of Premises:   General office for corporate headquarters, warehouse and distribution.
 
4.               Estimated Commencement Date:  14 weeks from and after the date of this Lease
 
5.               Lease  Term:   60 months, plus such additional days as may be required to cause this Lease to expire on the final day of the calendar month.
 
6.               Basic Rent:

Months of Term
or Period	 	Monthly Rate Per 
 Rentable Square Foot	 	Monthly Basic Rent (rounded to the 
 nearest dollar)	 	
1-12	 	$	.56	 	$	39,604.00	 	
13-24	 	$	.59	 	$	41,726.00	 	
25-36	 	$	.61	 	$	43,140.00	 	
37-48	 	$	.64	 	$	45,262.00	 	
49-60	 	$	.67	 	$	47,384.00	 	
 
Notwithstanding the above schedule of Basic Rent to the contrary, as long as Tenant is not in Default (as defined in Section 14.1) under this Lease, Tenant shall be entitled to an abatement of 3 full calendar months of Basic Rent in the aggregate amount of $118,812.00 (i.e. $39,604.00 per month) (the “Abated Basic Rent” ) for the initial 3 full calendar months of the Term (the “Abatement Period” ). In the event Tenant Defaults at any time during the Term, all Abated Basic Rent shall immediately become due and payable. The payment by Tenant of the Abated Basic Rent in the event of a Default shall not limit or affect any of Landlord’s other rights, pursuant to this Lease or at law or in equity. Only Basic Rent shall be abated during the Abatement Period and all other additional rent and other costs and charges specified in this Lease shall remain as due and payable pursuant to the provisions of this Lease.
 
7.               Expense Recovery Period:  Every twelve month period during the Term (or portion thereof during the first and last Lease years) ending June 30.
 
8.               Floor Area of Premises:   approximately 70,722 rentable square feet
 
Floor Area of Building:  approximately 70,722 rentable square feet
 
9.               Security Deposit:  $52,122.00
 
10.        Broker(s):  Irvine Realty Company ( “Landlord’s  Broker” ) and 360 Commercial Partners, Inc. ( “Tenant’s Broker” )
 
11.        Parking:  177 unreserved vehicle parking spaces in accordance with the provisions set forth in Exhibit F to this Lease.
 
1 

 
12.        Address for Payments and Notices:

LANDLORD	TENANT	
 	 	
Payment Address:	 	
 	 	
THE IRVINE COMPANY LLC	BOOT BARN, INC.	
Department #6494	15776 Laguna Canyon Road	
Los Angeles, CA 90084-6494	Irvine, CA  92618	
Attn:	Senior Vice President, Property Operations	 	
 	Irvine Office Properties	 	
 	 	 	
Notice Address:	 	
 	 	
THE IRVINE COMPANY LLC	 	
550 Newport Center Drive	 	
Newport Beach, CA 92660	 	
Attn:	Senior Vice President, Property Operations	 	
 	Irvine Office Properties	 	
 	 	
with a copy of notices to:	 	
 	 	
THE IRVINE COMPANY LLC	 	
550 Newport Center Drive	 	
Newport Beach, CA 92660	 	
Attn:	Vice President Operations	 	
 	Irvine Office Properties, Technology Portfolio	 	
 
13.        Additional Provisions.   The provisions of EXHIBIT G attached hereto are hereby incorporated into and made a part of this Lease.
 
LIST OF LEASE EXHIBITS:

Exhibit A	Description of Premises	
Exhibit B	Operating Expenses	
Exhibit C	Utilities and Services	
Exhibit D	Tenant’s Insurance	
Exhibit E	Rules and Regulations	
Exhibit F	Parking	
Exhibit G	Additional Provisions	
Exhibit H	Landlord’s Disclosures	
Exhibit I	[Intentionally Deleted]	
Exhibit J	Hazardous Material Survey Form	
Exhibit X	Work Letter	
Exhibit Y	Project Description	
 
2 

 
ARTICLE 2. PREMISES
 
2.1.                             LEASED PREMISES.  Landlord leases to Tenant and Tenant leases from Landlord the Premises shown in Exhibit A (the “Premises” ), containing approximately the floor area set forth in Item 8 of the Basic Lease Provisions (the “Floor Area” ).    The Premises consist of all of the Floor Area of the building identified in Item 2 of the Basic Lease Provisions (the “Building” ), which is a portion of the project described in Item 2 (the “Project” ).     Landlord and Tenant stipulate and agree that the Floor Area of Premises set forth in Item 8 of the Basic Lease Provisions is correct.
 
2.2.                             ACCEPTANCE OF PREMISES.   Tenant acknowledges that neither Landlord nor any representative of Landlord has made any representation or warranty with respect to the Premises, the Building or the Project or the suitability or fitness of either for any purpose, except as set forth in this Lease.   Tenant acknowledges that the flooring materials which may be installed within portions of the Premises located on the ground floor of the Building may be limited by the moisture content of the Building slab and underlying soils. The taking of possession or use of the Premises by Tenant for any purpose other than construction shall conclusively establish that the Premises and the Building were in satisfactory condition and in conformity with the provisions of this Lease in all respects, except for those matters which Tenant shall have brought to Landlord’s attention on a written punch list.    The punch list shall be limited to any items required to be accomplished by Landlord under the Work Letter attached as Exhibit X (the “Work Letter” ), and shall be delivered to Landlord within 30 days after the Commencement Date (as defined herein).   Nothing contained in this Section 2.2 shall affect the commencement of the Term or the obligation of Tenant to pay rent.   Landlord shall diligently complete all punch list items of which it is notified as provided above.
 
ARTICLE 3. TERM
 
3.1.                             GENERAL.   The Term of this Lease ( “Term” ) shall be for the period shown in Item 5 of the Basic Lease Provisions.  Subject to Tenant’s “Early Entry” rights set forth in the Work Letter and to the provisions of Section 3.2 below, the Term shall commence ( “Commencement Date” ) on the earlier of (a) the date the Premises are deemed “ready for occupancy” (as hereinafter defined) and possession thereof is delivered to Tenant, or (b) the date Tenant commences its business activities within the Premises. Promptly following request by Landlord, the parties shall memorialize on a form provided by Landlord (the “Commencement Memorandum” ) the actual Commencement Date and the expiration date ( “Expiration Date” ) of this Lease; should Tenant fail to execute and return the Commencement Memorandum to Landlord within 15 business days (or provide specific written objections thereto within that period), then Landlord’s determination of the Commencement and Expiration Dates as set forth in the Commencement Memorandum shall be conclusive.  The Premises shall be deemed “ready for occupancy” if and when Landlord, to the extent applicable, (i) has substantially completed all the work required to be completed by Landlord pursuant to the Work Letter (if any) attached to this Lease but for minor punch list matters, and has obtained the requisite governmental approvals for Tenant’s occupancy in connection with such work, and (ii) has provided reasonable access to the Premises for Tenant so that the Premises may be used without unreasonable interference.
 
3.2.                             DELAY IN POSSESSION.   If Landlord, for any reason whatsoever, cannot deliver possession of the Premises to Tenant on or before the Estimated Commencement Date set forth in Item 4 of the Basic Lease Provisions, this Lease shall not be void or voidable nor shall Landlord be liable to Tenant for any resulting loss or damage.   However, Tenant shall not be liable for any rent until the Commencement Date occurs as provided in Section 3.1 above, except that if Landlord’s failure to substantially complete all work required of Landlord pursuant to Section 3.1(i) above is attributable to any action or inaction by Tenant (including without limitation any Tenant Delay described in the Work Letter, if any, attached to this Lease), then the Premises shall be deemed ready for occupancy, and Landlord shall be entitled to full performance by Tenant (including the payment of rent), as of the date Landlord would have been able to substantially complete such work and deliver the Premises to Tenant but for Tenant’s delay(s).
 
Notwithstanding anything to the contrary contained in this Section 3.2, but provided the Lease is fully executed and delivered not later than June 22, 2010, if for any reason other than “Tenant Delays” (as defined in the Work Letter) or other matters beyond Landlord’s reasonable control, the actual Commencement Date of this Lease has not occurred on or before October 31, 2010 (the “Outside Date” ), then the Commencement Date of this Lease shall be extended to the date which is the earlier of (a) the date the Premises are deemed “ready for occupancy” and possession thereof is delivered to Tenant, but not sooner than January 15, 2011, or (b) the date Tenant commences its business activities within the Premises.
 
3 

 
ARTICLE 4. RENT AND OPERATING EXPENSES
 
4.1.                             BASIC RENT. From and after the Commencement Date, Tenant shall pay to Landlord without abatement, deduction or offset (except as otherwise provided for in this Lease), Basic Rent for the Premises in the total amount shown (including subsequent adjustments, if any) in Item 6 of the Basic Lease Provisions (the “Basic Rent” ).   If the Commencement Date is other than the first day of a calendar month, any rental adjustment shown in Item 6 shall be deemed to occur on the first day of the next calendar month following the specified monthly anniversary of the Commencement Date. The Basic Rent shall be due and payable in advance commencing on the Commencement Date and continuing thereafter on the first day of each successive calendar month of the Term, as prorated for any partial month.   No demand, notice or invoice shall be required.  An installment in the amount of 1 full month’s Basic Rent at the initial rate specified in Item 6 of the Basic Lease Provisions and 1 month’s estimated Tenant’s Share of Operating Expenses shall be delivered to Landlord concurrently with Tenant’s execution of this Lease and shall be applied against the Basic Rent and Operating Expenses first due hereunder; the next installment of Basic Rent shall be due on the first day of the next following calendar month of the Term, which installment shall, if applicable, be appropriately prorated to reflect the amount prepaid for that calendar month.
 
4.2.                             OPERATING EXPENSES. Tenant shall pay Tenant’s Share of Operating Expenses in accordance with Exhibit B of this Lease.
 
4.3.                             SECURITY DEPOSIT. Concurrently with Tenant’s delivery of this Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9 of the Basic Lease Provisions (the “Security Deposit” ), to be held by Landlord as security for the full and faithful performance of Tenant’s obligations under this Lease, to pay any rental sums, including without limitation such additional rent as may be owing under any provision hereof, and to maintain the Premises as required by Sections 7.1 and 15.3 or any other provision of this Lease.  Upon any breach of the foregoing obligations by Tenant, Landlord may apply all or part of the Security Deposit as full or partial compensation.  If any portion of the Security Deposit is so applied, Tenant shall within 5 days after written demand by Landlord deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount.  Landlord shall not be required to keep this Security Deposit separate from its general funds, and Tenant shall not be entitled to interest on the Security Deposit.  In no event may Tenant utilize all or any portion of the Security Deposit as a payment toward any rental sum due under this Lease.  Any unapplied balance of the Security Deposit shall be returned to Tenant or, at Landlord’s option, to the last assignee of Tenant’s interest in this Lease within 30 days following the termination of this Lease and Tenant’s vacation of the Premises.  Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code, or any similar or successor laws now or hereafter in effect, in connection with Landlord’s application of the Security Deposit to prospective rent that would have been payable by Tenant but for the early termination due to Tenant’s Default (as defined herein).
 
ARTICLE 5. USES
 
5.1.                             USE. Tenant shall use the Premises only for the purposes stated in Item 3 of the Basic Lease Provisions and for no other use whatsoever. The uses prohibited under this Lease shall include, without limitation, use of the Premises or a portion thereof for (i) offices of any agency or bureau of the United States or any state or political subdivision thereof; (ii) offices or agencies of any foreign governmental or political subdivision thereof; or (iii) schools, temporary employment agencies or other training facilities which are not ancillary to corporate, executive or professional office use.   Tenant shall not do or permit anything to be done in or about the Premises which will in any way interfere with the rights or quiet enjoyment of other occupants of the Building or the Project, or use or allow the Premises to be used for any unlawful purpose, nor shall Tenant permit any nuisance or commit any waste in the Premises or the Project.  Tenant shall not perform any work or conduct any business whatsoever in the Project other than inside the Premises.  Tenant shall comply at its expense with all present and future laws, ordinances and requirements of all governmental authorities that pertain to Tenant or its use of the Premises, including without limitation all federal and state occupational health and safety and handicap access requirements, whether or not Tenant’s compliance will necessitate expenditures or interfere with its use and enjoyment of the Premises, and with all energy usage reporting requirements of Landlord.
 
5.2.                             SIGNS. Provided Tenant continues to occupy the entire Premises, Tenant shall have the non-exclusive right to 2 exterior “building top” signs on the Building for Tenant’s name and graphics in locations designated by Landlord, subject to Landlord’s right of prior approval (which shall not be unreasonably withheld or delayed), that such exterior signage is in compliance with the Signage Criteria (defined below).   Except as provided in the foregoing, and except for Landlord’s standard suite signage identifying Tenant’s name and/or logo, Tenant shall have no right to maintain signs in any location in, on or about the Premises, the Building or the Project and shall not place or erect any signs that are visible from the exterior of the Building.   The size,
 
4 

 
design, graphics, material, style, color and other physical aspects of any permitted sign shall be subject to Landlord’s written determination, as determined solely by Landlord, prior to installation, that signage is in compliance with any covenants, conditions or restrictions encumbering the Premises and Landlord’s signage program for the Project, as in effect from time to time and approved by the City in which the Premises are located ( “Signage Criteria” ).   Prior to placing or erecting any such signs, Tenant shall obtain and deliver to Landlord a copy of any applicable municipal or other governmental permits and approvals, except to Landlord’s standard suite signage.   Tenant shall be responsible for all costs of any permitted sign, including, without limitation, the fabrication, installation, maintenance and removal thereof and the cost of any permits therefor, except that Landlord shall pay for the initial installation costs only of the standard suite signage.  If Tenant fails to maintain its sign in good condition at any time during the Term of this Lease following 30 days written notice from Landlord, or if Tenant fails to remove same upon termination of this Lease and repair and restore any damage caused by the sign or its removal, then Landlord may do so at Tenant’s expense.   Landlord shall have the right to temporarily remove any signs in connection with any repairs or maintenance in or upon the Building.  The term “sign” as used in this Section shall include all signs, designs, monuments, displays, advertising materials, logos, banners, projected images, pennants, decals, pictures, notices, lettering, numerals or graphics.
 
5.3        HAZARDOUS MATERIALS.
 
(a)                                  For purposes of this Lease, the term “Hazardous Materials” means (i) any “hazardous material” as defined in Section 25501(o) of the California Health and Safety Code, (ii) hydrocarbons, polychlorinated biphenyls or asbestos, (iii) any toxic or hazardous materials, substances, wastes or materials as defined pursuant to any other applicable state, federal or local law or regulation, and (iv) any other substance or matter which may result in liability to any person or entity as a result of such person’s possession, use, storage, release or distribution of such substance or matter under any statutory or common law theory.
 
(b)                                  Tenant shall not cause or permit any Hazardous Materials to be brought upon, stored, used, generated, released or disposed of on, under, from or about the Premises (including without limitation the soil and groundwater thereunder) without the prior written consent of Landlord, which consent may be given or withheld in Landlord’s sole and absolute discretion. Notwithstanding the foregoing, Tenant shall have the right, without obtaining prior written consent of Landlord, to utilize within the Premises a reasonable quantity of standard office products that may contain Hazardous Materials (such as photocopy toner, “White Out”, and the like), provided however , that (i) Tenant shall maintain such products in their original retail packaging, shall follow all instructions on such packaging with respect to the storage, use and disposal of such products, and shall otherwise comply with all applicable laws with respect to such products, and (ii) all of the other terms and provisions of this Section 5.3 shall apply with respect to Tenant’s storage, use and disposal of all such products.  Landlord may, in its sole and absolute discretion, place such conditions as Landlord deems appropriate with respect to Tenant’s use, storage and/or disposal of any Hazardous Materials requiring Landlord’s consent.   Tenant understands that Landlord may utilize an environmental consultant to assist in determining conditions of approval in connection with the storage, use, release, and/or disposal of Hazardous Materials by Tenant on or about the Premises, and/or to conduct periodic inspections of the storage, generation, use, release and/or disposal of such Hazardous Materials by Tenant on and from the Premises, and Tenant agrees that any costs incurred by Landlord in connection therewith shall be reimbursed by Tenant to Landlord as additional rent hereunder upon demand.
 
(c)                                   Prior to the execution of this Lease, Tenant shall complete, execute and deliver to Landlord a Hazardous Material Survey Form (the “Survey Form” ) in the form of Exhibit J attached hereto.  The completed Survey Form shall be deemed incorporated into this Lease for all purposes, and Landlord shall be entitled to rely fully on the information contained therein.  On each anniversary of the Commencement Date until the expiration or sooner termination of this Lease, Tenant shall disclose to Landlord in writing the names and amounts of all Hazardous Materials which were stored, generated, used, released and/or disposed of on, under or about the Premises for the twelve-month period prior thereto, and which Tenant desires to store, generate, use, release and/or dispose of on, under or about the Premises for the succeeding twelve-month period.   In addition, to the extent Tenant is permitted to utilize Hazardous Materials upon the Premises, Tenant shall promptly provide Landlord with complete and legible copies of all the following environmental documents relating thereto:  reports filed pursuant to any self-reporting requirements; permit applications, permits, monitoring reports, emergency response or action plans, workplace exposure and community exposure warnings or notices and all other reports, disclosures, plans or documents (even those which may be characterized as confidential) relating to water discharges, air pollution, waste generation or disposal, and underground storage tanks for Hazardous Materials; orders, reports, notices, listings and correspondence (even those which may be considered confidential) of or concerning the release, investigation, compliance, cleanup, remedial and corrective actions, and abatement of Hazardous Materials; and all complaints,
 
5 

 
pleadings and other legal documents filed by or against Tenant related to Tenant’s storage, generation, use, release and/or disposal of Hazardous Materials.
 
(d)                                  Landlord and its agents shall have the right, but not the obligation, to inspect, sample and/or monitor the Premises and/or the soil or groundwater thereunder at any time to determine whether Tenant is complying with the terms of this Section 5.3, and in connection therewith Tenant shall provide Landlord with full access to all facilities, records and personnel related thereto.  If Tenant is not in compliance with any of the provisions of this Section 5.3, or in the event of a release of any Hazardous Material on, under, from or about the Premises caused or permitted by Tenant, its agents, employees, contractors, licensees, subtenants or invitees, Landlord and its agents shall have the right, but not the obligation, without limitation upon any of Landlord’s other rights and remedies under this Lease, to immediately enter upon the Premises without notice and to discharge Tenant’s obligations under this Section 5.3 at Tenant’s expense, including without limitation the taking of emergency or long-term remedial action.   Landlord and its agents shall endeavor to minimize interference with Tenant’s business in connection therewith, but shall not be liable for any such interference. In addition, Landlord, at Tenant’s expense, shall have the right, but not the obligation, to join and participate in any legal proceedings or actions initiated in connection with any claims arising out of the storage, generation, use, release and/or disposal by Tenant or its agents, employees, contractors, licensees, subtenants or invitees of Hazardous Materials on, under, from or about the Premises.
 
(e)                                   If the presence of any Hazardous Materials on, under, from or about the Premises or the Project caused or permitted by Tenant or its agents, employees, contractors, licensees, subtenants, or invitees results in (i) injury to any person, (ii) injury to or any contamination of the Premises or the Project, or (iii) injury to or contamination of any real property adjoining the Project owned by Landlord, Tenant, at its expense, shall promptly take all actions necessary to return the Premises and the Project and any other affected real property adjoining the Project owned by Landlord to the condition existing prior to the introduction of such Hazardous Materials and to remedy or repair any such injury or contamination, including without limitation, any cleanup, remediation, removal, disposal, neutralization or other treatment of any such Hazardous Materials.   Notwithstanding the foregoing, Tenant shall not, without Landlord’s prior written consent, which consent may be given or withheld in Landlord’s sole and absolute discretion, take any remedial action in response to the presence of any Hazardous Materials on, under, from or about the Premises or the Project or any other affected real property adjoining the Project owned by Landlord or enter into any similar agreement, consent, decree or other compromise with any governmental agency with respect to any Hazardous Materials claims; provided however, Landlord’s prior written consent shall not be necessary in the event that the presence of Hazardous Materials on, under, from or about the Premises or the Project or any other affected real property adjoining the Project owned by Landlord (i) imposes an immediate threat to the health, safety or welfare of any individual and (ii} is of such a nature that an immediate remedial response is necessary and it is not possible to obtain Landlord’s consent before taking such action. To the fullest extent permitted by law, Tenant shall indemnify, hold harmless, protect and defend (with attorneys acceptable to Landlord) Landlord, and any successors to all or any portion of Landlord’s interest in the Premises and the Project and any other adjoining real property owned by Landlord, from and against any and all liabilities, losses, damages, diminution in value, judgments, fines, demands, claims, recoveries, deficiencies, costs and expenses (including without limitation attorneys’ fees, court costs and other professional expenses), whether foreseeable or unforeseeable, arising directly or indirectly out of the use, generation, storage, treatment, release, on- or off-site disposal or transportation of Hazardous Materials on, into, from, under or about the Premises, the Building or the Project and any other adjoining real property owned by Landlord, which are caused or permitted by Tenant, its agents, employees, contractors, licensees, subtenants or invitees.   Such indemnity obligation shall specifically include, without limitation, the cost of any required or necessary repair, restoration, cleanup or detoxification of the Premises, the Building and the Project and any other real property adjoining the Project owned by Landlord, the preparation of any closure or other required plans, whether such action is required or necessary during the Term or after the expiration of this Lease and any loss of rental due to the inability to lease the Premises or any portion of the Building or Project as a result of such Hazardous Materials, the remediation thereof or any repair, restoration or cleanup related thereto. If it is at any time discovered that Tenant or its agents, employees, contractors, licensees, subtenants or invitees may have caused or permitted the release of any Hazardous Materials on, under, from or about the Premises, the Building or the Project or any other real property adjoining the Project owned by Landlord, Tenant shall, at Landlord’s request, immediately prepare and submit to Landlord a comprehensive plan, subject to Landlord’s approval, specifying the actions to be taken by Tenant to return the Premises, the Building or the Project or any other real property adjoining the Project owned by Landlord to the condition existing prior to the introduction of such Hazardous Materials.   Upon Landlord’s approval of such plan, Tenant shall, at its expense, and without limitation of any rights and remedies of Landlord under this Lease or at law or in equity, immediately implement such plan and proceed to cleanup, remediate and/or remove all such Hazardous Materials in accordance with all applicable laws and as required by such plan
 
6 

 
and this Lease.  The provisions of this Section 5.3(e) shall expressly survive the expiration or sooner termination of this Lease.
 
(f)                                    Landlord hereby discloses to Tenant, and Tenant hereby acknowledges, certain facts relating to Hazardous Materials at the Project known by Landlord to exist as of the date of this Lease, as more particularly described in Exhibit H attached hereto.   Tenant shall have no liability or responsibility with respect to the Hazardous Materials facts described in Exhibit H , nor with respect to any Hazardous Materials which Tenant proves were not caused or permitted by Tenant, its agents, employees, contractors, licensees, subtenants or invitees.  Notwithstanding the preceding two sentences, Tenant agrees to notify its agents, employees, contractors, licensees, subtenants, and invitees of any exposure or potential exposure to Hazardous Materials at the Premises that Landlord brings to Tenant’s attention. Tenant hereby acknowledges that this disclosure satisfies any obligation of Landlord to Tenant pursuant to California Health & Safety Code Section 25359.7, or any amendment or substitute thereto or any other disclosure obligations of Landlord.
 
(g)                                   Landlord shall take responsibility, at its sole cost and expense and not as a Project Cost, for any governmentally-ordered clean-up, remediation, removal, disposal, neutralization or other treatment of those Hazardous Materials conditions described in Section 5.3(f) above for which Tenant has no liability or responsibility.  The foregoing obligation on the part of Landlord shall include the reasonable costs (including, without limitation, reasonable attorney’s fees) of defending Tenant from and against any legal action or proceeding instituted by any governmental agency in connection with such clean-up, remediation, removal, disposal, neutralization or other treatment of such conditions, provided that Tenant promptly tenders such defense to Landlord.  Tenant agrees to notify its agents, employees, contractors, licensees, and invitees of any exposure or potential exposure to Hazardous Materials at the Premises that Landlord brings to Tenant’s attention.
 
ARTICLE 6. LANDLORD SERVICES
 
6.1.                             UTILITIES AND SERVICES.   Landlord and Tenant shall be responsible to furnish those utilities and services to the Premises to the extent provided in Exhibit  C , subject to the conditions and payment obligations and standards set forth in this Lease.  Landlord shall not be liable for any failure to furnish any services or utilities when the failure is the result of any accident or other cause beyond Landlord’s reasonable control, nor shall Landlord be liable for damages resulting from power surges or any breakdown in telecommunications facilities or services. Landlord’s temporary inability to furnish any services or utilities shall not entitle Tenant to any damages, relieve Tenant of the obligation to pay rent or constitute a constructive or other eviction of Tenant, except that Landlord shall diligently attempt to restore the service or utility promptly. However, if the Premises, or a material portion of the Premises, are made untenantable for a period in excess of 5 consecutive business days as a result of a service interruption that is reasonably within the control of Landlord to correct and through no fault of Tenant and for reasons other than as contemplated in Article 11, then Tenant, as its sole remedy, shall be entitled to receive an abatement of rent payable hereunder during the period beginning on the 6 th  consecutive business day of the service interruption and ending on the day the service has been restored.  Tenant shall comply with all rules and regulations which Landlord may reasonably establish for the provision of services and utilities, and shall cooperate with all reasonable conservation practices established by Landlord. Landlord shall at all reasonable times have free access to all electrical and mechanical installations of Landlord.
 
6.2.                             OPERATION AND MAINTENANCE OF COMMON AREAS.    During the Term, Landlord shall operate all Common Areas within the Building and the Project.    The term “Common Areas” shall mean all areas within the Building and other buildings in the Project which are not held for exclusive use by persons entitled to occupy space, and all other appurtenant areas and improvements provided by Landlord for the common use of Landlord and tenants and their respective employees and invitees, including without limitation parking areas and structures, driveways, sidewalks, landscaped and planted areas, hallways and interior stairwells not located within the premises of any tenant, common electrical rooms, entrances and lobbies, elevators, and restrooms not located within the premises of any tenant.
 
6.3.                             USE OF COMMON AREAS.  The occupancy by Tenant of the Premises shall include the use of the Common Areas in common with Landlord and with all others for whose convenience and use the Common Areas may be provided by Landlord, subject, however, to compliance with Rules and Regulations described in Article 17 below.  Landlord shall at all times during the Term have exclusive control of the Common Areas, and may restrain or permit any use or occupancy, except as otherwise provided in this Lease or in Landlord’s rules and regulations. Tenant shall keep the Common Areas clear of any obstruction or unauthorized use related to Tenant’s operations.   Landlord may temporarily close any portion of the Common Areas for repairs, remodeling and/or alterations, to prevent a public dedication or the accrual of prescriptive rights, or for any other reasonable purpose.  Landlord’s temporary closure of any portion of the
 
7 

 
Common Areas for such purposes shall not deprive Tenant of reasonable access to the Premises.
 
6.4.                             CHANGES AND ADDITIONS BY LANDLORD.  Landlord reserves the right to make alterations or additions to the Building or the Project or to the attendant fixtures, equipment and Common Areas, and such change shall not entitle Tenant to any abatement of rent or other claim against Landlord.  No such change, nor Landlord’s construction and/or installation of any such alterations or additions, shall deprive Tenant of reasonable access to or use of the Premises.
 
ARTICLE 7. REPAIRS AND MAINTENANCE
 
7.1.                             TENANT’S MAINTENANCE AND REPAIR.  Subject to Articles 11 and 12, Tenant at its sole expense shall make all repairs necessary to keep the Premises and all improvements and fixtures therein in good condition and repair, excepting ordinary wear and tear.   Notwithstanding Section 7.2 below, Tenant’s maintenance obligation shall include without limitation all appliances, interior glass, doors, door closures, hardware, fixtures, electrical, plumbing, fire extinguisher equipment and other equipment installed in the Premises and all Alterations constructed by Tenant pursuant to Section 7.3 below, together with any supplemental HVAC equipment servicing only the Premises.  All repairs and other work performed by Tenant or its contractors shall be subject to the terms of Sections 7.3 and 7.4 below.    Alternatively, should Landlord or its management agent agree to make a repair on behalf of Tenant and at Tenant’s request, Tenant shall promptly reimburse Landlord as additional rent for all reasonable costs incurred (including the standard supervision fee) upon submission of an invoice.
 
7.2.                             LANDLORD’S MAINTENANCE AND REPAIR. Subject to Articles 11 and 12, Landlord shall provide service, maintenance and repair with respect to the heating, ventilating and air conditioning ( “HVAC” ) equipment of the Building (exclusive of any supplemental HVAC equipment servicing only the Premises) and shall maintain in good repair the Common Areas, roof, foundations, footings, the exterior surfaces of the exterior walls of the Building (including exterior glass), and the structural, electrical, mechanical and plumbing systems of the Building (including elevators, if any, serving the Building), except to the extent provided in Section 7.1 above.   Landlord shall have the right to employ or designate any reputable person or firm, including any employee or agent of Landlord or any of Landlord’s affiliates or divisions, to perform any service, repair or maintenance function. Landlord need not make any other improvements or repairs except as specifically required under this Lease, and nothing contained in this Section 7.2 shall limit Landlord’s right to reimbursement from Tenant for maintenance, repair costs and replacement costs as provided elsewhere in this Lease.   Notwithstanding any provision of the California Civil Code or any similar or successor laws to the contrary, Tenant understands that it shall not make repairs at Landlord’s expense or by rental offset.   Except as provided in Section 11.1 and Article 12 below, there shall be no abatement of rent and no liability of Landlord by reason of any injury to or interference with Tenant’s business arising from the making of any repairs, alterations or improvements to any portion of the Building, including repairs to the Premises, nor shall any related activity by Landlord constitute an actual or constructive eviction; provided, however, that in making repairs, alterations or improvements, Landlord shall interfere as little as reasonably practicable with the conduct of Tenant’s business in the Premises. Tenant hereby waives any and all rights under and benefits of subsection 1 of Section 1932, and Sections 1941 and 1942 of the California Civil Code, or any similar or successor laws now or hereafter in effect.   All costs of any maintenance, repairs and replacements on the part of Landlord provided hereunder shall be considered part of Project Costs.
 
7.3.                             ALTERATIONS.                        Tenant shall make no alterations, additions, decorations, or improvements (collectively referred to as “Alterations” ) to the Premises without the prior written consent of Landlord.   Landlord’s consent shall not be unreasonably withheld as long as the proposed Alterations do not affect the structural, electrical or mechanical components or systems of the Building, are not visible from the exterior of the Premises, do not change the basic floor plan of the Premises, and utilize only Landlord’s building standard materials ( “Standard Improvements” ).   Landlord’s failure to grant or withhold its consent pursuant to the foregoing within 10 business days following Tenant’s written request for any Alterations (and the receipt of any required or reasonably requested information in connection with such requested Alterations) shall be deemed to constitute Landlord’s approval of such Alterations.  Landlord may impose, as a condition to its consent, any requirements that Landlord in its discretion may deem reasonable or desirable, including but not limited to a requirement that all work be covered by a lien and completion bond satisfactory to Landlord and requirements as to the manner, time, and contractor for performance of the work.  Without limiting the generality of the foregoing, Tenant shall use Landlord’s designated mechanical and electrical contractors for all Alterations work affecting the mechanical or electrical systems of the Building.   Should Tenant perform any Alterations work that would necessitate any ancillary Building modification or other expenditure by Landlord, then Tenant shall promptly fund the cost thereof to Landlord.  Tenant shall obtain all required permits for the Alterations and shall perform the work in compliance with all applicable laws, regulations and ordinances with contractors reasonably acceptable to Landlord, and except for cosmetic
 
8 

 
Alterations not requiring a permit, Landlord shall be entitled to a supervision fee in the amount of 5% of the cost of the Alterations.  In no event shall Tenant prosecute any work that results in picketing or labor demonstrations in or about the Building or Project.  Any request for Landlord’s consent shall be made in writing and shall contain architectural plans describing the work in detail reasonably satisfactory to Landlord. Landlord may elect to cause its architect to review Tenant’s architectural plans, and the reasonable cost of that review shall be reimbursed by Tenant. Should the Alterations proposed by Tenant and consented to by Landlord change the floor plan of the Premises, then Tenant shall, at its expense, furnish Landlord with as-built drawings and CAD disks compatible with Landlord’s systems.   Alterations shall be constructed in a good and workmanlike manner using materials of a quality reasonably approved by Landlord, and Tenant shall ensure that no Alteration impairs any Building system or Landlord’s ability to perform its obligations hereunder.  Unless Landlord otherwise agrees in writing, all Alterations affixed to the Premises, including without limitation all Tenant Improvements constructed pursuant to the Work Letter (except as otherwise provided in the Work Letter), but excluding moveable trade fixtures and furniture, shall become the property of Landlord and shall be surrendered with the Premises at the end of the Term, except that Landlord may, by notice to Tenant given at least 30 days prior to the Expiration Date, require Tenant to remove by the Expiration Date, or sooner termination date of this Lease, all or any Alterations (including without limitation all telephone and data cabling) installed either by Tenant or by Landlord at Tenant’s request (collectively, the “Required Removables” ),   and to replace any non-Standard Improvements with the applicable Standard Improvements. Tenant, at the time it requests approval for a proposed Alteration, may request in writing that Landlord advise Tenant whether the Alteration or any portion thereof, is a Required Removable.  Within 10 days after receipt of Tenant’s request, Landlord shall advise Tenant in writing as to which portions of the subject Alterations are Required Removables. In connection with its removal of Required Removables, Tenant shall repair any damage to the Premises arising from that removal and shall restore the affected area to its pre-existing condition, reasonable wear and tear excepted.
 
7.4.                             MECHANIC’S LIENS.  Tenant shall keep the Premises free from any liens arising out of any work performed, materials furnished, or obligations incurred by or for Tenant.    Upon request by Landlord, Tenant shall promptly cause any such lien to be released by posting a bond in accordance with California Civil Code Section 3143 or any successor statute. In the event that Tenant shall not, within 15 days following its notification of the imposition of any lien, cause the lien to be released of record by payment or posting of a proper bond, Landlord shall have, in addition to all other available remedies, the right to cause the lien to be released by any means it deems proper, including payment of or defense against the claim giving rise to the lien.   All expenses so incurred by Landlord, including Landlord’s attorneys’ fees, shall be reimbursed by Tenant promptly following Landlord’s demand, together with interest from the date of payment by Landlord at the maximum rate permitted by law until paid.  Tenant shall give Landlord no less than 20 days’ prior notice in writing before commencing construction of any kind on the Premises so that Landlord may post and maintain notices of nonresponsibility on the Premises.
 
7.5.                             ENTRY AND INSPECTION.  Landlord shall at all reasonable times have the right to enter the Premises to inspect them, to supply services in accordance with this Lease, to make repairs and renovations as reasonably deemed necessary by Landlord, and to submit the Premises to prospective or actual purchasers or encumbrance holders (or, during the final twelve months of the Term or when an uncured Default exists, to prospective tenants), all without being deemed to have caused an eviction of Tenant and without abatement of rent except as provided elsewhere in this Lease. If reasonably necessary, Landlord may temporarily close all or a portion of the Premises to perform repairs, alterations and additions. Except in emergencies or to provide Building services, Landlord shall provide Tenant with reasonable prior verbal notice of entry and shall use reasonable efforts to minimize any interference with Tenant’s use of the Premises.
 
ARTICLE 8. [INTENTIONALLY DELETED]
 
ARTICLE 9. ASSIGNMENT AND SUBLETTING
 
9.1.                             RIGHTS OF PARTIES.
 
(a)                                  Except as otherwise specifically provided in this Article 9, Tenant may not, either voluntarily or by operation of law, assign, sublet, encumber, or otherwise transfer all or any part of Tenant’s interest in this Lease, or permit the Premises to be occupied by anyone other than Tenant (each, a “Transfer” ),   without Landlord’s prior written consent, which consent shall not unreasonably be withheld in accordance with the provisions of Section 9.1(b).  For purposes of this Lease, references to any subletting, sublease or variation thereof shall be deemed to apply not only to a sublease effected directly by Tenant, but also to a sub-subletting or an assignment of subtenancy by a subtenant at any level.   Except as otherwise specifically provided in this Article 9, no Transfer (whether voluntary, involuntary or by operation of law) shall be valid or
 
9 

effective without Landlord’s prior written consent and, at Landlord’s election, such a Transfer shall constitute a material default of this Lease.  Landlord shall not be deemed to have given its consent to any Transfer by any other course of action, including its acceptance of any name for listing in the Building directory.
 
(b)           Except as otherwise specifically provided in this Article 9, if Tenant or any subtenant hereunder desires to transfer an interest in this Lease, Tenant shall first notify Landlord in writing and shall request Landlord’s consent thereto.  Tenant shall also submit to Landlord in writing: (i) the name and address of the proposed transferee; (ii) the nature of any proposed subtenant’s or assignee’s business to be carried on in the Premises; (iii) the terms and provisions of any proposed sublease or assignment (including without limitation the rent and other economic provisions, term, improvement obligations and commencement date); (iv) evidence that the proposed assignee or subtenant will comply with the requirements of Exhibit D to this Lease; and (v) any other information requested by Landlord and reasonably related to the Transfer.  Landlord shall not unreasonably withhold its consent, provided: (1) the use of the Premises will be consistent with the provisions of this Lease and with Landlord’s commitment to other tenants of the Building and Project; (2) any proposed subtenant or assignee demonstrates that it is financially responsible by submission to Landlord of all reasonable information as Landlord may request concerning the proposed subtenant or assignee, including, but not limited to, a balance sheet of the proposed subtenant or assignee as of a date within 90 days of the request for Landlord’s consent and statements of income or profit and loss of the proposed subtenant or assignee for the two-year period preceding the request for Landlord’s consent; (3) the proposed assignee or subtenant is neither an existing tenant or occupant of the Building or Project nor a prospective tenant with whom Landlord or Landlord’s affiliate has been actively negotiating to become a tenant at the Building or Project; and (4) the proposed transferee is not an SDN (as defined below) and will not impose additional burdens or security risks on Landlord.  If Landlord consents to the proposed Transfer, then the Transfer may be effected within 90 days after the date of the consent upon the terms described in the information furnished to Landlord; provided that any material change in the terms shall be subject to Landlord’s consent as set forth in this Section 9.1(b).  Landlord shall approve or disapprove any requested Transfer within 30 days following receipt of Tenant’s written notice and the information set forth above.  Except in connection with a Permitted Transfer (as defined below), if Landlord approves the Transfer Tenant shall pay a transfer fee of $1,000.00 to Landlord concurrently with Tenant’s execution of a Transfer consent prepared by Landlord.
 
(c)           Notwithstanding the provisions of Subsection (b) above, and except in connection with a “Permitted Transfer” (as defined below), in lieu of consenting to a proposed assignment or subletting, Landlord may elect to terminate this Lease in its entirety in the event of an assignment, or terminate this Lease as to the portion of the Premises proposed to be subleased with a proportionate abatement in the rent payable under this Lease, such termination to be effective on the date that the proposed sublease or assignment would have commenced.  Landlord may thereafter, at its option, assign or re-let any space so recaptured to any third party, including without limitation the proposed transferee identified by Tenant.
 
(d)           Should any Transfer occur, Tenant shall, except in connection with a Permitted Transfer, promptly pay or cause to be paid to Landlord, as additional rent, 50% of any amounts paid by the assignee or subtenant, however described and whether funded during or after the Lease Term, to the extent such amounts are in excess of the sum of (i) the scheduled Basic Rent payable by Tenant hereunder (or, in the event of a subletting of only a portion of the Premises, the Basic Rent allocable to such portion as reasonably determined by Landlord) and (ii) the direct out-of-pocket costs, as evidenced by third party invoices provided to Landlord, incurred by Tenant to effect the Transfer, which costs shall be amortized over the remaining Term of this Lease or, if shorter, over the term of the sublease.
 
(e)           The sale of all or substantially all of the assets of Tenant (other than bulk sales in the ordinary course of business), the merger or consolidation of Tenant, the sale of Tenant’s capital stock, or any other direct or indirect change of control of Tenant, including, without limitation, change of control of Tenant’s parent company or a merger by Tenant or its parent company, shall be deemed a Transfer within the meaning and provisions of this Article.  Notwithstanding the foregoing, Tenant may assign this Lease to a successor to Tenant by merger, consolidation or the purchase of substantially all of Tenant’s assets or stock, or assign this Lease or sublet all or a portion of the Premises to an Affiliate (defined below), without the consent of Landlord but subject to the provisions of Section 9.2, provided that all of the following conditions are satisfied (a “Permitted Transfer” ): (i) Tenant is not then in Default of its obligations under this Lease (following notice from Landlord and the expiration of any applicable “cure” period without “cure” by Tenant); and (ii) the successor entity resulting from any merger or consolidation of Tenant or the sale of all or substantially all of the assets of Tenant, has a net worth (computed in accordance with generally accepted accounting principles ( “Net Worth” )) at the time of the Permitted Transfer that is at least equal to the Net Worth of Tenant immediately before the Permitted Transfer.  Tenant’s notice to Landlord shall be provided Landlord not later
 
10 

 
than 30 days following the Permitted Transfer, and shall include reasonable information and documentation evidencing the Permitted Transfer and showing that each of the above conditions has been satisfied.  If requested by Landlord, Tenant’s successor shall sign and deliver to Landlord a commercially reasonable form of assumption agreement.  “Affiliate” shall mean an entity controlled by, controlling or under common control with Tenant.
 
9.2.          EFFECT OF TRANSFER.  No subletting or assignment, even with the consent of Landlord, shall relieve Tenant, or any successor-in-interest to Tenant hereunder, of its obligation to pay rent and to perform all its other obligations under this Lease.  Moreover, Tenant shall indemnify and hold Landlord harmless, as provided in Section 10.3, for any act or omission by an assignee or subtenant.  Each assignee, other than Landlord, shall be deemed to assume all obligations of Tenant under this Lease and shall be liable jointly and severally with Tenant for the payment of all rent, and for the due performance of all of Tenant’s obligations, under this Lease.  Such joint and several liability shall not be discharged or impaired by any subsequent modification or extension of this Lease.  No transfer shall be binding on Landlord unless any document memorializing the transfer is delivered to Landlord, both the assignee/subtenant and Tenant deliver to Landlord an executed consent to transfer instrument prepared by Landlord and consistent with the requirements of this Article, and the assignee/subtenant independently complies with all of the insurance requirements of Tenant as set forth in Exhibit D and evidence thereof is delivered to Landlord.  The acceptance by Landlord of any payment due under this Lease from any other person shall not be deemed to be a waiver by Landlord of any provision of this Lease or to be a consent to any transfer.  Consent by Landlord to one or more transfers shall not operate as a waiver or estoppel to the future enforcement by Landlord of its rights under this Lease.  In addition to the foregoing, no change in the status of Tenant or any party jointly and severally liable with Tenant as aforesaid (e.g., by conversion to a limited liability company or partnership) shall serve to abrogate the liability of any person or entity for the obligations of Tenant, including any obligations that may be incurred by Tenant after the status change by exercise of a pre-existing right in this Lease.
 
9.3.          SUBLEASE REQUIREMENTS.  Any sublease, license, concession or other occupancy agreement entered into by Tenant shall be subordinate and subject to the provisions of this Lease, and if this Lease is terminated during the term of any such agreement, Landlord shall have the right to: (i) treat such agreement as cancelled and repossess the subject space by any lawful means, or (ii) require that such transferee attorn to and recognize Landlord as its landlord (or licensor, as applicable) under such agreement.  Landlord shall not, by reason of such attornment or the collection of sublease rentals, be deemed liable to the subtenant for the performance of any of Tenant’s obligations under the sublease.  If Tenant is in Default (hereinafter defined), Landlord is irrevocably authorized to direct any transferee under any such agreement to make all payments under such agreement directly to Landlord (which Landlord shall apply towards Tenant’s obligations under this Lease) until such Default is cured.  Tenant hereby irrevocably authorizes and directs any transferee, upon receipt of a written notice from Landlord stating that a Default exists in the performance of Tenant’s obligations under this Lease, to pay to Landlord all sums then and thereafter due under the sublease.  No collection or acceptance of rent by Landlord from any transferee shall be deemed a waiver of any provision of Article 9 of this Lease, an approval of any transferee, or a release of Tenant from any obligation under this Lease, whenever accruing.  In no event shall Landlord’s enforcement of any provision of this Lease against any transferee be deemed a waiver of Landlord’s right to enforce any term of this Lease against Tenant or any other person.
 
ARTICLE 10.  INSURANCE AND INDEMNITY
 
10.1.        TENANT’S INSURANCE.  Tenant, at its sole cost and expense, shall provide and maintain in effect the insurance described in Exhibit D.  Evidence of that insurance must be delivered to Landlord prior to the Commencement Date.
 
10.2.        LANDLORD’S INSURANCE.  Landlord shall provide the following types of insurance, with or without deductible and in amounts and coverages as may be determined by Landlord in its discretion: property insurance, subject to standard exclusions (such as, but not limited to, earthquake and flood exclusions), covering the Building or Project.  In addition, Landlord may, at its election, obtain insurance coverages for such other risks as Landlord or its Mortgagees may from time to time deem appropriate, including earthquake and commercial general liability coverage.  Landlord shall not be required to carry insurance of any kind on any tenant improvements or Alterations in the Premises installed by Tenant or its contractors (collectively, “Tenant Installations” ), or on any trade fixtures, furnishings, equipment, interior plate glass, signs or items of personal property in the Premises, and Landlord shall not be obligated to repair or replace any of the foregoing items should damage occur.  All proceeds of insurance maintained by Landlord upon the Building and Project shall be the property of Landlord, whether or not Landlord is obligated to or elects to make any repairs.
 
11 

 
10.3.        JOINT INDEMNITY.
 
(a)   To the fullest extent permitted by law, but subject to Section 10.5 below, Tenant shall defend, indemnify and hold harmless Landlord, its agents, lenders, and any and all affiliates of Landlord, from and against any and all claims, liabilities, costs or expenses arising either before or after the Commencement Date from Tenant’s use or occupancy of the Premises, the Building, the “Rear Area” (as defined in Section 3 of Exhibit G attached to this Lease) or the Common Areas, or from the conduct of its business, or from any activity, work, or thing done, permitted or suffered by Tenant or its agents, employees, subtenants, vendors, contractors, invitees or licensees in or about the Premises, the Building, the Rear Area or the Common Areas, or from any Default in the performance of any obligation on Tenant’s part to be performed under this Lease, or from any act or negligence of Tenant or its agents, employees, subtenants, vendors, contractors, invitees or licensees.  Landlord may, at its option, require Tenant to assume Landlord’s defense in any action covered by this Section 10.3(a) through counsel reasonably satisfactory to Landlord.  Notwithstanding the foregoing, Tenant shall not be obligated to indemnify Landlord against any liability or expense to the extent such liability or expense: (i) is ultimately determined to have been caused by the sole negligence or willful misconduct of Landlord, its agents, contractors or employees, or (ii) is covered by Landlord’s indemnity obligations set forth in Section 10.3(b) below.
 
(b)   To the fullest extent permitted by law, but subject to Section 10.5 below, Landlord shall defend, indemnify and hold harmless Tenant, its agents, lenders, and any and all affiliates of Tenant, from and against any and all claims, liabilities, costs or expenses arising either before or after the Commencement Date from any default by Landlord of its obligations under this Lease or from the active negligence or willful misconduct of Landlord, its employees, agents or contractors, in connection with the maintenance or repair of the Common Areas of the Project.  Tenant may, at its option, require Landlord to assume Tenant’s defense in any action covered by this Section 10.3(b) through counsel reasonably satisfactory to Tenant.  Notwithstanding the foregoing, Landlord shall not be obligated to indemnify Tenant against any liability or expense to the extent such liability or expense: (i) is ultimately determined to have been caused by the sole negligence or willful misconduct of Tenant, its· agents, employees, subtenants, vendors, contractors, invitees or licensees, or (ii) is covered by Tenant’s indemnity obligations set forth in Section 10.3(a) above.
 
10.4.        LANDLORD’S NONLIABILITY.  Landlord shall not be liable to Tenant, its employees, agents and invitees, and Tenant hereby waives all claims against Landlord, its employees and agents for loss of or damage to any property, or any injury to any person, resulting from any condition including, but not limited to, acts or omissions (criminal or otherwise) of third parties and/or other tenants of the Project, or their agents, employees or invitees, fire, explosion, falling plaster, steam, gas, electricity, water or rain which may leak or flow from or into any part of the Premises or from the breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires, appliances, plumbing, air conditioning, electrical works or other fixtures in the Building, whether the damage or injury results from conditions arising in the Premises or in other portions of the Building, unless such result from the gross negligence or willful misconduct of Landlord, its agents, employees or contractors in connection with the foregoing (but subject to Section 10.5 below).  It is understood that any such condition may require the temporary evacuation or closure of all or a portion of the Building.  Should Tenant elect to receive any service from a concessionaire, licensee or third party tenant of Landlord, Tenant shall not seek recourse against Landlord for any breach or liability of that service provider.  Notwithstanding anything to the contrary contained in this Lease, in no event shall Landlord be liable for Tenant’s loss or interruption of business or income (including without limitation, Tenant’s consequential damages, lost profits or opportunity costs), or for interference with light or other similar intangible interests.  Tenant shall immediately notify Landlord in case of fire or accident in the Premises, the Building or the Project and of defects in any improvements or equipment.
 
10.5.        WAIVER OF SUBROGATION.  Landlord and Tenant each hereby waives all rights of recovery against the other on account of loss and damage occasioned to the property of such waiving party to the extent that the waiving party is entitled to proceeds for such loss and damage under any property insurance policies carried or otherwise required to be carried by this Lease; provided however, that the foregoing waiver shall not apply to the extent of either party’s obligation to pay deductibles under any such policies and this Lease.  By this waiver it is the intent of the parties that neither Landlord nor Tenant shall be liable to any insurance company (by way of subrogation or otherwise) insuring the other party for any loss or damage insured against under any property insurance policies, even though such loss or damage might be occasioned by the negligence of such party, its agents, employees, contractors or invitees.  The foregoing waiver by Tenant shall also inure to the benefit of Landlord’s management agent for the Building.
 
12 

 
ARTICLE 11.  DAMAGE OR DESTRUCTION
 
11.1.        RESTORATION.
 
(a)           If the Building of which the Premises are a part is damaged as the result of an event of casualty, then subject to the provisions below, Landlord shall repair that damage as soon as reasonably possible unless Landlord reasonably determines that: (i) the Premises have been materially damaged and there is less than 1 year of the Term remaining on the date of the casualty; (ii) any Mortgagee (defined in Section 13.1) requires that the insurance proceeds be applied to the payment of the mortgage debt; or (iii) proceeds necessary to pay the full cost of the repair are not available from Landlord’s insurance, including without limitation earthquake insurance.  Should Landlord elect not to repair the damage for one of the preceding reasons, Landlord shall so notify Tenant in the “Casualty Notice” (as defined below), and this Lease shall terminate as of the date of delivery of that notice.
 
(b)           As soon as reasonably practicable following the casualty event but not later than 60 days thereafter, Landlord shall notify Tenant in writing ( “Casualty Notice” ) of Landlord’s election, if applicable, to terminate this Lease.  If this Lease is not so terminated, the Casualty Notice shall set forth the anticipated period for repairing the casualty damage.  If the anticipated repair period exceeds 270 days and if the damage is so extensive as to reasonably prevent Tenant’s substantial use and enjoyment of the Premises, then either party may elect to terminate this Lease by written notice to the other within 10 days following delivery of the Casualty Notice.
 
(c)           In the event that neither Landlord nor Tenant terminates this Lease pursuant to Section 11.1(b), Landlord shall repair all material damage to and/or shall restore the Premises or the Building to substantially its condition prior to the event of casualty as soon as reasonably possible and this Lease shall continue in effect for the remainder of the Term.  Upon notice from Landlord, Tenant shall assign or endorse over to Landlord (or to any party designated by Landlord) all property insurance proceeds payable to Tenant under Tenant’s insurance with respect to any Tenant Installations; provided if the estimated cost to repair such Tenant Installations exceeds the amount of insurance proceeds received by Landlord from Tenant’s insurance carrier, the excess cost of such repairs shall be paid by Tenant to Landlord prior to Landlord’s commencement of repairs.  Within 15 days of demand, Tenant shall also pay Landlord for any additional excess costs that are determined during the performance of the repairs to such Tenant Installations.
 
(d)           From and after the sixth (6 t h ) business day following the casualty event, the rental to be paid under this Lease shall be abated in the same proportion that the Floor Area of the Premises that is rendered unusable by the damage from time to time bears to the total Floor Area of the Premises.
 
(e)           Notwithstanding the provisions of subsections (a), (b) and (c) of this Section 11.1(e), but subject to Section 10.5, the cost of any repairs shall be borne by Tenant, and Tenant shall not be entitled to rental abatement or termination rights, if the damage is due to the fault or neglect of Tenant or its employees, subtenants, contractors, invitees or representatives.  In addition, subject to the express provisions of Section 11.1(c) above, the provisions of this Section 11.1(e) shall not be deemed to require Landlord to repair any Tenant Installations, fixtures and other items that Tenant is obligated to insure pursuant to Exhibit D or under any other provision of this Lease.
 
11.2.        LEASE GOVERNS.  Tenant agrees that the provisions of this Lease, including without limitation Section 11.1, shall govern any damage or destruction and shall accordingly supersede any contrary statute or rule of law.
 
ARTICLE 12.  EMINENT DOMAIN
 
Either party may terminate this Lease if any material part of the Premises is taken or condemned for any public or quasi-public use under Law, by eminent domain or private purchase in lieu thereof (a “Taking” ).  Landlord shall also have the right to terminate this Lease if there is a Taking of any portion of the Building or Project which would have a material adverse effect on Landlord’s ability to profitably operate the remainder of the Building.  The terminating party shall provide written notice of termination to the other party within 45 days after it first receives notice of the Taking.  The termination shall be effective as of the effective date of any order granting possession to, or vesting legal title in, the condemning authority.  If this Lease is not terminated, Basic Rent and Tenant’s Share of Operating Expenses shall be appropriately adjusted to account for any reduction in the square footage of the Building or Premises.  All compensation awarded for a Taking shall be the property of Landlord and the right to receive compensation or proceeds in connection with a Taking are expressly waived by Tenant; provided, however, Tenant may file a separate claim for Tenant’s personal property and Tenant’s reasonable relocation expenses, provided the filing of the claim does not diminish the amount of Landlord’s award.  If only a part of
 
13 

 
the Premises is subject to a Taking and this Lease is not terminated, Landlord, with reasonable diligence, will restore the remaining portion of the Premises as nearly as practicable to the condition immediately prior to the Taking.  Tenant agrees that the provisions of this Lease shall govern any Taking and shall accordingly supersede any contrary statute or rule of law.
 
ARTICLE 13.  SUBORDINATION; ESTOPPEL CERTIFICATE
 
13.1.        SUBORDINATION.  Tenant accepts this Lease subject and subordinate to any mortgage(s), deed(s) of trust, ground lease(s) or other lien(s) now or subsequently arising upon the Premises, the Building or the Project, and to renewals, modifications, refinancings and extensions thereof (collectively referred to as a “Mortgage” ).  The party having the benefit of a Mortgage shall be referred to as a “Mortgagee” .  This clause shall be self-operative, but upon request from a Mortgagee, Tenant shall execute a commercially reasonable subordination and attornment agreement in favor of the Mortgagee, provided such agreement provides a non-disturbance covenant benefiting Tenant.  Alternatively, a Mortgagee shall have the right at any time to subordinate its Mortgage to this Lease.  Upon request, Tenant, without charge, shall attorn to any successor to Landlord’s interest in this Lease in the event of a foreclosure of any mortgage.  Tenant agrees that any purchaser at a foreclosure sale or lender taking title under a deed in lieu of foreclosure shall not be responsible for any act or omission of a prior landlord, shall not be subject to any offsets or defenses Tenant may have against a prior landlord, and shall not be liable for the return of the Security Deposit not actually recovered by such purchaser nor bound by any rent paid in advance of the calendar month in which the transfer of title occurred; provided that the foregoing shall not release the applicable prior landlord from any liability for those obligations.  Tenant acknowledges that Landlord’s Mortgagees and their successors-in-interest are intended third party beneficiaries of this Section 13.1.
 
13.2.        ESTOPPEL CERTIFICATE.  Tenant shall, within 10 business days after receipt of a written request from Landlord, execute and deliver a commercially reasonable estoppel certificate in favor of those parties as are reasonably requested by Landlord (including a Mortgagee or a prospective purchaser of the Building or the Project).  Without limitation, such estoppel certificate may include a certification as to the status of this Lease, the existence of any Defaults and the amount of rent that is due and payable.
 
ARTICLE 14.  DEFAULTS AND REMEDIES
 
14.1.        TENANT’S DEFAULTS.  In addition to any other event of default set forth in this Lease, the occurrence of any one or more of the following events shall constitute a “Default” by Tenant:
 
(a)           The failure by Tenant to make any payment of rent required to be made by Tenant, as and when due, where the failure continues for a period of 5 business days after written notice from Landlord to Tenant.  For purposes of these default and remedies provisions, the term “additional rent” shall be deemed to include all amounts of any type whatsoever other than Basic Rent to be paid by Tenant pursuant to the terms of this Lease.
 
(b)           The assignment, sublease, encumbrance or other Transfer of the Lease by Tenant, either voluntarily or by operation of law, whether by judgment, execution, transfer by intestacy or testacy, or other means, without the prior written consent of Landlord unless otherwise authorized in Article 9 of this Lease.
 
(c)           The discovery by Landlord that any financial statement provided by Tenant, or by any affiliate, successor or guarantor of Tenant, was materially false.
 
(d)           The failure by Tenant to deliver the estoppel certificate required by the provisions of Section 13.2 of this Lease, the current annual financial statements required by Section 22.2 of this Lease, or the subordination and attornment agreement required by the provisions of Section 13.1 of this Lease, where such failure continues for a period of 10 business days after written notice from Landlord to Tenant.
 
(e)           The failure or inability by Tenant to observe or perform any of the covenants or provisions of this Lease to be observed or performed by Tenant, other than as specified in any other subsection of this Section 14.1, where the failure continues for a period of 30 days after written notice from Landlord to Tenant.  However, if the nature of the failure is such that more than 30 days are reasonably required for its cure, then Tenant shall not be deemed to be in Default if Tenant commences the cure within 30 days, and thereafter diligently pursues the cure to completion.
 
(f)            Tenant or any Guarantor becomes insolvent, makes a transfer in fraud of creditors, makes an assignment for the benefit of creditors, admits in writing its inability to pay its debts when due or forfeits or loses its right to conduct business.
 
14 

 
The notice periods provided herein are in lieu of, and not in addition to, any notice periods provided by law, and Landlord shall not be required to give any additional notice under California Code of Civil Procedure Section 1161, or any successor statute, in order to be entitled to commence an unlawful detainer proceeding.
 
14.2.        LANDLORD’S REMEDIES.
 
(a)           Upon the occurrence of any Default by Tenant, then in addition to any other remedies available to Landlord, Landlord may exercise the following remedies:
 
(i)    Landlord may terminate Tenant’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Tenant shall immediately surrender possession of the Premises to Landlord.  Such termination shall not affect any accrued obligations of Tenant under this Lease.  Upon termination, Landlord shall have the right to reenter the Premises and remove all persons and property.  Landlord shall also be entitled to recover from Tenant:
 
(1)   The worth at the time of award of the unpaid Rent which had been earned at the time of termination;
 
(2)   The worth at the time of award of the amount by which the unpaid Rent which would have been earned after termination until the time of award exceeds the amount of such loss that Tenant proves could have been reasonably avoided;
 
(3)   The worth at the time of award of the amount by which the unpaid Rent for the balance of the Term after the time of award exceeds the amount of such loss that Tenant proves could be reasonably avoided;
 
(4)   Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result from Tenant’s default, including, but not limited to, the cost of recovering possession of the Premises, commissions and other expenses of reletting, including necessary repair, renovation, improvement and alteration of the Premises for a new tenant, reasonable attorneys’ fees, and any other reasonable costs; and
 
(5)   At Landlord’s election, all other amounts in addition to or in lieu of the foregoing as may be permitted by law.  The term “Rent” as used in this Lease shall be deemed to mean the Basic Rent and all other sums required to be paid by Tenant to Landlord pursuant to the terms of this Lease, including without limitation any sums that may be owing from Tenant pursuant to Section 4.3 of this Lease.  Any sum, other than Basic Rent, shall be computed on the basis of the average monthly amount accruing during the 24 month period immediately prior to Default, except that if it becomes necessary to compute such rental before the 24 month period has occurred, then the computation shall be on the basis of the average monthly amount during the shorter period.  As used in subparagraphs (1) and (2) above, the “worth at the time of award” shall be computed by allowing interest at the rate of 10% per annum.  As used in subparagraph (3) above, the “worth at the time of award” shall be computed by discounting the amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus 1 %.
 
(ii)   Landlord may elect not to terminate Tenant’s right to possession of the Premises, in which event Landlord may continue to enforce all of its rights and remedies under this Lease, including the right to collect all rent as it becomes due.  Efforts by the Landlord to maintain, preserve or relet the Premises, or the appointment of a receiver to protect the Landlord’s interests under this Lease, shall not constitute a termination of the Tenant’s right to possession of the Premises.  In the event that Landlord elects to avail itself of the remedy provided by this subsection (ii), Landlord shall not unreasonably withhold its consent to an assignment or subletting of the Premises subject to the reasonable standards for Landlord’s consent as are contained in this Lease.
 
(b)           The various rights and remedies reserved to Landlord in this Lease or otherwise shall be cumulative and, except as otherwise provided by California law, Landlord may pursue any or all of its rights and remedies at the same time.  No delay or omission of Landlord to exercise any right or remedy shall be construed as a waiver of the right or remedy or of any breach or Default by Tenant.  The acceptance by Landlord of rent shall not be a (i) waiver of any preceding breach or Default by Tenant of any provision of this Lease, other than the failure of Tenant to pay the particular rent accepted, regardless of Landlord’s knowledge of the preceding breach or Default at the time of acceptance of rent, or (ii) a waiver of Landlord’s right to exercise any remedy available to Landlord by virtue of the breach or Default.  The acceptance of any payment from a debtor in possession, a trustee, a receiver or any other person acting on behalf of Tenant or Tenant’s estate shall not waive or cure a Default under Section 14.1.  No payment by
 
15 

 
Tenant or receipt by Landlord of a lesser amount than the rent required by this Lease shall be deemed to be other than a partial payment on account of the earliest due stipulated rent, nor shall any endorsement or statement on any check or letter be deemed an accord and satisfaction and Landlord shall accept the check or payment without prejudice to Landlord’s right to recover the balance of the rent or pursue any other remedy available to it.  Tenant hereby waives any right of redemption or relief from forfeiture under California Code of Civil Procedure Section 1174 or 1179, or under any successor statute, in the event this Lease is terminated by reason of any Default by Tenant.  No act or thing done by Landlord or Landlord’s agents during the Term shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept a surrender shall be valid unless in writing and signed by Landlord.  No employee of Landlord or of Landlord’s agents shall have any power to accept the keys to the Premises prior to the termination of this Lease, and the delivery of the keys to any employee shall not operate as a termination of the Lease or a surrender of the Premises.
 
14.3.        LATE PAYMENTS.
 
(a)           Any Rent due under this Lease that is not paid to Landlord within 5 days of the date when due shall bear interest at the maximum rate permitted by law from the date due until fully paid.  The payment of interest shall not cure any Default by Tenant under this Lease.  In addition, Tenant acknowledges that the late payment by Tenant to Landlord of rent will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult and impracticable to ascertain.  Those costs may include, but are not limited to, administrative, processing and accounting charges, and late charges which may be imposed on Landlord by the terms of any ground lease, mortgage or trust deed covering the Premises.  Accordingly, if any rent due from Tenant shall not be received by Landlord or Landlord’s designee within 5 days after the date due, then Tenant shall pay to Landlord, in addition to the interest provided above, a late charge for each delinquent payment equal to the greater of (i) 5% of that delinquent payment or (ii) $100.00; provided that Landlord shall waive the payment of said late charge for the initial delinquent payment of Basic Rent or Operating Expenses by Tenant.  Acceptance of a late charge by Landlord shall not constitute a waiver of Tenant’s Default with respect to the overdue amount, nor shall it prevent Landlord from exercising any of its other rights and remedies.
 
(b)           Following each second consecutive installment of Basic Rent that is not paid within 5 days following notice of nonpayment from Landlord, Landlord shall have the option (i) to require that beginning with the first payment of Basic Rent next due, Basic Rent shall no longer be paid in monthly installments but shall be payable quarterly 3 months in advance and/or (ii) to require that Tenant increase the amount, if any, of the Security Deposit by 100%.  Should Tenant deliver to Landlord, at any time during the Term, 2 or more insufficient checks, the Landlord may require that all monies then and thereafter due from Tenant be paid to Landlord by cashier’s check.
 
14.4.        RIGHT OF LANDLORD TO PERFORM.  If Tenant is in Default of any of its obligations under the Lease (following notice from Landlord and the expiration of any applicable “cure” period without “cure” by Tenant), the Landlord shall have the right to perform such obligations.  Tenant shall reimburse Landlord for the cost of such performance upon demand together with an administrative charge equal to 10% of the cost of the work performed by Landlord.
 
14.5.        DEFAULT BY LANDLORD.  Landlord shall not be deemed to be in default in the performance of any obligation under this Lease unless and until it has failed to perform the obligation within 30 days after written notice by Tenant to Landlord specifying in reasonable detail the nature and extent of the failure; provided, however, that if the nature of Landlord’s obligation is such that more than 30 days are required for its performance, then Landlord shall not be deemed to be in default if it commences performance within the 30 day period and thereafter diligently pursues the cure to completion.  Upon any such default by Landlord, Tenant may pursue any remedies available at law, but in no event shall Landlord be liable for Tenant’s loss or interruption of business or income (including, without limitation, Tenant’s consequential damages, lost profits or opportunity costs).
 
14.6.        EXPENSES AND LEGAL FEES.  Should either Landlord or Tenant bring any action in connection with this Lease, the prevailing party shall be entitled to recover as a part of the action its reasonable attorneys’ fees, and all other reasonable costs.  The prevailing party for the purpose of this paragraph shall be determined by the trier of the facts.
 
14.7.        WAIVER OF JURY TRIAL/JUDICIAL REFERENCE.
 
(a)           LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHT TO TRIAL BY JURY, AND EACH PARTY DOES HEREBY EXPRESSLY AND KNOWINGLY
 
16 

 
WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER (AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR SUBSIDIARY OR AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE.
 
(b)           In the event that the jury waiver provisions of Section 14.7(a) are not enforceable under California law, then the provisions of this Section 14.7(b) shall apply.  It is the desire and intention of the parties to agree upon a mechanism and procedure under which controversies and disputes arising out of this lease or related to the Premises will be resolved in a prompt and expeditious manner.  Accordingly, except with respect to actions for unlawful or forcible detainer or with respect to the prejudgment remedy of attachment, any action, proceeding or counterclaim brought by either party hereto against the other (and/or against its officers, directors, employees, agents or subsidiary or affiliated entities) on any matters whatsoever arising out of or in any way connected with this Lease, Tenant’s use or occupancy of the Premises and/or any claim of injury or damage, shall be heard and resolved by a referee under the provisions of the California Code of Civil Procedure, Sections 638 - 645.1, inclusive (as same may be amended, or any successor statute(s) thereto) (the “Referee Sections” ).  Any fee to initiate the judicial reference proceedings shall be paid by the party initiating such procedure; provided however, that the costs and fees, including any initiation fee, of such proceeding shall ultimately be borne in accordance with Section 14.6 above.  The venue of the proceedings shall be in the county in which the Premises are located.  Within 10 days of receipt by any party of a written request to resolve any dispute or controversy pursuant to this Section 14.7(b), the parties shall agree upon a single referee who shall try all issues, whether of fact or law, and report a finding and judgment on such issues as required by the Referee Sections.  If the parties are unable to agree upon a referee within such 10 day period, then any party may thereafter file a lawsuit in the county in which the Premises are located for the purpose of appointment of a referee under California Code of Civil Procedure Sections 639 and 640, as same may be amended or any successor statute(s) thereto.  If the referee is appointed by the court, the referee shall be a neutral and impartial retired judge with substantial experience in the relevant matters to be determined, from Jams/Endispute, Inc., the American Arbitration Association or similar mediation/arbitration entity.  The proposed referee may be challenged by any party for any of the grounds listed in Section 641 of the California Code of Civil Procedure, as same may be amended or any successor statute(s) thereto.  The referee shall have the power to decide all issues of fact and law and report his or her decision on such issues, and to issue all recognized remedies available at law or in equity for any cause of action that is before the referee, including an award of attorneys’ fees and costs in accordance with California law.  The referee shall not, however, have the power to award punitive damages, nor any other damages which are not permitted by the express provisions of this lease, and the parties hereby waive any right to recover any such damages.  The referee shall oversee discovery and may enforce all discovery orders in the same manner as any trial court judge, with rights to regulate discovery and to issue and enforce subpoenas, protective orders and other limitations on discovery available under California law; provided, however, that the referee shall limit discovery to that which is essential to the effective prosecution or defense of the action, and in no event shall discovery by either party include more than one non-expert witness deposition unless both parties otherwise agree.  The reference proceeding shall be conducted in accordance with California law (including the rules of evidence), and in all regards, the referee shall follow California law applicable at the time of the reference proceeding.  In accordance with Section 644 of the California Code of Civil procedure, the decision of the referee upon the whole issue must stand as the decision of the court, and upon the filing of the statement of decision with the clerk of the court, or with the judge if there is no clerk, judgment may be entered thereon in the same manner as if the action had been tried by the court.  The parties shall promptly and diligently cooperate with one another and the referee, and shall perform such acts as may be necessary to obtain a prompt and expeditious resolution of the dispute or controversy in accordance with the terms of this Section 14.7(b).  To the extent that no pending lawsuit has been filed to obtain the appointment of a referee, any party, after the issuance of the decision of the referee, may apply to the court of the county in which the Premises are located for confirmation by the court of the decision of the referee in the same manner as a petition for confirmation of an arbitration award pursuant to Code of Civil Procedure Section 1285 et seq.  (as same may be amended or any successor statute(s) thereto).
 
14.8         SATISFACTION OF JUDGMENT.  The obligations of Landlord do not constitute the personal obligations of the individual partners, trustees, directors, officers, members or shareholders of Landlord or its constituent partners or members.  Should Tenant recover a money judgment against Landlord, such judgment shall be satisfied only from the interest of Landlord in the Project and out of the rent or other income from such property receivable by Landlord or out of consideration received by Landlord from the sale or other disposition of all or any part of Landlord’s right, title or interest in the Project, and no action for any deficiency may be sought or obtained by Tenant.
 
17 

 
ARTICLE 15.  END OF TERM
 
15.1.        HOLDING OVER.  If Tenant holds over for any period after the Expiration Date (or earlier termination of the Term) without the prior written consent of Landlord, such tenancy shall constitute a tenancy at sufferance only and a Default by Tenant; such holding over with the prior written consent of Landlord shall constitute a month-to-month tenancy commencing on the 1 st  day following the termination of this Lease and terminating 30 days following delivery of written notice of termination by either Landlord or Tenant to the other.  In either of such events, possession shall be subject to all of the terms of this Lease, except that the monthly rental shall be 150% of the total monthly rental for the month immediately preceding the date of termination, subject to Landlord’s right to modify same upon 30 days notice to Tenant.  The acceptance by Landlord of monthly hold-over rental in a lesser amount shall not constitute a waiver of Landlord’s right to recover the full amount due unless otherwise agreed in writing by Landlord.  If Tenant fails to surrender the Premises upon the expiration of this Lease despite demand to do so by Landlord, Tenant shall indemnify and hold Landlord harmless from all loss or liability, including without limitation, any claims made by any succeeding tenant relating to such failure to surrender.  The foregoing provisions of this Section 15.1 are in addition to and do not affect Landlord’s right of re-entry or any other rights of Landlord under this Lease or at law.
 
15.2.        MERGER ON TERMINATION.  The voluntary or other surrender of this Lease by Tenant, or a mutual termination of this Lease, shall terminate any or all existing subleases unless Landlord, at its option, elects in writing to treat the surrender or termination as an assignment to it of any or all subleases affecting the Premises.
 
15.3.        SURRENDER OF PREMISES; REMOVAL OF PROPERTY.  Upon the Expiration Date or upon any earlier termination of this Lease, Tenant shall quit and surrender possession of the Premises to Landlord in as good order, condition and repair as when received or as hereafter may be improved by Landlord or Tenant, reasonable wear and tear and repairs which are Landlord’s obligation excepted, and shall remove or fund to Landlord the cost of removing all wallpapering and voice and/or data transmission cabling installed by or for Tenant, together with all personal property and debris, and shall perform all work required under Section 7.3 of this Lease and/or the Work Letter (if any ) attached hereto, except for any items that Landlord may by written authorization allow to remain.  Tenant shall repair all damage to the Premises resulting from the removal and restore the affected area to its pre-existing condition, reasonable wear and tear excepted, provided that Landlord may instead elect to repair any structural damage at Tenant’s expense.  If Tenant shall fail to comply with the provisions of this Section 15.3, Landlord may effect the removal and/or make any repairs, and the cost to Landlord shall be additional rent payable by Tenant upon demand.  If requested by Landlord, Tenant shall execute, acknowledge and deliver to Landlord an instrument in writing releasing and quitclaiming to Landlord all right, title and interest of Tenant in the Premises.
 
ARTICLE 16.  PAYMENTS AND NOTICES
 
All sums payable by Tenant to Landlord shall be paid, without deduction or offset, in lawful money of the United States to Landlord at its address set forth in Item 12 of the Basic Lease Provisions, or at any other place as Landlord may designate in writing.  Unless this Lease expressly provides otherwise, as for example in the payment of rent pursuant to Section 4.1, all payments shall be due and payable within 30 days after demand.  All payments requiring proration shall be prorated on the basis of the number of days in the pertinent calendar month or year, as applicable.  Any notice, election, demand, consent, approval or other communication to be given or other document to be delivered by either party to the other may be delivered to the other party, at the address set forth in Item 12 of the Basic Lease Provisions, by personal service or by any courier or “overnight” express mailing service.  Either party may, by written notice to the other, served in the manner provided in this Article, designate a different address.  The refusal to accept delivery of a notice, or the inability to deliver the notice (whether due to a change of address for which notice was not duly given or other good reason), shall be deemed delivery and receipt of the notice as of the date of attempted delivery.  If more than one person or entity is named as Tenant under this Lease, service of any notice upon any one of them shall be deemed as service upon all of them.
 
ARTICLE 17.  RULES AND REGULATIONS
 
Tenant agrees to comply with the Rules and Regulations attached as Exhibit E, and any reasonable and nondiscriminatory amendments, modifications and/or additions as may be adopted and published by written notice to tenants by Landlord for the safety, care, security, good order, or cleanliness of the Premises, Building, Project and/or Common Areas.  Landlord shall not be liable to Tenant for any violation of the Rules and Regulations or the breach of any covenant or condition in any lease or any other act or conduct by any other tenant, and the same shall not constitute a constructive eviction hereunder.  One or more waivers by Landlord of any breach of the Rules and Regulations by Tenant or by any other tenant(s) shall not be a waiver of any
 
18 

 
subsequent breach of that rule or any other.  Tenant’s failure to keep and observe the Rules and Regulations shall constitute a default under this Lease.  In the case of any conflict between the Rules and Regulations and this Lease, this Lease shall be controlling.
 
ARTICLE 18.  BROKER’S COMMISSION
 
The parties recognize as the broker(s) who negotiated this Lease the firm(s) whose name(s) is (are) stated in Item 10 of the Basic Lease Provisions, and agree that Landlord shall be responsible for the payment of brokerage commissions to those broker(s) unless otherwise provided in this Lease.  It is understood that Landlord’s Broker represents only Landlord in this transaction and Tenant’s Broker (if any) represents only Tenant.  Each party warrants that it has had no dealings with any other real estate broker or agent in connection with the negotiation of this Lease, and agrees to indemnify and hold the other party harmless from any cost, expense or liability (including reasonable attorneys’ fees) for any compensation, commissions or charges claimed by any other real estate broker or agent employed or claiming to represent or to have been employed by the indemnifying party in connection with the negotiation of this Lease.  The foregoing agreement shall survive the termination of this Lease.
 
ARTICLE 19.  TRANSFER OF LANDLORD’S INTEREST
 
In the event of any transfer of Landlord’s interest in the Premises, provided that the transferee (other than a Mortgagee) shall assume the obligations of “Landlord” under this Lease accruing from and after the effective date of such transfer, the transferor shall be automatically relieved of all obligations on the part of Landlord accruing under this Lease from and after the effective date of such transfer.  Any funds held by the transferor in which Tenant has an interest, including without limitation, the Security Deposit, shall be turned over, subject to that interest, to the transferee.  No Mortgagee to which this Lease is or may be subordinate shall be responsible in connection with the Security Deposit unless the Mortgagee actually receives the Security Deposit.  It is intended that the covenants and obligations contained in this Lease on the part of Landlord shall, subject to the foregoing, be binding on Landlord, its successors and assigns, only during and in respect to their respective successive periods of ownership.
 
ARTICLE 20.  INTERPRETATION
 
20.1.        NUMBER.  Whenever the context of this Lease requires, the words “Landlord” and “Tenant” shall include the plural as well as the singular.
 
20.2.        HEADINGS.  The captions and headings of the articles and sections of this Lease are for convenience only, are not a part of this Lease and shall have no effect upon its construction or interpretation.
 
20.3.        JOINT AND SEVERAL LIABILITY.  If more than one person or entity is named as Tenant, the obligations imposed upon each shall be joint and several and the act of or notice from, or notice or refund to, or the signature of, any one or more of them shall be binding on all of them with respect to the tenancy of this Lease, including, but not limited to, any renewal, extension, termination or modification of this Lease.
 
20.4.        SUCCESSORS.  Subject to Sections 13.1 and 22.3 and to Articles 9 and 19 of this Lease, all rights and liabilities given to or imposed upon Landlord and Tenant shall extend to and bind their respective heirs, executors, administrators, successors and assigns.  Nothing contained in this Section 20.4 is intended, or shall be construed, to grant to any person other than Landlord and Tenant and their successors and assigns any rights or remedies under this Lease.
 
20.5.        TIME OF ESSENCE.  Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor.
 
20.6.        CONTROLLING LAW/VENUE.  This Lease shall be governed by and interpreted in accordance with the laws of the State of California.  Should any litigation be commenced between the parties in connection with this Lease, such action shall be prosecuted in the applicable State Court of California in the county in which the Building is located.
 
20.7.        SEVERABILITY.  If any term or provision of this Lease, the deletion of which would not adversely affect the receipt of any material benefit by either party or the deletion of which is consented to by the party adversely affected, shall be held invalid or unenforceable to any extent, the remainder of this Lease shall not be affected and each term and provision of this Lease shall be valid and enforceable to the fullest extent permitted by law.
 
20.8.        WAIVER.  One or more waivers by Landlord or Tenant of any breach of any term, covenant or condition contained in this Lease shall not be a waiver of any subsequent breach of the same or any other term, covenant or condition.  Consent to any act by one of the parties shall
 
19 

not be deemed to render unnecessary the obtaining of that party’s consent to any subsequent act.  No breach of this Lease shall be deemed to have been waived unless the waiver is in a writing signed by the waiving party.
 
20.9.        INABILITY TO PERFORM.  In the event that either party shall be delayed or hindered in or prevented from the performance of any work or in performing any act required under this Lease by reason of any cause beyond the reasonable control of that party, then the performance of the work or the doing of the act shall be excused for the period of the delay and the time for performance shall be extended for a period equivalent to the period of the delay.  The provisions of this Section 20.9 shall not operate to excuse Tenant from the prompt payment of Rent.
 
20.10.      ENTIRE AGREEMENT.  This Lease and its exhibits and other attachments cover in full each and every agreement of every kind between the parties concerning the Premises, the Building, and the Project, and all preliminary negotiations, oral agreements, understandings and/or practices, except those contained in this Lease, are superseded and of no further effect.  Tenant waives its rights to rely on any representations or promises made by Landlord or others which are not contained in this Lease.  No verbal agreement or implied covenant shall be held to modify the provisions of this Lease, any statute, law, or custom to the contrary notwithstanding.
 
20.11.      QUIET ENJOYMENT.  Upon the observance and performance of all the covenants, terms and conditions on Tenant’s part to be observed and performed, and subject to the other provisions of this Lease, Tenant shall have the right of quiet enjoyment and use of the Premises for the Term without hindrance or interruption by Landlord or any other person claiming by or through Landlord.
 
20.12.      SURVIVAL.  All covenants of Landlord or Tenant which reasonably would be intended to survive the expiration or sooner termination of this Lease, including without limitation any warranty or indemnity hereunder, shall so survive and continue to be binding upon and inure to the benefit of the respective parties and their successors and assigns.
 
ARTICLE 21.  EXECUTION AND RECORDING
 
21.1.        COUNTERPARTS.  This Lease may be executed in one or more counterparts, each of which shall constitute an original and all of which shall be one and the same agreement.
 
21.2.        CORPORATE AND PARTNERSHIP AUTHORITY.  If Tenant is a corporation, limited liability company or partnership, each individual executing this Lease on behalf of the entity represents and warrants that he is duly authorized to execute and deliver this Lease and that this Lease is binding upon the corporation, limited liability company or partnership in accordance with its terms.  Tenant shall, at Landlord’s request, deliver a certified copy of its organizational documents or an appropriate certificate authorizing or evidencing the execution of this Lease.
 
21.3.        EXECUTION OF LEASE; NO OPTION OR OFFER.  The submission of this Lease to Tenant shall be for examination purposes only, and shall not constitute an offer to or option for Tenant to lease the Premises.  Execution of this Lease by Tenant and its return to Landlord shall not be binding upon Landlord, notwithstanding any time interval, until Landlord has in fact executed and delivered this Lease to Tenant, it being intended that this Lease shall only become effective upon execution by Landlord and delivery of a fully executed counterpart to Tenant.
 
21.4.        RECORDING.  Tenant shall not record this Lease without the prior written consent of Landlord.  Tenant, upon the request of Landlord, shall execute and acknowledge a “short form” memorandum of this Lease for recording purposes.
 
21.5.        AMENDMENTS.  No amendment or mutual termination of this Lease shall be effective unless in writing signed by authorized signatories of Tenant and Landlord, or by their respective successors in interest.  No actions, policies, oral or informal arrangements, business dealings or other course of conduct by or between the parties shall be deemed to modify this Lease in any respect.
 
21.6.        ATTACHMENTS.  All exhibits, riders and addenda attached to this Lease are hereby incorporated into and made a part of this Lease.
 
ARTICLE 22.  MISCELLANEOUS
 
22.1.        NONDISCLOSURE OF LEASE TERMS.  Tenant acknowledges that the content of this Lease and any related documents are confidential information.  Except to the extent disclosure is required by law, Tenant shall keep such confidential information strictly confidential and shall not disclose such confidential information to any person or entity other than Tenant’s financial, legal and space-planning consultants, provided, however, that Tenant may disclose the terms to prospective subtenants or assignees under this Lease or pursuant to legal requirement.
 
20 

 
22.2.        TENANT’S FINANCIAL STATEMENTS.  The application, financial statements and tax returns, if any, submitted and certified to by Tenant as an accurate representation of its financial condition have been prepared, certified and submitted to Landlord as an inducement and consideration to Landlord to enter into this Lease.  The application and statements are represented and warranted by Tenant to be correct and to accurately and fully reflect Tenant’s true financial condition as of the date of execution of this Lease by Tenant.  In connection with any refinancing or sale of the Building or the Project by Landlord, Tenant shall during the Term furnish Landlord with current annual financial statements accurately reflecting Tenant’s financial condition upon written request from Landlord within 10 business days following Landlord’s request; provided, however, that (i) unless Tenant is in Default, Landlord shall not request such statements more frequently than once during each calendar year during the Term, and (ii) so long as Tenant is a publicly traded corporation on a nationally recognized stock exchange, the foregoing obligation to deliver the statements shall be waived.  Except to the extent disclosure is required by law or by legal process, Landlord shall keep confidential any financial statements marked or otherwise designated by Tenant as “confidential” and shall not disclose same, without Tenant’s consent, to any person or entity other than Landlord’s financial, legal and other consultants with a “need to know”; provided, however, that Landlord may disclose same to any perspective lender or buyer or pursuant to legal requirement.
 
22.3.        MORTGAGEE PROTECTION.  No act or failure to act on the part of Landlord which would otherwise entitle Tenant to be relieved of its obligations hereunder or to terminate this Lease shall result in such a release or termination unless (a) Tenant has given notice by registered or certified mail to any Mortgagee of a Mortgage covering the Building whose address has been previously furnished to Tenant and (b) such Mortgagee is afforded a reasonable opportunity to cure the default by Landlord (which shall in no event be less than 60 days), including, if necessary to effect the cure, time to obtain possession of the Building by power of sale or judicial foreclosure provided that such foreclosure remedy is diligently pursued.  Tenant shall comply with any written directions by any Mortgagee to pay Rent due hereunder directly to such Mortgagee without determining whether a default exists under such Mortgagee’s Mortgage.
 
22.4.        SDN LIST.  Tenant hereby represents and warrants that, to the best of its knowledge as of the date of this Lease, neither Tenant nor any officer, director, employee, partner, member or other principal of Tenant (collectively, “Tenant Parties”) is listed as a Specially Designated National and Blocked Person (“SDN”) on the list of such persons and entities issued by the U.S.  Treasury Office of Foreign Assets Control (OFAC).  In the event Tenant or any Tenant Party is or becomes listed as an SDN, Tenant shall be deemed in breach of this Lease and Landlord shall have the right to terminate this Lease immediately upon written notice to Tenant.

LANDLORD:	 	TENANT:	
 	 	 	
THE IRVINE COMPANY LLC,	 	BOOT BARN, INC.,	
a Delaware limited liability company	 	a Delaware corporation	

By	/s/ Douglas G. Holte	 	By	/s/ Chris Britt	
 	Douglas G. Holte,	 	 	Chris Britt,	
 	President, Office Properties	 	 	Chairman of the Board	

By	/s/ Steven M. Case	 	By	/s/ Patrick Meany	
 	Steven M. Case	 	 	Patrick Meany,	
 	Executive Vice President
Office Properties	 	 	Chief Executive Officer	

 
21 

 

EXHIBIT A

 
EXHIBIT B
 
Operating Expenses
(Net)
 
(a)           From and after the Commencement Date, Tenant shall pay to Landlord, as additional rent, Tenant’s Share of all Operating Expenses, as defined in Section (f) below, incurred by Landlord in the operation of the Building and the Project.  The term “Tenant’s Share” means 100% of the Operating Expenses reasonably determined by Landlord to benefit or relate substantially to the Building, plus that portion of any Operating Expenses determined by multiplying the cost of such item by a fraction, the numerator of which is the Floor Area and the denominator of which is the total rentable square footage, as reasonably determined from time to time by Landlord, of all or some of the buildings in the Project, for expenses reasonably determined by Landlord to benefit or relate substantially to all or some .of the buildings in the Project rather than any specific building.  In the event that Landlord determines that the Premises or the Building incur a non-proportional benefit from any expense, or is the non-proportional cause of any such expense, Landlord may allocate a greater percentage of such Operating Expense to the Premises or the Building.  In the event that any management and/or overhead fee payable or imposed by Landlord for the management of Tenant’s Premises is calculated as a percentage of the rent payable by Tenant and other tenants of Landlord, then the full amount of such management and/or overhead fee which is attributable to the rent paid by Tenant shall be additional rent payable by Tenant, in full, provided, however, that Landlord may elect to include such full amount as part of Tenant’s Share of Operating Expenses.
 
(b)           Commencing prior to the start of the first full “Expense Recovery Period” of the Lease (as defined in Item 7 of the Basic Lease Provisions), and prior to the start of each full or partial Expense Recovery Period thereafter, Landlord shall give Tenant a written estimate of the amount of Tenant’s Share of Operating Expenses for the applicable Expense Recovery Period.  Tenant shall pay the estimated amounts to Landlord in equal monthly installments, in advance, concurrently with payments of Basic Rent.  If Landlord has not furnished its written estimate for any Expense Recovery Period by the time set forth above, Tenant shall continue to pay monthly the estimated Tenant’s Share of Operating Expenses in effect during the prior Expense Recovery Period; provided that when the new estimate is delivered to Tenant, Tenant shall, at the next monthly payment date, pay any accrued estimated Tenant’s Share of Operating Expenses based upon the new estimate.  Landlord may from time to time change the Expense Recovery Period to reflect a calendar year or a new fiscal year of Landlord, as applicable, in which event Tenant’s Share of Operating Expenses shall be equitably prorated for any partial year.
 
(c)           Within 180 days after the end of each Expense Recovery Period, Landlord shall furnish to Tenant a statement (a “Reconciliation Statement” ) showing in reasonable detail the actual or prorated Tenant’s Share of Operating Expenses incurred by Landlord during such Expense Recovery Period, and the parties shall within 30 days thereafter make any payment or allowance necessary to adjust Tenant’s estimated payments of Tenant’s Share of Operating Expenses, if any, to the actual Tenant’s Share of Operating Expenses as shown by the Reconciliation Statement.  Any delay or failure by Landlord in delivering any Reconciliation Statement shall not constitute a waiver of Landlord’s right to require Tenant to pay Tenant’s Share of Operating Expenses pursuant hereto.  Any amount due Tenant shall be credited against installments next coming due under this Exhibit B, and any deficiency shall be paid by Tenant together with the next installment.  Should Tenant fail to object in writing to Landlord’s determination of Tenant’s Share of Operating Expenses, or fail to give written notice of its intent to audit Landlord’s Operating Expenses pursuant to the provisions of the next succeeding paragraph, within 180 days following delivery of Landlord’s Reconciliation Statement, Landlord’s determination of Tenant’s Share of Operating Expenses for the applicable Expense Recovery Period shall be conclusive and binding on Tenant for all purposes and any future claims by Tenant to the contrary shall be barred.
 
Provided Tenant is not in Default, Tenant shall have the right to cause a certified public accountant, engaged on a non-contingency fee basis, to audit Operating Expenses by inspecting Landlord’s general ledger of expenses not more than once during any Expense Recovery Period.  However, to the extent that insurance premiums or any other component of Operating Expenses is determined by Landlord on the basis of an internal allocation of costs utilizing information Landlord in good faith deems proprietary, such expense component shall not be subject to audit so long as it does not exceed the amount per square foot typically imposed by landlords of other first class business parks in the vicinity of the Project.  Tenant shall give notice to Landlord of Tenant’s intent to audit within 180 days after delivery of Landlord’s Reconciliation Statement which sets forth Tenant’s Share of Landlord’s actual Operating Expenses to Tenant.  Such audit shall be conducted at a mutually agreeable time during normal business hours at the office of Landlord or its management agent where such
 
1 

 
accounts are maintained.  If Tenant’s audit determines that actual Operating Expenses have been overstated by more than 5%, then subject to Landlord’s right to review and/or contest the audit results, Landlord shall reimburse Tenant for the reasonable out-of-pocket costs of such audit.  Tenant’s rent shall be appropriately adjusted to reflect any overstatement in Operating Expenses.  All of the information obtained by Tenant and/or its auditor in connection with such audit, as well as any compromise, settlement, or adjustment reached between Landlord and Tenant as a result thereof, shall be held in strict confidence and, except as may be required pursuant to litigation, shall not be disclosed to any third party, directly or indirectly, by Tenant or its auditor or any of their officers, agents or employees.  Landlord may require Tenant’s auditor to execute a separate confidentiality agreement affirming the foregoing as a condition precedent to any audit.  In the event of a violation of this confidentiality covenant in connection with any audit, then in addition to any other legal or equitable remedy available to Landlord, Tenant shall forfeit its right to any reconciliation or cost reimbursement payment from Landlord due to said audit (and any such payment theretofore made by Landlord shall be promptly returned by Tenant), and Tenant shall have no further audit rights under this Lease.  Notwithstanding the foregoing, Tenant shall have no right of audit with respect to any Expense Recovery Period unless the total Operating Expenses per square foot for such Expense Recovery Period, as set forth in Landlord’s annual Reconciliation Statement, exceed the total Operating Expenses per square foot during the initial Expense Recovery Period during the Term, as increased by the percentage change in the United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index for all Urban Consumers, Los Angeles - Riverside - Orange County Area Average, all items (1982-84 = 100) (the “Index”), which change in the Index shall be measured by comparing the Index published for January of the initial Expense Recovery Period during the Term with the Index published for January of the applicable Expense Recovery Period.
 
(d)           Even though this Lease has terminated and the Tenant has vacated the Premises, when the final determination is made of Tenant’s Share of Operating Expenses for the Expense Recovery Period in which this Lease terminates, Tenant shall within 30 days of written notice pay the entire increase over the estimated Tenant’s Share of Operating Expenses already paid.  Conversely, any overpayment by Tenant shall be rebated by Landlord to Tenant not later than 30 days after such final determination.  However, in lieu thereof, Landlord may deliver a reasonable estimate of the anticipated reconciliation amount to Tenant prior to the Expiration Date of the Term, in which event the appropriate party shall fund the amount by the Expiration Date.
 
(e)           If, at any time during any Expense Recovery Period, any one or more of the Operating Expenses are increased to a rate(s) or amount(s) in excess of the rate(s) or amount(s) used in calculating the estimated Tenant’s Share of Operating Expenses for the year, then the estimate of Tenant’s Share of Operating Expenses may be increased by written notice from Landlord for the month in which such rate(s) or amount(s) becomes effective and for all succeeding months by an amount equal to the estimated amount of Tenant’s Share of the increase.  Landlord shall give Tenant written notice of the amount or estimated amount of the increase, the month in which the increase will become effective, Tenant’s Share thereof and the months for which the payments are due.  Tenant shall pay the increase to Landlord as part of the Tenant’s monthly payments of estimated expenses as provided in paragraph (b) above, commencing with the month in which effective.
 
(f)            The term “Operating Expenses” shall mean and include all Project Costs, as defined in Section (g) below, and Property Taxes, as defined in Section (h) below.
 
(g)           The term “Project Costs” shall mean all expenses of operation, management, repair, ‘replacement and maintenance of the Building and the Project, including without limitation all appurtenant Common Areas (as defined in Section 6.2 of the Lease), and shall include the following charges by way of illustration but not limitation: water and sewer charges; insurance premiums, deductibles, or reasonable premium equivalents or deductible equivalents should Landlord elect to self-insure any risk that Landlord is authorized to insure hereunder; license, permit, and inspection fees; light; power; window washing; trash pickup; janitorial services to any interior Common Areas; heating, ventilating and air conditioning; supplies; materials; equipment; tools; reasonable fees for consulting services directly related to Operating Expenses; access control/security costs, inclusive of the reasonable cost of improvements made to enhance access control systems and procedures; establishment of reasonable reserves for replacements and/or repairs; costs incurred in connection with compliance with any laws or changes in laws applicable to the Building or the Project; the cost of any capital improvements or replacements (other than tenant improvements for specific tenants) to the extent of the amortized amount thereof over the useful life of such capital improvements or replacements (or, if such capital improvements or replacements are anticipated to achieve a cost savings as to the Operating Expenses, any shorter estimated period of time over which the cost of the capital improvements or replacements would be recovered from the estimated cost
 
2 

 
savings) calculated at a market cost of funds, all as determined by Landlord, for each year of useful life or shorter recovery period of such capital expenditure whether such capital expenditure occurs during or prior to the Term; costs associated with the maintenance of an air conditioning, heating and ventilation service agreement, and maintenance of any communications or networked data transmission equipment, conduit, cabling, wiring and related telecommunications facilitating automation and control systems, remote telecommunication or data transmission infrastructure within the Building and/or the Project, and any other maintenance, repair and replacement costs associated with such infrastructure; labor; reasonably allocated wages and salaries, fringe benefits, and payroll taxes for administrative and other personnel directly applicable to the Building and/or Project, including both Landlord’s personnel and outside personnel; any expense incurred pursuant to Sections 6.1, 6.2, 7.2, 10.2, and Exhibits C and F of the Lease; and reasonable and market-competitive management fees for the professional operation of the Project.  It is understood and agreed that Project Costs may include competitive charges for direct services (including, without limitation, management and/or operations services) provided by any subsidiary, division or affiliate of Landlord.
 
(h)           The term “Property Taxes” as used herein shall include any form of federal, state, county or local government or municipal taxes, fees, charges or other impositions of every kind (whether general, special, ordinary or extraordinary) related to the ownership, leasing or operation of the Premises, Building or Project, including without limitation, the following: (i) all real estate taxes or personal property taxes levied against the Premises, the Building or Project, as such property taxes may be reassessed from time to time; and (ii) other taxes, charges and assessments which are levied with respect to this Lease or to the Building and/or the Project, and any improvements, fixtures and equipment and other property of Landlord located in the Building and/or the Project, (iii) all assessments and fees for public improvements, services, and facilities and impacts thereon, including without limitation arising out of any Community Facilities Districts, “Mello Roos” districts, similar assessment districts, and any traffic impact mitigation assessments or fees; (iv) any tax, surcharge or assessment which shall be levied in addition to or in lieu of real estate or personal property taxes, and (v) taxes based on the receipt of rent (including gross receipts or sales taxes applicable to the receipt of rent), and (vi) costs and expenses incurred in contesting the amount or validity of any Property Tax by appropriate proceedings.  Notwithstanding the foregoing, general net income or franchise taxes imposed against Landlord shall be excluded.
 
(i)            Notwithstanding anything contained in this Exhibit B to the contrary, in no event shall the term Operating Expenses include (1) costs attributable to original development of the Building or the Project, such as architectural and engineering fees and costs; (2) costs attributable to seeking and obtaining new tenants or lease extensions, such as advertising fees and brokerage commissions, or to enforcing judgments and similar expenses; (3) costs that are actually reimbursed to Landlord by tenants as a result of provisions contained in their specific leases (except by way of Operating Expense “pass-through” provisions similar to this Exhibit B) ; (4) reserves for bad debts or accountant’s fees; (5) interest on any mortgages on the Building or Project and rental under any ground or underlying lease; (6) repairs and other work occasioned by fire, windstorm or other casualty to the extent covered by property insurance required to be carried by Landlord hereunder or otherwise carried by Landlord; (7) any costs, fines, or penalties incurred due to violations by Landlord of any applicable laws related to the Building or the Project: (8) costs attributable to repairing items that are covered by warranties to the extent that Landlord actually recovers such costs under the warranties; (9) repairs and maintenance performed exclusively for a particular tenant’s exclusive space and not in the Common Areas, or tenant improvements in a tenant’s space rather than repairs and maintenance for improvements intended generally for the Common Areas or for the common benefit of the Building or Project: (10) costs of correcting defective conditions in the Building or Project resulting from failure to comply with applicable building and construction codes at the time such improvements were constructed, including without limitation, costs or repairs or replacement to cure inherent structural defects in the weight-bearing structural elements of the Building or Project; (11) any amounts expended by Landlord to remediate any “Hazardous Materials” from the Building or Project, except for “mold” conditions and except to the extent that Tenant is responsible therefor as provided in Section 5.3 of this Lease; or (12) overhead and profit increments paid to subsidiaries or affiliates of Landlord for services provided to the Building to the extent the same exceeds the costs that would generally be charged for such services if rendered on a competitive basis (based upon a standard of similar office buildings in the general market area of the Premises) by unaffiliated third parties capable of providing such service.  Landlord shall use it good faith efforts to minimize Operating Expenses in a manner consistent with good business practices, and there shall be no duplication in charges to Tenant.
 
3 

 
EXHIBIT C
 
UTILITIES AND SERVICE
 
Tenant shall be responsible for and shall pay promptly, directly to the appropriate supplier, all charges for electricity metered to the Premises, telephone, telecommunications service, janitorial service, interior landscape maintenance and all other utilities, materials and services furnished directly to Tenant or the Premises or used by Tenant in, on or about the Premises during the Term, together with any taxes thereon.  Landlord shall make a reasonable determination of Tenant’s proportionate share of the cost of water, gas, sewer, refuse pickup and any other utilities and services that are not separately metered to the Premises and services, and Tenant shall pay such amount to Landlord, as an item of additional rent, within 30 days after delivery of Landlord’s statement or invoice therefor.  Alternatively, Landlord may elect to include such cost in the definition of Project Costs in which event Tenant shall pay Tenant’s proportionate share of such costs in the manner set forth in Section 4.2.  Tenant shall also pay to Landlord as an item of additional rent, within 10 days after delivery of Landlord’s statement or invoice therefor, Landlord’s “standard charges” (as hereinafter defined, which shall be in addition to the electricity charge paid to the utility provider) for “after hours” usage by Tenant of each HVAC unit servicing the Premises.  “After hours” shall mean more than 3,432 hours of usage during each calendar year during the Term, as prorated for any partial calendar year.  “After hours” usage shall be determined based upon the operation of the applicable HVAC unit during each calendar year or partial year of the Term on a “non-cumulative” basis (that is, without regard to Tenant’s usage or nonusage of other unit(s) serving the Premises, or of the applicable unit during other years of the Term).  As used herein, “standard charges” shall mean the following charges for each hour of “after hours” use (in addition to the applicable electricity charges paid to the utility provider) of the following described HVAC units: (i) $1.00 per hour for 1-5 ton HVAC units, and (ii) $5.00 per hour for 6+ ton HVAC units.
 
1 

 
EXHIBIT D
 
TENANT’S INSURANCE
 
The following requirements for Tenant’s insurance shall be in effect at the Building, and Tenant shall also cause any subtenant to comply with the requirements.  Landlord reserves the right to adopt reasonable nondiscriminatory modifications and additions to these requirements.  Tenant agrees to obtain and present evidence to Landlord that it has fully complied with the insurance requirements.
 
1.     Tenant shall, at its sole cost and expense, commencing on the date Tenant is given access to the Premises for any purpose and during the entire Term, procure, pay for and keep in full force and effect: (i) commercial general liability insurance with respect to the Premises and the operations of or on behalf of Tenant in, on or about the Premises, including but not limited to coverage for personal injury, contractual liability, independent contractors, broad form property damage, fire legal liability, products liability (if a product is sold from the Premises), and liquor law liability (if alcoholic beverages are sold, served or consumed within the Premises), which policy(ies) shall be written on an “occurrence” basis and for not less than $2,000,000 combined single limit (with a $50,000 minimum limit on fire legal liability) per occurrence for bodily injury, death, and property damage liability, or the current limit of liability carried by Tenant, whichever is greater, and subject to such increases in amounts as Landlord may determine from time to time; (ii) workers’ compensation insurance coverage as required by law, together with employers’ liability insurance coverage of at least $1,000,000; (iii) with respect to improvements, alterations, and the like required or permitted to be made by Tenant under this Lease, builder’s risk insurance, in an amount equal to the replacement cost of the work; (iv) insurance against fire, vandalism, malicious mischief and such other additional perils as may be included in a standard “special form” policy, insuring all Tenant Installations, trade fixtures, furnishings, equipment and items of personal property in the Premises, in an amount equal to not less than 90% of their actual replacement cost (with replacement cost endorsement), which policy shall also include business interruption coverage in an amount sufficient to cover 1 year of loss.  In no event shall the limits of any policy be considered as limiting the liability of Tenant under this Lease.
 
2.     All policies of insurance required to be carried by Tenant pursuant to this Exhibit D shall be written by responsible insurance companies authorized to do business in the State of California and with a general policyholder rating of not less than “A-” and financial rating of not less than “VIII” in the most current Best’s Insurance Report.  The deductible or other retained limit under any policy carried by Tenant shall be commercially reasonable, and Tenant shall be responsible for payment of such retained limit with full waiver of subrogation in favor of Landlord.  Any insurance required of Tenant may be furnished by Tenant under any blanket or “umbrella” policy carried by it or under a separate policy.  A certificate of insurance, certifying that the policy has been issued, provides the coverage required by this Exhibit and contains the required provisions, together with endorsements acceptable to Landlord evidencing the waiver of subrogation and additional insured provisions required below, shall be delivered to Landlord prior to the date Tenant is given the right of possession of the Premises.  Proper evidence of the renewal of any insurance coverage shall also be delivered to Landlord not less than thirty (30) days prior to the expiration of the coverage.  In the event of a loss covered by any policy under which Landlord is an additional insured, Landlord shall be entitled to review a copy of such policy.
 
3.     Each policy evidencing insurance required to be carried by Tenant pursuant to this Exhibit shall contain the following provisions and/or clauses satisfactory to Landlord: (i) with respect to Tenant’s commercial general liability insurance, a provision that the policy and the coverage provided shall be primary and that any coverage carried by Landlord shall be excess of and noncontributory with any policies carried by Tenant, together with a provision including Landlord and any other parties in interest designated by Landlord as additional insureds; (ii) except with respect to Tenant’s commercial general liability insurance, a waiver by the insurer of any right to subrogation against Landlord, its agents, employees, contractors and representatives which arises or might arise by reason of any payment under the policy or by reason of any act or omission of Landlord, its agents, employees, contractors or representatives; and (iii) a provision that the insurer will not cancel or change the coverage provided by the policy without first giving Landlord 30 days prior written notice.  Tenant shall also name Landlord as an additional insured on any excess or umbrella liability insurance policy carried by Tenant.
 
4.     In the event that Tenant fails to procure, maintain and/or pay for, at the times and for the durations specified in this Exhibit D , any insurance required by this Exhibit D , or fails to carry insurance required by any governmental authority, Landlord may at its election procure that insurance and pay the premiums, in which event Tenant shall repay Landlord all sums paid by Landlord, together with interest at the maximum rate permitted by law and any related costs
 
1 

 
or expenses incurred by Landlord, within 10 days following Landlord’s written demand to Tenant.
 
NOTICE TO TENANT: IN ACCORDANCE WITH THE TERMS OF THIS LEASE, TENANT MUST PROVIDE EVIDENCE OF THE REQUIRED INSURANCE TO LANDLORD’S MANAGEMENT AGENT PRIOR TO BEING AFFORDED ACCESS TO THE PREMISES.
 
2 

 
EXHIBIT E
 
RULES AND REGULATIONS
 
This Exhibit sets forth the rules and regulations governing Tenant’s use of the Premises leased to Tenant pursuant to the terms, covenants and conditions of the Lease to which this Exhibit is attached and therein made part thereof.  In the event of any conflict or inconsistency between this Exhibit and the Lease, the Lease shall control.
 
1.     Tenant shall not place anything or allow anything to be placed near the glass of any window, door, partition or wall, which may appear unsightly from outside the Premises.
 
2.     The walls, walkways, sidewalks, entrance passages, elevators, stairwells, courts and vestibules shall not be obstructed or used for any purpose other than ingress and egress of pedestrian travel to and from the Premises, and shall not be used for smoking, loitering or gathering, or to display, store or place any merchandise, equipment or devices, or for any other purpose.  The walkways, sidewalks, entrance passageways, courts, vestibules and roof are not for the use of the general public and Landlord shall in all cases retain the right to control and prevent access thereto by all persons whose presence in the judgment of the Landlord shall be prejudicial to the safety, character, reputation and interests of the Building and its tenants, provided that nothing herein contained shall be construed to prevent such access to persons with whom Tenant normally deals in the ordinary course of Tenant’s business unless such persons are engaged in illegal activities.   Smoking is permitted outside the building and within the Project only in areas designated by Landlord.   Neither Tenant nor its employees, agents, contractors, invitees or licensees shall bring any firearm, whether loaded or unloaded, into the Project at any time.  No tenant or employee or invitee or agent of any tenant shall be permitted upon the roof of the Building without prior written approval from Landlord.
 
3.     No awnings or other projection shall be attached to the outside walls of the Building.  No security bars or gates, curtains, blinds, shades or screens shall be attached to or hung in, or used in connection with, any window or door of the Premises without the prior written consent of Landlord.   Neither the interior nor exterior of any windows shall be coated or otherwise sunscreened without the express written consent of Landlord.
 
4.     Tenant shall not mark, nail, paint, drill into, or in any way deface any part of the Premises or the Building except to affix standard pictures or other wall hangings on the interior walls of the premises so long as they are not visible from the exterior of the building.  Tenant shall not lay linoleum, tile, carpet or other similar floor covering so that the same shall be affixed to the floor of the Premises in any manner except as approved by Landlord in writing.  The expense of repairing any damage resulting from a violation of this rule or removal of any floor covering shall be borne by Tenant.
 
5.     The toilet rooms, urinals, wash bowls and other plumbing apparatus shall not be used for any purpose other than that for which they were constructed and no foreign substance of any kind whatsoever shall be thrown therein.  Any pipes or tubing used by Tenant to transmit water to an appliance or device in the Premises must be made of copper or stainless steel, and in no event shall plastic tubing be used for that purpose.  The expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by the tenant who, or whose employees or invitees, caused it.
 
6.     Landlord shall direct electricians as to the manner and location of any future telephone wiring.   No boring or cutting for wires will be allowed without the prior consent of Landlord.  The locations of the telephones, call boxes and other office equipment affixed to the Premises shall be subject to the prior written approval of Landlord.
 
7.     The Premises shall not be used for manufacturing or for the storage of merchandise except as such storage m;;y be incidental to the permitted use of the Premises.   No exterior storage shall be allowed at any time without the prior written approval of Landlord.  The Premises shall not be used for cooking or washing clothes without the prior written consent of Landlord, or for lodging or sleeping or for any immoral or illegal purposes.
 
8.     Tenant shall not make, or permit to be made, any unseemly or disturbing noises or disturb or interfere with occupants of this or neighboring buildings or premises or those having business with them, whether by the use of any musical instrument, radio, phonograph, noise, or otherwise.  Tenant shall not use, keep or permit to be used, or kept, any foul or obnoxious gas or substance in the Premises or permit or suffer the Premises to be used or occupied in any manner offensive or objectionable to Landlord or other occupants of this or neighboring buildings or premises by reason of any odors, fumes or gases.
 
1 

9.     No animals, except for seeing eye dogs, shall be permitted at any time within the Premises.
 
10.  Tenant shall not use the name of the Building or the Project in connection with or in promoting or advertising the business of Tenant, except as Tenant’s address, without the written consent of Landlord.  Landlord shall have the right to prohibit any advertising by any Tenant which, in Landlord’s reasonable opinion, tends to impair the reputation of the Project or its desirability for its intended uses, and upon written notice from Landlord any Tenant ·shall refrain from or discontinue such advertising.
 
11.  Canvassing, soliciting, peddling, parading, picketing, demonstrating or otherwise engaging in any conduct that unreasonably impairs the value or use of the Premises or the Project are prohibited and each Tenant shall cooperate to prevent the same.   Landlord shall have full and absolute authority to regulate or prohibit the entrance to the Premises of any vendor, supplier, purveyor, petitioner, proselytizer or other similar person if, in the good faith judgment of Landlord, such person will be involved in general solicitation activities, or the proselytizing, petitioning, or disturbance of other tenants or their customers or invitees, or engaged or likely to engage in conduct which may in Landlord’s opinion distract from the use of the Premises for its intended purpose.  Notwithstanding the foregoing, Landlord reserves the absolute right and discretion to limit or prevent access to the Buildings by any food or beverage vendor, whether or not invited by Tenant, and Landlord may condition such access upon the vendor’s execution of an entry permit agreement which may contain provisions for insurance coverage and/or the payment of a fee to Landlord.
 
12.  No equipment of any type shall be placed on the Premises which in Landlord’s opinion exceeds the load limits of the floor or otherwise threatens the soundness of the structure or improvements of the Building.
 
13.  [Intentionally Omitted]
 
14.  The entire Premises, including vestibules, entrances, parking areas, doors, fixtures, windows and plate glass, shall at all times be maintained in a safe, neat and clean condition by Tenant.  All trash, refuse and waste materials shall be regularly removed from the Premises by Tenant and placed in the containers at the locations designated by Landlord for refuse collection.  All cardboard boxes must be “broken down” prior to being placed in the trash container. All styrofoam chips must be bagged or otherwise contained prior to placement in the trash container, so as not to constitute a nuisance.  Pallets must be immediately disposed of by tenant and may not be disposed of in the Landlord provided trash container or enclosures. Pallets may be neatly stacked in an exterior location on a temporary basis (no longer than 5 days) so long as Landlord has provided prior written approval.  The burning of trash, refuse or waste materials is prohibited.
 
15.  Tenant shall use at Tenant’s cost such pest extermination contractor as Landlord may direct and at such intervals as Landlord may require.
 
16.  All keys for the Premises shall be provided to Tenant by Landlord and Tenant shall return to Landlord any of such keys so provided upon the termination of the Lease.   Tenant shall have the right, in its discretion, to change locks or install other locks on doors of the Premises, without the need for the prior written consent of Landlord. In the event of loss of any keys furnished by Landlord for Tenant, Tenant shall pay to Landlord the costs thereof.  Upon the termination of its tenancy, Tenant shall deliver to Landlord all the keys to lobby(s), suite(s) and telephone & electrical room(s) which have been furnished to Tenant or which Tenant shall have had made.
 
17.  No person shall enter or remain within the Project while intoxicated or under the influence of liquor or drugs.  Landlord shall have the right to exclude or expel from the Project any person who, in the absolute discretion of Landlord, is under the influence of liquor or drugs.
 
18.  [Intentionally Omitted]
 
19.  [Intentionally Omitted]
 
20.  Landlord may from time to time grant other tenants of the Project individual and temporary variances from these Rules, provided that any variance does not have a material adverse effect on the use and enjoyment of the Premises by Tenant.
 
21.  Landlord reserves the right to amend or supplement the foregoing Rules and Regulations and to adopt and promulgate additional rules and regulations applicable to the Premises.  Notice of such rules and regulations and amendments and supplements thereto, if any, shall be given to the Tenant.
 
2 

 
EXHIBIT F
 
PARKING
 
Tenant shall be entitled to the number of vehicle parking spaces set forth in Item 11 of the Basic Lease Provisions, which spaces shall be unreserved and unassigned, on those portions of the Common Areas designated by Landlord for parking.  Tenant shall not use more parking spaces than such number. All parking spaces shall be used only for parking of vehicles no larger than full size passenger automobiles, sport utility vehicles or pickup trucks.  Tenant shall not permit or allow any vehicles that belong to or are controlled by Tenant or Tenant’s employees, suppliers, shippers, customers or invitees to be loaded, unloaded or parked in areas other than those designated by Landlord for such activities.  If Tenant permits or allows any of the prohibited activities described above, then Landlord shall have the right, without notice, in addition to such other rights and remedies that Landlord may have, to remove or tow away the vehicle involved and charge the costs to Tenant.  Parking within the Common Areas shall be limited to striped parking stalls, and no parking shall be permitted in any driveways, access ways or in any area which would prohibit or impede the free flow of traffic within the Common Areas.  There shall be no parking of any vehicles for longer than a forty-eight (48) hour period unless otherwise authorized by Landlord, and vehicles which have been abandoned or parked in violation of the terms hereof may be towed away at the owner’s expense; provided that Tenant shall have the right to park not more than 12 vehicles owned by Tenant or its employees for periods of longer than 48 hours in those portions of the Common Areas as shall be designated by Landlord. Nothing contained in this Lease shall be deemed to create liability upon Landlord  for any damage to motor vehicles of visitors or employees, for any loss of property from within those motor vehicles, or for any injury to Tenant, its visitors or employees, unless ultimately determined to be caused by the sole  negligence or willful misconduct of Landlord.   Landlord shall have the right to establish, and from time to time amend, and to enforce against all users all reasonable rules and regulations (including the designation of areas for employee parking) that Landlord may deem necessary and advisable for the proper and efficient operation and maintenance of parking within the Common Areas. Landlord shall have the right to construct, maintain and operate lighting facilities within the parking areas; to change the area, level, location and arrangement of the parking areas and improvements therein; to restrict parking by tenants, their officers, agents and employees to employee parking areas; to enforce parking charges (by operation of meters or otherwise); and to do and perform such other acts in and to the parking areas and improvements therein as, in the use of good business judgment, Landlord shall determine to be advisable.  Any person using the parking area shall observe all directional signs and arrows and any posted speed limits.  In no event shall Tenant interfere with the use and enjoyment of the parking area by other tenants of the Project or their employees or invitees.  Parking areas shall be used only for parking vehicles.  Washing, waxing, cleaning, servicing or repair of vehicles is prohibited unless otherwise authorized by Landlord; provided that Tenant shall have the right to wash, wax and clean (but not to service or repair) vehicles owned by Tenant or its employees in the concrete “apron” areas adjoining the truck wells in the Rear Area of the Building, subject to the compliance with all legal requirements, including without limitation the obtaining of any permit required therefor from the City of Irvine, and subject to such reasonable rules and regulations as Landlord may from time to time adopt, including without limitation, Landlord’s collection of water requirements.  Tenant shall be liable for any damage to the parking areas caused by Tenant or Tenant’s employees, suppliers, shippers, customers or invitees, including without limitation damage from excess oil leakage.  Tenant shall have no right to install any fixtures, equipment or personal property in the parking areas.
 
1 

 
EXHIBIT G
 
ADDITIONAL PROVISIONS
 
The following additional provisions shall be binding on Landlord and Tenant:
 
1.              RIGHT TO EXTEND THIS LEASE.   Provided that no Default has occurred under any provision of this Lease, either at the time of exercise of the extension right granted herein or at the time of the commencement of such extension, and provided further that Tenant is occupying at least 50% of the Floor Area of the Premises and has not sublet more than 50% of the Floor Area nor assigned its interest in this Lease except in connection with a Permitted Transfer, then Tenant may extend the Term of this Lease for one (1) extension period of 60 months.   Tenant shall exercise its right to extend the Term by and only by delivering to Landlord, not less than 9 months or more than 12 months prior to the Expiration Date of the Term, Tenant’s irrevocable written notice of its commitment to extend (the “Commitment Notice” ). The Basic Rent payable under the Lease during any extension of the Term shall be determined as provided in the following provisions.
 
If Landlord and Tenant have not by then been able to agree upon the Basic Rent for the extension of the Term, then not less than 90 days or more than 120 days prior to the Expiration Date of the Term, Landlord shall notify Tenant in writing of the Basic Rent that would reflect the prevailing market rental rate for a 60-month renewal of comparable space in the Project (together with any increases thereof during the extension period) as of the commencement of the extension period ( “Landlord’s Determination” ).   Should Tenant disagree with the Landlord’s Determination, then Tenant shall, not later than 20 days thereafter, notify Landlord in writing of Tenant’s determination of those rental terms ( “Tenant’s Determination” ). Within 10 days following delivery of the Tenant’s Determination, the parties shall attempt to agree on an appraiser to determine the fair market rental. If the parties are unable to agree in that time, then each party shall designate an appraiser within 10 days thereafter. Should either party fail to so designate an appraiser within that time, then the appraiser designated by the other party shall determine the fair market rental.  Should each of the parties timely designate an appraiser, then the two appraisers so designated shall appoint a third appraiser who shall, acting alone, determine the fair market rental for the Premises.  Any appraiser designated hereunder shall have an MAl certification with not less than 5 years experience in the valuation of commercial industrial buildings in the vicinity of the Project.
 
Within 30 days following the selection of the appraiser and such appraiser’s receipt of the Landlord’s Determination and the Tenant’s Determination, the appraiser shall determine whether the rental rate determined by Landlord or by Tenant more accurately reflects the fair market rental rate for the 60-month renewal of the Lease for the Premises, as reasonably extrapolated to the commencement of the extension period.  Accordingly, either the Landlord’s Determination or the Tenant’s Determination shall be selected by the appraiser as the fair market rental rate for the extension period.   In making such determination, the appraiser shall consider rental comparables for the Project (provided that if there are an insufficient number of comparables within the project, the appraiser shall consider rental comparables for similarly improved space owned by Landlord in the vicinity of the Project with appropriate adjustment for location and quality of project), but the appraiser shall not attribute any factor for market tenant improvement allowances or brokerage commissions in making its determination of the fair market rental rate.  At any time before the decision of the appraiser is rendered, either party may, by written notice to the other party, accept the rental terms submitted by the other party, in which event such terms shall be deemed adopted as the agreed fair market rental.  The fees of the appraiser(s) shall be borne entirely by the party whose determination of the fair market rental rate was not accepted by the appraiser.
 
Within 20 days after the determination of the fair market rental, Landlord shall prepare an appropriate amendment to this Lease for the extension period, and Tenant shall execute and return same to Landlord within 10 days after Tenant’s receipt of same.  Should the fair market rental not be established by the commencement of the extension period, then Tenant shall continue paying rent at the rate in effect during the last month of the initial Term, and a lump sum adjustment shall be made promptly upon the determination of such new rental.
 
If Tenant fails to timely exercise the extension right granted herein within the time period expressly set forth for exercise by Tenant in the initial paragraph of this Section, Tenant’s right to extend the Term shall be extinguished and the Lease shall automatically terminate as of the expiration date of the Term, without any extension and without any liability to Landlord. Tenant’s rights under this Section shall belong solely to Boot Barn, Inc., a Delaware corporation, and  any  attempted assignment or  transfer of such  rights  (except  by  way  of  a  Permitted Transfer) shall be void and of no force and effect. Tenant shall have no other right to extend the
 
1 

 
Term beyond the single 60 month extension period created by this Section. Unless agreed to in a writing signed by Landlord and Tenant, any extension of the Term, whether created by an amendment to this Lease or by a holdover of the Premises by Tenant, or otherwise, shall be deemed a part of, and not in addition to, any duly exercised extension period permitted by this Section.
 
2.       LANDLORD’S RESPONSIBILITIES.
 
(a)           Landlord warrants to Tenant that the plumbing, fire sprinkler system, lighting, heating, ventilation and air conditioning systems and electrical systems serving the Premises shall be in good operating condition, and that the roof shall be “water tight”, on the Commencement Date of this Lease.   Provided that Tenant shall notify Landlord of a non-compliance with the foregoing warranty not later than thirty (30) days following the Commencement Date, then Landlord shall, except as otherwise provided in this Lease, promptly after receipt of written notice from Tenant setting forth the nature and extent of such non-compliance, rectify same at Landlord’s sole cost and expense and not as a Project Cost.
 
(b)           Landlord shall correct, repair and/or replace, at its sole cost and expense and not as a Project Cost, the structural components of the roof, the load-bearing walls and the foundations and footings of the Building.  Notwithstanding the foregoing, Landlord’s obligation contained in this Section to bear such costs and expenses shall not apply: (i) to the costs and expenses of periodic maintenance of the roof, walls, foundations and footings of the Building, (ii) to the cost of replacing the roof membrane and accompanying roof materials as and when such replacement is required, nor (iii) to the extent of the negligence or willful misconduct by Tenant, its employees, agents, contractors, licensees or invitees (in which case Tenant shall be responsible for the reasonable costs of such repairs and/or replacements).   The repairs or replacements required of Landlord pursuant to this Section shall be made promptly following notice from Tenant.
 
3.          REAR AREA.   Notwithstanding the provisions of Sections 6.2 and 6.3 of the Lease, Tenant shall have the right, at its sole cost and expense and without Landlord’s further approval during the initial 36 months of the Term, to fence and gate that certain area in the rear of the Building adjoining the truck wells as shown in Note 8.2 of the approved “Plan” as defined in the attached Work Letter (the “Rear Area” ), subject to the terms and conditions of the memo from Mr. David Baab attached as Exhibit G-1 hereto. Until such time as the Rear Area is fenced and gated as herein provided, Tenant may use the Rear Area solely for the purpose of the storage of shipping containers and the parking of delivery trucks and trailers and of vehicles owned by Tenant and its employees and for no other purpose.  Tenant shall maintain the Rear Area in good condition and repair at its sole cost and expense during the Term.  At such time as the Rear Area is fenced and gated as herein provided the Rear Area shall no longer be part of the Common Areas, provided that Landlord shall have access to the Rear Area at all times during the Term to inspect same and to make repairs and renovations as necessary, including without limitation, for purposes of re-slurrying same.
 
4.          WAIVER OF LANDLORD.   Within 15 business days following the execution of this Lease, Landlord shall execute and return to Tenant a Waiver of Landlord substantially in the form and with the content of Exhibit G-2 hereto.
 
5.          CONTINGENCY.   Tenant understands and agrees that the effectiveness of this Lease is contingent upon the mutual execution of a lease surrender and termination agreement for the Premises between Landlord and Telmar Holdings, Inc., the current tenant in possession of the Premises.
 
2 

 
EXHIBIT G-1

 

To:	Sue Lyle	 	 	
 	Irvine Company Office Properties	 	cc: Diana Beth Brucher, ICOP	
 	111 Innovation	 	Dave Byrd, ICOP	
 	Irvine, CA 92617	 	Jett McConnick, ICOP	
 	 	 	David Morgan, IC, UPD	
From:	Design Review Team	 	Brad Neal, IC, UPD	
 	 	 	Tracy Perrelle, ICOP	
Date:	January 15, 2010	 	 	
 	 	 	 	
Subject:	15776 Laguna Canyon Road, Irvine Spectrum 6	 	 	
 	 	 	 	
 	Fence and gates at loading area at rear of building	 	 	
 	 	 	 	
 	Photographs and site plan	 	 	
 	received with an email message dated 1/15/10	 	 	
 
Sue,
 
Adding a fence at the existing loading area at the rear of this building (at red arrow) should be acceptable to Irvine Company, subject to the submittal of drawings showing:
 
1)    The precise location of the fence and gates, which should be coordinated with the existing walls and should not interfere with on-site circulation when the gates are open.
 
2)    The height the fence and gates, which should provide adequate security at a height that is as low as possible.
 
3)    The design of the top of the fence and gates, which should be horizontal, not sloping; and should provide adequate security without using barbed  wire or razor  wire.
 
4)    The material, color, and style of the fence and gates, which should be a black architectural metal fence in a style similar to the fence below; unless senior management would allow a black, vinyl-covered chain link fence at this location, since it is not visible from the street.

 

If you have any questions, please contact David Baab by telephone at (949) 729-9210; by fax at (949) 861-2139; by e-mail at dbaab@irvinecompany.com; by interoffice mail at T1-6-2; or by US mail at Irvine Company, 550 Newport Center Drive, Newport Beach, CA 92660.
***
 
1 

 
EXHIBIT  G-2
 
WAIVER OF LANDLORD
 
This Waiver of Landlord (“Agreement”) is made and entered into as of           , 2009, by LANDLORD (“Landlord”), PNC Bank, N.A., 2 North Lake Avenue, Suite 440 Pasadena, California 91101 (“PNC”) and Fifth Street Finance Corp., a Delaware corporation with offices at 445 Hamilton Avenue, 12 th  Floor, White Plains, New York 10601 (“Fifth Street”; collectively with PNC, the “Lenders”).
 
1.     The Landlord agrees that the Lenders may remove, assemble, appraise, display, operate, maintain, prepare for sale or lease, repair, lease, transfer and/or sell (at public auction(s) or private sale(s)) all personal property now owned and hereafter acquired by Boot Barn, Inc. (“Borrower”), including, but not limited to, items purchased  with  loan  proceeds (“Borrower Property”) now/to be installed or kept at STORE ADDRESS (“Premises”) as such Premises  are  more  particularly described in that certain Lease dated April  21, 2008 between Landlord and Borrower (as amended, the “Lease”).  Landlord agrees to notify the Lenders (at the address provided above) within five (5) days of any termination of Borrower’s right to occupy the Premises.
 
2.     The Landlord agrees that the Borrower Property described above will remain personal property notwithstanding the manner of its annexation to the Premises, its adaptability to the uses and purposes for which the Premises are used and the intention of the party making annexation.
 
3.     The Landlord hereby waives any right, title, claim or interest in the Borrower Property by reason of such property being attached to or resting upon the Premises and hereby grants the Lenders permission to remove such property from the Premises at any reasonable time.  Any rights Landlord may claim to have in and to the Borrower Property, no matter how arising, shall be second and subordinate to the rights of Lenders therein.
 
4.     If the Lenders enter the Premises for the purpose of removing the Borrower Property and Borrower has already vacated the Premises, the Lenders agree not to remove Borrower Property in such a way that the Premises are damaged.  However, if the Premises are damaged by either PNC or Fifth Street, then such lender agrees to repair any such damage or reimburse Landlord for the reasonable cost of such repair.
 
5.     If Borrower has vacated the Premises and Borrower Property remains on the Premises under the control of the Lenders, Landlord will allow the Lenders, at their election, to remain in possession of the Borrower Property at the Premises for up to sixty (60) days for the purposes described in Paragraph 1, without regard to such time as the Lenders are legally unable to possess the Borrower Property.  During such time, the Lenders shall pay rent to Landlord prorated based upon the number of days they occupy the Premises in an amount equal to the daily equivalent of 1/30 of the minimum monthly rental provided for in the Lease.  Any extensions of the foregoing period shall be with the written consent of Landlord.  The Lenders shall have no obligation to pay Landlord for any past due rent or other payments that may be owed by Borrower and in no event shall the rent required to be paid by the Lenders, in the aggregate, exceed the then current rent under the Lease.
 
6.     This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed an original, but all of which taken together shall constitute but one Agreement.  This Agreement may be executed and delivered by facsimile or electronic counterparts, each of which shall have the same validity as an original counterpart.
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

“Landlord”	 	“PNC”	 	“Fifth Street”	
 	 	 	 	 	
 	 	PNC BANK, N.A.,	 	FIFTH STREET FINANCE CORP.,	
 	 	a national banking association	 	a Delaware corporation	
 	 	 	 	 	
By:	 	 	By:	 	 	By:	Fifth Street Management LLC,	
 	 	 	 	 	 	 	a Delaware limited liability	
Name:	 	 	Name:	 	 	 	company, its Agent	
 	 	 	 	 	 	 	 	
Title:	 	 	Title:	 	 	 	By:	 	
 	 	 	 	 	 	 	
 	 	 	 	 	Name:	 	
 	 	 	 	 	 	 	
 	 	 	 	 	Title:	 	
 
1 

 
EXHIBIT H
 
LANDLORD’S DISCLOSURES
 
SPECTRUM
 
The capitalized terms used and not otherwise defined in this Exhibit shall have the same definitions as set forth in the Lease.  The provisions of this Exhibit shall supersede any inconsistent or conflicting provisions of the Lease.
 
1.             Landlord has been informed that the El Toro Marine Corps Air Station (MCAS) has been listed as a Federal Superfund site as a result of chemical releases occurring over many years of occupancy.  Various chemicals including jet fuel, motor oil and solvents have been discharged in several areas throughout the MCAS site.  A regional study conducted by the Orange County Water District has estimated that groundwaters beneath more than 2,900 acres have been impacted by Trichloroethlene (TCE), an industrial solvent.  There is a potential that this substance may have migrated into the ground water underlying the Premises.  The U.S. Environmental Protection Agency, the Santa Ana Region Quality Control Board, and the Orange County Health Care Agency are overseeing the investigation/cleanup of this contamination. To the Landlord’s current actual knowledge, the ground water in this area is used for irrigation purposes only, and there is no practical impediment to the use or occupancy of the Premises due to the El Toro discharges.
 
1 

EXHIBIT J
 
THE IRVINE COMPANY- INVESTMENT PROPERTIES GROUP HAZARDOUS MATERIAL SURVEY FORM
 
The purpose of this form is to obtain information regarding the use of hazardous substances on Investment Properties Group (“IPG”) property.  Prospective tenants and contractors should answer the questions in light of their proposed activities on the premises. Existing tenants and contractors should answer the questions as they relate to ongoing activities on the premises and should update any information previously submitted.
 
If additional space is needed to answer the questions, you may attach separate sheets of paper to this form.  When completed, the form should be sent to the following address:
 
THE IRVINE COMPANY MANAGEMENT OFFICE
111 Innovation Drive
Irvine, CA  92617
 
Your cooperation in this matter is appreciated. If you have any questions, please call your property manager at (949) 720-4400 for assistance.
 
1.               GENERAL INFORMATION .

Name of Responding Company:	 	
Check all that apply:	Tenant	o	Contractor	o	
 	Prospective	o	Existing	o	
 
Mailing Address:
Contact person & Title:
Telephone Number:  (   )
 
Current TIC Tenant(s) :
 
Address of Lease Premises:
 
Length of Lease or Contract Term:
 
Prospective TIC Tenant(s) :
 
Address of Leased Premises:
 
Address of Current Operations:
 
Describe the proposed operations to take place on the property, including principal products manufactured or services to be conducted.   Existing tenants and contractors should describe any proposed changes to ongoing operations.

 
2.                                       HAZARDOUS MATERIALS . For the purposes of this Survey Form, the term “hazardous material” means any raw material, product or agent considered hazardous under any state or federal law. The term does not include wastes which are intended to be discarded.
 
2.1                                Will any hazardous materials be used or stored on site?

Chemical Products	Yes o   No o	
Biological Hazards/ Infectious Wastes	Yes o   No o	
Radioactive Materials	Yes o   No o	
Petroleum Products	Yes o   No o	
 
1 

 
2.2                                List any hazardous materials to be used or stored, the quantities that will be on-site at any given time, and the location and method of storage (e.g., bottles in storage closet on the premises).

Hazardous Materials	 	Location and Method
of Storage	 	Quantity	 	

 	 	 	 	 	 	
 
2.3                                Is any underground storage of hazardous materials proposed or currently conducted on the premises?  Yes o   No o
 
If yes, describe the materials to be stored, and the size and construction of the tank. Attach copies of any permits obtained for the underground storage of such substances.

 
3.                                       HAZARDOUS WASTE .  For the purposes of this Survey Form, the term “hazardous waste” means any waste (including biological, infectious or radioactive waste) considered hazardous under any state or federal law, and which is intended to be discarded.
 
3.1                                List any hazardous waste generated or to be generated on the premises, and indicate the quantity generated on a monthly basis.

Hazardous Materials	 	Location and Method
of Storage	 	Quantity	 	

 	 	 	 	 	 	
 
3.2                                Describe the method(s) of disposal (including recycling) for each waste.  Indicate where and how often disposal will take place.

Hazardous Materials	 	Location and Method 
of Storage	 	Disposal Method	 	

 	 	 	 	 	 	
 
3.3                                Is any treatment or processing of hazardous, infectious or radioactive wastes currently conducted or proposed to be conducted on the premise?
Yes o    No o
 
If yes, please describe any existing or proposed treatment methods.

 
3.4                                Attach copies of any hazardous waste permits or licenses issued to your company with respect to its operations on the premises.
 
4.                                                                                       SPILLS
 
4.1                                During the past year, have any spills or releases of hazardous materials occurred on the premises? Yes o No o
 
2 

 
If so, please describe the spill and attach the results of any testing conducted to determine the extent of such spills.

 
4.2                                Were any agencies notified in connection with such spills? Yes o No o
 
If so, attach copies of any spill reports or other correspondence with regulatory agencies.
 
4.3                                Were any clean-up actions undertaken in connection with the spills?
Yes o No o
 
If so, briefly describe the actions taken. Attach copies of any clearance letters obtained from any regulatory agencies involved and the results of any final soil or groundwater sampling done upon completion of the clean-up work.

 
5.                                                                                       WASTEWATER TREATMENT/DISCHARGE
 
5.1                                Do you discharge industrial wastewater to:
 
o storm drain?           o sewer?
o surface water?          o no industrial discharge
 
5.2                                Is your industrial wastewater treated before discharge? Yes o   No o
 
If yes, describe the type of treatment conducted.

 
5.3                                Attach copies of any wastewater discharge permits issued to your company with respect to its operations on the premises.
 
6.                                                                                       AIR DISCHARGES .
 
6.1                                Do you have any air filtration systems or stacks that discharge into the air?
Yes o No o
 
6.2                                Do you operate any equipment that requires air emissions permits?
Yes o No o
 
6.3                                Attach copies of any air discharge permits pertaining to these operations.
 
7.                                                                                       HAZARDOUS MATERIALS DISCLOSURES .
 
7.1                                Does your company handle an aggregate of at least 500 pounds, 55 gallons or
200 cubic feet of hazardous material at any given time? Yes o No o
 
7.2                                Has your company prepared a Hazardous Materials Disclosure - Chemical Inventory and Business Emergency Plan or similar disclosure document pursuant to state or county requirements? Yes o No o
 
If so, attach a copy.
 
7.3                                Are any of the chemicals used in your operations regulated under Proposition 65?
 
If so, describe the procedures followed to comply with these requirements.

3 

 
7.4                                Is your company subject to OSHA Hazard Communication Standard Requirements? Yes o No o
 
If so, describe the procedures followed to comply with these requirements.

 
8.                                                                                       ANIMAL TESTING .
 
8.1                                Does your company bring or intend to bring live animals onto the premises for research or development purposes? Yes o No o
 
If so, describe the activity.

 
8.2                                Does your company bring or intend to bring animal body parts or bodily fluids onto the premises for research or development purposes? Yes o No o
 
If so, describe the activity.

 
9.                                                                                       ENFORCEMENT ACTIONS, COMPLAINTS .
 
9.1                                Has your company ever been subject to any agency enforcement actions, administrative orders, lawsuits, or consent orders/decrees regarding environmental compliance or health and safety? Yes o No o
 
If so, describe the actions and any continuing obligations imposed as a result of these actions.

 
9.2                                Has your company ever received any request for information, notice of violation or demand letter, complaint, or inquiry regarding environmental compliance or health and safety? Yes o No o
 
9.3                                Has an environmental audit ever been conducted which concerned operations or activities on premises occupied by you? Yes o No o
 
9.4                                If you answered “yes” to any questions in this section, describe the environmental action or complaint and any continuing compliance obligation imposed as a result of the same.

 

 	 	 	

 	By:	 	
 	 	Name:	 	
 	 	Title:	 	
 	 	Date:	 	
 
4 

EXHIBIT X
 
WORK LETTER
 
BUILD TO SUIT
 
The tenant improvement work (the “Tenant Improvements” and the “Tenant Improvement Work” ) shall consist of the work, including work in place as of the date hereof, required to complete the improvements to the Premises as shown in the pricing plan (the “Plan” ) prepared by H. Hendy Architects, dated May 25, 2010, as modified by “Addendum A” to the Plan dated May 28, 2010 and by “Addendum B” to the Plan dated June 1, 2010, except that the fencing and gating shown in Note 8.2 of the Plan shall not be part of the Tenant Improvement Work. The Tenant Improvement Work shall be performed by a contractor selected by Landlord and in accordance with the requirements and procedures set forth below.
 
I.             ARCHITECTURAL AND CONSTRUCTION PROCEDURES.
 
A.            Landlord shall cause its contractor to construct the Tenant Improvements at Landlord’s sole cost and expense, provided that (i) any additional cost resulting from “Changes” (as hereinafter defined) requested by Tenant shall be borne solely by Tenant and paid to Landlord as hereinafter provided, and (ii) the Tenant Improvement Work shall not include the “Alternates,” if any, described in the Plan, unless Tenant shall timely elect same in which event any additional cost thereof shall be borne solely by Tenant and shall be paid to Landlord in the same manner as hereinafter provided for Changes. Unless otherwise specified in the Plan, all materials, specifications and finishes utilized in constructing the Tenant Improvements shall be Landlord’s building standard tenant improvements, materials and specifications for the Project as set forth in Schedule I attached hereto (“Standard Improvements”). Should Landlord submit any additional plans, equipment specification sheets, or other matters to Tenant for approval or completion in connection with the Tenant Improvement Work, Tenant shall respond in writing, as appropriate, within five (5) days unless a shorter period is provided herein. Tenant shall not unreasonably withhold its approval of any matter, and any disapproval shall be limited to items not previously approved by Tenant in the Plan or otherwise.
 
B.            the event that Tenant requests in writing a revision to the Plan ( “Change” ), and Landlord so approves such Change as provided in Section I.C below, Landlord shall advise Tenant by written change order as soon as is practical of any increase in the cost to complete the Tenant Improvement Work that such Change would cause. Such cost of the Change shall include an administrative/supervision fee to be paid to Landlord or to Landlord’s management agent in the amount of 5% of the cost of such Change. Tenant shall approve or disapprove such change order in writing within 2 days following Tenant’s receipt of such change order. If Tenant approves any such change order, Landlord, at its election, may either (i) require as a condition to the effectiveness of such change order that Tenant pay the increase in the cost to complete attributable to such change order concurrently with delivery of Tenant’s approval of the change order, or (ii) defer Tenant’s payment of such increase until the date 10 days after delivery of invoices for same. If Tenant disapproves any such change order, Tenant shall nonetheless be responsible for the reasonable architectural and/or planning fees incurred in preparing such change order. Landlord shall have no obligation to interrupt or modify the Tenant Improvement Work pending Tenant’s approval of a change order, but if Tenant fails to timely approve a change order, Landlord may (but shall not be required to) suspend the applicable Tenant Improvement Work.
 
C.            Landlord may consent in writing, in its sole and absolute discretion, to Tenant’s request for a Change, including any modification of a Standard Improvement in the Plan to a non standard improvement ( “Non-standard Improvement” ), if requested in writing by Tenant. In addition, Landlord agrees that it shall not unreasonably withhold its consent to Tenant’s requested Changes to previously approved Non-Standard Improvements, unless Landlord determines, in its sole and absolute discretion, that such requested Change to the Non-Standard Improvements (i) is of a lesser quality than the Non-Standard Improvements previously approved by Landlord, (ii) fails to conform to applicable governmental requirements, (iii) would result in the Premises requiring building services beyond the level normally provided to other tenants, (iv) interferes in any manner with the proper functioning of, or Landlord’s access to, any mechanical, electrical, plumbing or HVAC systems, facilities or equipment in or serving the Building, or (v) would have an adverse aesthetic impact to the Premises or cause additional expenses to Landlord in reletting the Premises. The cost to complete any Non-Standard Improvements shall be borne by Tenant. All Standard Improvements and Non-Standard Improvements shall become the property of Landlord and shall be surrendered with the Premises at the end of the Term; except that Landlord may, by notice to Tenant given either prior to or following the expiration or termination of the Lease, require Tenant either to remove all or any of the Non-Standard Improvements and all or any of the Tenant Improvements approved by way of a Change requested by Tenant, to
 
1 

 
repair any damage to the Premises or the Common Area arising from such removal, and to replace any such Non-Standard Improvements with the applicable Standard Improvement, or to reimburse Landlord for the reasonable cost of such removal, repair and replacement upon demand. Any such removals, repairs and replacements by Tenant shall be completed by the Expiration Date, or sooner termination of this Lease, or within ten (10) days following notice to Tenant if such notice is given following the Expiration Date or sooner termination.
 
D.            Notwithstanding any provision in the Lease to the contrary, and not by way of limitation of any other rights or remedies of Landlord, if Tenant fails to comply with any of the time periods specified in this Work Letter, fails otherwise to approve or reasonably disapprove any submittal within the time period specified herein for such response (or if no time period is so specified, within 5 days following Tenant’s receipt thereof), requests any Changes or Alternates, furnishes inaccurate or erroneous specifications or other information, or otherwise delays in any manner the completion of the Tenant Improvements (including without limitation by specifying materials that are not readily available) or the issuance of an occupancy certificate (any of the foregoing being referred to in this Lease as a ‘‘Tenant Delay” ), then Tenant shall bear any resulting additional construction cost or other expenses, and the Commencement Date of this Lease shall be deemed to have occurred for all purposes, including without limitation Tenant’s obligation to pay rent, as of the date Landlord reasonably determines that it would have been able to deliver the Premises to Tenant but for the collective Tenant Delays. Should Landlord determine that the Commencement Date should be advanced in accordance with the foregoing, it shall so notify Tenant in writing. Landlord’s determination shall be conclusive unless Tenant notifies Landlord in writing, within 5 days thereafter, of Tenant’s election to contest same by arbitration pursuant to the provisions of Section Ill below. Pending the outcome of such arbitration proceedings, Tenant shall make timely payment of all rent due under this Lease based upon the Commencement Date set forth in the aforesaid notice from Landlord.
 
E.            Landlord shall supply Tenant with periodic updates of the construction schedule for the Tenant Improvements, and shall give its good faith estimate at least 15 days prior to the date the Premises is scheduled to be “ready for occupancy”.
 
F.             Prior to the Commencement Date of the Lease, Landlord shall permit Tenant and its agents to enter (i) the Premises in order that Tenant may install fixtures, furniture and cabling through Tenant’s own contractors within 30 days prior to the Commencement Date, (ii) the “warehouse” portion of the first floor of the Premises on or after September 1, 2010 for purposes of the stocking of non-inventory only, and (iii) the “warehouse” portion of the first floor of the Premises within 15 days prior to the Commencement Date for purposes of the stocking of inventory only (collectively, Tenant’s “Early Entry” rights herein). The foregoing license to enter the Premises prior to the Commencement Date is, however, conditioned upon Tenant’s contractors and their subcontractors and employees working in harmony and not interfering with the work being performed by Landlord as determined by Landlord in Landlord’s sole and absolute discretion, and shall be subject to Tenant’s obtaining any and all permits required by the City of Irvine for such Early Entry. If at any time that entry shall cause disharmony or interfere with the work being performed by Landlord as defined by Landlord in Landlord’s sole and absolute discretion, this license may be withdrawn by Landlord upon 24 hours written notice to Tenant. That license is further conditioned upon the compliance by Tenant’s contractors with all requirements imposed by Landlord on third party contractors, including without limitation the maintenance by Tenant and its contractors and subcontractors of workers’ compensation and public liability and property damage insurance in amounts and with companies and on forms satisfactory to Landlord, with certificates of such insurance being furnished to Landlord prior to proceeding with any such Early Entry. The Early Entry shall be deemed to be under all of the provisions of the Lease except as to the covenants to pay rent; provided, however, that to the extent Tenant commences its regular business operations in the “warehouse” portion of the Premises during its Early Entry, including without limitation, commencing its regular distribution of inventory from the Premises, then Tenant shall thereafter pay Basic Rent to Landlord for the “warehouse” portion in a monthly amount equal to $.56 multiplied by the rentable square footage of the “warehouse” portion of the Premises. Landlord shall not be liable in any way for any injury, loss or damage which may occur to any such work being performed by Tenant during its Early Entry, the same being solely at Tenant’s risk. In no event shall the failure of Tenant’s contractors to complete any work in the Premises extend the Commencement Date of this Lease.
 
G.            Tenant hereby designates Paul Iacono ( Tenant’s Construction Representative” ), Telephone No. (714) 288-8181, as its representative, agent and attorney-in-fact for all matters related to the Tenant Improvement Work, including but not by way of limitation, for purposes of receiving notices, approving submittals and issuing requests for Changes, and Landlord shall be entitled to rely upon authorizations and directives of such person(s) as if given directly by Tenant. The foregoing authorization is intended to provide assurance to Landlord that it may rely upon the directives and decision making of the Tenant’s Construction Representative with respect to the Tenant Improvement Work and is not intended to limit or reduce Landlord’s
 
2 

 
right to reasonably rely upon any decisions or directives given by other officers or representatives of Tenant. Tenant may amend the designation of its Tenant’s Construction Representative(s) at any time upon delivery of written notice to Landlord.
 
II.                                    DISPUTE RESOLUTION
 
A.            All claims or disputes between Landlord and Tenant arising out of, or relating to, this Work Letter shall be decided by the JAMS/ENDISPUTE ( “JAMS” ), or its successor, with such arbitration to be held in Orange County, California, unless the parties mutually agree otherwise. Within 10 business days following submission to JAMS, JAMS shall designate three arbitrators and each party may, within 5 business days thereafter, veto one of the three persons so designated. If two different designated arbitrators have been vetoed, the third arbitrator shall hear and decide the matter. If less than 2 arbitrators are timely vetoed, JAMS shall select a single arbitrator from the non-vetoed arbitrators originally designated by JAMS, who shall hear and decide the matter. Any arbitration pursuant to this section shall be decided within 30 days of submission to JAMS. The decision of the arbitrator shall be final and binding on the parties. All costs associated with the arbitration shall be awarded to the prevailing party as determined by the arbitrator.
 
B.            Notice of the demand for arbitration by either party to the Work Letter shall be filed in writing with the other party to the Work Letter and with JAMS and shall be made within a reasonable time after the dispute has arisen. The award rendered by the arbitrator shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof. Except by written consent of the person or entity sought to be joined, no arbitration arising out of or relating to this Work Letter shall include, by consolidation, joinder or in any other manner, any person or entity not a party to the Work Letter unless (1) such person or entity is substantially involved in a common question of fact or law, (2) the presence of such person or entity is required if complete relief is to be accorded in the arbitration, or (3) the interest or responsibility of such person or entity in the matter is not insubstantial.
 
C.            The agreement herein among the parties to arbitrate shall be specifically enforceable under prevailing law. The agreement to arbitrate hereunder shall apply only to disputes arising out of, or relating to, this Work Letter, and shall not apply to other matters of dispute under the Lease except as may be expressly provided in the Lease.
 
3 

 
Tenant Improvement / Interior Construction Outline Specifications
 
(By Tenant/Tenant Allowance)

TENANT STANDARD GENERAL OFFICE:	CARPET	
	Direct glue, from one of the following options:	
 	Designweave - Z6354 Tempest Esq.:	Designweave - Z6356 Techno:	
 	a) 553 Steel Wool	a) 336 Lido	
 	b) 773 Melba Toast	b) 252 Topaz	
 	c) 575 Silver Smoke	c) 518 Night Sky	
 	d) 535 Dolphin	d) 997 Silver Plum	
 	e) 454 Denim	e) 496 Galactic	
 	 	 	
 	VINYL COMPOSITION TILE (VCT)	
 	12x12 VCT Armstrong Standard Excelon, from the following options:	
 	a) 51803 Pearl White	c) 51908 Pewter	
 	b) 51899 Cool White	d) 51899 Cool White	
 	 	
 	PAINT / WALLS	
 	5/8” gypsum drywall on 2-1/2” x 25 ga. metal studs, floor to ceiling construction, no walls shall penetrate the grid unless required by code. All walls shall be straight, and parallel to building perimeter walls. All offices and rooms shall be constructed of a standard size and tangent to a building shell or core wall. Paint finish, one standard color to be Benjamin Moore AC-40, Glacier White, flat finish	
 	 	
 	BASE	
 	2-1/2”Burke rubber base color: Pearl 137P, straight at cut pile carpet, coved at resilient flooring and loop carpet.	
 	 	
 	RUBBER TRANSITION STRIP	
 	Transition strip between carpet and resilient flooring to be Burke #150, color: to match adjacent V.C.T.	
 	 	
 	PLASTIC LAMINATE	
 	Plastic laminate color at millwork to be Nevamar “Smoky White”, Textured #S-7-27T.	
 	 	
 	CEILING	
 	2x4 USG Radar Illusions #2842 grid and scored tile on 9/16” T-bar grid. Continuous grid throughout.	
 	 	
 	PERIMETER WALLS	
 	Furring, 25 ga. metal studs with 5/8” gypsum drywall, with batt insulation.	
 	 	
 	LIGHTING	
 	2X4 fluorescent, 3-lamp energy saving ballast, 18-cell parabolic lens fixture.	
 	 	
 	DOORS	
 	1-3/4” solid core, 3”-0” x 8’-10”, plain sliced white oak, Western Integrated clear anodized aluminum frames, Schlage “D” series “Sparta” latchset hardware, dull chrome finish.	
 	 	
 	OFFICE SIDELITES	
 	All interior offices to have sidelite glazing adjacent to office entry door. 2’ wide x door height, Western Integrated clear anodized aluminum frame integral to door frame with clear tempered glass.	
 
Schedule I
 
1 

 

TENANT STANDARD GENERAL OFFICE (CONTINUED):	WINDOW COVERINGS
Vertical blinds: Mariak Industries PVC blinds at building perimeter windows, Model M-3000, Color:
Light Grey.	
 	 	
TENANT STANDARD MECHANICAL:	HVAC
Interior and Exterior zone VAV boxes shall be connected to the main supply air loop. Exterior zone VAV boxes shall be provided with single-row hot water reheat coil.	
 	 	
 	Air distribution downstream of VAV boxes shall be provided complete with ductwork, 2’x2’ perforated face ceiling diffusers, 2’x2’ perforated return air grilles and air balance.	
 	 	
 	Pneumatic thermostats with blank white cover shall be provided for each zone. Thermostats shall be located adjacent to light switch at 48” above finished floor.	
 	 	
 	Exterior comer spaces with more than one exposure shall be provided with a separate zone.
 
Conference Room (or Training Room) 20’x13’ or larger shall be provided with a separate zone.
 
Exterior zone shall be limited to a single exposure and a maximum of 750 to 1000 square feet.
 
Interior zone shall be limited to a maximum of 2000 square feet.	
 	 	
 	FIRE PROTECTION	
 	Pendant satin chrome plated, recessed heads, adjustable canopies, minimum K factor to be 5.62, located at center of scored ceiling tile. Ceiling drops from shell supply loop.	
 	 	
TENANT STANDARD ELECTRICAL:	ELECTRICAL SYSTEM	
 	277/480 volt, three phase, four wire metered distribution section added to main service at Main Electrical Room.	
 	 	
 	Electrical tenant distribution capacity suitable for 22 watts per s.f. to accommodate HVAC, lighting, data processing, computer loads and convenience outlets.	
 	 	
 	Tenant Electrical Room, located within the lease space, to include 270/480 volt and 120/208 volt panels, transformer, lighting control panel, as required.	
 	 	
 	LIGHTING	
 	Double switch per Title 24, paired in double gang box, Leviton “Decora” white plastic coverplate, 42” AFF to switch centerline. Provide occupancy sensors as required by code. 2x4 fluorescent light fixtures, 3-lamp energy saving ballast, 18-cell parabolic lens fixture based upon one (1) fixture per 80 square feet.	
 	 	
 	Exit signs: Internally illuminated, white sign face with green text.	
 
2 

 

TENANT STANDARD ELECTRICAL (CONTINUED):	OUTLETS	
 	Power: 15-amp 125-volt specification grade duplex receptacle mounted vertically, 18” AFF to centerline, white plastic coverplate. Feeds to systems furniture by Tenant to be via walls, furred columns or ceiling J-box. Power poles and furniture by Tenant. Ratio of one (1) feed per eight (8) workstations. Assumes four (4) circuits, eight (8) wire configuration of systems furniture.	
 	 	
 	Telephone/Data: Single gang box with mud ring and pull string, mounted vertically, 18” AFF to centerline, Cover plate by telephone and/or cabling company. Teflon cable by tenant.	
 	 	
 	One (1) empty 2” conduit to be routed from Tenant’s Server Room, 4x8 backboard to building main telephone backboard.	
 	 	
TENANT STANDARD WAREHOUSE/SHIPPING AND RECEIVING:	 
FLOORS
Sealed concrete.	
 	 	
 	WALLS	
 	5/8” gypsum wallboard standard partition. Paint to match Benjamin Moore AC-40 Glacier White; rated partition at occupancy separation as required by code.	
 	 	
 	CEILING	
 	Exposed structure, non-painted.	
 	 	
 	WINDOWS	
 	None	
 	 	
 	ACCESS	
 	7’-6” H x 7’-6” W glazed service doors. Glazing is bronze reflective glass.	
 	 	
 	HVAC	
 	None	
 	 	
 	PLUMBING	
 	Single accommodation restroom, if required.	
 	 	
 	Sheet vinyl flooring to be Armstrong Classic Corlon “Seagate” #86526 Oyster, with Smooth White FRP panel wainscot to 48” high. Painted walls and ceiling to be Benjamin Moore AC-40 Glacier White, semi-gloss finish.	
 	 	
 	LIGHTING	
 	Chain hung florescent strip fixtures.	
 	 	
 	OTHER ELECTRICAL	
 	Convenience outlets; surface mounted at exposed concrete walls.	
 	 	
 	SECURITY	
 	Lockable doors.	
 
3 

 

EXHIBIT Y
 
1 

Exhibit 10.9
 
FIRST AMENDMENT TO LEASE
 
I.             PARTIES AND DATE.
 
This First Amendment to Lease (the “Amendment” ) dated March 29, 2013, is by and between THE IRVINE COMPANY LLC, a Delaware limited liability company ( “ Landlord ” ), and BOOT BARN, INC., a Delaware corporation (“ Tenant ”).
 
II.             RECITALS.
 
On June 25, 2010, Landlord and Tenant entered into a lease ( “Lease” ) for space in a building located at 15776 Laguna Canyon Road, Irvine, California (herein referred to as the “15776 Laguna Canyon Premises” ).
 
Landlord and Tenant each desire to modify the Lease to add approximately 22,347 rentable square feet of space in a building located at 15770 Laguna Canyon Road, Irvine, California, which space is more particularly described on EXHIBIT A attached to this Amendment and herein referred to as the “15770 Laguna Canyon Premises” , to adjust the Basic Rent and to make such other modifications as are set forth in “III.  MODIFICATIONS” next below.
 
Ill.            MODIFICATIONS.
 
A     Building/Premises .  From and after the Commencement Date for the 15770 Laguna Canyon Premises, all references to the “Building” in the Lease shall be amended to refer to the two (2) buildings located at 15770 Laguna Canyon Road (the “15770 Laguna Canyon Building” ) and at 15776 Laguna Canyon Road (the “15776 Laguna Canyon Building” ),   Irvine, California, either collectively or individually as the context may reasonably require, and the 15770 Laguna Canyon Premises together with the 15776 Laguna Canyon Premises shall collectively constitute the “Premises” under the Lease.
 
B.    Basic Lease Provisions .  The Basic Lease Provisions are hereby amended as follows:
 
1.             Effective as of the Commencement Date for the 15770 Laguna Canyon Premises, Item 2 shall be deleted in its entirety and substituted therefor shall be the following:
 
“1.  Premises: The Premises are more particularly described in Section 2.1.
 
Address of Buildings: 15770 Laguna Canyon, Suite 150, Irvine, CA
15776 Laguna Canyon, Irvine, CA “
 
2.             Item 4 is hereby amended by adding the following:
 
“Commencement Date for the 15770 Laguna Canyon Premises: June 1, 2013”
 
3.             Item 5 is hereby amended by adding the following:
 
“5.  Lease Term as to the 15770 Laguna Canyon Premises: The Term of the Lease as to the 15770 Laguna Canyon Premises shall expire concurrently with the Expiration Date of the Lease, that is at midnight on September 30, 2015.”

 
4.             Item 6 is hereby amended by adding the following:
 
“Basic Rent for the 15770 Laguna Canyon Premises:

Months of Term 
 or Period 
 for the 15770 Laguna 
 Canyon Premises	 	Monthly Rate Per 
 Rentable Square 
 Foot 
 for the 15770 
 Laguna Canyon 
 Premises	 	Monthly Basic Rent 
 (rounded to the
nearest dollar) 
 for the 15770 Laguna 
 Canyon Premises	 	
Commencement Date for the 15770 Laguna Canyon Premises — May 31, 2014	 	$	.70	 	$	15,643.00	 	
June 1, 2014 — May 31, 2015	 	$	.73	 	$	16,313.00	 	
June 1, 2015 — Expiration Date	 	$	.76	 	$	16,984.00	 	
 
5.             Effective as of the Commencement Date for the 15770 Laguna Canyon Premises, Item 8 shall be deleted in its entirety and substituted therefor shall be the following:
 
“8.  Floor Area of Premises: Approximately 93,069 rentable square feet, comprised of the following:
 
15770 Laguna Canyon Premises — approximately 22,347 rentable square feet
 
15776 Laguna Canyon Premises — approximately 70,722 rentable square feet
 
Floor Area of the 15770 Laguna Canyon Building — approximately 50,562 rentable square feet
 
Floor Area of the 15776 Laguna Canyon Building — approximately 70,722 rentable square feet”
 
6.             Item 9 is hereby deleted in its entirety and substituted therefor shall be the following:
 
“9.  Security Deposit: $70,804.00”
 
7.             Effective as of the Commencement Date for the 15770 Laguna Canyon Premises, Item 11 shall be deleted in its entirety and substituted therefor shall be the following:
 
“11.  Vehicle Parking Spaces: 227 unreserved vehicle parking spaces in accordance with the provisions set forth in Exhibit F to the Lease”
 
C.  Right to Extend the Lease .  The provisions of Section 1 of Exhibit G to the Lease, entitled “Right to Extend this Lease”, shall remain in full force and effect and exercisable by Tenant during the Term of the Lease, but as to the 15770 Laguna Canyon Premises and the 15776 Laguna Canyon Premises, collectively.
 
D.  Landlord’s Responsibilities .  Effective as of the Commencement Date for the 15770 Laguna Canyon Premises, Section 2 of Exhibit G attached to the Lease, entitled “Landlord’s Responsibilities”, shall be binding as to the 15770 Laguna Canyon Premises and Building, except that the reference to the “Commencement Date” of the Lease in Subsection 2(a) of Exhibit G shall be revised to the “Commencement Date for the 15770 Laguna Canyon Premises”.
 
2 

 
E.  Operating Expenses for the 15770 Laguna Canyon Premises .  Effective as of the Commencement Date for the 15770 Laguna Canyon Premises, the definition of “Tenant’s Share” in Section (a) of Exhibit B attached to the Lease shall be amended and restated as follows:
 
“The Term “Tenant’s Share” means 100% of the Operating Expenses reasonably determined by Landlord to benefit or relate substantially to the 15776 Laguna Canyon Building, plus that portion of any Operating Expenses determined by multiplying the cost of such item by a fraction, the numerator of which is the Floor Area of the Premises and the denominator of which is the total rentable square footage, as reasonably determined from time to time by Landlord, of all or some of the buildings in the Project for expenses reasonably determined by Landlord to benefit or relate substantially to all of some of the buildings in the Project rather than to the 15776 Laguna Canyon Building or any other specific building.”
 
F.  Security Deposit .  Concurrently with Tenant’s delivery of this Amendment, Tenant shall deliver the sum of $18,682.00 to Landlord, which sum shall be added to the Security Deposit presently being held by Landlord in accordance with Section 4.3 of the Lease.
 
G.  Signs .  Effective as of the Commencement Date for the 15770 Laguna Canyon Premises, the first sentence of Section 5.2 of the Lease shall be amended and restated as follows:
 
“Provided Tenant continues to occupy the entire Premises, Tenant shall have the non-exclusive right to 2 exterior “building top” signs on the 15776 Laguna Canyon Building and one (1) exterior “building top” sign on the 15770 Laguna Canyon Building for Tenant’s name and graphics in locations designated by Landlord, subject to Landlord’s right of prior approval (which shall not be unreasonably withheld or delayed), that such exterior signage is in compliance with the Signage Criteria (defined below).”
 
H.  Termination of Existing Month-to-Month Lease .  Landlord and Tenant are currently parties to a month-to-month lease for a portion of the 15770 Laguna Canyon Premises (the “Existing Lease”).  Unless earlier terminated by either of the parties, the parties agree that the Existing Lease shall terminate effective as of the day preceding the Commencement Date for the 15770 Laguna Canyon Premises (the “Termination Date”).  Such termination, however, shall not relieve Tenant of: (a) any rental obligations (or obligations for other charges) owed by Tenant, or other obligations required of Tenant, as are set forth in the Existing Lease which accrue prior to the Termination Date, and (b) any indemnity, hold harmless or other obligation under the Existing Lease which is reasonably intended to survive the expiration or early termination of the Existing Lease.
 
I.  Early Occupancy .  Promptly following the date of the full execution and delivery of this Amendment (the “Early Occupancy Date” ), Landlord agrees that Tenant shall be permitted to store its document(s) only in that portion of the 15770 Laguna Canyon Premises shown on Exhibit A-1 attached to this Amendment (the “Early Occupancy Premises” ), subject to the following terms and conditions: (a) concurrently with the execution and delivery of this Amendment, and prior to any such early occupancy by Tenant, Tenant shall deliver to Landlord the required insurance certificates for its occupancy of the Early Occupancy Premises; and (b) Tenant’s occupancy of the Early Occupancy Premises prior to the Commencement Date for the 15770 Laguna Canyon Premises pursuant to this Section shall be subject to all of the covenants and conditions on Tenant’s part contained in the Lease (including, without limitation, the covenants contained in Sections 5.3, 6.1, 7.1, 7.3, 7.4, 10.1 and 10.  3 of the Lease), except for the obligation to pay Basic Rent and Operating Expenses for the 15770 Laguna Canyon Premises.
 
J.  Specified Alterations .  Landlord hereby conditionally approves the demolition of the “clean room/lab area” portion of the 15770 Laguna Canyon Premises, as generally shown on Exhibit A-1 attached hereto and the conversion of such area to warehouse space (the “Specified Alterations” ), provided that such Specified Alterations shall be constructed at Tenant’s sole cost and expense in accordance with all City-required permit(s) therefor, and that Tenant shall forward architectural plans for such Specified Alterations to Landlord for approval prior to the commencement of construction thereof.  Landlord agrees that Tenant shall have no obligation to remove or restore the Specified Alterations at the Expiration Date or sooner termination of the Lease.  Except as otherwise
 
3 

 
specifically provided in this Section, Tenant’s construction of the Specified Alterations shall be subject to the terms and conditions of Section 7.3 of the Lease.
 
K.  Broker’s Commission .  Article XVIII of the Lease is amended to provide that the parties recognize Irvine Realty Company ( “Landlord’s Broker’’ ) as the broker representing Landlord in connection with the negotiation of this Amendment, and that no broker has represented Tenant in connection with the negotiation of this Amendment.  Landlord shall be responsible for the payment of a brokerage commission to Landlord’s Broker.  The warranty and indemnity provisions of Article XVIII of the Lease, as amended hereby, shall be binding and enforceable in connection with the negotiation of this Amendment.
 
L.  Acceptance of the 15770 Laguna Canyon Premises .  Tenant acknowledges that the lease of the 15770 Laguna Canyon Premises pursuant to this Amendment shall be subject to the acknowledgements set forth in the initial two (2) sentences of Section 2.2 of the Lease, and shall be on an “as-is” basis without further obligation on Landlord’s part as to improvements whatsoever.
 
IV.                                GENERAL.
 
A.  Effect of Amendments .  The Lease shall remain in full force and effect except to the extent that it is modified by this Amendment.
 
B.  Entire Agreement .  This Amendment embodies the entire understanding between Landlord and Tenant with respect to the modifications set forth in “III.  MODIFICATIONS” above and can be changed only by a writing signed by Landlord and Tenant.
 
C.  Counterparts .  If this Amendment is executed in counterparts, each is hereby declared to be an original; all, however, shall constitute but one and the same amendment. In any action or proceeding, any photographic, photostatic, or other copy of this Amendment may be introduced into evidence without foundation.
 
D.  Defined Terms .  All words commencing with initial capital letters in this Amendment and defined in the Lease shall have the same meaning in this Amendment as in the Lease, unless they are otherwise defined in this Amendment.
 
E.  Corporate and Partnership Authority .  If Tenant is a corporation or partnership, or is comprised of either or both of them, each individual executing this Amendment for the corporation or partnership represents that he or she is duly authorized to execute and deliver this Amendment on behalf of the corporation or partnership and that this Amendment is binding upon the corporation or partnership in accordance with its terms.
 
V.                                     EXECUTION
 
Landlord and Tenant executed this Amendment on the date as set forth in “1.  PARTIES AND DATE.” above.

LANDLORD:	 	TENANT:	
 	 	 	
THE IRVINE COMPANY LLC	 	BOOT BARN, INC.	
a Delaware limited li ab ility company	 	a Delaware corporation	
 	 	 	
By	/s/ Steven M.  Case	 	By	/s/ James Conroy	
 	Steven M.  Case, Executive Vice President	 	Name	James Conroy	
 	Office Properties	 	Title	CEO	

By	/s/ Michael T.  Bennett	 	By	/s/ Paul Iacono	
 	Michael T.  Bennett, Senior Vice President	 	Name	Paul Iacono	
 	Operations, Office Properties	 	Title	CFO	

 
4 

 
EXHIBIT A
 
15770 Laguna Canyon

 
1 

 
EXHIBIT A-1
 
15770 Laguna Canyon, Suite 150

 
1 

Exhibit 10.10

SECOND AMENDED AND RESTATED REVOLVING CREDIT
 
AND
 
SECURITY AGREEMENT
 
PNC BANK, NATIONAL ASSOCIATION
(AS A LENDER AND AS AGENT)
 
AND
 
THE OTHER LENDERS FROM TIME TO TIME PARTY HERETO
 
WITH
 
BOOT BARN, INC.
(AS BORROWER)
 
AND
 
BOOT BARN HOLDING CORPORATION,
(AS PARENT HOLDCO)
 
MAY 31, 2013

 
TABLE OF CONTENTS

 	 	Page	
 	 	 	
I.	DEFINITIONS	2	
 	 	 	
 	1.1	Accounting Terms	2	
 	1.2	General Terms	3	
 	1.3	Uniform Commercial Code Terms	43	
 	1.4	Certain Matters of Construction	43	
 	 	 	
II.	ADVANCES, PAYMENTS	44	
 	 	 	
 	2.1	Revolving Advances	44	
 	2.2	Procedure for Revolving Advances Borrowing	45	
 	2.3	Disbursement of Advance Proceeds	47	
 	2.4	[Reserved]	47	
 	2.5	Maximum Advances	47	
 	2.6	Repayment of Advances	47	
 	2.7	Repayment of Excess Advances	48	
 	2.8	Statement of Account	48	
 	2.9	Letters of Credit	48	
 	2.10	Issuance of Letters of Credit	49	
 	2.11	Requirements For Issuance of Letters of Credit	49	
 	2.12	Disbursements, Reimbursement	50	
 	2.13	Repayment of Participation Advances	51	
 	2.14	Documentation	51	
 	2.15	Determination to Honor Drawing Request	52	
 	2.16	Nature of Participation and Reimbursement Obligations	52	
 	2.17	Indemnity	53	
 	2.18	Liability for Acts and Omissions	53	
 	2.19	Additional Payments	55	
 	2.20	Manner of Borrowing and Payment	55	
 	2.21	Reduction of Maximum Revolving Advance Amount	56	
 	2.22	Use of Proceeds	57	
 	2.23	Defaulting Lender	57	
 	2.24	Joint and Several Liability, Waivers, etc.	59	
 	2.25	Increase in Maximum Revolving Advance Amount	62	
 	 	 	 	
III.	INTEREST AND FEES	64	
 	 	 	 	
 	3.1	Interest	64	
 	3.2	Letter of Credit Fees	65	
 	3.3	Unused Facility Fee	66	
 	3.4	Fee Letter	66	
 	3.5	Computation of Interest and Fees	66	
 	3.6	Maximum Charges	66	
 	3.7	Increased Costs	66	
 
i 

 
TABLE OF CONTENTS
(continued)

 	 	Page	
 	 	 	 	
 	3.8	Basis For Determining Interest Rate Inadequate or Unfair	67	
 	3.9	Capital Adequacy	68	
 	3.10	Taxes	68	
 	3.11	Mitigation; Replacement of Lenders	71	
 	 	 	 	
IV.	COLLATERAL: GENERAL TERMS	72	
 	 	 	 	
 	4.1	Security Interest in the Collateral	72	
 	4.2	Perfection of Security Interest	73	
 	4.3	[Reserved]	73	
 	4.4	Preservation of Collateral	73	
 	4.5	Ownership of Collateral; Liens	74	
 	4.6	Defense of Agent’s and Lenders’ Interests	74	
 	4.7	Books and Records	75	
 	4.8	Financial Disclosure	75	
 	4.9	Compliance with Laws	75	
 	4.10	Inspection of Premises	76	
 	4.11	Insurance	76	
 	4.12	Failure to Pay Insurance	77	
 	4.13	Payment of Taxes	77	
 	4.14	Payment of Leasehold Obligations	77	
 	4.15	Receivables	77	
 	4.16	Inventory	81	
 	4.17	Maintenance of Equipment	81	
 	4.18	Exculpation of Liability	82	
 	4.19	Environmental Matters	82	
 	4.20	Provisions with Respect to Investment Property	83	
 	 	 	
V.	REPRESENTATIONS AND WARRANTIES	85	
 	 	 	 	
 	5.1	Authority	85	
 	5.2	Formation and Qualification; Subsidiaries; Compliance with Laws	86	
 	5.3	Survival of Representations and Warranties	86	
 	5.4	Tax Returns	86	
 	5.5	Financial Statements and Projections	87	
 	5.6	Entity Name	87	
 	5.7	O.S.H.A.; Environmental Compliance; Flood Laws	87	
 	5.8	Solvency; No Litigation, Violation, Indebtedness or Default	88	
 	5.9	Patents, Trademarks, Copyrights and Licenses	90	
 	5.10	Licenses and Permits	91	
 	5.11	Default of Indebtedness	91	
 	5.12	No Default	91	
 	5.13	No Burdensome Restrictions	91	
 	5.14	Labor Matters	91	
 
ii 

 
TABLE OF CONTENTS
(continued)

 	 	Page	
 	 	 	 	
 	5.15	Margin Regulations	91	
 	5.16	[Reserved]	91	
 	5.17	Disclosure	91	
 	5.18	Swaps	92	
 	5.19	Conflicting Agreements	92	
 	5.20	Application of Certain Laws and Regulations	92	
 	5.21	Business and Property of Borrower	92	
 	5.22	Section 20 Subsidiaries	92	
 	5.23	No Brokers or Agents	92	
 	5.24	[Reserved]	92	
 	5.25	Federal Securities Laws	92	
 	5.26	Collateral	92	
 	5.27	[Reserved]	93	
 	5.28	Ventures, Subsidiaries and Affiliates; Outstanding Stock	93	
 	5.29	Government Regulation	93	
 	5.30	Other Environmental Matters	93	
 	5.31	Insurance	94	
 	5.32	[Reserved]	94	
 	5.33	Transaction Documents	94	
 	 	 	 	
VI.	AFFIRMATIVE COVENANTS	94	
 	 	 	
 	6.1	[Reserved]	94	
 	6.2	Conduct of Business and Maintenance of Existence and Assets	94	
 	6.3	[Reserved]	95	
 	6.4	Government Receivables	95	
 	6.5	Financial Covenant	95	
 	6.6	Execution of Supplemental Instruments	95	
 	6.7	Payment of Indebtedness	95	
 	6.8	Standards of Financial Statements	95	
 	6.9	[Reserved]	95	
 	6.10	Intellectual Property	96	
 	6.11	Keepwell	97	
 	6.12	Lien Waiver Agreements	97	
 	6.13	Exercise of Rights under Related Transaction Documents	98	
 	 	 	 	
VII.	NEGATIVE COVENANTS	98	
 	 	 	 	
 	7.1	Merger, Consolidation, Acquisition and Disposition of Assets	98	
 	7.2	Creation of Liens	98	
 	7.3	Guarantees	98	
 	7.4	Investments	98	
 	7.5	Loans	99	
 	7.6	[Reserved]	99	
 
iii 

 
TABLE OF CONTENTS
(continued)

 	 	Page	
 	 	 	 	
 	7.7	Restricted Payments	99	
 	7.8	Indebtedness	100	
 	7.9	Nature of Business	100	
 	7.10	Transactions with Affiliates	101	
 	7.11	Management Fees	101	
 	7.12	Subsidiaries	102	
 	7.13	Fiscal Year and Accounting Changes; Change of Jurisdiction or Corporate Name	102	
 	7.14	Pledge of Credit	103	
 	7.15	Amendments of Certain Documents	103	
 	7.16	Compliance with ERISA	103	
 	7.17	Payment of Indebtedness	104	
 	7.18	[Reserved]	104	
 	7.19	Membership/Partnership Interests	104	
 	7.20	Bank Accounts	104	
 	7.21	Limitation on Issuance of Equity Interests	104	
 	7.22	Limitations on Negative Pledges	105	
 	7.23	[Reserved]	105	
 	7.24	Capital Structure and Business	106	
 	7.25	[Reserved]	106	
 	7.26	Sale-Leasebacks	106	
 	7.27	No Impairment of Intercompany Transfers	106	
 	7.28	No Speculative Transactions	106	
 	 	 	 	
VIII.	CONDITIONS PRECEDENT	106	
 	 	 	 	
 	8.1	Conditions to Initial Advances	106	
 	8.2	Conditions to Each Advance	109	
 	 	 	 	
IX.	INFORMATION AS TO THE LOAN PARTIES	110	
 	 	 	 	
 	9.1	Disclosure of Material Matters	110	
 	9.2	Schedules	111	
 	9.3	Environmental Matters	111	
 	9.4	Litigation; Violations	112	
 	9.5	Material Occurrences	112	
 	9.6	Government Receivables	113	
 	9.7	Annual Financial Statements	113	
 	9.8	Quarterly Financial Statements	114	
 	9.9	Monthly Financial Statements	114	
 	9.10	Additional Information	114	
 	9.11	Projected Operating Budget	114	
 	9.12	Variances from Operating Budget and Prior Financial Statement Comparisons	115	
 
iv 

 
TABLE OF CONTENTS
(continued)

 	 	Page	
 	 	 	 	
 	9.13	Notice of Suits, Adverse Events	115	
 	9.14	ERISA Notices and Requests	115	
 	9.15	Federal Securities Laws	116	
 	9.16	IP Notices	116	
 	9.17	Notices Relating to Related Transactions	116	
 	9.18	Additional Documents	116	
 	 	 	 	
X.	EVENTS OF DEFAULT	116	
 	 	 	 	
 	10.1	Nonpayment	116	
 	10.2	Breach of Representation	116	
 	10.3	Financial Information	117	
 	10.4	Judicial Actions	117	
 	10.5	Noncompliance	117	
 	10.6	Judgments	119	
 	10.7	Bankruptcy	119	
 	10.8	Inability to Pay	119	
 	10.9	Cash Management	119	
 	10.10	Restraint of Business Activities	119	
 	10.11	Lien Priority	119	
 	10.12	Cross Default	119	
 	10.13	Breach of Guaranty	120	
 	10.14	Change of Control	120	
 	10.15	Invalidity	120	
 	10.16	Licenses	120	
 	10.17	Seizures	121	
 	10.18	Operations	121	
 	10.19	Pension Plans	121	
 	10.20	Invalidity or Breach of Certain Agreements	121	
 	10.21	Material Assets	121	
 	10.22	Reportable Compliance Event	121	
 	 	 	 	
XI.	LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT	121	
 	 	 	 	
 	11.1	Rights and Remedies	121	
 	11.2	Agent’s Discretion	123	
 	11.3	Setoff	123	
 	11.4	Rights and Remedies not Exclusive	123	
 	11.5	Allocation of Payments After Event of Default	124	
 	 	 	 	
XII.	WAIVERS AND JUDICIAL PROCEEDINGS	125	
 	 	 	 	
 	12.1	Waiver of Notice	125	
 	12.2	Delay	125	
 	12.3	Jury Waiver	125	
 
v 

 
TABLE OF CONTENTS
(continued)

 	 	Page	
 	 	 	 	
XIII.	EFFECTIVE DATE AND TERMINATION	125	
 	 	 	 	
 	13.1	Term	125	
 	13.2	Termination	126	
 	 	 	 	
XIV.	REGARDING AGENT	126	
 	 	 	 	
 	14.1	Appointment	126	
 	14.2	Nature of Duties	127	
 	14.3	Lack of Reliance on Agent and Resignation	127	
 	14.4	Certain Rights of Agent	128	
 	14.5	Reliance	128	
 	14.6	Notice of Default	128	
 	14.7	Indemnification	128	
 	14.8	Agent in its Individual Capacity	129	
 	14.9	Delivery of Documents	129	
 	14.10	Borrower’s Undertaking to Agent	129	
 	14.11	No Reliance on Agent’s Customer Identification Program	129	
 	14.12	Other Agreements	129	
 	14.13	Collateral Matters	130	
 	 	 	 	
XV.	MISCELLANEOUS	131	
 	 	 	 	
 	15.1	Governing Law	131	
 	15.2	Entire Understanding	131	
 	15.3	Successors and Assigns; Participations; New Lenders	134	
 	15.4	Application of Payments	136	
 	15.5	Indemnity	136	
 	15.6	Notice	137	
 	15.7	Survival	139	
 	15.8	Severability	139	
 	15.9	Expenses	139	
 	15.10	Injunctive Relief	140	
 	15.11	Consequential Damages	140	
 	15.12	Captions	140	
 	15.13	Counterparts; Facsimile Signatures	140	
 	15.14	Construction	140	
 	15.15	Confidentiality; Sharing Information	140	
 	15.16	Publicity	141	
 	15.17	Certifications From Banks and Participants; USA PATRIOT Act	141	
 	15.18	Anti-Money Laundering/International Trade Law Compliance	142	
 	15.19	Intercreditor Agreement	142	
 
vi 

 
List of Exhibits and Schedules

Exhibits	 	 	
 	 	 	
Exhibit 1.2(a)	 	Compliance Certificate	
Exhibit 1.2(b)	 	Borrowing Base Certificate	
Exhibit 2.1	 	Revolving Credit Note	
Exhibit 6.10(a)	 	Intellectual Property Security Agreement	
Exhibit 7.12	 	Joinder Agreement	
Exhibit 8.1(p)	 	Intercreditor Agreement	
Exhibit 9.3	 	Environmental Compliance Certificate	
Exhibit 15.3	 	Commitment Transfer Supplement	
 	 	 	
Schedules	 	 	
 	 	 	
Schedule 1.2(a)	 	Permitted Encumbrances	
Schedule 1.2(b)	 	Permitted Holders	
Schedule 4.5	 	Equipment and Inventory Location	
Schedule 4.15(h)(1)	 	Blocked Account Banks	
Schedule 4.15(h)(2)	 	Deposit and Investment Accounts	
Schedule 5.1	 	Consents	
Schedule 5.2(a)	 	States of Qualification and Good Standing	
Schedule 5.2(b)	 	Subsidiaries	
Schedule 5.4	 	Taxes and Federal Tax Identification Number	
Schedule 5.6	 	Prior Names	
Schedule 5.8(b)	 	Litigation and Indebtedness for Borrowed Money	
Schedule 5.8(d)	 	Plans	
Schedule 5.9	 	Intellectual Property, Source Code Escrow Agreements	
Schedule 5.10	 	Licenses and Permits	
Schedule 5.14	 	Labor Disputes	
Schedule 5.28	 	Ventures, Subsidiaries and Affiliates; Outstanding Stock	
Schedule 5.30	 	Environmental Matters	
Schedule 5.31	 	Insurance	
Schedule 7.8	 	Indebtedness	
Schedule 7.10	 	Agreements with Affiliates	
Schedule 7.11	 	Management Fees	
Schedule 8.1(a)	 	Closing Date Loan Documents	
 
vii 

SECOND AMENDED AND RESTATED REVOLVING CREDIT
AND SECURITY AGREEMENT
 
This Second Amended and Restated Revolving Credit and Security Agreement, dated as of May 31, 2013, is entered into by and among BOOT BARN, INC., a corporation organized under the laws of the State of Delaware (“ Boot Barn ” and collectively with each other Person joined as a party to this Agreement as a “Borrower” in accordance with Section 7.12 hereof, and all of their respective permitted successors and assigns, “ Borrower ”), BOOT BARN HOLDING CORPORATION, a corporation organized under the laws of the State of Delaware (“ Parent Holdco ”), the financial institutions which are now or which hereafter become a party hereto (collectively, “ Lenders ” and individually, a “ Lender ”) and PNC BANK, NATIONAL ASSOCIATION (“ PNC ”), as agent for Lenders (PNC, in such capacity, “ Agent ”), with reference to the following facts:
 
RECITALS
 
A.                                     Borrower, Parent Holdco, Agent and Lenders are parties to that certain Amended and Restated Revolving Credit, Term Loan and Security Agreement dated as of December 12, 2011 (as amended prior to the date hereof, the “ Existing Credit Agreement ”), pursuant to which, among other things, the Lenders have extended to Borrower a revolving credit facility (including a subfacility for letters of credit) of up to $50,000,000 and made a term loan to Borrower in the original principal amount of $20,000,000 (the “ Existing Term Loan ”).
 
B.                                     Boot Barn, Baskins Acquisition Holdings, LLC (“ Baskins ”), the members of Baskins signatory thereto as Selling Members and CGP Baskins, LLC, as the Sellers’ Representative have entered into that certain Membership Interest Purchase Agreement, dated as of May 9, 2013 (as amended by (i) that certain First Amendment to Membership Interest Purchase Agreement, dated as of May 13, 2013, and (ii) that certain Second Amendment to Membership Interest Purchase Agreement, dated as of May 26, 2013, together with all schedules and exhibits thereto, the “ Purchase Agreement ”), pursuant to which Boot Barn intends to acquire all of the issued and outstanding Membership Interests (as defined in the Purchase Agreement) of Baskins (the “ Acquisition ”).
 
C.                                     Boot Barn and Parent Holdco have advised Agent that, concurrently with the consummation of the Acquisition, Borrower and Parent Holdco intend to enter into that certain Term Loan and Security Agreement, dated the date hereof (as amended, amended and restated, supplemented, or otherwise modified from time to time as permitted under this Agreement, the “ Term Loan Agreement ”), with the lenders party thereto (the “ Term Loan Lenders ”) Golub Capital, LLC, as agent for the Term Loan Lenders (in such capacity, and together with its successors and assigns in such capacity, the “ Term Loan Agent ”) and Golub Capital, LLC, as sole bookrunner, pursuant to which, among other things, the Term Loan Lenders will make a $100,000,000 term loan to Borrower (the “ Term Loan Facility ”).
 
D.                                     Boot Barn and Parent Holdco have requested that Agent and Lenders further amend and restate the Existing Credit Agreement to, among other things, (i) permit the Acquisition and the Term Loan Facility and (ii) convert the Existing Term Loan into Revolving
 
1 

 
Advances under this Agreement, which Agent and Lenders are willing to do on the terms and conditions set forth herein.
 
E.                                      The proceeds of the Advances under this Agreement and the proceeds of the Term Loan Facility will be used to (i) convert the outstanding balance of the Existing Term Loan into Advances under this Agreement, (ii) refinance certain existing indebtedness of Boot Barn and Baskins, (iii) provide a portion of the funds for the Acquisition, (iv) provide for working capital, Capital Expenditures, Permitted Acquisitions and for other general corporate purposes of Borrower, in each case to the extent not prohibited under this Agreement and (v) pay fees, costs and expenses in connection with the closing of the credit facility contemplated by this Agreement, the Term Loan Facility and the Acquisition (collectively, the “ Transactions ”).
 
F.                                       This Agreement shall amend, restate, replace and supersede (but shall not cause a novation of) the Existing Credit Agreement and hereinafter shall govern the terms and conditions under which Agent and Lenders shall provide credit facilities to Borrower.
 
G.                                     From and after the Closing Date, the Existing Term Loan, the “Revolving Advances,” the “Letters of Credit,” and all other “Obligations” outstanding under (and as all such terms are, as applicable, defined in) the Existing Credit Agreement as of the moment immediately prior to the Closing Date shall be deemed to be outstanding under this Agreement and shall constitute Revolving Advances, Letters of Credit and Obligations, as applicable, hereunder.
 
NOW, THEREFORE, in consideration of the above premises and the mutual covenants and undertakings herein contained, Borrower, Parent Holdco, Lenders and Agent hereby agree as follows:
 
I.                                         DEFINITIONS.
 
1.1                                Accounting Terms .  As used in this Agreement, the Other Documents or any certificate, report or other document made or delivered pursuant to this Agreement, accounting terms not defined in Section 1.2 or elsewhere in this Agreement and accounting terms partly defined in Section 1.2 to the extent not defined, shall have the respective meanings given to them under GAAP; provided , however , that if Borrower notifies Agent that Borrower requests an amendment to Section 6.3 to eliminate or appropriately adjust for the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if Agent notifies Borrower that Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such provision is amended to eliminate or adjust for the effect of any such change in accordance herewith.  Notwithstanding the foregoing, for purposes of calculating the financial covenants and the covenants set forth in this Agreement, (a) no effect shall be given to FAS 141R or any subsequent codification thereof, and (b) any change to GAAP requiring leases which were previously classified as operating leases to be treated as capitalized leases shall be ignored for the purpose of determining Indebtedness hereunder and such leases shall continue to
 
2 

 
be treated as operating leases for such purposes consistent with GAAP as in effect on the date hereof.
 
1.2                                General Terms .  For the purpose of this Agreement, the following terms shall have the following respective meanings:
 
“ Accountants ” shall have the meaning set forth in Section 9.7 hereof.
 
“ Acquisition ” shall have the meaning set forth in the recitals to this Agreement.
 
“ Advance Rates ” shall mean, collectively, the Receivables Advance Rate and the Inventory Advance Rate.
 
“ Advances ” shall mean and include the Revolving Advances and the Letters of Credit.
 
“ Affiliate ” of any Person shall mean (a) any Person which, directly or indirectly, is in control of, is controlled by, or is under common control with such Person, or (b) any Person who is a director, managing member, general partner or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person described in clause (a) above. For purposes of this definition, control of a Person shall mean the power, direct or indirect, (x) to vote 5% or more of the Equity Interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for any such Person, or (y) to direct or cause the direction of the management and policies of such Person whether by ownership of Equity Interests, contract or otherwise. Notwithstanding the foregoing, the term “Affiliate” shall exclude Agent, any Lender, Freeman Spogli, and each portfolio company of Freeman Spogli (other than Borrower, Parent Holdco or any other Loan Party) or any purchaser of subordinated debt.
 
“ Agent ” shall have the meaning set forth in the preamble to this Agreement and shall include its successors and assigns.
 
“ Agreement ” shall mean this Second Amended and Restated Revolving Credit and Security Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.
 
“ Alternate Base Rate ” shall mean, for any day, a rate per annum equal to the highest of (i) the Base Rate in effect on such day, (ii) the Federal Funds Open Rate in effect on such day plus 1/2 of 1% or (iii) the Daily LIBOR Rate plus 1%. For purposes of this definition, “ Daily LIBOR Rate ” shall mean, for any day, the rate per annum determined by Agent by dividing (x) the Published Rate by (y) a number equal to 1.00 minus the percentage prescribed by the Federal Reserve for determining the maximum reserve requirements with respect to any eurocurrency funding by banks on such day. For the purposes of this definition, “ Published Rate ” shall mean the rate of interest published each Business Day in The Wall Street Journal “Money Rates” listing under the caption “London Interbank Offered Rates” for a one month period (or, if no such rate is published therein for any reason, then the Published Rate shall be the eurodollar rate for a one month period as published in another publication reasonably determined by Agent).
 
3 

 
“ Anti-Terrorism Laws ” shall mean any Laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering or bribery, all as amended, supplemented or replaced from time to time.
 
“ Applicable Law ” shall mean all Laws applicable to the Person, conduct, transaction, covenant, Other Document or contract in question, including, with respect to any Collateral located in Canada, the PPSA.
 
“ Applicable Rates ” shall mean (a) as of the Closing Date and through and including September 30, 2013, the margin for Eurodollar Rate Loans, the margin for Domestic Rate Loans or the per annum rate for the Facility Fee, as applicable, set forth as Level I in the table below and (b) effective as of the first day of each calendar quarter thereafter (each such day an “ Adjustment Date ”), each Applicable Rate shall be adjusted, if necessary, to the Level set forth in the table below corresponding to the Average Usage Amount for the most recently completed calendar quarter prior to such Adjustment Date:

Level	 	Average Usage Amount	 	Applicable
Margin for
Eurodollar Rate
Loans	 	Applicable
Margin for
Domestic Rate
Loans	 	Applicable 
 Facility Fee Rate	 	
I	 	Less than or equal to 60% of the then applicable Maximum Revolving Advance Amount	 	1.75	 	0.75	 	0.375	%	
II	 	Greater than 60% of the then applicable Maximum Revolving Advance Amount	 	2.00	 	1.00	 	0.250	%	
 
Notwithstanding anything to the contrary contained herein, and without affecting the Agent’s or Required Lenders’ right to implement the Default Rate, at the option of Agent or the direction of the Required Lenders and upon written notice thereof to Borrower, so long as any Event of Default shall have occurred and be continuing the Applicable Rates shall be as set forth in Level II.
 
“ Average Usage Amount ” shall mean, as of any date of determination, the sum of (a) the average daily unpaid balance of the Revolving Advances for each day of the calendar quarter ending on such date of determination and (b) the average undrawn amount of any Letters of Credit outstanding on each day during the calendar quarter ending on such date of determination.
 
“ Base Rate ” shall mean the base commercial lending rate of PNC as publicly announced to be in effect from time to time, such rate to be adjusted automatically, without notice, on the effective date of any change in such rate. This rate of interest is determined from time to time by PNC as a means of pricing some loans to its customers and is neither tied to any external rate of
 
4 

 
interest or index nor does it necessarily reflect the lowest rate of interest actually charged by PNC to any particular class or category of customers of PNC.
 
“ Baskins ” shall have the meaning set forth in the recitals to this Agreement.
 
“ Baskins Earnout Payment ” shall mean the payment that may be due and owing pursuant to the terms of Section 2.5 of the Purchase Agreement, as in effect on the date hereof.
 
“ Blocked Account Bank ” shall mean any bank at which a Borrowing Base Party maintains collection accounts which is party to a deposit account control agreement in favor of Agent which directs such bank to transfer, no less frequently than weekly, all funds in such collection accounts either to any account maintained by Agent at such bank or by wire transfer to the Collection Account of Borrower maintained with PNC.
 
“ Boot Barn ” shall have the meaning set forth in the preamble to this Agreement.
 
“ Borrower ” shall have the meaning set forth in the preamble to this Agreement.
 
“ Borrower’s Account ” shall have the meaning set forth in Section 2.8.
 
“ Borrowing Base Certificate ” shall mean a certificate in substantially the form of Exhibit 1.2(b)  duly executed by the President, Chief Financial Officer or Controller of the Borrower and delivered to the Agent, appropriately completed, by which such officer shall certify on behalf of Borrower to Agent the Formula Amount and calculation thereof as of the date of such certificate.  Notwithstanding the terms of the form attached hereto as Exhibit 1.2(b) , the parties agree that if there is a conflict between Exhibit 1.2(b)  and this Agreement, the terms of this Agreement shall govern.
 
“ Borrowing Base Parties ” shall mean Boot Barn, RCC, Baskins and, as of any date of determination, any other Person joined as a party to this Agreement as a “Borrower” in accordance with Section 7.12 hereof and with respect to which, to the extent required by Agent: (a) Agent has completed and been satisfied with its audit and inspection of the assets of such Person which are contemplated to be included in the Borrowing Base, (b) Agent has received all applicable appraisals with respect to the assets of such Person which are contemplated to be included in the Borrowing Base and (c) Agent has received all other documentation and information with respect to such Person as may be reasonably required by Agent.
 
“ Business Day ” shall mean any day other than Saturday or Sunday or a legal holiday on which commercial banks are authorized or required by law to be closed for business in East Brunswick, New Jersey and, if the applicable Business Day relates to any Eurodollar Rate Loans, such day must also be a day on which dealings are carried on in the London interbank market.
 
“ Capital Expenditures ” shall mean, with respect to any Person for any period, the aggregate of all expenditures for any fixed assets or improvements or for replacements, substitutions or additions thereto, that have a useful life of more than one (1) year and which are required to be capitalized under GAAP, including the total principal portion of Capital Lease Obligations and excluding any portion of Capital Expenditures made to replace or restore assets to the extent financed by (a) insurance proceeds paid on account of loss or damage to any assets
 
5 

 
of such Person, (b) awards of compensation arising in connection with an eminent domain or condemnation proceeding, (c) made as a reinvestment of proceeds pursuant to Section 7.1 or (d) to the extent the same would otherwise be treated as Capital Expenditures, consideration paid in a Permitted Acquisition.
 
“ Capital Financing Indebtedness ” shall mean, as of any date of determination, Indebtedness (other than the Obligations, but including Capital Lease Obligations), incurred at the time of, or within 120 days after, the acquisition, purchase, construction, improvement or remodel (in each case, other than pursuant to a Permitted Acquisition) of any PP&E for the purpose of financing all or any part of the acquisition, purchase, construction, improvement or remodeling cost thereof; provided that any such PP&E shall be sufficiently identified as the subject of such Capital Financing Indebtedness.
 
“ Capital Lease ” shall mean, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, would be required to be classified and accounted for as a capital lease on a balance sheet of such Person.
 
“ Capital Lease Obligation ” shall mean, with respect to any Capital Lease of any Person, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease.
 
“ Cash Management Products and Services ” shall mean agreements or other arrangements under which Agent or any Lender or any Affiliate of Agent or a Lender provides any of the following products or services to any Borrower:  (a) credit cards; (b) credit card processing services; (c) debit cards and stored value cards; (d) purchase cards; (e) ACH transactions; (f) cash management and treasury management services and products, including controlled disbursement accounts or services, lockboxes, automated clearinghouse transactions, overdrafts, interstate depository network services; or (g) Foreign Currency Hedges.  The indebtedness, obligations and liabilities of Borrower to the provider of any Cash Management Products and Services (including all obligations and liabilities owing to such provider in respect of any returned items deposited with such provider) (the “ Cash Management Liabilities ”) shall be “Obligations” hereunder, guaranteed obligations under each Guaranty and secured obligations under each Guarantor Security Agreement, as applicable, except to the extent constituting Excluded Hedge Liabilities of such Person (subject to the final sentence of the definition of Excluded Hedge Liabilities) and otherwise treated as Obligations for purposes of this Agreement and each of the Other Documents (other than any Lender-Provided Interest Rate Hedge or Lender-Provided Foreign Currency Hedge).  The Liens securing the Cash Management Products and Services shall be pari passu with the Liens securing all other Obligations under this Agreement and the Other Documents, subject to the express provisions of Section 11.5.
 
“ Cash Management Liabilities ” shall have the meaning provided in the definition of “Cash Management Products and Services.”
 
“ CEA ” shall mean the Commodity Exchange Act (7 U.S.C.§1 et seq.), as amended from time to time, and any successor statute.
 
6 

 
“ CERCLA ” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.
 
“ CFTC ” shall mean the Commodity Futures Trading Commission.
 
“ Change in Law ” shall mean the occurrence, after the Closing Date, of any of the following: (a) the adoption or taking effect of any Applicable Law; (b) any change in any Applicable Law or in the administration, implementation, interpretation or application thereof by any Governmental Body; or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Body; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines, interpretations or directives thereunder or issued in connection therewith (whether or not having the force of Applicable Law) and (y) all requests, rules, regulations, guidelines, interpretations or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities (whether or not having the force of law), in each case pursuant to Basel III, shall in each case be deemed to be a Change in Law regardless of the date enacted, adopted, issued, promulgated or implemented.
 
“ Change of Control ” shall mean (a) the occurrence of any event (whether in one or more transactions) which results in a transfer of control of Borrower to a Person who is not the Original Owner or a Person, directly or indirectly, controlled by Freeman Spogli, (b) any merger or consolidation of or with Borrower or sale of all or substantially all of the property or assets of Borrower or sale or transfer of all of the Equity Interests of Borrower to a Person who is not the Original Owner or a Person, directly or indirectly, controlled by Freeman Spogli, (c) Freeman Spogli ceases to own and control, directly or indirectly, at least seventy-five percent (75%) of the outstanding Equity Interests of Parent Holdco owned by Freeman Spogli on the Closing Date or Freeman Spogli ceases to own, directly or indirectly, a majority of the voting Equity Interests of Parent Holdco, (d) in one or more transactions, any Person (or such Person and its Affiliates) other than Freeman Spogli acquires the ability to elect a majority of the board of directors or equivalent governing body of Parent Holdco, or (e) except in connection with a merger or consolidation permitted under Section 7.1 , Borrower fails to own at any time one hundred percent (100%) of the Equity Interests of any of its Subsidiaries.  For purposes of this definition, “control of Borrower” shall mean the power, direct or indirect (x) to vote 50% or more of the Equity Interests having ordinary voting power for the election of directors (or the individuals performing similar functions) of Borrower or (y) to direct or cause the direction of the management and policies of Borrower by contract or otherwise.
 
“ Charges ” shall mean all taxes, charges, fees, imposts, levies or other assessments, including all net income, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation and property taxes, custom duties, fees, assessments, liens, claims and charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other authority, domestic or foreign (including the PBGC or any environmental agency or superfund), upon the Collateral, any Loan Party or any of its Affiliates.
 
7 

 
“ Closing Date ” shall mean the date on which all conditions precedent to the effectiveness of this Agreement set forth in Section 8.1 shall have been satisfied.
 
“ Closing Date Adjusted EBITDA ” shall mean $39,170,083.00.
 
“ Code ” shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.
 
“ Collateral ” shall mean and include, subject to the exclusions specified in Section 4.1, in each case with respect to Borrower or any Guarantor granting a lien on the following assets in favor of Agent:
 
(a)                                  all Receivables;
 
(b)                                  all Equipment;
 
(c)                                   all General Intangibles;
 
(d)                                  all Inventory;
 
(e)                                   all Investment Property;
 
(f)                                    all Real Property;
 
(g)                                   all Subsidiary Stock;
 
(h)                                  all of such Person’s right, title and interest in and to, whether now owned or hereafter acquired and wherever located, (i) its respective goods and other property including, but not limited to, all merchandise returned or rejected by Customers, relating to or securing any of the Receivables; (ii) all of such Person’s rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in transit, setoff, detinue, replevin, reclamation and repurchase; (iii) all additional amounts due to such Person from any Customer relating to the Receivables; (iv) other property, including warranty claims, relating to any goods securing the Obligations; (v) all of such Person’s contract rights, rights of payment which have been earned under a contract right, instruments (including promissory notes), documents, chattel paper (including electronic chattel paper), warehouse receipts, deposit accounts, letters of credit and money; (vi) all commercial tort claims (whether now existing or hereafter arising); (vii) if and when obtained by such Person, all real and personal property of third parties in which such Person has been granted a lien or security interest as security for the payment or enforcement of Receivables; (viii) all letter of credit rights (whether or not the respective letter of credit is evidenced by a writing); (ix) all supporting obligations; and (x) any other goods, personal property or real property now owned or hereafter acquired in which such Person has expressly granted a security interest or may in the future grant a security interest to Agent hereunder, or in any amendment or supplement hereto or thereto, or under any other agreement between Agent and such Person;
 
8 

 
(i)                                      all of such Person’s ledger sheets, ledger cards, files, correspondence, records, books of account, business papers, computers, computer software (owned by such Person or in which it has an interest), computer programs, tapes, disks and documents relating to (a), (b), (c), (d), (e) or (f) of this Paragraph; and
 
(j)                                     all proceeds and products of (a), (b), (c), (d), (e), (f) and (g) in whatever form, including, but not limited to: cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim proceeds.
 
“ Collection Accounts ” shall have the meaning set forth in Section 4.15(h).
 
“ Commitment Amount ” shall mean, (i) as to any Lender other than a New Lender, the Commitment Amount (if any) set forth below such Lender’s name on the signature page hereto (or, in the case of any Lender that became party to this Agreement after the Closing Date pursuant to Section 15.3(c) or (d) hereof, the Revolving Commitment amount (if any) of such Lender as set forth in the applicable Commitment Transfer Supplement), and (ii) as to any Lender that is a New Lender, the Commitment Amount provided for in the joinder signed by such New Lender under Section 2.25(a)(x), in each case as the same may be adjusted upon any increase by such Lender pursuant to Section 2.25 hereof, any decrease pursuant to Section 2.21 or any assignment by or to such Lender pursuant to Section 15.3(c) or (d) hereof.
 
“ Commitment Percentage ” shall mean (i) as to any Lender other than a New Lender, the Commitment Percentage (if any) set forth below such Lender’s name on the signature page hereof (or, in the case of any Lender that became party to this Agreement after the Closing Date pursuant to Section 15.3(c) or (d) hereof, the Commitment Percentage (if any) of such Lender as set forth in the applicable Commitment Transfer Supplement), and (ii) as to any Lender that is a New Lender, the Commitment Percentage provided for in the joinder signed by such New Lender under Section 2.25(a)(ix), in each case as the same may be adjusted upon any increase by such Lender pursuant to Section 2.25 hereof, any decrease pursuant to Section 2.21 or any assignment by or to such Lender pursuant to Section 15.3(c) or (d) hereof.
 
“ Commitment Transfer Supplement ” shall mean a document in the form of Exhibit 15.3 hereto, properly completed and otherwise in form and substance satisfactory to Agent by which the Purchasing Lender purchases and assumes a portion of the obligation of Lenders to make Advances under this Agreement.
 
“ Compliance Authority ” shall mean each and all of the (a) U.S. Treasury Department/Office of Foreign Assets Control, (b) U.S. Treasury Department/Financial Crimes Enforcement Network, (c) U.S. State Department/Directorate of Defense Trade Controls, (d) U.S. Commerce Department/Bureau of Industry and Security, (e) U.S. Internal Revenue Service, (f) the U.S. Justice Department, and (g) U.S. Securities and Exchange Commission.
 
9 

 
“ Compliance Certificate ” shall mean a certificate in substantially the form of Exhibit 1.2(a)  hereto, duly executed by the President, Chief Financial Officer or Controller of Parent Holdco and delivered to Agent, appropriately completed.
 
“ Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
 
“ Consents ” shall mean all filings and all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Bodies (including, without limitation, Hart-Scott-Rodino clearance) and other third parties, domestic or foreign, necessary to carry on Borrower’s business or necessary (including to avoid a breach under any material agreement, instrument, other document, license, permit or other authorization) for the execution, delivery or performance of this Agreement and the Other Documents, including any Consents required under all applicable federal, state or other Applicable Law.
 
“ Consigned Inventory ” shall mean Inventory of a Person that is in the possession of another Person on a consignment, sale or return, or other basis that does not constitute a final sale and acceptance of such Inventory.
 
“ Consolidated Net Income ” shall mean, with respect to any Person for any period, the net income (loss) of such Person and its Subsidiaries for such period, determined on a consolidated basis and in accordance with GAAP.
 
“ Consolidated Net Interest Expense ” shall mean, with respect to any Person for any period, (a) Interest Expense (excluding interest paid-in-kind) of such Person and its Subsidiaries for such period determined on a consolidated basis and in accordance with GAAP, less (b) the sum of (i) interest income for such period and (ii) gains for such period on Hedge Agreements (to the extent not included in interest income above and to the extent not deducted in the calculation of gross interest expense), plus (c) the sum of (i) losses for such period on Hedge Agreements (to the extent not included in gross interest expense) and (ii) the upfront costs or fees for such period associated with Hedge Agreements (to the extent not included in gross interest expense), in each case, determined on a consolidated basis and in accordance with GAAP.
 
“ Controlled Group ” shall mean, at any time, Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with Borrower, are treated as a single employer under Section 414 of the Code.
 
“ Copyright ” shall mean all of the following (whether now owned or hereafter acquired by a Loan Party):  copyrights, copyright registrations and other works protectable by copyright registration, including the copyright registrations and recordings thereof and all applications in connection therewith listed on Schedule 5.9 attached hereto and made a part hereof, and (i) all restorations, reversions, renewals, reissues, continuations or extensions thereof, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, (iii) the right to sue for past,
 
10 

present and future infringements and dilutions thereof and (iv) all of such Person’s rights corresponding thereto throughout the world.
 
“ Covenant Compliance Period ” shall mean any period commencing on any date after July 2, 2013 on which either (a) Undrawn Availability is less than $5,000,000 for five (5) consecutive Business Days or (b) average Undrawn Availability for any period of thirty (30) consecutive days is less than the greater of (i) $7,500,000 or (ii) 12.5% of the then applicable Maximum Revolving Advance Amount (each a “ Trigger Date ”) and continues until the first day after such Trigger Date on which average Undrawn Availability is equal to or greater than the greater of (x) $7,500,000 or (y) 12.5% of the then applicable Maximum Revolving Advance Amount for a period of thirty (30) consecutive days.
 
“ Covered Entity ” shall mean (a) each Loan Party, each Loan Party’s Subsidiaries, all pledgors of Collateral, and (b) each Person which, directly or indirectly, is in control of the Person described in clause (a) above.  For purposes of this definition, control of a Person shall mean the, direct or indirect, (x) ownership of, or power to vote, 25% or more of the issued and outstanding Equity Interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for any such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of Equity Interests, contract or otherwise.
 
“ Credit Card Agreements ” shall mean all agreements now or hereafter entered into by and between any Borrowing Base Party and any Credit Card Issuer or Credit Card Processor, as the same may now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
 
“ Credit Card Issuer ” shall mean any Person who issues or whose members issue credit cards or debit cards used by Customers of any Borrowing Base Party to purchase goods, including, without limitation, Discover, MasterCard, VISA and American Express.
 
“ Credit Card Notices ” shall mean those certain notices, each in form and substance reasonably satisfactory to Agent in its Permitted Discretion, issued jointly by Agent and each applicable Borrowing Base Party to Credit Card Issuers and Credit Card Processors pursuant to which such Credit Card Issuers and Credit Card Processors are notified of Agent’s first priority security interest in all amounts due to such Borrowing Base Party under any Credit Card Agreement and the collateral assignment by such Borrowing Base Party to Agent of the right to collect and receive such amounts and are directed to make all such payments to the Collection Account set forth therein.
 
“ Credit Card Processor ” shall mean any servicing or processing agent or any factor or financial intermediary who facilitates, services, processes or manages the credit authorization, billing transfer and/or payment with respect to Credit Card Receivables from a Credit Card Issuer and other procedures with respect to any sales transactions of a Borrowing Base Party involving credit card or debit card purchases by Customers using credit cards or debit cards issued by any Credit Card Issuer.
 
11 

 
“ Credit Card Receivables ” shall mean all Receivables consisting of the present and future rights of a Borrowing Base Party to payment by Credit Card Issuers or Credit Card Processors for merchandise sold and delivered to Customers of such Borrowing Base Party who have purchased such goods using a credit card or a debit card issued by a Credit Card Issuer.
 
“ Customer ” shall mean and include the account debtor (including Credit Card Processors and Credit Card Issuers) with respect to any Receivable and/or the prospective purchaser of goods, services or both with respect to any contract or contract right, and/or any party who enters into any contract or other arrangement with a Borrowing Base Party, pursuant to which such Borrowing Base Party is to deliver any Inventory or perform any services.
 
“ Customs ” shall have the meaning set forth in Section 2.11(b) hereof.
 
“ Default ” shall mean an event, circumstance or condition which, with the giving of notice or passage of time or both, would constitute an Event of Default.
 
“ Defaulting Lender ” shall mean any Lender that: (a) has failed, within two (2) Business Days of the date required to be funded or paid, to (i) fund any portion of its Commitment Percentage of Advances, (ii) if applicable, fund any portion of its Participation Commitment in Letters of Credit or (iii) pay over to Agent, Issuer or any Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including a particular Default or Event of Default, if any) has not been satisfied as of the date such funding is required; (b) has notified Borrower or Agent in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including a particular Default or Event of Default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit; (c) has failed, within two (2) Business Days after request by Agent, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Advances and, if applicable, participations in then outstanding Letters of Credit under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon Agent’s receipt of such certification in form and substance satisfactory to the Agent; (d) has become the subject of an Insolvency Event; or (e) has failed at any time to comply with the provisions of Section 2.20(d) with respect to purchasing participations from the other Lenders, whereby such Lender’s share of any payment received, whether by setoff or otherwise, is in excess of its pro rata share of such payments due and payable to all of the Lenders.
 
“ Default Rate ” shall have the meaning set forth in Section 3.1 hereof.
 
“ Disqualified Equity Interests ” shall mean any Equity Interest that, by its terms (or by the terms of any security or other Equity Interest into which it is convertible or for which it is exchangeable), (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior
 
12 

 
to the date which is six (6) months after the last day of the Term (other than to the extent mandatorily redeemable by the holder thereof upon the occurrence of a contingent event within a Loan Party’s control) in cash, (b) is convertible into or exchangeable for (i) debt securities or (ii) any Equity Interests referred to in clause (a) above, in each case at any time prior to the date which is six (6) months after the last day of the Term or (c) provides for scheduled payments or the payment of cash dividends or distributions prior to the date that is six (6) months after the last day of the Term.
 
“ Dollar ” and the sign “$” shall mean lawful money of the United States of America.
 
“ Domestic Holding Company ” shall mean any Domestic Subsidiary that is disregarded as an entity separate from its owner for U.S. federal income tax purposes and either (i) substantially all of its assets consist of Equity Interests of one or more Foreign Subsidiaries that are “controlled foreign corporations” (as defined in Section 957(a) of the Code) or (ii) a significant portion of its assets consist of Equity Interests in one or more Foreign Subsidiaries that are “controlled foreign corporations” as so defined and the direct or indirect pledge of more than sixty-six and two-thirds percent (66 2/3%) of the Equity Interests in such Foreign Subsidiaries, in the reasonable judgment of Borrower, would result in a materially adverse tax consequence to Borrower or its Affiliates.
 
“ Domestic Rate Loan ” shall mean any Advance that bears interest based upon the Alternate Base Rate.
 
“ Domestic Subsidiary ” is any Subsidiary other than a Foreign Subsidiary.
 
“ Drawing Date ” shall have the meaning set forth in Section 2.12(b) hereof.
 
“ Early Termination Date ” shall have the meaning set forth in Section 13.1 hereof.
 
“ EBITDA ” shall mean, with respect to any Loan Party for any specified period: (a) the Consolidated Net Income of Borrower and its Subsidiaries for such period, plus (b) without duplication, the sum of the following amounts of Borrower and its Subsidiaries, on a consolidated basis, to the extent deducted in determining Consolidated Net Income of Borrower and its Subsidiaries for such period: (i) Consolidated Net Interest Expense, plus (ii) depreciation and amortization and other non-cash charges (including any (A) non-cash charges relating to employee equity incentive programs, (B) non-cash charges attributable to inventory revaluations as a result of the Transactions, the RCC Acquisition, the Acquisition (as defined in the Existing Credit Agreement) or any Permitted Acquisition and (C) non-cash write-offs relating to impairment of stores), all in accordance with GAAP, plus (iii) net income tax expense, to the extent a positive number (including franchise and foreign withholding taxes and any state business, unitary, gross receipts or similar tax), to the extent deducted in the calculation of Consolidated Net Income, plus (iv) payment-in-kind interest, plus (v) proceeds from business interruption insurance for loss of income(whether or not such loss of income was deducted in determining Consolidated Net Income), plus (vi) Pre-Opening Costs, plus (vii) amortized or deferred financing fee expenses to the extent not included in Consolidated Net Interest Expense, plus (viii) straight line non-cash rent adjustment to the extent rent expense included in Consolidated Net Income exceeds the applicable cash rent payments, plus (ix) non-recurring
 
13 

 
expenses and charges for such period attributable to (A) the Transactions as of the Closing Date, (B) the Transactions following the Closing Date in an aggregate amount not to exceed $3,000,000 and (C) bonuses paid to officers, directors and employees as a direct result of the Transactions not to exceed $750,000 in the aggregate, plus (x) expenses and charges (including premiums, discounts and Hedge Agreement settlement and termination costs) in such period attributable to any debt financings or refinancings, equity offerings, mergers, recapitalizations, acquisitions, investments, option buyouts, dispositions or similar transactions in an amount not to exceed $2,000,000 per fiscal year, provided that any such expenses and charges shall have been incurred prior to or no later than 180 days following the consummation of the applicable transaction, plus (xi) extraordinary or non-recurring losses not to exceed $500,000 in the aggregate or as otherwise approved by Agent, plus (xii) restructuring expenses and charges, plus (xiii) net income tax charges, plus (xiv) losses from discontinued operations not to exceed $500,000 per fiscal year, plus (xv) non-cash expenses relating to the Boot Barn Rewards Program, plus (xvi) the principal amount received from Permitted Freeman Spogli Investments (other than in respect of an Equity Cure for a default with respect to Section 7.6 of the Term Loan Agreement), plus (xvii) the Baskins Earnout Payment and any other earnout or other similar deferred purchase price payment obligations incurred in connection with a Permitted Acquisition, and minus (c) without duplication, (i) extraordinary or non-recurring gains, (ii) net income tax benefits, (iii) gains from discontinued operations and (iv) straight line non-cash rent adjustment to the extent cash rent payments exceed the applicable rent expense included in Consolidated Net Income.  Notwithstanding the foregoing: (x) it is agreed that for purposes of determining compliance with the financial covenants set forth in Section 6.5 hereof (including any test requiring compliance on a pro forma basis), commencing with the measurement period ended nearest to September 30, 2013, the EBITDA of Baskins shall be included for all relevant periods, and (i) EBITDA of Borrower and its Subsidiaries, including Baskins, for the fiscal quarter ended nearest to March 31, 2013 shall be $7,488,000 and (ii) EBITDA of Borrower and its Subsidiaries, including Baskins, for the fiscal quarter ended nearest to December 31, 2012 shall be $18,545,727; and (y) for purposes of this definition, EBITDA shall be determined on a pro forma basis to give effect to (i) any Permitted Acquisitions (computed utilizing the provisions of this definition together with adjustments reflecting anticipated cost savings and synergies projected by the Borrower in good faith to be realized as a result of specified actions taken or expected to be taken (which cost savings or synergies shall be subject to certification by a responsible officer of the Borrower and shall be calculated on a pro forma basis), in each case to the extent quantifiable and demonstrable and supported by a quality of earnings report prepared by an accounting firm reasonably acceptable to Agent, and in form and substance reasonably acceptable to Agent); provided, that the aggregate amount of adjustments reflecting such anticipated cost savings and synergies in any four fiscal quarter period shall not exceed ten percent (10%) of EBITDA for such period calculated prior to giving effect to such adjustments and (ii) any divestitures by Borrower or any of its Subsidiaries of all or substantially all the assets of, or all the Equity Interests in, a Person or division or line of business of a Person occurring during any period, in each case, as if such transaction had occurred on the first day of such period.
 
“ Eligibility Date ” shall mean, with respect to each Loan Party and each Swap, the date on which this Agreement or any Other Document becomes effective with respect to such Swap (for the avoidance of doubt, the Eligibility Date shall be the date of the execution of such Swap if this Agreement or any Other Document is then in effect with respect to such Loan Party, and
 
14 

 
otherwise it shall be the date of execution and delivery of this Agreement and/or such Other Document(s) to which such Loan Party is a party).
 
“ Eligible Contract Participant ” shall mean an “eligible contract participant” as defined in the CEA and regulations thereunder.
 
“ Eligible Inventory ” shall mean and include Inventory of each Borrowing Base Party (excluding work in process), valued at the lower of cost or market value, determined on a first-in-first-out basis, which is not, in Agent’s Permitted Discretion, unmerchantable and which Agent, in its Permitted Discretion, shall not deem ineligible Inventory, based on such considerations as Agent, in its Permitted Discretion, may from time to time deem appropriate. In addition, Inventory shall not be Eligible Inventory if it (i) does not conform to all material standards imposed by any Governmental Body which has regulatory authority over such goods or the use or sale thereof, (ii) is in transit from the vendor, (iii) is located outside the continental United States or any province in Canada (other than Quebec) with respect to which Agent has perfected its Lien on any Inventory located there under the PPSA as in effect in such province, (iv) constitutes Consigned Inventory, (v) is the subject of an Intellectual Property infringement claim; (vi) is subject to a License Agreement or other agreement that limits, conditions or restricts such Borrowing Base Party’s or Agent’s right to sell or otherwise dispose of such Inventory, unless Agent is a party to a Licensor/Agent Agreement with the Licensor under such License Agreement; or (vii) is not subject to the perfected, first priority security interest of Agent or is subject to any Lien other than a Permitted Encumbrance.  Eligible Inventory shall not include Inventory being acquired pursuant to a trade Letter of Credit to the extent such trade Letter of Credit remains outstanding.
 
“ Eligible Receivables ” shall mean and include with respect to the Borrowing Base Parties, the Dollar amount of Credit Card Receivables (determined, without duplication, net of any credits, fees, rebates, charges, charge backs, “contra accounts” and any other amounts owed by a Borrowing Base Party to the applicable Credit Card Issuer or Credit Card Processor (except for fees and expenses of the applicable Credit Card Issuer or Credit Card Processor), and net of unapplied cash and credits in respect thereof) owned by the Borrowing Base Parties arising in the Ordinary Course of Business and which Agent, in its Permitted Discretion, shall deem to be an Eligible Receivable, based on such considerations as Agent may from time to time deem appropriate. No Credit Card Receivable shall be an Eligible Receivable if:
 
(a)                                  it arises out of a sale made by a Borrowing Base Party to an Affiliate of any Borrowing Base Party or to a Person controlled by an Affiliate of a Borrowing Base Party to the extent such are not in the Ordinary Course of Business;
 
(b)                                  it has been outstanding for more than seven (7) days after the date such Credit Card Receivable first arose;
 
(c)                                   any covenant, representation or warranty contained in this Agreement with respect to such Credit Card Receivable has been materially breached or the applicable Borrowing Base Party is in material breach of any express or implied representation, warranty, covenant or other agreement with respect to such Credit Card Receivable or the payment processing thereof;
 
15 

 
(d)                                  the Credit Card Issuer or Credit Card Processor shall be subject to an Insolvency Event;
 
(e)                                   unless otherwise agreed by Agent in writing, it is owed by a Credit Card Issuer or processed by a Credit Card Processor that is located outside of the United States of America;
 
(f)                                    the sale giving rise thereto does not represents a complete bona fide transaction or is not otherwise a valid, legally enforceable obligation of the applicable Credit Card Issuer, Credit Card Processor or credit card holder;
 
(g)                                   it is evidenced by chattel paper or an instrument of any kind;
 
(h)                                  it is subject to any offset, deduction, defense, dispute, or counterclaim, the obligor thereunder is also a creditor or supplier of any Borrowing Base Party or such Credit Card Receivable is contingent in any respect or for any reason, but only to the extent of the amount of any such offset, deduction, defense, dispute, counterclaim or contingency;
 
(i)                                      any return, rejection or repossession of the merchandise that is the subject of such Credit Card Receivable has occurred or the rendition of services that is the subject of such Credit Card Receivable has been disputed, provided, that only that portion of such Credit Card Receivable subject to such return, rejection, repossession or dispute shall be deemed ineligible under this clause (i);
 
(j)                                     it is not payable to a Borrowing Base Party in Dollars;
 
(k)                                  it is not subject to Agent’s perfected, first priority security interest or is subject to any Lien other than a Permitted Encumbrance;
 
(l)                                      it is not payable to a Borrowing Base Party;
 
(m)                              it requires further acts on the part of any Borrowing Base Party to make such Credit Card Receivable payable by the Credit Card Issuer or Credit Card Processor;
 
(n)                                  it arises under a contract that, by its terms, prohibits or makes void or unenforceable the grant of a security interest by the applicable Borrowing Base Party in and to such agreement or Credit Card Receivable or otherwise does not arise under a Credit Card Agreement which has been delivered to, and is in form and substance reasonably satisfactory to, Agent;
 
(o)                                  it is not subject to a Credit Card Notice;
 
(p)                                  the creation thereof does not comply in all material respects with all Applicable Laws, including, without limitation, usury laws, the Federal Truth in Lending Act, and Regulation Z of the Board of Governors of the Federal Reserve System; or
 
(q)                                  it arises from the use of a private label credit card issued or guaranteed by any Borrowing Base Party or Affiliate thereof.
 
16 

 
“ Environmental Authority ” shall have the meaning set forth in Section 9.3(b).
 
“ Environmental Complaint ” shall have the meaning set forth in Section 9.3(b) hereof.
 
“ Environmental Laws ” shall mean all Applicable Laws relating to the environment, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating to the protection of the environment, preservation or reclamation of natural resources and/or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the rules, regulations, policies, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto.
 
“ Environmental Liabilities ” shall mean, with respect to any Person, all liabilities, obligations, responsibilities, response, remedial and removal costs, investigation and feasibility study costs, capital costs, operation and maintenance costs, losses, damages, punitive damages, property damages, natural resource damages, consequential damages, treble damages, costs and expenses (including all fees, disbursements and expenses of counsel, experts and consultants), fines, penalties, sanctions and interest incurred as a result of or related to any claim, suit, action, investigation, proceeding or demand by any Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law, arising under or related to any Environmental Laws, Environmental Permits, or in connection with any Release or threatened Release or presence of a Hazardous Substance whether on, at, in, under, from or about or in the vicinity of any real or personal property.
 
“ Environmental Permits ” shall mean all permits, licenses, authorizations, certificates, approvals, registrations or other written documents required by any Governmental Body under any Environmental Laws.
 
“ Equipment ” shall mean and include all of Borrower’s goods (other than Inventory) whether now owned or hereafter acquired and wherever located including all equipment, machinery, apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all replacements and substitutions therefor or accessions thereto.
 
“ Equity Cure ” shall have the meaning given in Section 10.5(c) hereof.
 
“ Equity Interests ” of any Person shall mean any and all shares, rights to purchase, options, warrants, general, limited or limited liability partnership interests, member interests, participation or other equivalents of or interest in (regardless of how designated) equity of such Person, whether voting or nonvoting, including common stock, preferred stock, convertible securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).
 
“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time and the rules and regulations promulgated thereunder.
 
“ Eurodollar Rate ” shall mean for any Eurodollar Rate Loan for the then current Interest Period relating thereto the interest rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by Agent by dividing (i) the rate which appears on the Bloomberg Page
 
17 

 
BBAM1 (or on such other substitute Bloomberg page that displays rates at which US dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by Agent which has been approved by the British Bankers’ Association as an authorized information vendor for the purpose of displaying rates at which US dollar deposits are offered by leading banks in the London interbank deposit market (a “ Eurodollar Alternate Source ”), at approximately 11:00 a.m., London time two (2) Business Days prior to the first day of such Interest Period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Eurodollar Alternate Source, a comparable replacement rate determined by the Agent at such time (which determination shall be conclusive absent manifest error)) for an amount comparable to such Eurodollar Rate Loan and having a borrowing date and a maturity comparable to such Interest Period by (ii) a number equal to 1.00 minus the Reserve Percentage.  The Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan that is outstanding on the effective date of any change in the Reserve Percentage as of such effective date. The Agent shall give prompt notice to the Borrower of the Eurodollar Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.
 
“ Eurodollar Rate Loan ” shall mean an Advance at any time that bears interest based on the Eurodollar Rate.
 
“ Event of Default ” shall have the meaning set forth in Article X hereof.
 
“ Exchange Act ” shall have the mean the Securities Exchange Act of 1934, as amended.
 
“ Excluded Hedge Liability or Liabilities ” shall mean, with respect to each Loan Party, each of its Swap Obligations if, and to the extent that, all or any portion of this Agreement or any Other Document that relates to such Swap Obligation (or the guaranty of such Swap Obligation, or the grant by such Loan Party of a security interest in the Collateral to secure such Swap Obligation) is or becomes illegal under the CEA, or any rule, regulation or order of the CFTC, by virtue of such Loan Party’s failure to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap.  Notwithstanding anything to the contrary contained in the foregoing or in any other provision of this Agreement or any Other Document, the foregoing is subject to the following provisos: (a) if a Swap Obligation arises under a master agreement governing more than one Swap, this definition shall only include the portion of such Swap Obligation that is attributable to Swaps for which such guaranty or security interest is or becomes illegal as a result of the failure by such Loan Party for any reason to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap; (b) if a guarantee of a Swap Obligation would cause such obligation to be an Excluded Hedge Liability but the grant of a security interest would not cause such obligation to be an Excluded Hedge Liability, such Swap Obligation shall constitute an Excluded Hedge Liability for purposes of the guaranty but not for purposes of the grant of the security interest; and (c) if there is more than one Loan Party executing this Agreement or the Other Documents and a Swap Obligation would be an Excluded Hedge Liability with respect to one or more of such Persons, but not all of them, the definition of Excluded Hedge Liability or Liabilities with respect to each such Person shall only be deemed applicable to (i) the particular Swap Obligations that constitute Excluded Hedge Liabilities with respect to such Person, and (ii) the particular Person with respect to which such Swap Obligations constitute Excluded Hedge Liabilities.
 
18 

 
“ Excluded Taxes ” shall mean, with respect to any Recipient of any payment to be made by or on account of any Obligations, (a) taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender  or Issuer, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes (b) in the case of a Lender, any U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in an Advance or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Advance or Commitment (other than pursuant to an assignment request by the Borrower under Section 3.11(a)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 3.10(a), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.10(e), (d) Taxes attributable to the failure of the Agent to properly maintain the Register, and (e) any U.S. federal withholding Taxes imposed under FATCA.
 
“ Existing Credit Agreement ” shall have the meaning set forth in the recitals to this Agreement.
 
“ Existing Term Loan ” shall have the meaning set forth in the recitals to this Agreement.
 
“ Facility Fee ” shall have the meaning set forth in Section 3.3 hereof.
 
“ FATCA ” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations thereunder or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
 
“ Federal Funds Effective Rate ” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced.
 
“ Federal Funds Open Rate ” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate), or as set forth on such other recognized electronic source used for the
 
19 

 
purpose of displaying such rate as selected by PNC (a “ Federal Funds Alternate Source ”) (or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on any Federal Funds Alternate Source, or if there shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Federal Funds Alternate Source, a comparable replacement rate determined by the PNC at such time (which determination shall be conclusive absent manifest error); provided however, that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the “open” rate on the immediately preceding Business Day. If and when the Federal Funds Open Rate changes, the rate of interest with respect to any advance to which the Federal Funds Open Rate applies will change automatically without notice to Borrower, effective on the date of any such change.
 
“ Fee Letter ” shall mean the second amended and restated fee letter dated the date hereof by and between Borrower and the Agent.
 
“ Financial Condition Certificate ” shall have the meaning set forth in Section 8.1(h) hereof.
 
“ Fixed Charge Coverage Ratio ” shall mean and include, with respect to any fiscal period, the ratio of (a) EBITDA for such period minus Unfinanced Capital Expenditures made during such period minus cash dividends paid during such period to (b) Fixed Charges for such period.
 
“ Fixed Charges ” shall mean and include, with respect to any fiscal period of Parent Holdco and its Subsidiaries, on a consolidated basis calculated in accordance with GAAP, the sum of (without duplication) of: (a) cash Interest Expense (net of interest income) and cash taxes paid during or in respect of such period, (b) scheduled principal payments on Funded Debt due during such period (in each case, whether or not paid during such period), and (c) cash dividends paid and permitted to be paid by the Loan Parties under the terms of this Agreement during such period.  Notwithstanding the foregoing, for purposes of calculating the Fixed Charge Coverage Ratio for each of the four fiscal quarter periods ending nearest to September 30, 2013, December 31, 2013 and March 31, 2014, the components of the Fixed Charge Coverage Ratio attributable to (1) Interest Expense and (2) scheduled principal payments on Funded Debt ((1) and (2) collectively, the “ Annualized Fixed Charges ”) shall be annualized during such fiscal quarters such that for the calculation of the Fixed Charge Coverage Ratio as of the last day of the fiscal quarter ending nearest to (x) September 30, 2013, Annualized Fixed Charges for the 4 fiscal quarter period ending nearest to September 30, 2013 will be deemed to be the actual amounts of items (1) and (2) for the fiscal quarter ending nearest to September 30, 2013 multiplied by four (4), (y) December 31, 2013, Annualized Fixed Charges for the 4 fiscal quarter period ending nearest to December 31, 2013 will be deemed to be the actual amounts of items (1) and (2) for the two fiscal quarter period ending nearest to December 31, 2013 multiplied by two (2), and (z) March 31, 2014, Annualized Fixed Charges for the 4 fiscal quarter period ending nearest to March 31, 2014 will be deemed to be the actual amounts of items (1) and (2) for the three fiscal quarter period ending nearest to March 31, 2014 multiplied by four (4) and then divided by three (3).
 
“ Flood Laws ” shall mean all Applicable Laws relating to policies and procedures that address requirements placed on federally regulated lenders under the National Flood Insurance Reform Act of 1994 and other Applicable Laws related thereto.
 
20 

“ Foreign Currency Hedge ” shall mean any foreign exchange transaction, including spot and forward foreign currency purchases and sales, listed or over-the-counter options on foreign currencies, non-deliverable forwards and options, foreign currency swap agreements, currency exchange rate price hedging arrangements, and any other similar transaction providing for the purchase of one currency in exchange for the sale of another currency.
 
“ Foreign Lender ” shall mean any Lender that is organized under the laws of a jurisdiction other than that in which Borrower is resident for tax purposes.  For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
 
“ Foreign Subsidiary ” of any Person, shall mean any Subsidiary of such Person that is not organized or incorporated in the United States or any State or territory thereof.
 
“ Formula Amount ” shall have the meaning set forth in Section 2.1(a).
 
“ Freeman Spogli ” means Freeman Spogli & Co., LLC, a Delaware limited liability company and all Affiliates thereof from time to time, other than the Loan Parties.
 
“ Funded Debt ” shall mean, with respect to any Person, without duplication, all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or similar evidences of Indebtedness that by its terms matures more than one year from, or is directly or indirectly renewable or extendible at such Person’s option under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year from the date of creation thereof, and specifically including Capitalized Lease Obligations, current maturities of long-term debt, revolving credit and short-term debt extendible beyond one year at the option of the debtor, and also including, in the case of Borrower, the Obligations and, without duplication, Indebtedness consisting of guaranties of Funded Debt of other Persons (other than another Loan Party).
 
“ Funding Account ” shall mean the deposit account of Boot Barn at PNC established for the purpose of receiving proceeds of the Advances.
 
“ GAAP ” shall mean generally accepted accounting principles in the United States of America in effect from time to time.  Notwithstanding any other provision contained herein, (i) all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to in Section 6.5 shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 (or any other Financing Accounting Standard or FASB Accounting Standards Codification™ having a similar result or effect) to value any Indebtedness or other liabilities of any Loan Party or any Subsidiary of any Loan Party at “fair value,” (ii) no effect shall be given to FAS 141R or any subsequent codification thereof, and (iii) any change to GAAP requiring leases which were previously classified as operating leases to be treated as capitalized leases shall be ignored for the purpose of determining Indebtedness hereunder and such leases shall continue to be treated as operating leases for such purposes consistent with GAAP as in effect on the date hereof.
 
21 

 
“ General Intangibles ” shall mean and include all of Borrower’s general intangibles, whether now owned or hereafter acquired, including all payment intangibles, all choses in action, causes of action, corporate or other business records, inventions, designs, Patents, equipment formulations, manufacturing procedures, quality control procedures, Trademarks, trade secrets, goodwill, Copyrights, design rights, software, computer information, source codes, codes, records and updates, registrations, licenses, franchises, customer lists, tax refunds, tax refund claims, computer programs, all claims under guaranties, security interests or other security held by or granted to Borrower to secure payment of any of the Receivables by a Customer (other than to the extent covered by Receivables) all rights of indemnification and all other intangible property of every kind and nature (other than Receivables).
 
“ Governmental Acts ” shall have the meaning set forth in Section 2.17.
 
“ Governmental Body ” shall mean any nation or government, any state or other political subdivision thereof or any entity, authority, agency, division or department exercising the executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to a government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
 
“ Guaranteed Indebtedness ” shall mean, as to any Person, any obligation of such Person guaranteeing any indebtedness, lease, dividend, or other obligation (“ primary obligations ”) of any other Person (the “ primary obligor ”) in any manner, including any obligation or arrangement of such Person (a) to purchase or repurchase any such primary obligation, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) to indemnify the owner of such primary obligation against loss in respect thereof.  The amount of any Guaranteed Indebtedness at any time shall be deemed to be an amount equal to the lesser at such time of (x) the stated or determinable amount of the primary obligation in respect of which such Guaranteed Indebtedness is made and (y) the maximum amount for which such Person may be liable pursuant to the terms of the instrument embodying such Guaranteed Indebtedness; or, if not stated or determinable, the maximum reasonably anticipated liability (assuming full performance) in respect thereof; provided that if such obligation is limited in recourse against a specific asset, the amount of such Guaranteed Indebtedness shall be calculated as the lesser of the obligation so guaranteed or otherwise supported or, if not a fixed and determined amount, the maximum amount so guaranteed or supported and the fair market value of such asset.
 
“ Guarantor ” shall mean Parent Holdco, RCC, Baskins and any other Person who may hereafter guarantee payment or performance of the whole or any part of the Obligations, and “ Guarantors ” means collectively all such Persons.
 
22 

 
“ Guarantor Security Agreement(s) ” shall mean the Amended and Restated Pledge and Security Agreement executed by Parent Holdco, RCC and Baskins, jointly and severally, in favor of Agent, dated as of even date herewith, and any other security agreement executed by any Guarantor in favor of Agent securing the Guaranty of such Guarantor, in form and substance reasonably satisfactory to Agent.
 
“ Guaranty ” shall mean any guaranty of the Obligations (or any portion thereof) executed by a Guarantor in favor of Agent for its benefit and for the ratable benefit of Lenders, in form and substance reasonably satisfactory to Agent.
 
“ Hazardous Discharge ” shall have the meaning set forth in Section 9.3(b) hereof.
 
“ Hazardous Substance ” shall mean, without limitation, any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, or any other applicable Environmental Law and in the regulations adopted pursuant thereto.
 
“ Hazardous Wastes ” shall mean all waste materials subject to regulation under CERCLA, RCRA or other applicable Environmental Laws, now in force or hereafter enacted relating to hazardous waste disposal.
 
“ Hedge Agreement ” shall mean any interest rate, commodity or equity swap, collar, cap, floor or forward rate agreement, or other agreement or arrangement designed to protect against fluctuations in interest rates or commodity or equity values (including, without limitation, any option with respect to any of the foregoing and any combination of the foregoing agreements or arrangements), and any confirmation executed in connection with any such agreement or arrangement.
 
“ Hedge Liabilities ” shall mean the liabilities of any Loan Party or Subsidiary thereof pursuant to any Lender Provided Interest Rate Hedge or Lender-Provided Foreign Currency Hedge.
 
“ Increasing Lender ” has the meaning set forth in Section 2.25 hereof.
 
“ Indebtedness ” shall mean, with respect to any Person, without duplication (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property, but excluding accounts payable incurred in the Ordinary Course of Business that are unsecured and not overdue by more than 120 days or being Properly Contested, (b) all reimbursement and other obligations with respect to letters of credit, bankers’ acceptances and surety bonds, whether or not matured, but such amounts, not to exceed $1,000,000 in the aggregate, shall be excluded in calculations (including related definitions) of the Financial Covenants in Section 6.3, (c) all obligations evidenced by notes, bonds, debentures or similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations and the present value (discounted at the rate of 10%) of future
 
23 

 
rental payments under all synthetic leases, (f) obligations (the amount of which, as of any date of determination, shall be the net termination value thereof on such date of determination) under any Interest Rate Hedge, Foreign Currency Hedge, or other interest rate management device, foreign currency exchange agreement, currency swap agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement, (g) [reserved], (h) all Indebtedness referred to above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property or other assets (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, the amount of such Indebtedness to be limited to the lesser of the fair market value of the encumbered property or assets and the amount of the Indebtedness secured by such Lien, (i) “earnouts” and similar payment obligations that have been earned in full as of such date and are not contingent, (j) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Disqualified Equity Interests in such Person or any other Person, valued, in the case of redeemable preferred interests, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends and (k) the Obligations.
 
“ Indemnified Taxes ” shall mean (a) Taxes, other than Excluded Taxes, and (b) to the extent not otherwise described in (a), Other Taxes.
 
“ Ineligible Security ” shall mean any security which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.
 
“ Insolvency Event ” shall mean, with respect to any Person, including without limitation any Lender, such Person or such Person’s direct or indirect parent company (a) becomes the subject of a bankruptcy or insolvency proceeding (including any proceeding under Title 11 of the United States Code), or regulatory restrictions, (b) has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it or has called a meeting of its creditors, (c) admits in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (d) with respect to a Lender, such Lender is unable to perform hereunder due to the application of Applicable Law, or (e) in the good faith determination of Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment of a type described in clauses (a) or (b); provided that an Insolvency Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person or such Person’s direct or indirect parent company by a Governmental Body or instrumentality thereof if, and only if, such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Body or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
 
“ Intellectual Property ” shall mean property constituting under any Applicable Law a Patent, Copyright, Trademark, trade secret or license or other right to use any of the foregoing.
 
24 

 
“ Intercreditor Agreement ” shall mean the Intercreditor Agreement, dated as of the date hereof, by and between Agent and Term Loan Agent in the form of Exhibit 8.1(p)  hereto.
 
“ Interest Expense ” shall mean, for any period, as to any Person, as determined in accordance with GAAP and without duplication, the total interest expense of such Person, with respect to such Person and its Subsidiaries, on a consolidated basis, for such period whether paid or accrued during such period (including the interest component of Capitalized Lease Obligations for such period), including, without limitation, interest expense paid to Affiliates of such Person, discounts in connection with the sale of any Receivables and bank fees, commissions, discounts and other fees and charges owed with respect to letters of credit, banker’s acceptances or similar instruments.
 
“ Interest Period ” shall mean the period provided for any Eurodollar Rate Loan pursuant to Section 2.2(b).
 
“ Interest Rate Hedge ” shall mean an interest rate exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor or similar agreements entered into by the Borrower or its Subsidiaries in order to provide protection to, or minimize the impact upon, the Borrower, any Guarantor and/or their respective Subsidiaries of increasing floating rates of interest applicable to Indebtedness.
 
“ Inventory ” shall mean and include, with respect to any specified Person, all of such Person’s now owned or hereafter acquired goods, merchandise and other personal property, wherever located, to be furnished under any consignment arrangement, contract of service or held for sale or lease, all raw materials, work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in such Person’s business or used in selling or furnishing such goods, merchandise and other personal property, and all documents of title or other documents representing them.
 
“ Inventory Advance Rate ” shall have the meaning set forth in Section 2.1(ii) hereof.
 
“ Investment Property ” shall mean and include all of Borrower’s now owned or hereafter acquired securities (whether certificated or uncertificated), securities entitlements, securities accounts, commodities contracts and commodities accounts.
 
“ Issuer ” shall mean any Person who issues a Letter of Credit and/or accepts a draft pursuant to the terms hereof.
 
“ Law(s) ” shall mean any law(s) (including common law and equitable principles), federal, state and foreign constitutions, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, judgment, authorization or approval, lien or award of or any settlement arrangement with any Governmental Body or arbitrator, directives and orders of any Governmental Body, in each case, whether, foreign or domestic, state, federal or local.
 
“ Lender ” and “ Lenders ” shall have the meaning ascribed to such term in the preamble to this Agreement and shall include each Person which becomes a transferee, successor or assign of any Lender.  For the purpose of provision of this Agreement or any Other Document which
 
25 

 
provides for the granting of a security interest or other Lien to the Agent for the benefit of Lenders as security for the Obligations, “Lenders” shall include any Affiliate of a Lender to which such Obligation (specifically including any Hedge Liabilities and any Cash Management Liabilities) is owed.
 
“ Lender-Provided Foreign Currency Hedge ” shall mean a Foreign Currency Hedge which is provided by any Lender and with respect to which Agent confirms in writing prior to the execution thereof: (a) is documented in a standard International Swap Dealer Association Agreement; (b) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner; and (c) is entered into for hedging (rather than speculative) purposes.  The liabilities to the provider of any Lender-Provided Foreign Currency Hedge are part of the Hedge Liabilities of the Loan Party or Subsidiary that is party to such Lender-Provided Foreign Currency Hedge shall, for purposes of this Agreement and all Other Documents be “Obligations” of such Person and of each other Loan Party except to the extent constituting Excluded Hedge Liabilities of such Person (subject to the final sentence of the definition of Excluded Hedge Liabilities).
 
“ Lender-Provided Interest Rate Hedge ” shall mean an Interest Rate Hedge which is provided by any Lender and with respect to which Agent confirms in writing prior to the execution thereof: (a) is documented in a standard International Swap Dealer Association Agreement; (b) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner; and (c) is entered into for hedging (rather than speculative) purposes.  The liabilities to the provider of any Lender-Provided Interest Rate Hedge are part of the Hedge Liabilities of the Loan Party or Subsidiary that is party to such Lender-Provided Interest Rate Hedge shall, for purposes of this Agreement and all Other Documents be “Obligations” of such Person and of each other Loan Party except to the extent constituting Excluded Hedge Liabilities of such Person (subject to the final sentence of the definition of Excluded Hedge Liabilities).  The Liens securing such Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agreement and the Other Documents, subject to the express provisions of Section 11.5 hereof.
 
“ Letter of Credit Fees ” shall have the meaning set forth in Section 3.2.
 
“ Letter of Credit Borrowing ” shall have the meaning set forth in Section 2.12(d).
 
“ Letter of Credit Reserve ” shall mean, as of any date of determination, the aggregate Maximum Undrawn Amount of all outstanding (and/or requested but not yet issued) Letters of Credit.
 
“ Letter of Credit Sublimit ” shall mean $5,000,000.
 
“ Letters of Credit ” shall have the meaning set forth in Section 2.9.
 
“ License Agreement ” shall mean any agreement between Borrower and a Licensor pursuant to which Borrower is authorized to use any Intellectual Property, other than off the-shelf software, in connection with the manufacturing, marketing, sale or other distribution of any Inventory of Borrower or otherwise in connection with Borrower’s business operations.
 
26 

 
“ Licensor ” shall mean any Person from whom Borrower obtains the right to use (whether on an exclusive or non-exclusive basis) any Intellectual Property in connection with Borrower’s manufacture, marketing, sale or other distribution of any Inventory or otherwise in connection with Borrower’s business operations.
 
“ Licensor/Agent Agreement ” shall mean an agreement between Agent and a Licensor, in form and content satisfactory to Agent, by which Agent is given the unqualified right, vis-a-vis such Licensor, to enforce Agent’s Liens with respect to and to dispose of Borrower’s Inventory with the benefit of any Intellectual. Property applicable thereto, irrespective of Borrower’s default under any License Agreement with such Licensor.
 
“ Lien ” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), Charge, claim or encumbrance, or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset of any kind or nature whatsoever including any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction.
 
“ Lien Waiver Agreement ” shall mean an agreement which is executed in favor of Agent by a Person who owns or occupies premises at which any Collateral may be located from time to time in form and substance reasonably satisfactory to Agent.
 
“ Loan Parties ” shall mean Borrower and the Guarantors collectively, and “ Loan Party ” shall mean Borrower or any Guarantor individually.
 
“ Material Adverse Effect ” shall mean (a) on the Closing Date, as used with respect to Baskins, a “Company Material Adverse Effect” as defined in the Purchase Agreement, and (b) both on the Closing Date, as used with respect to all Loan Parties other than Baskins, and after the Closing Date with respect to all Loan Parties, a material adverse effect on (i) the condition (financial or otherwise), operations, assets or properties of the Loan Parties (taken as a whole), (ii) Borrower’s consolidated ability to duly and punctually pay or perform the Obligations in accordance with the terms thereof, (ii) the value of the Collateral, or Agent’s Liens on the Collateral or the priority of any such Liens or (d) the practical realization of the benefits of Agent’s and each Lender’s rights and remedies under this Agreement and the Other Documents.
 
“ Maximum Face Amount ” shall mean, with respect to any outstanding Letter of Credit, the face amount of such Letter of Credit including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective.
 
“ Maximum Revolving Advance Amount ” shall mean $60,000,000, as such amount may be increased pursuant to Section 2.25 hereof or decreased pursuant to Section 2.21 hereof.
 
“ Maximum Undrawn Amount ” shall mean with respect to any outstanding Letter of Credit, the amount of such Letter of Credit that is or may become available to be drawn, including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective.
 
27 

 
“ Mezzanine Credit Agreement ” means the Senior Subordinated Term Loan and Security Agreement dated as of December 12, 2011 by and among Capital South Partners SBIC Fund III, LP, as Agent, the financial institutions party thereto as Lenders, Borrower and Parent Holdco, as amended to date.
 
“ Modified Commitment Transfer Supplement ” shall have the meaning set forth in Section 15.3(d).
 
“ Mortgages ” shall mean any mortgage, deed of trust or other such agreement or instrument granting a Lien on any Real Property of Borrower or any Guarantor, together with all extensions, renewals, amendments, supplements, modifications, substitutions and replacements of or with respect to any of the foregoing.
 
“ Multiemployer Plan ” shall mean a “multiemployer plan” as defined in Sections 3(37) and 4001(a)(3) of ERISA which is subject to Title IV of ERISA and to which any Loan Party or member of the Controlled Group is obligated to contribute.
 
“ New Lender ” has the meaning set forth in Section 2.25 hereof.
 
“ Non-Defaulting Lender ” shall mean, at any time, any Lender holding a Commitment Percentage that is not a Defaulting Lender at such time.
 
“ Non-Qualifying Party ” shall mean any Loan Party that fails for any reason to qualify as an Eligible Contract Participant.
 
“ Obligations ” shall mean and include any and all loans, advances, debts, liabilities, obligations, covenants and duties owing by the Borrower to Lenders or Agent or to any other direct or indirect subsidiary or affiliate of Agent or any Lender of any kind or nature, present or future (including any interest or other amounts accruing thereon after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to the Borrower, whether or not a claim for post-filing or post-petition interest or other amounts is allowed in such proceeding), evidenced by this Agreement and the Other Documents (including, without limitation, Hedge Liabilities and Cash Management Liabilities), whether or not for the payment of money, whether arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease or guarantee, or in any other manner, whether arising out of overdrafts or deposit or other accounts or electronic funds transfers (whether through automated clearing houses or otherwise) or out of the Agent’s or any Lenders non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository transfer check or other similar arrangements, whether direct or indirect (including those acquired by assignment or participation), absolute or contingent, joint or several, due or to become due, now existing or hereafter arising, contractual or tortious, liquidated or unliquidated, regardless of how such indebtedness or liabilities arise or by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument, all amounts payable under Section 15.5 or Section 15.9 and all payment, performance and observance obligations of Loan Parties to Agent or Lenders under this Agreement and the Other Documents.  Notwithstanding anything to the contrary contained in the foregoing (but subject to the final sentence of the definition of Excluded Hedge Liabilities), as to
 
28 

 
each Loan Party, the Obligations shall not include any Excluded Hedge Liabilities of such Person.
 
“ Ordinary Course of Business ” shall mean, in respect of any transaction involving any Person, the ordinary course of such Person’s business, as conducted by any such Person in accordance with, or reasonably related to, past practice or otherwise related or complementary thereto, and undertaken by such Person in good faith and not for purposes of evading any covenant or restriction in this Agreement or any Other Document.
 
“ Original Owner ” shall mean Parent Holdco.
 
“ Other Connection Taxes ” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
 
“ Other Documents ” shall mean the Revolving Credit Note, the Perfection Certificate, the Credit Card Notices, the Fee Letter, the Guaranty, any Guarantor Security Agreement, any Lender-Provided Interest Rate Hedge, any Lender-Provided Foreign Currency Hedge, any agreements for Cash Management Products and Services, the Mortgages (if any), the Intercreditor Agreement and any and all other agreements, instruments, notes and documents, including guaranties, pledges, security agreements, control agreements, powers of attorney, consents, interest or currency swap agreements or other similar agreements heretofore, now or hereafter executed by Borrower or any Guarantor and/or delivered to Agent or any Lender in respect of the transactions contemplated by this Agreement.
 
“ Other Taxes ” shall mean all present or future stamp, court or documentary, intangible, recording, filing or any other excise or property Taxes, charges or similar levies arising from any payment made hereunder or under any Other Document or from the execution, delivery, performance, registration or enforcement of, from the receipt or perfection of a security interest under, or otherwise with respect to, this Agreement or any Other Document except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.11(a)).
 
“ Out-of-Formula Loans ” shall have the meaning set forth in Section 15.2(b).
 
“ Overadvance Threshold Amount ” shall have the meaning set forth in Section 15.2(b).
 
“ Parent ” of any Person shall mean a corporation or other Person owning, directly or indirectly at least 50% of the shares of stock or other ownership interests having ordinary voting power to elect a majority of the directors of such Person, or other Persons performing similar functions for any such Person.
 
“ Parent Holdco ” shall have the meaning set forth in the preamble to this Agreement.
 
“ Participant ” shall have the meaning set forth in Section 15.3(b)(i).
 
29 

 
“ Participant Register ” shall have the meaning set forth in Section 15.3(b)(ii).
 
“ Participation Advance ” shall have the meaning set forth in Section 2.12(d).
 
“ Participation Commitment ” shall mean each Lender’s obligation to buy a participation of the Letters of Credit issued hereunder.
 
“ Patent ” shall mean all of the following (whether now owned or hereafter acquired by Borrower): discoveries and ideas, whether patentable or not, and all issued patents and patent applications, including the patents and patent applications listed on Schedule 5.9 attached hereto and made a part hereof, and (i) all reissues, continuations, continuations-in-part, substitutes, extensions or renewals thereof and improvements thereon, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, (iii) the right to sue for past, present and future infringements and dilutions thereof, and (iv) all of Borrower’s rights corresponding thereto throughout the world.
 
“ Payment Office ” shall mean initially Two Tower Center Boulevard, East Brunswick, New Jersey 08816 and thereafter, such other office of Agent, if any, which it may designate by notice to Borrower and to each Lender to be the Payment Office.
 
“ PBGC ” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.
 
“ Pension Benefit Plan ” shall mean at any time any employee pension benefit plan (including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code and either (i) is maintained by any member of the Controlled Group for employees of any member of the Controlled Group; or (ii) has at any time within the preceding five years been maintained by any entity which was at such time a member of the Controlled Group for employees of any entity which was at such time a member of the Controlled Group.
 
“ Perfection Certificate ” shall mean that certain Amended and Restated Perfection Certificate, dated the Closing Date, executed by Parent Holdco, Borrower, RCC and Baskins and provided to Agent.
 
“ Permitted Acquisition ” means an acquisition by Borrower or a Guarantor that either (x) is (i) of all or substantially all of the assets, a line of business or division or the Equity Interests of any Person engaged in a business which is substantially related to that of Borrower and its Subsidiaries or (ii) is a Real Estate Acquisition, provided , that, in the case of each of (i) and (ii),  (a) the total consideration (including, without limitation, assumed Indebtedness (on a net of cash basis), cash, debt securities, purchase price adjustments, earnouts or other similar deferred purchase price payment obligations or other property, but excluding any portion of such consideration consisting of Equity Interests of Topco or funded with cash proceeds of Permitted Equity Issuances that are not Permitted Freeman Spogli Investments) for all such acquisitions after the Closing Date does not exceed $35,000,000 in the aggregate, (b) in the event that the total consideration (including, without limitation, assumed Indebtedness (on a net of cash basis),
 
30 

cash, debt securities, purchase price adjustments, earnouts or other similar deferred purchase price payment obligations or other property, but excluding any portion of such consideration consisting of Equity Interests of Topco or funded with cash proceeds of Permitted Equity Issuances that are not Permitted Freeman Spogli Investments) for any single acquisition exceeds $20,000,000, the prior written consent of the Agent shall be required, (c) all such acquisitions are approved by the board of directors and stockholders, if required, of the acquiree and are not otherwise hostile, (d) either the Person acquired shall be or become a Subsidiary organized under the laws of a jurisdiction in, or substantially all of the assets, line of business or division acquired shall be located within, the United States or Canada, (e) in the case of an acquisition of Equity Interests, Borrower or one or more Guarantors shall have beneficial ownership of all of the Equity Interests of the Person acquired, (f) both immediately prior, and after giving effect, to any such proposed acquisition no Default or Event of Default shall have occurred and be continuing or would result therefrom, (g) both immediately prior, and after giving effect, to any such proposed acquisition, Borrower and its Subsidiaries shall be in compliance with the financial covenant set forth in Section 6.5 on a pro forma basis after giving effect to such acquisition, recomputed for the twelve (12) month period ending on the last day of the fiscal month most recently ended, (h) such acquisition is a “Permitted Acquisition” under the Term Loan Agreement, (i) except for a Real Estate Acquisition, EBITDA of the Person acquired for the most recent trailing twelve month period prior to the acquisition date for which financial statements are available, after giving pro forma effect to such acquisition (reflecting demonstrable and quantifiable cost savings and synergies to be realized within 12 months after such acquisition, which cost savings and synergies are set forth in a quality of earnings report prepared by an accounting firm reasonably acceptable to Agent, and in form and substance reasonably acceptable to Agent, or as otherwise consented to by Agent), shall be equal to or greater than zero and (j) after giving effect to such acquisition, the Borrower and its Subsidiaries shall have Undrawn Availability of not less than $15,000,000; or (y) both the Agent and the Term Loan Agent have agreed in writing constitutes a Permitted Acquisition.  Compliance with all of the foregoing provisions (other than with respect to a Permitted Acquisition described in clause (y) above) shall be confirmed by a certificate of an authorized officer of Borrower.  Borrower shall give Agent and Lenders 15 days’ (or such lesser time period as Agent may agree) prior written notice of each such proposed acquisition, and together with such notice and also on the date of consummation of such proposed acquisition, Borrower shall furnish Agent and the Lenders with the other items required by this definition, financial statements (for the three prior years, if available), projections revised to give effect to the proposed Permitted Acquisition, an executed term sheet and/or commitment letter (setting forth in reasonable detail the terms and conditions of such acquisition) and, at the request of the Agent, such other information and documents (including, without limitation, the Other Documents required by Section 6.6), certificates, Lien searches, resolutions and opinions that the Agent may request in its Permitted Discretion, including, without limitation and to the extent available, final or substantially final drafts of the respective material agreements, documents or instruments pursuant to which such acquisition is to be consummated (including, without limitation, any related management, non-compete, employment, option or other material agreements), any schedules to such agreements, documents or instruments and all other material ancillary agreements, instruments and documents to be executed or delivered in connection therewith.  Agent shall promptly undertake a review of such information and shall expeditiously inform the Borrower as to whether the required criteria has been satisfied.  Within a reasonable time following the consummation of
 
31 

 
such acquisition, Borrower shall deliver to the Agent copies of executed counterparts of each of the material documents with respect to such acquisition.
 
“ Permitted Consignment Sale ” means a sale of Inventory by Borrower to a third party on a consignment basis, provided that: (a) the aggregate value of all such Inventory sold by Borrower on consignment at any time shall not exceed $250,000; and (b) Borrower shall have filed a valid UCC-1 financing statement covering the consigned Inventory in the relevant filing office under the Uniform Commercial Code applicable to the consignee and, if applicable, notified any creditor of the consignee with a security interest in the Inventory of the consignee of Borrower’s rights as consignee with respect to such Inventory.
 
“ Permitted Discretion ” shall mean a determination made in good faith and in the exercise of commercially reasonable (from the perspective of a secured asset-based lender) business judgment.
 
“ Permitted Disposition ” shall mean (a) the sale of Inventory and Equipment in the Ordinary Course of Business; (b) Permitted Consignment Sales; (c) Permitted Investments, (d) the disposition or transfer of (i) damaged, obsolete, surplus or worn-out property in the Ordinary Course of Business during any fiscal year having an aggregate fair market value of not more than $250,000 or (ii) the assets (involving Inventory) at closed retail locations, in each case only to the extent (A) the proceeds of any such disposition are used, or committed to be used, within 270 days of such disposition, to acquire replacement property or other assets reasonably related to the business of Borrower which, in each case, are subject to Agent’s first priority security interest (subject to Permitted Encumbrances and the terms of the Intercreditor Agreement), (B) if such assets were Term Loan Priority Collateral, the proceeds thereof are remitted to the Term Loan Agent to be applied pursuant to the terms of the Term Loan Agreement, (C) if such assets were Revolving Loan Priority Collateral, the proceeds thereof are deposited in a Collection Account for application to the Obligations pursuant to Section 4.15(h), or, if applicable, Section 11.5, or (D) if the Term Loan Facility has been terminated and no obligations thereunder remain outstanding, the proceeds are deposited in a Collection Account for application to the Obligations pursuant to Section 4.15(h), or, if applicable, Section 11.5; (e) the sale, transfer, conveyance, assignment or disposition (i) by any Loan Party or Subsidiary thereof to Borrower, (ii) by any Loan Party to any other Loan Party; provided , that , if Borrower is a party thereto, Borrower must be the recipient entity, (iii) by a Borrowing Base Party to another Borrowing Base Party; provided , that , a Borrower may not transfer a material portion of its assets to a Borrowing Base Party that is not also a Borrower, (iv) by any Subsidiary of a Loan Party to any Loan Party or Domestic Subsidiary thereof, (v) by any Foreign Subsidiary to another Foreign Subsidiary, or (vi) by any Domestic Subsidiary that is not a Loan Party to any other Domestic Subsidiary that is not a Loan Party; (f) sales, transfers, conveyances, assignments or dispositions solely to effectuate a merger or consolidation permitted pursuant to Section 7.1 ; (g) the licensing and sublicensing, on a non-exclusive basis, of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of business; (h) to the extent permitted by Section 6.10, the lapse of registered patents, trademarks and other intellectual property of a Loan Party or Subsidiary thereof; (i) the granting of Permitted Encumbrances; (j) subject to the terms of Section 4.11, any involuntary loss or condemnation, damage or destruction of property and any disposition of any such damaged property to any insurer with respect thereto in settlement of any claim by the applicable Loan Party or Subsidiary thereof to the extent required by the
 
32 

 
applicable insurance policy; (k) dispositions of assets acquired by the Loan Parties and their Subsidiaries pursuant to a Permitted Acquisition consummated within 12 months of the date of the proposed disposition in an aggregate amount not to exceed $500,000 for each such Permitted Acquisition; (l) sales or other dispositions of a de minimis number of shares of the Equity Interests of a Foreign Subsidiary of Borrower in order to qualify members of the governing body of such Foreign Subsidiary if required by Applicable Law; and (m) other sales, transfers, conveyances, assignments or dispositions of assets (excluding Equity Interests) have a fair market value not in excess of $250,000 during any fiscal year.
 
“ Permitted Encumbrances ” shall mean:
 
(a)                                  Liens in favor of Agent for the benefit of Agent and Lenders, including without limitation, Liens securing Hedge Liabilities and Cash Management Products and Services;
 
(b)                                  Liens for Taxes, assessments or other governmental charges not delinquent or being Properly Contested;
 
(c)                                   Liens disclosed in the financial statements referred to in Section 5.5;
 
(d)                                  deposits or pledges to secure obligations under worker’s compensation, social security or similar laws, or under unemployment insurance;
 
(e)                                   deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the Ordinary Course of Business;
 
(f)                                    Liens arising by virtue of the rendition, entry or issuance against Borrower or any Subsidiary, or any property of Borrower or any Subsidiary, of any judgment, writ, order, or decree so long as such does not constitute an Event of Default under Section 10.6;
 
(g)                                   Liens of (i) Landlords’, carriers’, mechanics’, workers’, materialmen’s, warehousemen’s, repairmen’s or other like Liens arising under Applicable Law in the Ordinary Course of Business with respect to obligations which are not due or which are being Properly Contested and (ii) the Liens granted to each of Frontier Mall Associates Limited Partnership, MSW Promenade, L.P., TX-SW #1, LP, Ambassador Way Associates, LP and Bluecap, Ltd. pursuant to the leases entered with such Persons by a Loan Party, as such leases exist on the Closing Date with such amendments and modifications thereto as are permitted under this Agreement so long as either (A) subject to Section 6.12, such Liens are subordinated to Agent’s Liens pursuant to a Lien Waiver Agreement or (B) Agent has received the reporting required under Section 9.2(a) and, at the election of Agent, implemented a Reserve with respect to such Lien in an amount determined by Agent in its Permitted Discretion;
 
(h)                                  Liens or interests of lessors under Capital Leases to the extent that such Liens or interests secure Capital Financing Indebtedness; provided that (i) such Lien attaches only to the asset purchased, acquired, constructed, improved or remodeled and the proceeds thereof, and (ii) the aggregate amount of Indebtedness secured by such Liens incurred as a result of such purchases shall not exceed the amount provided for in clause (iii) of Section 7.8;
 
33 

 
(i)                                      other Liens incidental to the conduct of Borrower’s business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances or credit, and which do not in the aggregate materially detract from Agent’s or Lenders’ rights in and to the Collateral or the value of Borrower’s property or assets or which do not materially impair the use thereof in the operation of Borrower’ s business;
 
(j)                                     Liens disclosed on Schedule 1.2(a) ; provided that such Liens shall secure only those obligations which they secure on the Closing Date (and extensions, renewals and refinancings of such obligations permitted by Section 7.8) and shall not subsequently apply to any other property or assets of Borrower;
 
(k)                                  Easements, rights of way, zoning, covenants, conditions and other restrictions, minor defects or other irregularities in title, and other similar encumbrances incurred in the Ordinary Course of Business which, either individually or in the aggregate do not in any case materially detract from the value of the Property subject thereto or interfere in any material respect with the ordinary conduct of the businesses of any Loan Party or any Subsidiary of any Loan Party;
 
(l)                                      Liens arising from (i) precautionary UCC financing statements in respect of leases of goods permitted by this Agreement or in respect of trade show or special event consignment arrangements, in each case to the extent that such Liens attach only to such leased property or consigned goods, and (ii) non-consensual filings of any financing statement under the Uniform Commercial Code or any comparable law which the Loan Parties are making commercially reasonable efforts to terminate or remove (promptly after the earlier to occur of (x) receipt of a written request thereto from the Agent and (y) any Loan Party becoming aware of the existence of such non-consensual filing);
 
(m)                              Liens held by creditors of consignees of Inventory of Borrower in connection with Permitted Consignment Sales by Borrower;
 
(n)                                  Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties in connection with the importation of goods in the Ordinary Course of Business so long as such Liens attach only to the imported goods;
 
(o)                                  Good faith pledges on deposits (not otherwise covered in clause (d) above) made in the ordinary course of business to secure new construction of business locations of the Borrower and its Subsidiaries; and
 
(p)                                  to the extent having the priority provided for in the Intercreditor Agreement and securing only the amount permitted thereunder, Liens securing the Term Loan Facility.
 
“ Permitted Equity Issuances ” shall mean, collectively, (a) Permitted Freeman Spogli Investments and (b) any sale or issuance for cash of any Equity Interests (other than Disqualified Equity Interests) to the Permitted Holders.
 
34 

 
“ Permitted Freeman Spogli Investment ” shall mean the purchase by Freeman Spogli, the Permitted Holders or any of their Affiliates of additional Equity Interests of Topco (or any such entity’s making of a loan or advance to Topco), the net cash proceeds of which shall be used by Topco to purchase additional Equity Interests (other than Disqualified Equity Interests) of, or make an unsecured loan or advance to (which unsecured loan shall be on terms satisfactory to Agent, in its reasonable discretion, in all respects and subordinated in right of payment to the Obligations pursuant to a written subordination agreement satisfactory to the Agent, in its reasonable discretion, in all respects), Parent Holdco to be similarly invested into Borrower in connection with the exercise of an Equity Cure pursuant to Section 10.5(c).
 
“ Permitted Holders ” shall mean the persons listed on Schedule 1.2(b)  hereto and their respective Affiliates, successors and assigns and the officers, directors, employees and consultants of any Loan Party.
 
“ Permitted Investment ” has the meaning set forth in Section 7.4 hereof.
 
“ Permitted Subordinated Debt ” shall mean unsecured Indebtedness incurred from, or provided by, a Person who is not an Affiliate of any Loan Party which is on terms satisfactory to Agent, in its reasonable discretion, in all respects and subordinated in right of payment to the Obligations pursuant to a written subordination agreement satisfactory to the Agent, in its reasonable discretion, in all respects.
 
“ Person ” shall mean any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, association, limited liability company, limited liability partnership, institution, public benefit corporation, joint venture, entity or Governmental Body (whether federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof).
 
“ Plan ” shall mean any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Benefit Plan but not any Multiemployer Plan), maintained for employees of a Loan Party or any such Plan to which a Loan Party is required to contribute on behalf of any of its employees.
 
“ PNC ” shall have the meaning set forth in the preamble to this Agreement and shall extend to all of its successors and assigns.
 
“ PP&E ” shall mean Property, Plant and Equipment as such term is defined in accordance with GAAP.
 
“ PPSA ” shall mean the Personal Property Security Act as in effect from time to time in any province or territory of Canada applicable to any Collateral.  References to sections of the PPSA shall be construed to also refer to any successor sections.
 
“ Pre-Opening Costs ” means expenses incurred with respect to the acquisition, opening and organizing of new Stores of the Loan Parties to the extent not prohibited by this Agreement, such costs including, but not limited to, the cost of feasibility studies, staff-training and recruiting, and travel costs for employees engaged in such start-up activities; provided, however,
 
35 

 
that (a) such Pre-Opening Costs are incurred within ninety (90) days before the opening of the applicable new Store, and (b) the aggregate amount of such Pre-Opening Costs does not exceed an average of $150,000 with respect to each single location or $2,500,000 in the aggregate for all locations during any fiscal year.
 
“ Priority Payables ” shall mean, as of any date of determination: (a) the full amount of the liabilities of any Borrower at such time which, except for liabilities associated with Permitted Encumbrances (i) have a trust, deemed trust or statutory lien imposed to provide for payment or a security interest, pledge, hypothec, charge or other Lien ranking or capable of ranking senior to or pari passu with the Liens granted to Agent on the Collateral under federal, provincial, municipal or local law in Canada or (ii) have a right imposed to provide for payment ranking or capable of ranking senior to or pari passu with such Obligations under local or federal law, regulation or directive, including, but not limited to, claims for unremitted and/or accelerated rents, taxes (including sales tax, goods and services taxes, harmonized sales taxes and withholding taxes), wages, withholding taxes, VAT and other amounts payable to an insolvency administrator, employee withholdings or deductions and vacation pay, severance and termination pay, workers’ compensation obligations, government royalties, pension fund obligations or any amounts representing any unfunded liability (whether or not due), solvency deficiency or wind up deficiency with respect to any defined benefit plan for Canadian employees which could become subject to a trust, deemed trust or statutory lien, in each case, to the extent such trust, deemed trust, statutory lien, security interest, hypothec, charge or other Lien has been or could reasonably be expected to be imposed as determined by Agent in its sole discretion; and (b) the amount equal to the percentage applicable to Inventory located in Canada that is part of the Formula Amount which Agent, in its Permitted Discretion, considers as being, or is reasonably likely to become, subject to retention of title by a supplier or a right of a supplier to recover possession thereof, where such supplier’s right has priority over Agent’s Liens securing such Obligations, including, without limitation, Eligible Inventory subject to a right of a supplier to repossess goods pursuant to Section 81.1 of the Bankruptcy and Insolvency Act (Canada) or any applicable laws granting revendication or similar rights to unpaid suppliers or any similar laws of Canada or any other applicable jurisdiction.
 
“ Pro Forma Balance Sheet ” shall mean the unaudited consolidated balance sheet of the Loan Parties and their Subsidiaries as of March 31, 2013 after giving pro forma effect to the Transactions.
 
“ Projections ” shall have the meaning set forth in Section 5.5 hereof.
 
“ Properly Contested ” shall mean, in the case of any Indebtedness or Lien, as applicable, of any Person (including any taxes) that is not paid as and when due or payable by reason of such Person’s bona fide dispute concerning its liability to pay same or concerning the amount thereof, (i) such Indebtedness or Lien, as applicable, is being properly contested in good faith and in the case of Indebtedness to or Liens in favor of a Governmental Body, by appropriate proceedings promptly instituted and diligently conducted; (ii) such Person has established appropriate reserves as shall be required in conformity with GAAP; (iii) the nonpayment of such Indebtedness is not reasonably likely to have a Material Adverse Effect; (iv) no Lien is imposed upon any of such Person’s assets with respect to such Indebtedness unless such Lien is at all times junior and subordinate in priority to the Liens in favor of the Agent (except only with
 
36 

 
respect to property taxes or other statutory Liens that have priority as a matter of applicable state law) and enforcement of such Lien is stayed during the period prior to the final resolution or disposition of such dispute; (v) if such Indebtedness or Lien, as applicable, results from, or is determined by the entry, rendition or issuance against a Person or any of its assets of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review; and (vi) if such contest is abandoned, settled or determined adversely (in whole or in part) to such Person, such Person forthwith pays such Indebtedness and all penalties, interest and other amounts due in connection therewith.
 
“ Purchase Agreement ” shall have the meaning set forth in the recitals to this Agreement.
 
“ Purchase Documents ” shall mean, collectively, the Purchase Agreement and all other agreements, documents and instruments entered into in connection therewith (excluding, in any event, the Term Loan Documents, this Agreement and the Other Documents).
 
“ Purchasing CLO ” shall have the meaning set forth in Section 15.3(d) hereof. “ Purchasing Lender ” shall have the meaning set forth in Section 15.3(c) hereof.
 
“ Qualified ECP Loan Party ” shall mean each Loan Party that (a) has total assets exceeding $10,000,000 on the Eligibility Date, or (b) such other Person as is qualified to give a “letter of credit or keepwell, support, or other agreement” for purposes of Section 1a(18)(A(v)(II) of the CEA.
 
“ RCC ” shall mean RCC Western Stores, Inc., a South Dakota corporation.
 
“ RCC Acquisition ” shall mean the purchase by Borrower of all of the issued and outstanding shares of common stock of RCC pursuant to the RCC Purchase Agreement.
 
“ RCC Purchase Agreement ” shall mean the Stock Purchase Agreement dated as of August 7, 2012 by and among Borrower, RCC, the stockholders of RCC party thereto, and Robert Hoover as the representative of such stockholders.
 
“ RCRA ” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as same may be amended from time to time.
 
“ Real Estate Acquisition ” shall mean the acquisition of all or substantially all of the assets, a line of business or division, or the Equity Interests, of any Person solely or primarily for the purpose of acquiring its real property assets, whether fee interests or leaseholds, and assets and rights incidental or appurtenant thereto, to the extent that no more than ten (10) real estate locations are so acquired in any one such acquisition.
 
“ Real Property ” shall mean all real property now or hereafter owned or leased by Borrower or any Guarantor.
 
“ Receivables ” shall mean and include, as to Borrower, all of Borrower’s accounts, contract rights, instruments (including those evidencing indebtedness owed to Borrower by its Affiliates), documents, chattel paper (including electronic chattel paper), general intangibles relating to accounts, drafts and acceptances, Credit Card Receivables and all other forms of
 
37 

 
obligations owing to Borrower arising out of or in connection with the sale or lease of Inventory or the rendition of services, all supporting obligations, guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or assigned to Agent hereunder.
 
“ Receivables Advance Rate ” shall have the meaning set forth in Section 2.1(a)(i) hereof.
 
“ Recipient ” means the Agent, any Lender (including, as applicable, any Participant), and any Issuer.
 
“ Register ” “ Register ” shall have the meaning set forth in Section 15.3(e) hereof.
 
“ Reimbursement Obligation ” shall have the meaning set forth in Section 2.12(b) hereof “ Release ” shall have the meaning set forth in Section 5.7(c)(i) hereof.
 
“ Related Transaction Documents ” shall mean the Purchase Documents and the Term Loan Documents.
 
“ Release ” shall have the meaning set forth in Section 5.7(c)(i) hereof.
 
“ Reportable Compliance Event ” shall mean that any Covered Entity becomes a Sanctioned Person, or is indicted, arraigned, investigated or custodially detained, or receives a written inquiry from a Governmental Body, in connection with any Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or self-discovers facts or circumstances implicating any aspect of its operations constituting actual or possible violations of any Anti-Terrorism Law.
 
“ Reportable Event ” shall mean a reportable event described in Section 4043(c) of ERISA or the regulations promulgated thereunder with respect to a Pension Benefit Plan for which the requirement of thirty (30) days’ notice has not been waived under the regulations of the PBGC as in effect on the date of this Agreement.
 
“ Required Lenders ” shall mean Lenders, other than Defaulting Lenders, holding at least fifty-one percent (51%) of the Advances and, if no Advances are outstanding, shall mean Lenders (other than Defaulting Lenders) holding fifty-one percent (51%) of the aggregate Commitment Percentages of all Lenders other than Defaulting Lenders; provided , however , if there are fewer than three (3) Lenders, Required Lenders shall mean all Lenders other than Defaulting Lenders.
 
“ Reserves ” shall mean as of any date of determination, such amounts as Agent may from time to time establish and revise in its Permitted Discretion reducing the Formula Amount which would otherwise be available to Borrower under the lending formula(s) provided for herein: (a) to reflect events, conditions, contingencies or risks which, as determined by Agent in its Permitted Discretion, materially adversely affect, would or could have a reasonable likelihood of materially adversely affecting, either (1) the Collateral or any other property which is security for the Obligations, its value or the amount that might be received by Agent from the sale or other disposition or realization upon such Collateral, (2) the assets, business or condition (financial or otherwise) of Borrower or the Guarantors, (3) the security interests and other rights of Agent in the Collateral (including the enforceability, perfection and priority thereof), (4) Borrower’s
 
38 

 
and/or any Guarantor’s ability to perform hereunder or under the Other Documents or (5) Agent’s or Lenders’ ability to enforce their rights under this Agreement and the Other Documents, (b) to ensure Borrower’s or any Guarantor’s ability to satisfy any payment obligation for which it is liable, (c) to reflect Agent’s good faith belief that any collateral report or financial information furnished by or on behalf of Borrower to Agent is or may have been incomplete, inaccurate or misleading in any material respect, (d) in respect of any state of facts which Agent determines in good faith and following notice to Borrower constitutes or would reasonably be expected to result in a Default or an Event of Default or (e) if Borrower maintains any operations or has any employees in Canada, amounts for applicable Priority Payables.  The amount of any Reserve established by Agent shall have a reasonable relationship to the event, condition or other matter which is the basis for such Reserve as determined by Agent in its Permitted Discretion and, prior to establishing and imposing any such Reserve, Agent shall, where commercially practicable, endeavor to (but shall have no liability for failing to) provide Borrower with five (5) days’ prior notice of the creation of any such Reserve during which period Borrower and Agent may discuss the imposition of such Reserve.
 
“ Reserve Percentage ” shall mean as of any day the maximum percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”).
 
“ Restricted Payment ” shall mean (a) the declaration or payment of any dividend or the incurrence of any liability to make any other payment or distribution of cash or other property or assets (other than in the form of common stock) in respect of a Person’s Equity Interests, (b) any payment on account of the purchase, redemption, defeasance, sinking fund or other retirement of a Person’s Equity Interests or any other payment or distribution made in respect thereof, either directly or indirectly, (c) any payment or prepayment of principal of, premium, if any, or interest, fees or other amounts on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to, any Permitted Subordinated Debt or any earnout or other similar deferred purchase price payment obligations incurred with respect to a Permitted Acquisition; (d) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire Equity Interests of such Person now or hereafter outstanding; (e) any payment of a claim for the rescission of the purchase or sale of, or for material damages arising from the purchase or sale of, any shares of such Person’s Equity Interests or of a claim for reimbursement, indemnification or contribution arising out of or related to any such claim for damages or rescission; (f) any payment, loan, contribution, or other transfer of funds or other property to any equity holder of such Person; and (g) any payment of management fees (or other fees of a similar nature) by such Person to any present or future equity holder of such Person or their Affiliates.
 
“ Revolving Advances ” shall mean Advances made other than Letters of Credit.
 
“ Revolving Credit Facility ” means the revolving credit facility provided by Lenders to Borrower pursuant to Section 2.1.
 
39 

 
“ Revolving Credit Note ” shall have the meaning set forth in Section 2.1(a) hereof.
 
“ Revolving Interest Rate ” shall mean (a) in the case of a Revolving Advance that is a Domestic Rate Loan, an interest rate per annum equal to the sum of the Alternate Base Rate plus the Applicable Rate for Domestic Rate Loans, and (b) in the case of a Revolving Advance that is a Eurodollar Rate Loan, the sum of the Eurodollar Rate plus the Applicable Rate for Eurodollar Rate Loans.
 
“ Sanctioned Country ” shall mean a country subject to a sanctions program maintained by any Compliance Authority under the Anti-Terrorism Laws.
 
“ Sanctioned Person ” shall mean any individual person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person or entity, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection of transactions), under any Anti-Terrorism Laws.
 
“ SEC ” shall mean the Securities and Exchange Commission or any successor thereto.
 
“ Section 20 Subsidiary ” shall mean the Subsidiary of the bank holding company controlling PNC, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
 
“ Securities Act ” shall mean the Securities Act of 1933, as amended.
 
“ Settlement Date ” shall mean the Closing Date and thereafter Wednesday or Thursday of each week or more frequently if Agent deems appropriate unless such day is not a Business Day in which case it shall be the next succeeding Business Day.
 
“ Specified Representations ” means, in each case, to the extent made or deemed made on the Closing Date by or with respect to Baskins, the representations and warranties set forth in Sections 5.1(solely as it relates to this Agreement and the Other Documents), 5.2 (other than with respect to jurisdictions other than a Loan Party’s jurisdiction of formation), 5.5 (solely with respect to Projections), 5.8(a), (b) (solely with respect to clause (i) thereof and solely as it relates to this Agreement and the Other Documents) and (c) (solely with respect to the first sentence thereof), 5.15, 5.19, 5.26, 5.29 and 15.18.
 
“ Stores ” shall mean the retail stores owned and operated by Borrower or any of its Subsidiaries.
 
“ Subsidiary ” of any Person shall mean a corporation or other entity of whose Equity Interests having ordinary voting power (other than Equity Interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person.
 
“ Subsidiary Stock ” shall mean all of the issued and outstanding Equity Interests of each first-tier Subsidiary of a Loan Party other than Equity Interests owned directly or indirectly by a
 
40 

Foreign Subsidiary, or voting Equity Interests of a Domestic Holding Company or Foreign Subsidiary to the extent in excess of 65% of the voting Equity Interests thereof.
 
“ Swap ” shall mean any “swap” as defined in Section 1a(47) of the CEA and regulations thereunder, other than (a) a swap entered into, or subject to the rules of, a board of trade designated as a contract market under Section 5 of the CEA, or (b) a commodity option entered into pursuant to CFTC Regulation 32.3(a).
 
“ Swap Obligation ” means any obligation to pay or perform under any agreement, contract or transaction that constitutes a Swap which is also a Lender-Provided Interest Rate Hedge or a Lender-Provided Foreign Currency Hedge.
 
“ Taxes ” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Body, including any interest, additions to tax or penalties applicable thereto.
 
“ Term ” shall have the meaning set forth in Section 13.1 hereof.
 
“ Term Loan Agent ” shall have the meaning set forth in the recitals to this Agreement.
 
“ Term Loan Agreement ” shall have the meaning set forth in the recitals to this Agreement.
 
“ Term Loan Documents ” shall mean the Term Loan Agreement and the “Other Documents,” as defined therein, as the same may be amended, restated, replaced, modified or supplemented from time to time, including, without limitation, amendments, modifications, supplements, restatements and/or replacements thereof giving effect to increases, renewals, extensions, refundings, deferrals, restructurings, replacements or refinancings of, or additions to, the arrangements provided in such documents, in each case, to the extent not prohibited under the Intercreditor Agreement.
 
“ Term Loan Facility ” shall have the meaning set forth in the recitals to this Agreement.
 
“ Term Loan Lenders ” shall have the meaning set forth in the recitals to this Agreement.
 
“ Termination Event ” shall mean (i) a Reportable Event; (ii) the withdrawal of Borrower or any member of the Controlled Group from a Pension Benefit Plan or Multiemployer Plan during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Pension Benefit Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Pension Benefit Plan or Multiemployer Plan; (v) any event or condition (a) which could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Benefit Plan or Multiemployer Plan, or (b) that could be reasonably likely to result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of Borrower or any member of the Controlled Group from a Multiemployer Plan.
 
41 

 
“ Topco ” shall mean WW Top Holding Corporation, a Delaware corporation.
 
“ Toxic Substance ” shall mean and include any material present on any Real Property which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., or any other applicable Environmental Laws now in force or hereafter enacted relating to toxic substances. “Toxic Substance” includes but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.
 
“ Trademarks ” shall mean all of the following (whether now owned or hereafter adopted or acquired by Borrower): trademarks, trade names, registered trademarks, trademark applications, service marks, registered service marks and service mark applications, brand names, certification marks, collective marks, d/b/a’s, internet domain names, logos, symbols, trade dress, assumed names, fictitious business names and other indicia of origin, including the trade names, registered trademarks, trademark applications, registered service marks and service mark applications listed on Schedule 5.9 attached hereto and made a part hereof, and (i) all reissues, continuations, extensions, modifications and renewals thereof, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, (iii) the right to sue for past, present and future infringements and dilutions thereof, (iv) the goodwill of Borrower’s business symbolized by the foregoing and connected therewith, and (v) all of Borrower’s rights corresponding thereto throughout the world.
 
“ Transactions ” shall have the meaning set forth in the recitals hereto.
 
“ Transferee ” shall have the meaning set forth in Section 15.3(d) hereof.
 
“ Undrawn Availability ” shall mean, as at a particular date, an amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance Amount, minus (b) the sum of (i) the outstanding amount of Advances plus (ii) all amounts due and owing to Borrower’s trade creditors that are more than 60 days past due and are not otherwise on formal extended terms, plus (iii) fees and expenses arising hereunder or under the Other Documents for which Borrower is liable and has received an invoice but which have not been paid or charged to Borrower’s Account plus (iv) all other fees and expenses in connection with the transactions contemplated under this Agreement which are required to be paid by Borrower (for which Borrower has received an invoice) in order to effectuate such transactions.
 
“ Unfinanced Capital Expenditures ” shall mean all Capital Expenditures of Parent Holdco and its Subsidiaries in cash other than (a) those made utilizing financing provided by the applicable seller or third party financing sources, (b) expenditures constituting reinvestments from proceeds of any disposition of assets or property permitted by this Agreement, (c) those made utilizing the proceeds of (i) a sale or issuance of Equity Interests, which proceeds are not required to be used to prepay the Indebtedness under the Term Loan Facility or (ii) a capital contribution to Borrower from Parent Holdco or its Affiliates, which proceeds are not required to be used to prepay the Indebtedness under the Term Loan Facility, and/or (d) those made utilizing reimbursement proceeds by another Person that is not an Affiliate of a Loan Party, such as a landlord (including, without limitation, pursuant to any applicable rent abatement provisions).
 
42 

 
For the avoidance of doubt, Capital Expenditures made utilizing Revolving Advances shall be deemed Unfinanced Capital Expenditures.
 
“ Unfinanced Permitted Acquisition Expenses ” means all cash expenses of the Loan Parties in connection with Permitted Acquisitions other than (a) those made utilizing financing provided by the applicable seller or third party financing sources and (b) those made utilizing the proceeds of a substantially contemporaneous sale or issuance of Equity Interests which are not required to be used to prepay the Indebtedness under the Term Loan Facility.
 
“ Uniform Commercial Code ” shall have the meaning set forth in Section 1.3 hereof.
 
“ USA PATRIOT Act ” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
 
“ Week ” shall mean the time period commencing with the opening of business on a Wednesday and ending on the end of business the following Tuesday.
 
1.3                                Uniform Commercial Code Terms .  All terms used herein and defined in the Uniform Commercial Code as adopted in the State of New York from time to time (the “ Uniform Commercial Code ”) shall have the meaning given therein unless otherwise defined herein. Without limiting the foregoing, unless otherwise defined herein, the terms “accounts,” “chattel paper,” “commercial tort claims,” “instruments,” “general intangibles,” “goods,” “payment intangibles,” “proceeds,” “supporting obligations,” “securities,” “investment property,” “documents,” “deposit accounts,” “software,” “letter of credit rights,” “inventory,” “equipment” and “fixtures,” as and when used in the description of Collateral shall have the meanings given to such terms in Articles 8 or 9 of the Uniform Commercial Code.  To the extent the definition of any category or type of collateral is expanded by any amendment, modification or revision to the Uniform Commercial Code, such expanded definition will apply automatically as of the date of such amendment, modification or revision.
 
1.4                                Certain Matters of Construction .  The terms “herein”, “hereof’ and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision.  All references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement.  Any pronoun used shall be deemed to cover all genders.  Wherever appropriate in the context, terms used herein in the singular also include the plural and vice versa.  All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations, except as otherwise provided herein.  Unless otherwise provided, all references to any instruments or agreements to which Agent is a party, including references to any of the Other Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof. All references herein to the time of day shall mean the time in New York, New York.  Unless otherwise provided, all financial calculations shall be performed with Inventory valued on a first-in, first-out basis.  Whenever the words “including” or “include” shall be used, such words shall be understood to mean “including, without limitation” or “include, without limitation.”  A Default or Event of Default shall be deemed to exist at all times during the period commencing on the date that such
 
43 

 
Default or Event of Default occurs to the date on which such Default or Event of Default is waived in writing pursuant to this Agreement or, in the case of a Default, is cured within any period of cure expressly provided for in this Agreement; and an Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by the Required Lenders. Any Lien referred to in this Agreement or any of the Other Documents as having been created in favor of Agent, any agreement entered into by Agent pursuant to this Agreement or any of the Other Documents, any payment made by or to or funds received by Agent pursuant to or as contemplated by this Agreement or any of the Other Documents, or any act taken or omitted to be taken by Agent, shall, unless otherwise expressly provided, be created, entered into, made or received, or taken or omitted, for the benefit or account of Agent and Lenders. Wherever the phrase “to the best of Borrower’s knowledge” or words of similar import relating to the knowledge or the awareness of Borrower are used in this Agreement or Other Documents, such phrase shall mean and refer to (i) the actual knowledge of a senior officer of Borrower or (ii) the knowledge that a senior officer would have obtained if he had engaged in good faith and diligent performance of his duties, including the making of such reasonably specific inquiries as may be necessary of the employees or agents of Borrower and a good faith attempt to ascertain the existence or accuracy of the matter to which such phrase relates.  Wherever the phrase “paid in full in cash” is used in this Agreement or the Other Documents, such phrase shall mean and refer to (a) the full payment in cash of the Obligations (other than Obligations relating to Letters of Credit), excluding any then existing contingent indemnification or cost or expense reimbursement obligations that have not at that date been actually asserted and (b) to the extent applicable, cash collateralization of the Obligations relating to Letters of Credit as required by this Agreement.  All references to filing, registering or recording financing statements or other required documents under the Uniform Commercial Code shall be deemed to include filings and registrations under the PPSA.
 
II.                                    ADVANCES, PAYMENTS.
 
2.1                                Revolving Advances .  Subject to the terms and conditions set forth in this Agreement, each Lender, severally and not jointly, will make Revolving Advances to Borrower during the Term in an aggregate amount outstanding at any time equal to such Lender’s Commitment Percentage of the lesser of (x) the Maximum Revolving Advance Amount less the aggregate amount of the Letter of Credit Reserve or (y) an amount equal to the sum of :
 
(i)                                      up to 90%, subject to the provisions of Section 2.1(b) hereof (the “ Receivables Advance Rate ”), of Eligible Receivables, plus
 
(ii)                                   up to the lesser of (the “ Inventory Advance Rate ” and together with the Receivables Advance Rate, collectively, the “ Advance Rates ”) (A) 65%, subject to the provisions of Section 2.1(b) hereof, of the value of the Eligible Inventory and (B) 85% of the appraised net orderly liquidation value of Eligible Inventory (as evidenced by an Inventory appraisal conducted at such time and by such appraiser as shall be mutually satisfactory to Agent and Borrower), minus
 
(iii)                                the amount of the Letter of Credit Reserve, minus
 
44 

 
(iv)                               such Reserves as Agent may deem proper and necessary from time to time in its Permitted Discretion.
 
The amount derived from the sum of (x) Sections 2.1(i) and (ii)  minus (y) Sections 2.1(iii) and (iv) at any time and from time to time shall be referred to as the “ Formula Amount .”  The Revolving Advances shall be evidenced by one or more secured promissory notes (each, a “ Revolving Credit Note ” and collectively, the “ Revolving Credit Note ”) substantially in the form attached hereto as Exhibit 2.1 .
 
2.2                                Procedure for Revolving Advances Borrowing .
 
(a)                                  Borrower may notify Agent prior to 10:00 a.m. (Pacific time) on a Business Day of Borrower’s request to incur, on that day, a Revolving Advance hereunder. Should any amount required to be paid as interest hereunder, or as fees or other charges under this Agreement or any other agreement with Agent or Lenders, or with respect to any other Obligation, become due, same shall be deemed a request for a Revolving Advance maintained as a Domestic Rate Loan as of the date such payment is due, in the amount required to pay in full such interest, fee, charge or Obligation under this Agreement or any other agreement with Agent or Lenders, and such request shall be irrevocable.
 
(b)                                  Notwithstanding the provisions of subsection (a) above, in the event Borrower desires to obtain a Eurodollar Rate Loan, Borrower shall give Agent written notice by no later than 10:00 a.m. (Pacific time) on the day which is three (3) Business Days prior to the date such Eurodollar Rate Loan is to be borrowed, specifying (i) the date of the proposed borrowing (which shall be a Business Day), (ii) the type of borrowing and the amount of such borrowing which amount shall be in an aggregate principal amount that is not less than $500,000 and integral multiples of $100,000 in excess thereof, and (iii) the duration of the first Interest Period therefor. Interest Periods for Eurodollar Rate Loans shall be for one, two, three or six months; provided , that, if an Interest Period would end on a day that is not a Business Day, it shall end on the next succeeding Business Day unless such day falls in the next succeeding calendar month in which case the Interest Period shall end on the next preceding Business Day. No Eurodollar Rate Loan shall be made available to Borrower during the continuance of an Event of Default. After giving effect to each requested Eurodollar Rate Loan, including those which are converted from a Domestic Rate Loan under Section 2.2(d), there shall not be outstanding more than five (5) Eurodollar Rate Loans, in the aggregate.
 
(c)                                   Each Interest Period of a Eurodollar Rate Loan shall commence on the date such Eurodollar Rate Loan is made and shall end on such date as Borrower may elect as set forth in subsection (b)(iii) above, provided that the exact length of each Interest Period shall be determined in accordance with the practice of the interbank market for offshore Dollar deposits and no Interest Period shall end after the last day of the Term.
 
Borrower shall elect the initial Interest Period applicable to a Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section 2.2(d), as the case may be. Borrower shall elect the duration of each succeeding Interest Period by giving irrevocable written notice to Agent of such duration not later than 10:00 a.m. on the day which is three (3) Business Days prior to the last day of the
 
45 

 
then current Interest Period applicable to such Eurodollar Rate Loan.  If Agent does not receive timely notice of the Interest Period elected by Borrower, Borrower shall be deemed to have elected to convert to a Domestic Rate Loan subject to Section 2.2(d) hereinbelow.
 
(d)                                  Provided that no Event of Default shall have occurred and be continuing, Borrower may, on the last Business Day of the then current Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any Business Day with respect to Domestic Rate Loans, convert any such loan into a loan of another type in the same aggregate principal amount provided that any conversion of a Eurodollar Rate Loan shall be made only on the last Business Day of the then current Interest Period applicable to such Eurodollar Rate Loan. If Borrower desires to convert a loan, Borrower shall give Agent written notice by no later than 10:00 a.m. (i) on the day which is three (3) Business Days’ prior to the date on which such conversion is to occur with respect to a conversion from a Domestic Rate Loan to a Eurodollar Rate Loan, or (ii) on the day which is one (1) Business Day prior to the date on which such conversion is to occur with respect to a conversion from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying, in each case, the date of such conversion, the loans to be converted and if the conversion is from a Domestic Rate Loan to any other type of loan, the, duration of the first Interest Period therefor.
 
(e)                                   At its option and upon written notice given prior to 10:00 a.m. (Pacific time) at least three (3) Business Days’ prior to the date of such prepayment, Borrower may prepay the Eurodollar Rate Loans in whole at any time or in part from time to time with accrued interest on the principal being prepaid to the date of such repayment. Borrower shall specify the date of prepayment of Advances which are Eurodollar Rate Loans and the amount of such prepayment. In the event that any prepayment of a Eurodollar Rate Loan is required or permitted on a date other than the last Business Day of the then current Interest Period with respect thereto, Borrower shall indemnify Agent and Lenders therefor in accordance with Section 2.2(f) hereof.
 
(f)                                    Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless from and against any and all losses or expenses that Agent and Lenders may sustain or incur as a consequence of any prepayment, conversion of or any default by Borrower in the payment of the principal of or interest on any Eurodollar Rate Loan or failure by Borrower to complete a borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof has been given, including, but not limited to, any interest payable by Agent or Lenders to lenders of funds obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder. A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Agent or any Lender to Borrower shall be conclusive absent manifest error.
 
(g)                                   Notwithstanding any other provision hereof, if any Applicable Law or any Change in Law, shall make it unlawful for Lenders or any Lender (for purposes of this subsection (g), the term “Lender” shall include any Lender and the office or branch where any Lender or any Person controlling such Lender makes or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the obligation of Lenders (or such affected Lender) to make Eurodollar Rate Loans hereunder shall forthwith be cancelled and Borrower shall, if any affected Eurodollar Rate Loans are then outstanding, promptly upon request from Agent, either pay all such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate Loans into loans of another type.  If any such payment or conversion of any Eurodollar Rate Loan is made on a day that is not the last day of the Interest Period applicable to such Eurodollar Rate Loan,
 
46 

 
Borrower shall pay Agent, upon Agent’s request, such amount or amounts as may be necessary to compensate Lenders for any loss or expense sustained or incurred by Lenders in respect of such Eurodollar Rate Loan as a result of such payment or conversion, including (but not limited to) any interest or other amounts payable by Lenders to lenders of funds obtained by Lenders in order to make or maintain such Eurodollar Rate Loan.  A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Lenders to Borrower shall be conclusive absent manifest error.
 
2.3                                Disbursement of Advance Proceeds .  All Advances shall be disbursed from whichever office or other place Agent may designate from time to time and, together with any and all other Obligations of Borrower to Agent or Lenders, shall be charged to Borrower’s Account on Agent’s books. During the Term, Borrower may use the Revolving Advances by borrowing, prepaying and reborrowing, all in accordance with the terms and conditions hereof. The proceeds of each Revolving Advance requested by Borrower or deemed to have been requested by Borrower under Section 2.2(a) hereof shall, with respect to requested Revolving Advances to the extent Lenders make such Revolving Advances, be made available to Borrower on the day so requested by way of credit to the Funding Account, or such other account as Borrower may designate following notification to Agent, in immediately available federal funds or other immediately available funds or, with respect to Revolving Advances deemed to have been requested by Borrower, be disbursed to Agent to be applied to the outstanding Obligations giving rise to such deemed request.
 
2.4                                [ Reserved ].
 
2.5                                Maximum Advances .  Except as provided in Section 2.7, the aggregate balance of Revolving Advances outstanding at any time shall not exceed the lesser of (a) the Maximum Revolving Advance Amount or (b) the Formula Amount less, in each case, the aggregate Maximum Undrawn Amount of all issued and outstanding Letters of Credit.
 
2.6                                Repayment of Advances .
 
(a)                                  The Revolving Advances shall be due and payable in full on the last day of the Term subject to earlier prepayment as herein provided.  Revolving Advances may be prepaid (or repaid) and reborrowed at any time without penalty or premium.
 
(b)                                  Borrower recognizes that the amounts evidenced by checks, notes, drafts or any other items of payment relating to and/or proceeds of Collateral may not be collectible by Agent on the date received. In consideration of Agent’s agreement to conditionally credit Borrower’s Account as of the Business Day on which Agent receives those items of payment, Borrower agrees that, in computing the charges under this Agreement, all items of payment shall be deemed applied by Agent on account of the Obligations one (1) Business Day after (i) the Business Day Agent receives such payments via wire transfer or electronic depository check or (ii) in the case of payments received by Agent in any other form, the Business Day such payment constitutes good funds in Agent’s account. In the case of items of payment other than payments via wire transfer or electronic depository check, Agent is not, however, required to credit Borrower’s Account for the amount of any such item of payment which is unsatisfactory to
 
47 

 
Agent and Agent may charge Borrower’s Account for the amount of any such item of payment which is returned to Agent unpaid.
 
(c)                                   All payments of principal, interest and other amounts payable hereunder, or under any of the Other Documents shall be made to Agent at the Payment Office not later than 1:00 P.M. (New York time) on the due date therefor in lawful money of the United States of America in federal funds or other funds immediately available to Agent. Agent shall have the right to effectuate payment on any and all Obligations due and owing hereunder by charging Borrower’s Account or by making Advances as provided in Section 2.2 hereof.
 
(d)                                  Borrower shall pay principal, interest, and all other amounts payable hereunder, or under any related agreement, without any deduction whatsoever, including, but not limited to, any deduction for any setoff or counterclaim.
 
2.7                                Repayment of Excess Advances .  Except (a) as permitted by Agent pursuant to Section 15.2 and (b) excess Advances outstanding for not more than ten (10) Business Days which are caused by Agent’s imposition of a Reserve, the aggregate balance of Advances outstanding at any time in excess of the maximum amount of Advances permitted hereunder shall be immediately due and payable without the necessity of any demand, at the Payment Office, whether or not a Default or Event of Default has occurred.
 
2.8                                Statement of Account .  Agent shall maintain, in accordance with its customary procedures, a loan account (“ Borrower’s Account ”) in the name of Borrower in which shall be recorded the date and amount of each Advance made by Agent and the date and amount of each payment in respect thereof; provided, however, the failure by Agent to record the date and amount of any Advance shall not adversely affect Agent or any Lender. Each month, Agent shall send to Borrower a statement showing the accounting for the Advances made, payments made or credited in respect thereof, and other transactions between Agent and Borrower, during such month. The monthly statements shall be deemed correct and binding upon Borrower in the absence of manifest error and shall constitute an account stated between Lenders and Borrower unless Agent receives a written statement of Borrower’s specific exceptions thereto within thirty (30) days after such statement is received by Borrower. The records of Agent with respect to the loan account shall be conclusive evidence absent manifest error of the amounts of Advances and other charges thereto and of payments applicable thereto.
 
2.9                                Letters of Credit .  Subject to the terms and conditions hereof, Agent shall issue or cause the issuance of standby and/or trade letters of credit (“ Letters of Credit ”) for the account of Borrower; provided, however, that Agent will not be required to issue or cause to be issued any Letters of Credit to the extent that the issuance thereof would then cause the sum of (i) the outstanding Revolving Advances plus (ii) the Maximum Undrawn Amount of all outstanding Letters of Credit to exceed the lesser of (x) the Maximum Revolving Advance Amount or (y) the Formula Amount. The Maximum Undrawn Amount of all outstanding Letters of Credit shall not exceed in the aggregate at any time the Letter of Credit Sublimit. All disbursements or payments related to Letters of Credit shall be deemed to be Domestic Rate Loans consisting of Revolving Advances and shall bear interest at the Revolving Interest Rate for Domestic Rate Loans. Letters of Credit that have not been drawn upon shall not bear interest.
 
48 

 
2.10                         Issuance of Letters of Credit .
 
(a)                                  Borrower may request Agent to issue or cause the issuance of a Letter of Credit by delivering to Agent, at the Payment Office, prior to 10:00 a.m. (New York time), at least five (5) Business Days’ prior to the proposed date of issuance, Agent’s form of Letter of Credit Application (the “ Letter of Credit Application ”) completed to the satisfaction of Agent; and, such other certificates, documents and other papers and information as Agent may reasonably request. Borrower also has the right to give instructions and make agreements with respect to any application, any applicable letter of credit and security agreement, any applicable letter of credit reimbursement agreement and/or any other applicable agreement, any letter of credit and the disposition of documents, disposition of any unutilized funds, and to agree with Agent upon any amendment, extension or renewal of any Letter of Credit.
 
(b)                                  Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts, other written demands for payment, or acceptances of usance drafts when presented for honor thereunder in accordance with the terms thereof and when accompanied by the documents described therein and (ii) have an expiry date not later than twenty-four (24) months (or such later time as Agent may reasonably agree) after such Letter of Credit’s date of issuance and in no event later than the last day of the Term.  Each standby Letter of Credit shall be subject either to the Uniform Customs and Practice for Documentary Credits as most recently published by the International Chamber of Commerce at the time a Letter of Credit is issued (the “ UCP ”) or the International Standby Practices (ISP98-International Chamber of Commerce Publication Number 590) (the “ ISP98 Rules ”)) , and any subsequent revision thereof at the time a standby Letter of Credit is issued, as determined by Agent, and each trade Letter of Credit shall be subject to the UCP.
 
(c)                                   Agent shall use its reasonable efforts to notify Lenders of the request by Borrower for a Letter of Credit hereunder.
 
2.11                         Requirements For Issuance of Letters of Credit .
 
(a)                                  Borrower shall authorize and direct any Issuer to name Borrower as the “Applicant” or “Account Party” of each Letter of Credit. If Agent is not the Issuer of any Letter of Credit, Borrower shall authorize and direct the Issuer to deliver to Agent all instruments, documents, and other writings and property received by the Issuer pursuant to the Letter of Credit and to accept and rely upon Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit or the application therefor.
 
(b)                                  In connection with all Letters of Credit issued or caused to be issued by Agent under this Agreement to purchase Inventory, Borrower hereby appoints Agent, or its designee, as its attorney, with full power and authority if an Event of Default shall have occurred and be continuing, (i) to sign and/or endorse Borrower’s name upon any warehouse or other receipts or letter of credit applications, (ii) to sign Borrower’s name on bills of lading; (iii) to clear Inventory through the United. States of America Customs Department (“ Customs ”) in the name of Borrower or Agent or Agent’s designee, and to sign and deliver to Customs officials powers of attorney in the name of Borrower for such purpose; and (iv) to complete in Borrower’s name or Agent’s, or in the name of Agent’s designee, any order, sale or transaction, obtain the
 
49 

 
necessary documents in connection therewith, and collect the proceeds thereof.  Neither Agent nor its attorneys will be liable for any acts or omissions nor for any error of judgment or mistakes of fact or law, except for Agent’s or its attorney’s gross negligence or willful misconduct. This power, being coupled with an interest, is irrevocable as long as any Letters of Credit remain outstanding.
 
2.12                         Disbursements, Reimbursement .
 
(a)                                  Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from Agent a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Lender’s Commitment Percentage of the Maximum Face Amount of such Letter of Credit and the amount of such drawing, respectively.
 
(b)                                  In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, Agent will promptly notify Borrower. Provided that it shall have received such notice, Borrower shall reimburse (such obligation to reimburse Agent shall sometimes be referred to as a “ Reimbursement Obligation ”) Agent prior to 12:00 Noon (Eastern time) on each date that an amount is paid by Agent under any Letter of Credit (each such date, a “ Drawing Date ”) in an amount equal to the amount so paid by Agent. In the event Borrower fails to reimburse Agent for the full amount of any drawing under any Letter of Credit by 12:00 Noon Pacific time on the Drawing Date, Agent will promptly notify each Lender thereof, and Borrower shall be deemed to have requested that a Revolving Advance maintained as a Domestic Rate Loan be made by the Lenders to be disbursed on the Drawing Date under such Letter of Credit, subject to the amount of the unutilized portion of the lesser of Maximum Revolving Advance Amount or the Formula Amount and subject to Section 8.2 hereof Any notice given by Agent pursuant to this Section 2.12(b) may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
 
(c)                                   Each Lender shall upon any notice pursuant to Section 2.12(b) make available to Agent an amount in immediately available funds equal to its Commitment Percentage of the amount of the drawing, whereupon the participating Lenders shall (subject to Section 2.12(d)) each be deemed to have made a Revolving Advance maintained as a Domestic Rate Loan to Borrower in that amount. If any Lender so notified fails to make available to Agent the amount of such Lender’s Commitment Percentage of such amount by no later than 2:00 p.m. (New York time) on the Drawing Date, then interest shall accrue on such Lender’s obligation to make such payment, from the Drawing Date to the date on which such Lender makes such payment (i) at a rate per annum equal to the Federal Funds Effective Rate during the first three days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Revolving Advances maintained as a Domestic Rate Loans on and after the fourth day following the Drawing Date. Agent will promptly give notice of the occurrence of the Drawing Date, but failure of Agent to give any such notice on the Drawing Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender from its obligation under this Section 2.12(c), provided that such Lender shall not be obligated to pay interest as provided in Section 2.12(c) (i) and (ii) until and commencing from the date of receipt of notice from Agent of a drawing.
 
50 

(d)                                  With respect to any unreimbursed drawing that is not converted into a Revolving Advance maintained as a Domestic Rate Loan to Borrower in whole or in part as contemplated by Section 2.12(b), because of Borrower’s failure to satisfy the conditions set forth in Section 8.2 (other than any notice requirements) or for any other reason caused by Borrower, Borrower shall be deemed to have incurred from Agent a borrowing (each a “ Letter of Credit Borrowing ”) in the amount of such drawing. Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to a Revolving Advance maintained as a Domestic Rate Loan. Each Lender’s payment to Agent pursuant to Section 2.12(c) shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing and shall constitute a “ Participation Advance ” from such Lender in satisfaction of its Participation Commitment under this Section 2.12.
 
(e)                                   Each Lender’s Participation Commitment shall continue until the last to occur of any of the following events: (x) Agent ceases to be obligated to issue or cause to be issued Letters of Credit hereunder; (y) no Letter of Credit issued or created hereunder remains outstanding and uncancelled and (z) all Persons (other than Borrower) have been fully reimbursed for all payments made under or relating to Letters of Credit.
 
2.13                         Repayment of Participation Advances .
 
(a)                                  Upon (and only upon) receipt by Agent for the account of Issuer of immediately available funds from Borrower (i) in reimbursement of any payment made by Issuer or Agent under the Letter of Credit with respect to which any Lender has made a Participation Advance to Agent, or (ii) in payment of interest on such a payment made by Issuer or Agent under such a Letter of Credit, Agent will pay to each Lender, in the same funds as those received by Agent, the amount of such Lender’s Commitment Percentage of such funds, except Agent shall retain the amount of the Commitment Percentage of such funds of any Lender that did not make a Participation Advance in respect of such payment by Agent (and, to the extent that any of the other Lender(s) have funded any portion such Defaulting Lender’s Participation Advance in accordance with the provisions of Section 2.23, Agent will pay over to such Non-Defaulting Lenders a pro rata portion of the funds so withheld from such Defaulting Lender) .
 
(b)                                  If Agent is required at any time to return to Borrower, or to a trustee, receiver, liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments made by Borrower to Agent pursuant to Section 2.13(a) in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Lender shall, on demand of Agent, forthwith return to Agent the amount of its Commitment Percentage of any amounts so returned by Agent plus interest at the Federal Funds Effective Rate.
 
2.14                         Documentation .  Borrower agrees to be bound by the terms of the Letter of Credit Application and by Agent’s interpretations of any Letter of Credit issued for Borrower’s account and by Agent’s written regulations and customary practices relating to letters of credit, though Agent’s interpretations may be different from Borrower’s own. In the event of a conflict between the Letter of Credit Application and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence, bad faith or willful misconduct (as determined by a court of competent jurisdiction in a final, non-appealable judgment), Agent shall not be liable for any error, negligence and/or mistakes, whether of
 
51 

 
omission or commission, in following Borrower’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.
 
2.15                         Determination to Honor Drawing Request .  In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, Issuer shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit and that any other drawing condition appearing on the face of such Letter of Credit has been satisfied in the manner so set forth.
 
2.16                         Nature of Participation and Reimbursement Obligations .  Each Lender’s obligation in accordance with this Agreement to make the Revolving Advances or Participation Advances as a result of a drawing under a Letter of Credit, and the obligations of Borrower to reimburse Agent upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.16 under all circumstances, including the following circumstances:
 
(i)                                      any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Agent, Borrower or any other Person for any reason whatsoever;
 
(ii)                                   the failure of Borrower or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditions set forth in this Agreement for the making of a Revolving Advance, it being acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing and the obligation of the Lenders to make Participation Advances under Section 2.12;
 
(iii)                                any lack of validity or enforceability of any Letter of Credit;
 
(iv)                               any claim of breach of warranty that might be made by Borrower or any Lender against the beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, cross-claim, defense or other right which Borrower or any Lender may have at any time against a beneficiary, any successor beneficiary or any transferee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), Agent or any Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between Borrower or any Subsidiaries of Borrower and the beneficiary for which any Letter of Credit was procured);
 
(v)                                  the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provisions of services relating to a Letter of Credit, in each case even if Agent or any of Agent’s Affiliates has been notified thereof;
 
52 

 
(vi)                               payment by Agent under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit;
 
(vii)                            the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a, role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;
 
(viii)                         any failure by the Agent or any of Agent’s Affiliates to issue any Letter of Credit in the form requested by Borrower, unless the Agent has received written notice from Borrower of such failure within three (3) Business Days after the Agent shall have furnished Borrower a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;
 
(ix)                               any Material Adverse Effect on Borrower or any Guarantor;
 
(x)                                  any breach of this Agreement or any Other Document by any party thereto;
 
(xi)                               the occurrence or continuance of an insolvency proceeding with respect to Borrower or any Guarantor;
 
(xii)                            the fact that a Default or Event of Default shall have occurred and be continuing;
 
(xiii)                         the fact that the Term shall have expired or this Agreement or the Obligations hereunder shall have been terminated; and
 
(xiv)                        any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.
 
2.17                         Indemnity .  In addition to amounts payable as provided in Section 15.5, Borrower hereby agrees to protect, indemnify, pay and save harmless Agent and any of Agent’s Affiliates that have issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, Taxes (other than Excluded Taxes or Indemnified Taxes), penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which the Agent or any of Agent’s Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, other than as a result of (a) the gross negligence, bad faith or willful misconduct of the Agent as determined by a final and non-appealable judgment of a court of competent jurisdiction or (b) the wrongful dishonor by the Agent or any of Agent’s Affiliates of a proper demand for payment made under any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Body (all such acts or omissions herein called “ Governmental Acts ”).
 
2.18                         Liability for Acts and Omissions .  As between Borrower and Agent and Lenders, Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the
 
53 

 
respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the respective foregoing, Agent shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if Agent shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of Borrower against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among Borrower and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, facsimile, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of Agent, including any governmental acts, and none of the above shall affect or impair, or prevent the vesting of, any of Agent’s rights or powers hereunder. Nothing in the preceding sentence shall relieve Agent, Issuer or their respective Affiliates from liability for Agent’s, Issuer’s or their respective Affiliates’ gross negligence, bad faith or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment) in connection with actions or omissions described in such clauses (i) through (viii) of such sentence. In no event shall Agent or Agent’s Affiliates be liable to Borrower for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation attorneys’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.
 
Without limiting the generality of the foregoing, but subject to each of the limitations set forth in the immediately preceding paragraph, Agent and each of its Affiliates (i) may rely on any oral or other communication believed in good faith by Agent or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit, (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by Agent or its Affiliates; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on Agent or its Affiliate in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “ Order ”) and honor any
 
54 

 
drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.
 
In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by Agent under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith and without gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), shall not put Agent under any resulting liability to Borrower or any Lender.
 
2.19                         Additional Payments .  To the extent entitled thereto pursuant to Section 15.9 of this Agreement, any sums expended by Agent or any Lender due to Borrower’s failure to perform or comply with its obligations under this Agreement or any Other Document including Borrower’s obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to Borrower’s Account as a Revolving Advance and added to the Obligations.
 
2.20                         Manner of Borrowing and Payment .
 
(a)                                  Each borrowing of Revolving Advances shall be advanced according to the applicable Commitment Percentages of Lenders.
 
(b)                                  Each payment (including each prepayment) by Borrower on account of the principal of and interest on the Revolving Advances, shall be applied to the Revolving Advances pro rata according to the applicable Commitment Percentages of Lenders.  Except as expressly provided herein, all payments (including prepayments) to be made by Borrower on account of principal, interest and fees shall be made without set off or counterclaim and shall be made to Agent on behalf of the Lenders to the Payment Office, in each case on or prior to 1:00 P.M., New York time, in Dollars and in immediately available funds.
 
(c)
 
(i)                                      Notwithstanding anything to the contrary contained in Sections 2.20(a) and (b) hereof, commencing with the first Business Day following the Closing Date, each borrowing of Revolving Advances shall be advanced by Agent and each payment by Borrower on account of Revolving Advances shall be applied first to those Revolving Advances advanced by Agent. On or before 1:00 P.M., New York time, on each Settlement Date commencing with the first Settlement Date following the Closing Date, Agent and Lenders shall make certain payments as follows: (I) if the aggregate amount of new Revolving Advances made by Agent during the preceding Week (if any) exceeds the aggregate amount of repayments applied to outstanding Revolving Advances during such preceding Week, then each Lender shall provide Agent with funds in an amount equal to its applicable Commitment Percentage of the difference between (w) such Revolving Advances and (x) such repayments and (II) if the aggregate amount of repayments applied to outstanding Revolving Advances during such Week exceeds the aggregate amount of new Revolving Advances made during such Week, then Agent shall provide each Lender with funds in an amount equal to its applicable Commitment Percentage of the difference between (y) such repayments and (z) such Revolving Advances.
 
55 

 
(ii)                                   Each Lender shall be entitled to earn interest at the applicable Revolving Interest Rate on outstanding Advances which it has funded.
 
(iii)                                Promptly following each Settlement Date, Agent shall submit to each Lender a certificate with respect to payments received and Advances made during the Week immediately preceding such Settlement Date. Such certificate of Agent shall be conclusive in the absence of manifest error.
 
(d)                                  If any Lender or Participant (a “ benefited Lender ”) shall at any time receive any payment of all or part of its Advances, or interest thereon, or receive any Collateral in respect thereof (whether voluntarily or involuntarily or by set-off) in a greater proportion than any such payment to and Collateral received by any other Lender, if any, in respect of such other Lender’s Advances, or interest thereon, and such greater proportionate payment or receipt of Collateral is not expressly permitted hereunder, such benefited Lender shall purchase for cash from the other Lenders a participation in such portion of each such other Lender’s Advances, or shall provide such other Lender with the benefits of any such Collateral, or the proceeds thereof, as shall be necessary to cause such benefited Lender to share the excess payment or benefits of such Collateral or proceeds ratably with each of the other Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. Each Lender so purchasing a portion of another Lender’s Advances may exercise all rights of payment (including rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion.
 
(e)                                   Unless Agent shall have been notified by telephone, confirmed in writing, by any Lender that such Lender will not make the amount which would constitute its applicable Commitment Percentage of the Advances available to Agent, Agent may (but shall not be obligated to) assume that such Lender shall make such amount available to Agent on the next Settlement Date and, in reliance upon such assumption, make available to Borrower a corresponding amount. Agent will promptly notify Borrower of its receipt of any such notice from a Lender. If such amount is made available to Agent on a date after such next Settlement Date, such Lender shall pay to Agent on demand an amount equal to the product of (i) the daily average Federal Funds Effective Rate (computed on the basis of a year of 360 days) during such period as quoted by Agent, times (ii) such amount, times (iii) the number of days from and including such Settlement Date to the date on which such amount becomes immediately available to Agent. A certificate of Agent submitted to any Lender with respect to any amounts owing under this paragraph (e) shall be conclusive, in the absence of manifest error. If such amount is not in fact made available to Agent by such Lender within three (3) Business Days after such Settlement Date, Agent shall be entitled to recover such an amount, with interest thereon at the rate per annum then applicable to such Revolving Advances hereunder, on demand from Borrower; provided, however, that Agent’s right to such recovery shall not prejudice or otherwise adversely affect Borrower’s rights (if any) against such Lender.
 
2.21                         Reduction of Maximum Revolving Advance Amount .  Borrower may, at any time, on at least three (3) Business Days’ prior written notice received by Agent (which shall promptly advise each Lender thereof) permanently reduce the Maximum Revolving Advance Amount, in minimum increments of $5,000,000 (and multiples of $1,000,000 in excess thereof)
 
56 

 
to an amount not less than the greater of (i) $20,000,000 or (ii) the amount of the then outstanding Advances.  All reductions of the Maximum Revolving Advance Amount shall be applied ratably among the Lenders according to their respective Commitment Percentages.
 
2.22                         Use of Proceeds .
 
(a)                                  Borrower shall apply the proceeds of Advances, together with the proceeds of the Term Loan Facility, to (i) convert the outstanding balance of the Existing Term Loan into Advances under this Agreement, (ii) refinance certain existing indebtedness of Boot Barn and Baskins, (iii) provide a portion of the funds for the Acquisition, (iv) provide for working capital, Capital Expenditures, Permitted Acquisitions and for other general corporate purposes of Borrower, in each case to the extent not prohibited under this Agreement and (v) pay fees, costs and expenses in connection with the Transactions.
 
(b)                                  Without limiting the generality of Section 2.22(a) above, subject to the terms of this Agreement (including the condition that Borrower have sufficient Undrawn Availability therefor), Borrower once during the Term may request up to $2,000,000 of Revolving Advances for the purpose of depositing such funds in the Funding Account or in such other deposit account at PNC as Borrower may designate.  So long as no Event of Default has occurred and is continuing, Borrower shall have unrestricted use of such funds.
 
(c)                                   Without limiting the generality of Section 2.22(a) above, neither the Borrower, the Guarantors nor any other Person which may in the future become party to this Agreement or the Other Documents as Loan Party, intends to use nor shall they use any portion of the proceeds of the Advances, directly or indirectly, for any purpose in violation of Applicable Law.
 
2.23                         Defaulting Lender .
 
(a)                                  Notwithstanding anything to the contrary contained herein, in the event any Lender is a Defaulting Lender, all rights and obligations hereunder of such Defaulting Lender and of the other parties hereto shall be modified to the extent of the express provisions of this Section 2.23 so long as such Lender is a Defaulting Lender.
 
(b)                                  (i) Except as otherwise expressly provided for in this Section 2.23, Revolving Advances shall be made pro rata from Non-Defaulting Lenders based on their respective Commitment Percentages, and no Commitment Percentage of any Lender or any pro rata share of any Revolving Advances required to be advanced by any Lender shall be increased as a result of any Lender being a Defaulting Lender.  Amounts received in respect of principal of any type of Revolving Advances shall be applied to reduce such type of Revolving Advances of each Lender (other than any Defaulting Lender) in accordance with their Commitment Percentages; provided , that , Agent shall not be obligated to transfer to a Defaulting Lender any payments received by Agent for Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees).  Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent.  Agent may hold and, in its discretion, re-lend to Borrower the amount of such payments received or retained by it for the account of such Defaulting Lender.
 
57 

 
(ii)                                   Fees pursuant to Section 3.3 hereof shall cease to accrue in favor of such Defaulting Lender.
 
(iii)                                If any Letter of Credit Obligations (or drawings under any Letter of Credit for which Issuer has not been reimbursed) are outstanding or exist at the time any such Lender becomes a Defaulting Lender, then:
 
A.                                     Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all outstanding Letters of Credit shall be reallocated among Non-Defaulting Lenders in proportion to the respective Commitment Percentages of such Non-Defaulting Lenders to the extent (but only to the extent) that (x) such reallocation does not cause the aggregate sum of outstanding Revolving Advances made by any such Non-Defaulting Lender plus such Lender’s reallocated Participation Commitment in the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit to exceed the Commitment Percentage of any such Non-Defaulting Lender, and (y) no Default or Event of Default has occurred and is continuing at such time;
 
B.                                     if the reallocation described in clause (A) above cannot, or can only partially, be effected, Borrower shall within one Business Day following notice by Agent, cash collateralize for the benefit of Issuer, Borrower’s obligations corresponding to such Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit (after giving effect to any partial reallocation pursuant to clause (A) above) in accordance with Section 3.2(b) for so long as such Obligations are outstanding;
 
C.                                     if Borrower cash collateralizes any portion of such Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit pursuant to clause (B) above, Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 3.2(a) with respect to such Defaulting Lender’s Commitment Percentage of Maximum Undrawn Amount of all Letters of Credit during the period such Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit are cash collateralized;
 
D.                                     if Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit is reallocated pursuant to clause (A) above, then the fees payable to Lenders pursuant to Section 3.2(a) shall be adjusted and reallocated to Non-Defaulting Lenders in accordance with such reallocation; and
 
E.                                      if all or any portion of such Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit is neither reallocated nor cash collateralized pursuant to clauses (A) or (B) above, then, without prejudice to any rights or remedies of Issuer or any other Lender hereunder, all Letter of Credit Fees payable under Section 3.2(a) with respect to such Defaulting Lender’s Commitment Percentage of the Maximum Undrawn Amount of all Letters of Credit shall be payable to the Issuer (and not to such Defaulting Lender) until (and then only to the extent that) such Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit is reallocated and/or cash collateralized; and
 
58 

 
(iv)                               so long as any Lender is a Defaulting Lender, Issuer shall not be required to issue, amend or increase any Letter of Credit, unless such Issuer is satisfied that the related exposure and Defaulting Lender’s Participation Commitment in the Maximum Undrawn Amount of all Letters of Credit (after giving effect to any such issuance, amendment, increase or funding) will be fully allocated to Non-Defaulting Lenders and/or cash collateral for such Letters of Credit will be provided by Borrower in accordance with clause (A) and (B) above, and participating interests in any newly issued or increased Letter of Credit shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 2.23(b)(iii)(A) above (and such Defaulting Lender shall not participate therein).
 
(c)                                   A Defaulting Lender shall not be entitled to give instructions to Agent or to approve, disapprove, consent to or vote on any matters relating to this Agreement and the Other Documents, and all amendments, waivers and other modifications of this Agreement and the Other Documents may be made without regard to a Defaulting Lender and, for purposes of the definition of “Required Lenders”, a Defaulting Lender shall not be deemed to be a Lender, to have any outstanding Advances or a Commitment Percentage .
 
(d)                                  Other than as expressly set forth in this Section 2.23, the rights and obligations of a Defaulting Lender (including the obligation to indemnify Agent) and the other parties hereto shall remain unchanged.  Nothing in this Section 2.23 shall be deemed to release any Defaulting Lender from its obligations under this Agreement and the Other Documents, shall alter such obligations, shall operate as a waiver of any default by such Defaulting Lender hereunder, or shall prejudice any rights which Borrower, Agent or any Lender may have against any Defaulting Lender as a result of any default by such Defaulting Lender hereunder .
 
(e)                                   In the event that Agent, Borrower and Issuer agree in writing that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then Agent will so notify the parties hereto, and then Participation Commitments of Lenders (including such cured Defaulting Lender) of the Maximum Undrawn Amount of all outstanding Letters of Credit shall be reallocated to reflect the inclusion of such Lender’s Commitment Percentage, and on such date such Lender shall purchase at par such of the Revolving Advances of the other Lenders as Agent shall determine may be necessary in order for such Lender to hold such Revolving Advances in accordance with its Commitment Percentage.
 
(f)                                    If Issuer has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, Issuer shall not be required to issue, amend or increase any Letter of Credit, unless Issuer shall have entered into arrangements with Borrower or such Lender, satisfactory to Issuer to defease any risk to it in respect of such Lender hereunder.
 
2.24                         Joint and Several Liability, Waivers, etc .  Each Person from time to time party hereto as “Borrower” hereby agrees as follows.
 
(a)                                  Each such Person is accepting joint and several liability hereunder and under the Other Documents in consideration of the financial accommodations to be provided by Agent and the Lenders under this Agreement, for the mutual benefit, directly and indirectly, of
 
59 

 
each such Person and in consideration of the undertakings of the other Persons from time to time party hereto as “Borrower” to accept joint and several liability for the Obligations.
 
(b)                                  Each such Person, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Persons from time to time party hereto as “Borrower”, with respect to the payment and performance of all of the Obligations (including any Obligations arising under this Section 2.24), it being the intention of such Persons and the parties hereto that all the Obligations shall be the joint and several obligations of each Person from time to time party hereto as “Borrower” without preferences or distinction among them.
 
(c)                                   If and to the extent that any such Person shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event such Person will make such payment with respect to, or perform, such Obligation.
 
(d)                                  The Obligations of each such Person under the provisions of this Section 2.24 constitute the absolute and unconditional, full recourse Obligations of each such Person enforceable against each such Person to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of this Agreement or any other circumstances whatsoever.
 
(e)                                   Except as otherwise expressly provided in this Agreement, each such Person hereby waives notice of acceptance of its joint and several liability, notice of any Advances or Letters of Credit issued under or pursuant to this Agreement, notice of the occurrence of any Default, Event of Default, or of any demand for any payment under this Agreement, notice of any action at any time taken or omitted by Agent or Lenders under or in respect of any of the Obligations, any requirement of diligence or to mitigate damages and, generally, to the extent permitted by applicable law, all demands, notices and other formalities of every kind in connection with this Agreement (except as otherwise provided in this Agreement). Each such Person hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by Agent or Lenders at any time or times in respect of any default by any such Person in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by Agent or Lenders in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations or the addition, substitution or release, in whole or in part, of any such Person. Without limiting the generality of the foregoing, each such Person assents to any other action or delay in acting or failure to act on the part of Agent or any Lender with respect to the failure by any such Person to comply with any of its respective Obligations, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this Section 2.24 afford grounds for terminating, discharging or relieving any such Person, in whole or in part, from any of its Obligations under this Section 2.24, it being the intention of each such Person that, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of each such Person under this Section 2.24 shall not be
 
60 

discharged except by performance and then only to the extent of such performance. The Obligations of each such Person under this Section 2.24 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any such Person or Agent or any Lender.
 
(f)                                    Each such Person represents and warrants to Agent and Lenders that such Person is currently informed of the financial condition of the other Persons from time to time party hereto as “Borrower” and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each such Person further represents and warrants to Agent and Lenders that such Person has read and understands the terms and conditions of this Agreement and the Other Documents. Each such Person hereby covenants that such Person will continue to keep informed of the other such Person’s financial condition, the financial condition of other guarantors, if any, and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Obligations.
 
(g)                                   Each such Person waives, to the maximum extent permitted by law, all rights and defenses arising out of an election of remedies by Agent or any Lender, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed Agent’s or such Lender’s rights of subrogation and reimbursement against any such Person by the operation of Section 580(d) of the California Code of Civil Procedure, any comparable statute, or otherwise.
 
(h)                                  Each such Person waives, to the maximum extent permitted by law, all rights and defenses that such Person may have because the Obligations are or become secured by Real Property. This means, among other things: (i) Agent and Lenders may collect from such Person without first foreclosing on any Real Property or personal property Collateral pledged by any other Person and (ii) if Agent or any Lender forecloses on any Real Property pledged by any such Person or any Guarantor: (A) the amount of the Obligations may be reduced only by the price for which such Collateral is sold at the foreclosure sale, even if such Collateral is worth more than the sale price; and (B) Agent and Lenders may collect from such Person even if Agent or Lenders, by foreclosing on any such Real Property, has destroyed any right such Person may have to collect from the other Persons from time to time party hereto as “Borrower.” This is an unconditional and irrevocable waiver of any rights and defenses such Person may have because the Obligations are secured by Real Property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure or any comparable statutes. As provided in Section 15.1 hereof, this Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. The foregoing provisions are included solely out of an abundance of caution and shall not be construed to mean that any of the above referenced provisions of California law are in any way applicable to this Agreement or the Obligations.
 
(i)                                      The provisions of this Section 2.24 are made for the benefit of Agent, Lenders and their respective successors and permitted assigns, and may be enforced by it or them from time to time against any or all Persons from time to time signatory hereto as “Borrower” as often as occasion therefor may arise and without requirement on the part of Agent, any Lender, any of their respective successors or permitted assigns first to marshal any of its or their claims or to exercise any of its or their rights against any such Persons or to exhaust any remedies
 
61 

 
available to it or them against any such Persons or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 2.24 shall remain in effect until all of the Obligations shall have been paid in full in accordance with the terms of this Agreement. If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by Agent or any Lender upon the insolvency, bankruptcy or reorganization of any such Person, or otherwise, the provisions of this Section 2.24 will forthwith be reinstated in effect, as though such payment had not been made.
 
(j)                                     Until the Obligations have been paid in full in cash and all of the commitments of the Lenders hereunder have been terminated, each such Person hereby agrees that it will not enforce any of its rights of contribution or subrogation against any other such Person with respect to any liability incurred by it hereunder or under any of the Other Documents, any payments made by it to Agent or any Lender with respect to any of the Obligations or any collateral security therefor until such time as all of the Obligations have been paid in full in cash. Any claim which any such Person may have against any other such Person with respect to any payments to Agent or any Lender hereunder or under any Other Documents are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar proceeding under the laws of any jurisdiction relating to any such Person, its debts or its assets, whether voluntary or involuntary, all such Obligations shall be paid in full in cash before any payment or distribution of any character, whether in cash, securities or other property, shall be made to any other such Person therefore.
 
(k)                                  Each such Person hereby agrees that, after the occurrence and during the continuance of any Event of Default, the payment of any amounts due with respect to the indebtedness or other obligations owing by any such Person to any other such Person is hereby subordinated to the prior payment in full in cash of the Obligations in accordance with the terms of this Agreement. Each such Person hereby agrees that after the occurrence and during the continuance of any Event of Default, such Person will not demand, sue for or otherwise attempt to collect any indebtedness of any other such Person owing to such Person until the Obligations shall have been paid in full in cash. If, notwithstanding the foregoing sentence, such Person shall collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected, enforced and received by such Person as trustee for Agent, and such Person shall deliver any such amounts to Agent for application to the Obligations in accordance with the terms of this Agreement.
 
2.25                         Increase in Maximum Revolving Advance Amount .
 
(a)                                  Borrower may, at any time request that the Maximum Revolving Advance Amount be increased by (1) one or more of the current Lenders increasing their Commitment Amount (any current Lender which elects to increase its Commitment Amount shall be referred to as an “ Increasing Lender ”) or (2) one or more new lenders (each a “ New Lender ”) joining this Agreement and providing a Commitment Amount hereunder , subject to the following terms and conditions:
 
62 

 
(i)                                      No current Lender shall be obligated to increase its Commitment Amount and any increase in the Commitment Amount by any current Lender shall be in the sole discretion of such current Lender;
 
(ii)                                   Borrower may not request the addition of a New Lender unless (and then only to the extent that) there is insufficient participation on behalf of the existing Lenders in the commitments for the increased Maximum Revolving Advance Amount being requested by Borrower;
 
(iii)                                There shall exist no Event of Default or Default on the effective date of such increase after giving effect to such increase;
 
(iv)                               After giving effect to such increase, the Maximum Revolving Advance Amount shall not exceed $70,000,000;
 
(v)                                  Borrower may not request an increase in the Maximum Revolving Advance Amount under this Section 2.24 more than once during the Term, and no such increase in the Maximum Revolving Advance Amount shall be for an amount less than $5,000,000;
 
(vi)                               Borrower shall deliver to Agent on or before the effective date of such increase the following documents in form and substance satisfactory to Agent: (1) certification of its corporate secretary or other authorized officer with attached resolutions certifying that the increase in the Commitment Amounts has been approved by Borrower, (2) a certificate dated as of the effective date of such increase certifying that each of the conditions set forth in Section 8.2 hereof are then satisfied, (3) such other agreements, instruments and information (including supplements or modifications to this Agreement and/or the Other Documents executed by Borrower as Agent reasonably deems necessary in order to document the increase to the Maximum Revolving Advance Amount and to protect, preserve and continue the perfection and priority of the liens, security interests, rights and remedies of Agent and Lenders hereunder and under the Other Documents in light of such increase, and (4) an opinion of counsel in form and substance satisfactory to Agent which shall cover such matters related to such increase as Agent may reasonably require and Borrower hereby authorizes and directs such counsel to deliver such opinions to Agent and Lenders;
 
(vii)                            Borrower shall execute and deliver (1) to each Increasing Lender who so requests a replacement Revolving Credit Note reflecting the new amount of such Increasing Lender’s Commitment Amount after giving effect to the increase (and the prior Revolving Credit Note issued to such Increasing Lender, if any, shall be deemed to be cancelled) and (2) to each New Lender a Revolving Credit Note reflecting the amount of such New Lender’s Commitment Amount;
 
(viii)                         Any New Lender selected by Borrower shall be subject to the approval of Agent and Issuer (such approval not to be unreasonably withheld or delayed) and any New Lender selected by Agent shall be subject to the approval of Borrower;
 
(ix)                               Each Increasing Lender shall confirm its agreement to increase its Commitment Amount pursuant to an acknowledgement in a form acceptable to Agent, signed by
 
63 

 
it and Borrower and delivered to Agent at least five (5) days before the effective date of such increase; and
 
(x)                                  Each New Lender shall execute a lender joinder in substantially the form of Exhibit 2.25 pursuant to which such New Lender shall join and become a party to this Agreement and the Other Documents with a Commitment Amount and Commitment Percentage as set forth in such lender joinder.
 
(xi)                               On the effective date of such increase the Commitment Percentages of the Lenders (including each Increasing Lender and/or New Lender) shall be recalculated such that each such Lender’s Commitment Percentage is equal to (i) the Commitment Amount of such Lender divided by (ii) the aggregate of the Commitment Amounts of all Lenders.  Each Lender shall participate in any new Revolving Advances made on or after such date in accordance with its Commitment Percentage after giving effect to the increase in the Maximum Revolving Advance Amount and recalculation of the Commitment Percentages contemplated by this Section 2.25.
 
(xii)                            On the effective date of such increase, each Increasing Lender shall be deemed to have purchased an additional/increased participation in, and each New Lender will be deemed to have purchased a new participation in, each then outstanding Letter of Credit and each drawing thereunder in an amount equal to such Lender’s Commitment Percentage (as calculated pursuant to Section 2.25(b) above) of the Maximum Undrawn Amount of each such Letter of Credit (as in effect from time to time) and the amount of each drawing, respectively.  As necessary to effectuate the foregoing, each existing Lender holding a Commitment Percentage that is not an Increasing Lender shall be deemed to have sold to each applicable Increasing Lender and/or New Lender, as necessary, a portion of such existing Lender’s participations in such outstanding Letters of Credit and drawings such that, after giving effect to all such purchases and sales, each Lender holding a Commitment (including each Increasing Lender and/or New Lender) shall hold a participation in all Letters of Credit (and drawings thereunder) in accordance with their respective Commitment Percentages (as calculated pursuant to Section 2.25(b) above).
 
(xiii)                         On the effective date of such increase, Borrower shall pay all reasonable and documented costs and expenses incurred by Agent and by each Increasing Lender and New Lender in connection with the negotiations regarding, and the preparation, negotiation, execution and delivery of all agreements and instruments executed and delivered by any of Agent, Borrower and/or Increasing Lenders and New Lenders in connection with, such increase (including all fees for any supplemental or additional public filings of any Other Documents necessary to protect, preserve and continue the perfection and priority of the liens, security interests, rights and remedies of Agent and Lenders hereunder and under the Other Documents in light of such increase).
 
III.                               INTEREST AND FEES.
 
3.1                                Interest .  Interest on Advances shall be payable in arrears on the first day of each month with respect to Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at the end of each Interest Period or, for Eurodollar Rate Loans with an Interest Period in excess of
 
64 

 
three months, at the earlier of (a) each three months from the commencement of such Eurodollar Rate Loan or (b) the end of the Interest Period. Interest charges shall be computed on the actual principal amount of Advances outstanding during the applicable period at a rate per annum equal to the applicable Revolving Interest Rate.  Whenever, subsequent to the date of this Agreement, the Alternate Base Rate is increased or decreased, the applicable Revolving Interest Rate for Domestic Loans shall be similarly changed without notice or demand of any kind by an amount equal to the amount of such change in the Alternate Base Rate during the time such change or changes remain in effect.  Upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the direction of Required Lenders, following written notice from Agent to Borrower and provided that such Event of Default is not cured or waived within 15 Business Days after Agent sends such notice, the Revolving Advances and all other Obligations shall bear interest at a rate per annum equal to the rate of interest otherwise applicable thereto plus two (2) percentage points (as applicable, the “ Default Rate ”).
 
3.2                                Letter of Credit Fees .
 
(a)                                  Borrower shall pay (x) to Agent, for the ratable benefit of Lenders, fees for each Letter of Credit for the period from and excluding the date of issuance of same to and including the date of expiration or termination, equal to the average daily face amount of each outstanding Letter of Credit multiplied by a per annum rate equal to the Applicable Rate for Eurodollar Rate Loans then in effect, such fees to be calculated on the basis of a 360-day year for the actual number of days elapsed and to be payable quarterly in arrears on the first day of each quarter and on the last day of the Term, and (y) to the Issuer, a fronting fee of one quarter of one percent (0.25%) per annum times the face amount of such Letter of Credit, together with any and all administrative, issuance, amendment, payment and negotiation charges with respect to Letters of Credit and all fees and expenses as agreed upon by the Issuer and the Borrower in connection with any Letter of Credit, including in connection with the opening, amendment or renewal of any such Letter of Credit and any acceptances created thereunder and shall reimburse Agent for any and all reasonable fees and expenses, if any, paid by Agent to the Issuer (all of the foregoing fees, the “ Letter of Credit Fees ”). All such charges shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any reason. Any such charge in effect at the time of a particular transaction shall be the charge for that transaction, notwithstanding any subsequent change in the Issuer’s prevailing charges for that type of transaction. All Letter of Credit Fees payable hereunder shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any reason. Upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the direction of Required Lenders, following written notice from Agent to Borrower and provided that such Event of Default is not cured or waived within 15 Business Days after Agent sends such notice, the Letter of Credit Fees described in clause (x) of this Section 3.2(a) shall be increased by an additional two percent (2.00%) per annum.
 
(b)                                  On demand by Agent after an Event of Default and during the continuation thereof, Borrower will cause cash to be deposited and maintained in an account with Agent, as cash collateral, in an amount equal to one hundred and five percent (105%) of the Maximum Undrawn Amount of all outstanding Letters of Credit, and Borrower hereby
 
65 

 
irrevocably authorizes Agent, in its discretion, on Borrower’s behalf and in Borrower’s name, to open such an account and to make and maintain deposits therein, or in an account opened by Borrower, in the amounts required to be made by Borrower, out of the proceeds of Receivables or other Collateral or out of any other funds of Borrower coming into any Lender’s possession at any time. Agent will invest such cash collateral (less applicable reserves) in such short-term money-market items as to which Agent and Borrower mutually agree and the net return on such investments shall be credited to such account and constitute additional cash collateral. Borrower may not withdraw amounts credited to any such account except upon the occurrence of all of the following: (i) (x) payment and performance in full of all Obligations, (y) expiration of all Letters of Credit and (z) termination of this Agreement or (ii) cure or waiver of all Events of Default.
 
3.3                                Unused Facility Fee .  If, for any calendar quarter during the Term, the Average Usage Amount for such calendar quarter does not equal the Maximum Revolving Advance Amount, then Borrower shall pay to Agent for the ratable benefit of Lenders a fee (the “ Facility Fee ”) at a per annum rate equal to Applicable Rate times the amount by which the Maximum Revolving Advance Amount exceeds such Average Usage Amount for such calendar quarter. The Facility Fee shall be payable to Agent in arrears on the first day of each calendar quarter with respect to the previous calendar quarter.
 
3.4                                Fee Letter .  Borrower shall pay the amounts required to be paid in the Fee Letter in the manner and at the times required by the Fee Letter.
 
3.5                                Computation of Interest and Fees .  Interest and fees hereunder shall be computed on the basis of a year of 360 days and for the actual number of days elapsed. If any payment to be made hereunder becomes due and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and interest thereon shall be payable at the applicable Revolving Interest Rate for Domestic Rate Loans during such extension.
 
3.6                                Maximum Charges .  In no event whatsoever shall interest and other charges charged hereunder exceed the highest rate permissible under law. In the event interest and other charges as computed hereunder would otherwise exceed the highest rate permitted under law, such excess amount shall be first applied to any unpaid principal balance owed by Borrower, and if the then remaining excess amount is greater than the previously unpaid principal balance, Lenders shall promptly refund such excess amount to Borrower and the provisions hereof shall be deemed amended to provide for such permissible rate.
 
3.7                                Increased Costs .  In the event that any adoption of any new Applicable Law or any Change in Law or compliance by any Lender (for purposes of this Section 3.7, the term “Lender” shall include Agent, any Issuer or Lender and any corporation or bank controlling Agent, any Lender or Issuer and the office or branch where Agent, any Lender or Issuer (as so defined) makes or maintains any Eurodollar Rate Loans) with any request or directive (whether or not having the force of law) from any central bank or other financial, monetary or other authority, shall:
 
(a)                                  subject Agent, any Lender or Issuer to any Tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any
 
66 

 
Eurodollar Rate Loan, or change the basis of taxation of payments to Agent, such Lender or Issuer in respect thereof (except for (i) Indemnified Taxes, (ii) Taxes described in clauses (b) through (e) of the definition of Excluded Taxes and (iii) Connection Income Taxes);
 
(b)                                  impose, modify or deem applicable any reserve, special deposit, assessment, special deposit, compulsory loan, insurance charge or similar requirement against assets held by, or deposits in or for the account of, advances or loans by, or other credit extended by, any office of Agent, Issuer or any Lender, including pursuant to Regulation D of the Board of Governors of the Federal Reserve System ; or
 
(c)                                   impose on Agent, any Lender, Issuer or the London interbank offered rate market any other condition, loss or expense (other than Taxes) affecting this Agreement or any Other Document or any Advance made by any Lender, or any Letter of Credit or participation therein ;
 
and the result of any of the foregoing is to increase the cost to Agent, any Lender or Issuer of making, converting to, continuing, renewing or maintaining its Advances hereunder by an amount that Agent, such Lender or Issuer in good faith deems to be material or to reduce the amount of any payment (whether of principal, interest or otherwise) in respect of any of the Advances by an amount that Agent or such Lender or Issuer in good faith deems to be material, then, in any case Borrower shall promptly pay Agent, such Lender or Issuer, upon its demand, such additional amount as will compensate Agent or such Lender or Issuer for such additional cost or such reduction, as the case may be; provided that the foregoing shall not apply to increased costs which are reflected in the Eurodollar Rate, as the case may be.  Agent, such Lender or Issuer shall certify the amount of such additional cost or reduced amount to Borrower, and such certification shall be conclusive absent manifest error.
 
3.8                                Basis For Determining Interest Rate Inadequate or Unfair .  In the event that Agent or any Lender shall have determined that:
 
(a)                                  reasonable means do not exist for ascertaining the Eurodollar Rate applicable pursuant to Section 2.2 hereof for any Interest Period; or
 
(b)                                  Dollar deposits in the relevant amount and for the relevant maturity are not available in the London interbank Eurodollar market, with respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan, then Agent shall give Borrower prompt written or telephonic notice of such determination. If such notice is given, (i) any such requested Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrower shall notify Agent no later than 10:00 a.m. (Pacific time) two (2) Business Days prior to the date of such proposed borrowing, that its request for such borrowing shall be cancelled or made as an unaffected type of Eurodollar Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have been converted to an affected type of Eurodollar Rate Loan shall be continued as or converted into a Domestic Rate Loan, or, if Borrower shall notify Agent, no later than 10:00 a.m. (Pacific time) two (2) Business Days prior to the proposed conversion, shall be maintained as an unaffected type of Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be converted into a Domestic Rate Loan, or, if Borrower shall notify Agent, no later than 10:00 a.m. (Pacific time)
 
67 

 
two (2) Business Days prior to the last Business Day of the then current Interest Period applicable to such affected Eurodollar Rate Loan, shall be converted into an unaffected type of Eurodollar Rate Loan, on the last Business Day of the then current Interest Period for such affected Eurodollar Rate Loans. Until such notice has been withdrawn, Lenders shall have no obligation to make an affected type of Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate Loans and Borrower shall not have the right to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate Loan.
 
3.9                                Capital Adequacy .
 
(a)                                  In the event that Agent, any Lender or Issuer shall have determined in good faith that any adoption of any new Applicable Law or guideline regarding capital adequacy, or any Change in Law or any change in the interpretation or administration thereof by any Governmental Body, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Agent, Issuer or any Lender (for purposes of this Section 3.9, the term “Lender” shall include Agent, Issuer or any Lender and any corporation or bank controlling Agent, Issuer or any Lender and the office or branch where Agent, Issuer or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on Agent’s, Issuer’s or any Lender’s capital as a consequence of its obligations hereunder to a level below that which Agent, Issuer or such Lender could have achieved but for such adoption, change or compliance (taking into consideration Agent’s, Issuer’s and each Lender’s policies with respect to capital adequacy) by an amount deemed by Agent, Issuer or any Lender to be material, then, from time to time, Borrower shall pay upon demand to Agent, Issuer or such Lender such additional amount or amounts as will compensate Agent, Issuer or such Lender for such reduction.  In determining such amount or amounts, Agent, Issuer or such Lender may use any reasonable averaging or attribution methods.  The protection of this Section 3.9 shall be available to Agent, Issuer and each Lender regardless of any possible contention of invalidity or inapplicability with respect to the Applicable Law, guideline or condition referred to in this Section 3.9(a) .
 
(b)                                  A certificate of Agent or such Lender setting forth such amount or amounts as shall be necessary to compensate Agent or such Lender with respect to Section 3.9(a) hereof when delivered to Borrower shall be conclusive absent manifest error.
 
3.10                         Taxes .
 
(a)                                  Any and all payments by or on account of any Obligations hereunder or under any Other Document shall be made free and clear of and without reduction or withholding for any Taxes; provided that if Applicable Law requires any payor of an amount hereunder to deduct any Taxes from such payments, then (i) in the case of Indemnified Taxes, the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Recipient receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions in accordance with Applicable Law, and (iii) Borrower
 
68 

 
shall timely pay the full amount deducted to the relevant Governmental Body in accordance with Applicable Law.
 
(b)                                  Without limiting the provisions of Section 3.10(a) above, Borrower shall timely pay any Other Taxes to the relevant Governmental Body in accordance with Applicable Law.
 
(c)                                   Borrower shall indemnify each Recipient within ten (10) days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by such Recipient, and (without duplication) any penalties, interest and reasonable out of pocket expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Body.  A certificate as to the amount of such payment or liability delivered to Borrower by a Recipient (with a copy to Agent), or by Agent on its own behalf or on behalf of a Lender or Issuer, shall be conclusive absent manifest error.
 
(d)                                  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by Borrower to a Governmental Body, Borrower shall deliver to Agent the original or a certified copy of a receipt issued by such Governmental Body evidencing such payment (if any), a copy of the return reporting such payment, or such other evidence of such payment reasonably satisfactory to Agent.
 
(e)                                   Any Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which Borrower is resident for tax purposes, or under any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any Other Document shall deliver to Borrower (with a copy to Agent), at the time or times prescribed by Applicable Law or reasonably requested by Borrower or Agent, such properly completed and executed documentation prescribed by Applicable Law as will permit such payments to be made without withholding or at a reduced rate of withholding.  Notwithstanding the submission of such documentation claiming a reduced rate of or exemption from U.S. withholding tax, Agent, as applicable, shall be entitled to withhold United States federal income taxes at the full 30% withholding rate if in its reasonable judgment it is required to do so under the due diligence requirements imposed upon a withholding agent under § 1.1441-7(b) of the United States Income Tax Regulations or other Applicable Law.  Further, Agent is indemnified under § 1.1461-1(e) of the United States Income Tax Regulations against any claims and demands of any Lender, Issuer or assignee or participant of a Lender or Issuer for the amount of any tax it deducts and withholds in accordance with regulations under § 1441 of the Code.  In addition, any Lender, if requested by Borrower or Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or Agent as will enable Borrower or Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Without limiting the generality of the foregoing, in the event that Borrower is resident for tax purposes in the United States of America, each Foreign Lender (or other Lender) shall deliver to Borrower and Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of Borrower or Agent,
 
69 

 
but only if such Foreign Lender (or other Lender) is legally entitled to do so), whichever of the following is applicable:
 
(i)                                      in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, two duly completed valid and executed originals of IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
 
(ii)                                   two (2) duly completed valid and executed originals of IRS Form W-8ECI,
 
(iii)                                in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate (a “ U.S. Tax Compliance Certificate ”) to the effect that such Foreign Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (y) two duly completed valid originals of IRS Form W-8BEN,
 
(iv)                               to the extent a Foreign Lender is not the beneficial owner, duly completed, valid and executed originals of IRS Form W-8IMY, accompanied by duly completed, valid and executed originals of IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner,
 
(v)                                  any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Agent to determine the withholding or deduction required to be made, or
 
(vi)                               to the extent that any Lender is not a Foreign Lender, such Lender shall submit to Agent two (2) duly completed valid and executed originals of an IRS Form W-9 or any other form prescribed by Applicable Law demonstrating that such Lender is not a Foreign Lender.
 
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Agent in writing of its legal inability to do so.
 
70 

(f)                                    If a payment made to a Recipient under this Agreement or any Other Document would be subject to U.S. Federal withholding Tax imposed by FATCA if such Person fails to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Recipient shall deliver to the Agent (in the case of a Lender, Participant or Issuer) and Borrower at such times as are prescribed by Applicable Law, and at such other times as reasonably requested by Agent or Borrower, as applicable, (A) a certification signed by the chief financial officer, principal accounting officer, treasurer or controller of such Person, and (B) such other documentation reasonably requested by Agent or Borrower sufficient for Agent and Borrower to comply with their obligations under FATCA and to determine that such Recipient has complied with their own obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (f), “FATCA” shall include any amendments made to FATCA after the date of this Agreement .
 
(g)                                   If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by Borrower or with respect to which Borrower has paid additional amounts pursuant to this Section, it shall pay to Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by Borrower under this Section with respect to the Indemnified Taxes or Other Taxes giving rise to such refund); net of all out-of-pocket expenses of such party and without interest (other than any interest paid by the relevant Governmental Body with respect to such refund); provided that Borrower, upon the request of such party, agrees to repay the amount paid over to Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Body) to such party to the extent such party is required to repay such refund to such Governmental Body.  This Section shall not be construed to require any party to make available its tax returns (or any other information relating to its taxes that it deems confidential) to Borrower or any other Person.
 
3.11                         Mitigation; Replacement of Lenders .
 
(a)                                  If any Lender requests compensation under Section 3.7, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Body for the account of any Lender pursuant to Section 3.10, then, unless Borrower has elected to exercise its rights under Section 3.11(b) below, such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Advances or Commitments hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.7 or 3.10, as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
 
(b)                                  If any Lender (an “ Affected Lender ”) (i) makes demand upon Borrower for (or if Borrower is otherwise required to pay) amounts pursuant to Section 3.7, 3.9 or 3.10 hereof and the Affected Lender has not taken the actions described in Section 3.11(a) above, (ii) is unable to make or maintain Eurodollar Rate Loans as a result of a condition described in
 
71 

 
Section 2.2(g) hereof, (iii) is a Defaulting Lender, or (iv) denies any consent requested by the Agent pursuant to Section 15.2(b) hereof, Borrower may, within ninety (90) days of receipt of such demand, notice (or the occurrence of such other event causing Borrower to be required to pay such compensation or causing Section 2.2(g) hereof to be applicable), or such Lender becoming a Defaulting Lender or denial of a request by Agent pursuant to Section 15.2(b) hereof, as the case may be, by notice in writing to the Agent and such Affected Lender (A) request the Affected Lender to cooperate with Borrower in obtaining a replacement Lender satisfactory to Agent and Borrower (the “ Replacement Lender ”); (B) request the non-Affected Lenders to acquire and assume all of the Affected Lender’s Advances and its Commitment Percentage, as provided herein, but none of such Lenders shall be under any obligation to do so; or (C) propose a Replacement Lender subject to approval by Agent in its good faith business judgment.  If any satisfactory Replacement Lender shall be obtained, and/or if any one or more of the non-Affected Lenders shall agree to acquire and assume all of the Affected Lender’s Advances and its Commitment Percentage, then such Affected Lender shall assign, in accordance with Section 15.3 hereof, all of its Advances and its Commitment Percentage and other rights and obligations under this Agreement and the Other Documents to such Replacement Lender or non-Affected Lenders, as the case may be, in exchange for payment of the principal amount so assigned and all interest and fees (except as otherwise provided in Section 2.23) accrued on the amount so assigned, plus all other Obligations then due and payable to the Affected Lender.
 
IV.                                COLLATERAL:  GENERAL TERMS
 
4.1                                Security Interest in the Collateral .  To secure the prompt payment and performance to Agent and each Lender of the Obligations, Borrower hereby assigns, pledges and grants, and shall cause each Borrowing Base Party to assign, pledge and grant, to Agent for its benefit and for the ratable benefit of each Lender a continuing security interest in and to and Lien on all of its Collateral, whether now owned or existing or hereafter acquired or arising and wheresoever located.  Notwithstanding any of the other provisions set forth in this Section 4.1, this Agreement shall not constitute a grant of a security interest in any property (and such property shall not constitute Collateral) to the extent that such grant of a security interest is (x) prohibited by any requirements of any law, rule or regulation of any governmental authority, requires a consent not obtained of any governmental authority pursuant to such requirement or (y) prohibited by, or constitutes a breach or default under or results in the termination of or requires any consent not obtained under, any contract, license, agreement, instrument or other document evidencing or giving rise to such property; provided , that the exclusions set forth in clauses (x) and (y) above shall not apply to accounts, payment intangibles or to any other category of Collateral to the extent such requirements of law, rule or regulation or the term in such contract, license, agreement, instrument or other document or shareholder or similar agreement providing for such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law; provided , further , that the Collateral shall not include (a) Equity Interests in first-tier Domestic Holding Companies or Foreign Subsidiaries of a Loan Party in excess of the shares representing 100% of the nonvoting Equity Interests and 65% of the total combined voting power of all classes of Equity Interests entitled to vote of any such Domestic Holding Company or Foreign Subsidiary or (b) Equity Interests of any Subsidiary owned, directly or indirectly, by a Domestic Holding Company or Foreign Subsidiary of a Loan Party.  Borrower shall, and shall cause each Borrowing Base Party to, promptly provide Agent
 
72 

 
with written notice of all commercial tort claims for claims in excess of $500,000, such notice to contain the case title together with the applicable court and a brief description of the claim(s).  Upon delivery of each such notice, Borrower (or the applicable Borrowing Base Party) shall be deemed to hereby grant to Agent a security interest and lien in and to such commercial tort claims and all proceeds thereof.
 
4.2                                Perfection of Security Interest .  Borrower shall, and shall cause each Borrowing Base Party to, take all action that Agent may reasonably request, so as at all times to maintain the validity, perfection, enforceability and priority of Agent’s security interest in and Lien on the Collateral or to enable Agent to protect, exercise or enforce its rights hereunder and in the Collateral, including, but not limited to, (i) promptly discharging all Liens other than Permitted Encumbrances, (ii) delivering to Agent, endorsed or accompanied by such instruments of assignment as Agent may reasonably specify, and stamping or marking, in such manner as Agent may specify, any and all chattel paper, instruments, letters of credit and advices thereof and documents in excess of $100,000 evidencing or forming a part of the Collateral, (iv) entering into warehousing, lockbox and other custodial arrangements reasonably satisfactory to Agent, and (v) executing and delivering financing statements, control agreements, instruments of pledge, mortgages, notices and assignments, in each case subject to customary provisos and exceptions and in form and substance reasonably satisfactory to Agent, relating to the creation, validity, perfection, maintenance or continuation of Agent’s security interest and Lien under the Uniform Commercial Code, the PPSA or other Applicable Law.  By its signature hereto, Borrower hereby authorizes, and shall cause each Borrowing Base Party to authorize, Agent to file against Borrower and such Borrowing Base Parties, one or more financing, continuation or amendment statements pursuant to the Uniform Commercial Code, the PPSA or other Applicable Law in form and substance satisfactory to Agent (which statements may have a description of collateral which is broader than that set forth herein, including “all assets,” “all property” or similar phrases).  All costs and expenses as provided for in Section 15.9 hereof that Agent may incur in doing any of the foregoing, and any local taxes relating thereto, shall be charged to Borrower’s Account as a Revolving Advance of a Domestic Rate Loan and added to the Obligations, or, at Agent’s option, shall be paid to Agent for its benefit and for the ratable benefit of Lenders promptly upon demand.
 
4.3                                [ Reserved ].
 
4.4                                Preservation of Collateral .  Following the occurrence and during the continuance of an Event of Default and the demand by Agent for payment of all Obligations due and owing, in addition to the rights and remedies set forth in Section 11.1 hereof, Agent: (a) may at any time take such steps as Agent deems necessary to protect Agent’s interest in and to preserve the Collateral, including the hiring of such security guards or the placing of other security protection measures as Agent may deem necessary; (b) may employ and maintain at any of any Borrowing Base Party’s premises a custodian who shall have full authority to do all acts necessary to protect Agent’s interests in the Collateral; (c) may lease warehouse facilities to which Agent may move all or part of the Collateral; (d) may use any Borrowing Base Party’s owned or leased lifts, hoists, trucks and other facilities or equipment for handling or removing the Collateral; and (e) shall have, and is hereby granted, a right of ingress and egress to the places where the Collateral is located, and may proceed over and through any of any Borrowing Base Party’s owned or leased property (subject to the terms of the applicable lease and the rights of the parties
 
73 

 
thereunder), in each case, in accordance with, and subject to the other terms of, this Article IV.  Borrower shall, and shall cause each Borrowing Base Party to, cooperate fully with all of Agent’s efforts to preserve the Collateral and will take such actions to preserve the Collateral as Agent may direct.  All of Agent’s expenses of preserving the Collateral, including any expenses relating to the bonding of a custodian, shall be charged to Borrower’s Account as a Revolving Advance maintained as a Domestic Rate Loan and added to the Obligations.
 
4.5                                Ownership of Collateral; Liens .
 
(a)                                  With respect to the Collateral, at the time the Collateral becomes subject to Agent’s security interest: (i) Borrower or the applicable Borrowing Base Party shall be the sole owner of and fully authorized and able to sell, transfer, pledge and/or grant a first priority security interest (subject to Permitted Encumbrances and, as to priority, the terms of the Intercreditor Agreement) in each and every item of the Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall be free and clear of all Liens and encumbrances whatsoever; (ii) each document and agreement executed by any Borrowing Base Party or delivered to Agent or any Lender in connection with this Agreement shall be true and correct in all material respects; (iii) all signatures and endorsements of any Borrowing Base Party that appear on such documents and agreements shall be genuine and such Borrowing Base Party shall have full capacity to execute same; and (iv) each Borrowing Base Party’s Equipment and Inventory shall be located as set forth on Schedule 4.5 (as updated from time to time upon written notice from Borrower to Agent) and shall not be removed from such location(s) (except for Inventory and Equipment in transit, temporarily at event locations and Equipment off-site for repairs) without the prior written consent of Agent except with respect to the sale of Inventory and Equipment in the Ordinary Course of Business and other property to the extent permitted in Section 7.1 hereof.  Borrower or the applicable Borrowing Base Party has good legal title to, or valid leasehold interests in, all of the Collateral purported to be owned by it.
 
(b)                                  (i) As of the Closing Date, there is no location at which any Borrowing Base Party has any Inventory (except for Inventory in transit or temporarily at event locations) other than those locations listed on Schedule 4.5 ; (ii)  Schedule 4.5 hereto contains a correct and complete list, as of the Closing Date, of the legal names and addresses of each warehouse at which Inventory of any Borrowing Base Party is stored; (iii)  Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of (A) each place of business of each Borrowing Base Party and (B) the chief executive office of each Borrowing Base Party; and (iv)  Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of the location, by state and street address, of all Real Property owned or leased by a Borrowing Base Party, together with the names and addresses of any landlords.
 
4.6                                Defense of Agent’s and Lenders’ Interests .  Until (a) payment in full in cash of all of the Obligations and (b) termination of this Agreement, Agent’s interests in the Collateral shall continue in full force and effect.  During such period Borrower shall not, nor shall it permit any Borrowing Base Party to, without Agent’s prior written consent, pledge, assign, transfer, sell (except to the extent permitted in Section 7.1), create or suffer to exist a Lien upon or encumber or allow or suffer to be encumbered in any way except for Permitted Encumbrances, any part of the Collateral.  Borrower shall, and shall cause each Borrowing Base Party to, defend Agent’s interests in the Collateral against any and all Persons whatsoever.  At any time following the
 
74 

 
occurrence of an Event of Default and demand by Agent for payment of all Obligations, Agent shall have the right to take possession of the indicia of the Collateral and the Collateral in whatever physical form contained, including: labels, stationery, documents, instruments and advertising materials.  If Agent exercises this right to take possession of the Collateral, Borrower shall and shall cause each Borrowing Base Party to, upon demand, assemble it in a commercially reasonable manner and make it available to Agent at a place reasonably convenient to Agent.  In addition, with respect to all Collateral, Agent and Lenders shall be entitled to all of the rights and remedies set forth herein and further provided by the Uniform Commercial Code, the PPSA or other Applicable Law.  After the occurrence and during the continuation of an Event of Default, Borrower shall, and shall cause each Borrowing Base Party to, and Agent may, at its option, instruct all suppliers, carriers, forwarders, warehousers or others receiving or holding cash, checks, Inventory, documents or instruments in which Agent holds a security interest to deliver same to Agent and/or subject to Agent’s order and if they shall come into any Borrowing Base Party’s possession, they, and each of them, shall be held by such Borrowing Base Party in trust as Agent’s trustee, and Borrower will, and will cause each Borrowing Base Party to, immediately deliver them to Agent in their original form together with any necessary endorsement.
 
4.7                                Books and Records .  Borrower shall, and shall cause each Borrowing Base Party to, (a) keep books of record and account in which entries that are true and correct in all material respects will be made; and (b) set up on its books accruals with respect to all taxes, assessments, charges, levies and claims. All determinations pursuant to this subsection shall, to the extent applicable, be made in accordance with, or as required by, GAAP consistently applied in the opinion of such independent public accountant as shall then be regularly engaged by Topco.
 
4.8                                Financial Disclosure .  Borrower hereby irrevocably authorizes and directs, and shall cause each Borrowing Base Party to authorize and direct, all accountants and auditors employed by any Borrowing Base Party at any time during the Term to exhibit and deliver to Agent copies of any of any Borrowing Base Party’s financial statements, trial balances or other accounting records of any sort in the accountant’s or auditor’s possession, and to disclose to Agent any information such accountants may have concerning each Borrowing Base Party’s financial status and business operations.  Borrower hereby authorizes, and shall cause each Borrowing Base Party to authorize, all Governmental Bodies to furnish to Agent copies of reports or examinations relating to any Borrowing Base Party, whether made by a Borrowing Base Party or otherwise; however, Agent will attempt to obtain such information or materials directly from Borrowing Base Parties prior to obtaining such information or materials from such accountants or Governmental Bodies.
 
4.9                                Compliance with Laws .  Borrower shall, and shall cause each Borrowing Base Party to, comply in all material respects with all Applicable Laws with respect to the Collateral or any part thereof or to the operation of each Borrowing Base Party’s business the non-compliance with which could reasonably be expected to have a Material Adverse Effect.  Borrowing Base Parties may, however, contest or dispute any Applicable Laws in any reasonable manner, provided that any related Lien is inchoate or stayed and sufficient reserves are established to the reasonable satisfaction of Agent to protect Agent’s Lien on or security interest in the Collateral.  Borrower shall, and shall cause each Borrowing Base Party to, obtain and maintain all licenses, permits (including Environmental Permits), certifications, franchises, consents and governmental authorizations and approvals necessary to own its property and to
 
75 

 
conduct its business as conducted on the Closing Date, except to the extent failure to obtain and maintain, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
 
4.10                         Inspection of Premises .  At reasonable times and upon reasonable prior notice Agent shall have full access to and the right to audit, check, inspect and make abstracts and copies from each Borrowing Base Party’s books, records, audits, correspondence and all other papers relating to the Collateral and the operation of each Borrowing Base Party’s business.  Agent and its agents may enter upon any of any Borrowing Base Party’s premises at any time during business hours and at any other reasonable time and upon reasonable prior notice, and from time to time, for the purpose of inspecting the Collateral and any and all records pertaining thereto and the operation of such Borrowing Base Party’s business.  So long as no Event of Default exists, Agent shall not exercise its rights under this Section 4.10 more frequently than two (2) times in any calendar year.
 
4.11                         Insurance .  The assets and properties of each Borrowing Base Party at all times shall be maintained in accordance with the requirements of all insurance carriers which provide insurance with respect to the assets and properties of each Borrowing Base Party so that such insurance shall remain in full force and effect.  The Borrowing Base Parties shall bear the full risk of any loss of any nature whatsoever with respect to the Collateral.  At the Borrowing Base Parties’ own cost and expense in amounts and with carriers either (x) reasonably acceptable to Agent or (y) with an AM Best Rating of at least A1/P1 or otherwise reasonably acceptable to Agent, the Borrowing Base Parties shall (a) keep all their insurable properties and properties in which any Borrowing Base Party has an interest insured against the hazards of fire, flood, sprinkler leakage, those hazards covered by extended coverage insurance and such other hazards, and for such amounts, as is customary in the case of companies engaged in businesses similar to the Borrowing Base Parties’ including business interruption insurance; (b) maintain a bond or insurance in such amounts as is customary in the case of companies engaged in businesses similar to the Borrowing Base Parties’ insuring against larceny, embezzlement or other criminal misappropriation of insured’s officers and employees who may either singly or jointly with others at any time have access to the assets or funds of any Borrowing Base Party either directly or through authority to draw upon such funds or to direct generally the disposition of such assets; (c) maintain public and product liability insurance against claims for personal injury, death or property damage suffered by others; (d) maintain all such worker’s compensation or similar insurance as may be required under the laws of any state or jurisdiction in which the applicable Borrowing Base Party is engaged in business; (e) furnish Agent with (i) copies of all policies and evidence of the maintenance of such policies by the renewal thereof at least thirty (30) days before any expiration date, and (ii) appropriate loss payable endorsements in form and substance satisfactory to Agent, naming Agent as a co-insured and loss payee as its interests may appear with respect to all insurance coverage referred to in clauses (a) and (c) above, and providing (A) that all proceeds under property insurance with respect to the Collateral shall, subject to the terms of the Intercreditor Agreement, be payable to Agent, (B) no such insurance shall be affected by any act or neglect of the insured or owner of the property described in such policy, and (C) that such policy and loss payable clauses may not be cancelled, amended or terminated unless at least thirty (30) days’ prior written notice is given to Agent.  Subject to the Intercreditor Agreement, in the event of any loss under property insurance with respect to the Collateral, the carriers named therein hereby are directed by Agent and each Borrowing Base Party to make
 
76 

 
payment for such loss to Agent and not to any Borrowing Base Party and Agent jointly.  If any insurance losses are paid by check, draft or other instrument payable to a Borrowing Base Party and Agent jointly, Agent may endorse such Borrowing Base Party’s name thereon and do such other things as Agent may deem advisable to reduce the same to cash.  Agent is hereby authorized to adjust and compromise claims under insurance coverage referred to in clauses (a) and (b) above.  Subject to the terms of the Intercreditor Agreement, all loss recoveries received by Agent upon any such insurance shall be applied to reduce the principal balance of the Revolving Advances.  Any surplus shall be paid by Agent to the applicable Borrowing Base Party or applied as may be otherwise required by law.  If after giving effect to the application of such loss recovery proceeds the aggregate outstanding Revolving Advances exceed the limitation set forth in Section 2.5 hereof, Borrower shall pay to Agent, on demand, the amount necessary to eliminate such excess.  Borrower shall, and shall cause each Borrowing Base Party to, take all actions required under the Flood Laws and/or requested by Agent to assist in ensuring that each Lender is in compliance with the Flood Laws applicable to the Collateral, including, but not limited to, providing Agent with the address and/or GPS coordinates of each structure owned or leased by a Loan Party and located on any Real Property that will be subject to a Mortgage and, to the extent required, obtaining flood insurance for such property, structures and contents prior to such property, structures and contents becoming Collateral, and thereafter maintaining such flood insurance in full force and effect for so long as required by the Flood Laws.
 
4.12                         Failure to Pay Insurance .  If any Borrowing Base Party fails to obtain insurance as hereinabove provided or in any Other Document, or to keep the same in force, Agent, if Agent so elects, may obtain such insurance and pay the premium therefor on behalf of such Borrowing Base Party, and charge Borrower’s Account therefor as a Revolving Advance of a Domestic Rate Loan and such expenses so paid shall be part of the Obligations.
 
4.13                         Payment of Taxes .  Borrower will, and will cause each Borrowing Base Party to, pay, before the same shall become delinquent, all material Taxes, assessments and other Charges lawfully levied or assessed upon any Borrowing Base Party or any of the Collateral including real and personal property Taxes, assessments and charges and, without duplication, all franchise, income, employment, social security benefits, withholding, and sales Taxes other than Taxes, assessments or Charges to the extent that the applicable Borrowing Base Party has Properly Contested those Taxes, assessments or Charges.
 
4.14                         Payment of Leasehold Obligations .  Borrower shall, and shall cause each Borrowing Base Party to, at all times pay, when and as due, its rental obligations under all leases under which it is a tenant unless such are being contested, and shall otherwise comply with all other terms of such leases and keep them in full force and effect (where the failure to pay or contest is likely to have a Material Adverse Effect) and, at Agent’s reasonable request, will provide evidence of having done so.  As of the Closing Date, all rental and other payments due under the Leases between Baskins and each of MSW Promenade, L.P., TX-SW #1, LP, Ambassador Way Associates, LP and Bluecap, Ltd. have been paid in full.
 
4.15                         Receivables .
 
(a)                                  Nature of Receivables .  Each of the Receivables shall be a bona fide and valid account owed by the Customer therein named, for the sum set forth in the applicable
 
77 

 
Borrowing Base Certificate, with respect to an absolute sale or lease and delivery of goods upon stated terms of the applicable Borrowing Base Party, or work, labor or services theretofore rendered by the applicable Borrowing Base Party as of the date of such Borrowing Base Certificate.  Same shall be due and owing in accordance with the applicable Borrowing Base Party’s standard terms of sale without dispute, setoff or counterclaim except as may be stated on the accounts receivable schedules delivered by Borrower (or any Borrowing Base Party) to Agent.
 
(b)                                  Solvency of Customers .  No Customer with respect to any Eligible Receivable, to the applicable Borrowing Base Party’s actual knowledge, as of the date such Receivable is created, is subject to any of the events or conditions described in clause (d) of the definition of Eligible Receivables, or if such Customer is subject to any such event or condition, the applicable Borrowing Base Parties have set up on its books and in its financial records bad debt reserves adequate to cover such Eligible Receivable.
 
(c)                                   Locations of Borrowing Base Parties .  As of the Closing Date, the current location of the chief executive office and principal place of business of each Borrowing Base Party is set forth in Schedule 4.5 , and none of such locations have changed within the twelve (12) months preceding the Closing Date.  Until written notice is given to Agent by Borrower of any other office at which any Borrowing Base Party keeps its records pertaining to Receivables, all such records shall be kept at the executive office for such Borrowing Base Party set forth in Schedule 4.5 .
 
(d)                                  Collection of Receivables .  Except as otherwise provided in this Agreement with respect to Credit Card Receivables, until the Borrowing Base Parties’ authority to do so is terminated by Agent (which notice Agent may give at any time following the occurrence and during the continuation of an Event of Default), each Borrowing Base Party will, at such Borrowing Base Party’s sole cost and expense, but on Agent’s behalf and for Agent’s account, collect as Agent’s property and in trust for Agent all amounts received on Receivables, and shall not commingle such collections with such Borrowing Base Party’s funds or use the same except to pay Obligations.  Each Borrowing Base Party shall deposit in the Collection Accounts or, upon the reasonable request by Agent, deliver to Agent, in original form and on the date of receipt thereof, all checks, drafts, notes, money orders, acceptances, cash and other evidences of Indebtedness.
 
(e)                                   Notification of Assignment of Receivables .
 
(i)                                      With respect to Credit Card Receivables, Agent shall have the right to send notice of the collateral assignment of, and Agent’s security interest in and Lien on, such Receivables to any and all Customers or any third party holding or otherwise concerned with such Receivables, whether pursuant to the Credit Card Notices or otherwise.  After such notices are sent, all amounts payable on such Receivables shall be remitted to a Collection Account maintained with PNC and applied to the Obligations as set forth herein.  Agent’s actual expenses in connection with the foregoing may be charged to Borrower’s Account and added to the Obligations.
 
78 

 
(ii)                                   With respect to all Receivables other than Credit Card Receivables, at any time following the occurrence and during the continuance of an Event of Default, Agent shall have the right to send notice of the assignment of, and Agent’s security interest in and Lien on, such Receivables to any and all Customers or any third party holding or otherwise concerned with any of the Collateral.  After such notices are sent, Agent shall have the sole right to collect such Receivables, take possession of the Collateral, or both.  Agent’s actual collection expenses, including, but not limited to, stationery and postage, telephone and telegraph, secretarial and clerical expenses and the salaries of any collection personnel used for collection, may be charged to Borrower’s Account and added to the Obligations.
 
(f)                                    Power of Agent to Act on each Borrowing Base Party’s Behalf .  Agent shall have the right to receive, endorse, assign and/or deliver in the name of Agent or any applicable Borrowing Base Party any and all checks, drafts and other instruments for the payment of money relating to the Receivables, and Borrower hereby waives, on behalf of itself and each Borrowing Base Party, notice of presentment, protest and non-payment of any instrument so endorsed.  Borrower hereby constitutes Agent or Agent’s designee as each Borrowing Base Party’s attorney with power (i) to endorse such Borrowing Base Party’s name upon any notes, acceptances, checks, drafts, money orders or other evidences of payment or Collateral; (ii) at any time following the occurrence and continuance of an Event of Default, to sign such Borrowing Base Party’s name on any invoice or bill of lading relating to any of the Receivables, drafts against Customers, and assignments of Receivables; (iii) to sign such Borrowing Base Party’s name on and to send verifications of Receivables to any Customer without disclosing Agent’s identity; (iv) to sign such Borrowing Base Party’s name on all documents or instruments deemed necessary or, following the occurrence and continuance of an Event of Default, appropriate by Agent to preserve, protect, or perfect Agent’s interest in the Collateral and to file same; (v) at any time following the occurrence and during the continuance of an Event of Default, to demand payment of the Receivables; (vi) at any time following the occurrence and during the continuance of an Event of Default, to enforce payment of the Receivables by legal proceedings or otherwise; (vii) at any time following the occurrence and during the continuance of an Event of Default, to exercise all of such Borrowing Base Party’s rights and remedies with respect to the collection of the Receivables and any other Collateral; (viii) at any time following the occurrence and during the continuance of an Event of Default, to settle, adjust, compromise, extend or renew the Receivables; (ix) at any time following the occurrence and during the continuance of an Event of Default, to settle, adjust or compromise any legal proceedings brought to collect Receivables; (x) at any time following the occurrence and during the continuance of an Event of Default, to prepare, file and sign such Borrowing Base Party’s name on a proof of claim in bankruptcy or similar document against any Customer; (xi) at any time following the occurrence and during the continuance of an Event of Default, to prepare, file and sign such Borrowing Base Party’s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables; and (xii) at any time following the occurrence and during the continuance of an Event of Default, to do all other acts and things necessary to carry out this Agreement. All acts of said attorney or designee are hereby ratified and approved, and said attorney or designee shall not be liable for any acts of omission or commission nor for any error of judgment or mistake of fact or of law, unless done willfully or with gross (not mere) negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment); this power being coupled with an interest is irrevocable while any of the Obligations remain unpaid.  Agent shall have the right at any time following the occurrence
 
79 

 
and during the continuation of an Event of Default or Default, to change the address for delivery of mail addressed to any Borrowing Base Party to such address as Agent may designate and to receive, open and dispose of all mail addressed to any Borrowing Base Party.
 
(g)                                   No Liability .  Neither Agent nor any Lender shall, under any circumstances or in any event whatsoever, have any liability for any error or omission or delay of any kind occurring in the settlement, collection or payment of any of the Receivables or any instrument received in payment thereof, or for any damage resulting therefrom other than due to its gross negligence or willful misconduct.  Following the occurrence and during the continuation of an Event of Default, Agent may, without notice or consent from any Borrowing Base Party, sue upon or otherwise collect, extend the time of payment of, compromise or settle for cash, credit or upon any terms any of the Receivables or any other securities, instruments or insurance applicable thereto and/or release any obligor thereof.  Agent is authorized and empowered to accept following the occurrence and during the continuation of an Event of Default the return of the goods represented by any of the Receivables, without notice to or consent by any Borrowing Base Party, all without discharging or in any way affecting any Borrowing Base Party’s liability hereunder or under any Other Document.
 
(h)                                  Establishment of a Lockbox Account, Dominion Account .
 
(i)                                      All proceeds of Collateral shall be deposited by Borrowing Base Parties into (A) with respect to Baskins, solely during the one hundred twenty (120) day period (or such longer period as Agent may agree to) following the Closing Date, the accounts of Baskins set forth on Schedule 4.15(h)(1)  (as such schedule may be updated by Baskins to reflect the consolidation of its deposit accounts) designated as collection accounts (the “ Baskins Collection Accounts ”), (B) a collection account established at a bank or banks pursuant to an arrangement with such bank as may be selected by Borrower and be reasonably acceptable to Agent which is subject to a deposit account control agreement in form and substance reasonably satisfactory to Agent in its Permitted Discretion directing such bank to transfer, no less frequently than weekly, such funds so deposited to Agent, either to any account maintained by Agent at such bank or by wire transfer to the Collection Account of Borrower maintained with PNC or (C) one or more collection accounts established at PNC for the deposit of such proceeds (all such accounts in the foregoing clauses (A) - (C) the “ Collection Accounts ”).  On or before the date that is one hundred twenty (120) days (or such longer period as Agent may agree to) after the Closing Date, Baskins, Agent and each depository bank at which any Baskins Collection Accounts are then maintained shall enter into a deposit account control agreement in form and substance reasonably satisfactory to Agent in its Permitted Discretion directing such bank to transfer, no less frequently than weekly, such funds so deposited to Agent, either to any account maintained by Agent at such bank or by wire transfer to the Collection Account of Borrower maintained with PNC.  All funds deposited in the Collection Accounts shall immediately become the property of Agent.  All funds deposited in such Collection Accounts shall be applied to the outstanding Obligations in the manner set forth in this Agreement and, subject to all applicable terms of this Agreement (other than Article VIII), Borrower may request, in accordance with Sections 2.2 and 2.3, that any such funds in excess of the outstanding Obligations be remitted to the Funding Account.  Neither Agent nor any Lender assumes any responsibility for such collection account arrangement, including any claim of accord and
 
80 

satisfaction or release with respect to deposits accepted by any Blocked Account Bank thereunder.
 
(ii)                                   All deposit accounts and investment accounts of Borrowing Base Parties are set forth on Schedule 4.15(h)(2) .  Borrower shall ensure that, at all times on and after the date that is one hundred twenty (120) days (or such later date as Agent may agree to) after the Closing Date, that Agent has received control agreements, in form and substance satisfactory to Agent in its Permitted Discretion, with respect to all such accounts, other than (A) those containing, at all times, less than $25,000 with respect to any one account or $100,000 in the aggregate for all such accounts and (B) those utilized solely for making payroll or employee benefit related payments.
 
(iii)                                Borrower shall, and shall cause each Borrowing Base Party to, jointly with Agent, issue Credit Card Notices to each Credit Card Issuer and each Credit Card Processor utilized by any Borrowing Base Party, as and when requested by Agent.  No Borrowing Base Party may change (except, upon prior written notice to Agent, to direct such funds to another Collection Account maintained with PNC) any direction or designation as to payments on Credit Card Receivables set forth in the Credit Card Notices without the prior written consent of Agent.  Without limiting the foregoing or any other provision of this Agreement, in the event a Credit Card Notice is not in effect with respect to any credit or debit card processing arrangement to which a Borrowing Base Party is a party, the applicable Borrowing Base Party shall instruct the Credit Card Issuer and Credit Card Processor with respect thereto to remit all proceeds of the Credit Card Receivables arising therefrom to the Collection Account designated for receipt of such proceeds in the Credit Card Notices and shall not rescind or alter such instruction without the prior written consent of Agent (except, upon prior written notice to Agent, to direct such funds to another Collection Account maintained with PNC).
 
(iv)                               Agent and Borrower each hereby acknowledge that each of the requirements set forth in Section 4.15(h) above which are required to be completed on or prior to the Closing Date with respect to Borrower and RCC have been so satisfied as of the Closing Date.
 
(i)                                      Adjustments .  No Borrowing Base Party will, without Agent’s consent, compromise or adjust any material amount of the Receivables (or extend the time for payment thereof) or accept any material returns of merchandise or grant any additional discounts, allowances or credits thereon except for those compromises, adjustments, returns, discounts, credits and allowances as have been heretofore customary in the Ordinary Course of Business.
 
4.16                         Inventory .  To the extent Inventory held for sale or lease has been produced by a Borrowing Base Party, it has been and will be produced by such Borrowing Base Party in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations and orders thereunder.
 
4.17                         Maintenance of Equipment .  The Equipment shall be maintained in good operating condition and repair (reasonable wear and tear excepted).  No Borrowing Base Party shall use or operate the Equipment in violation in any material respect of any law, statute,
 
81 

 
ordinance, code, rule or regulation.  Borrowing Base Parties shall have the right to sell Equipment to the extent set forth in Section 7.1 hereof.
 
4.18                         Exculpation of Liability .  Nothing herein contained shall be construed to constitute Agent or any Lender as any Borrowing Base Party’s agent for any purpose whatsoever, nor shall Agent or any Lender be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral wherever the same may be located and regardless of the cause thereof unless caused by such Person’s gross negligence or willful misconduct.  Neither Agent nor any Lender, whether by anything herein or in any assignment or otherwise, assume any of any Borrowing Base Party’s obligations under any contract or agreement assigned to Agent or such Lender, and neither Agent nor any Lender shall be responsible in any way for the performance by any Borrowing Base Party of any of the terms and conditions thereof.
 
4.19                         Environmental Matters .
 
(a)                                  Each Borrowing Base Party shall conduct its operations and businesses in compliance in all material respects with all Environmental Laws and no Borrowing Base Party shall place or permit to be placed , or cause or permit a Release of, any material Hazardous Substances on any Real Property which would adversely impact the value or marketability of any of the Real Property or any of the Collateral, other than such violations or impacts which could not reasonably be expected to have a Material Adverse Effect, in each case, except as permitted by Applicable Law or appropriate Governmental Bodies.
 
(b)                                  Each Borrowing Base Party shall dispose of any and all Hazardous Waste generated at the Real Property only at facilities and with carriers that maintain valid permits under RCRA and any other applicable Environmental Laws.
 
(c)                                   If any Borrowing Base Party shall fail to respond promptly to any Hazardous Discharge or Environmental Complaint or any Borrowing Base Party shall fail to comply in any material respect with any of the requirements of any Environmental Laws, Agent on behalf of Lenders may, but without the obligation to do so, for the sole purpose of protecting Agent’s interest in the Collateral and not to participate in the management of the Real Property or any facilities thereon:  (A) give such notices or (B) enter onto the Real Property (or authorize third parties to enter onto the Real Property) and take such actions as Agent (or such third parties as directed by Agent) deem reasonably necessary or advisable, to investigate, clean up, remove, mitigate or otherwise deal with any such Hazardous Discharge or Environmental Complaint.  All costs and expenses of the type described in Section 15.9 incurred by Agent and Lenders (or such third parties) in the exercise of any such rights, including any sums paid in connection with any judicial or administrative investigation or proceedings, fines and penalties, together with interest thereon from the date expended at the Default Rate for Domestic Rate Loans constituting Revolving Advances shall be paid upon demand by Borrower, and until paid shall be added to and become a part of the Obligations secured by the Liens created by the terms of this Agreement and the Other Documents.
 
82 

 
(d)                                  For purposes of Section 4.19 and 5.7, all references to Real Property shall be deemed to include all of each Borrowing Base Party’s right, title and interest in and to its owned and leased premises.
 
4.20                         Provisions with Respect to Investment Property .
 
(a)                                  Other than with respect to the Liens and Indebtedness evidenced by the Term Loan Documents, Borrower represents, warrants and covenants to the Agent and the Lenders that, on the Closing Date, and immediately after giving effect to the consummation of the Transactions:  (i) there are no restrictions on the pledge or transfer of any of the Investment Property, other than restrictions referenced on the face or back of any certificates evidencing such Investment Property, transfer restrictions under any Applicable Law and any Liens described in clauses (a) and (b) of the definition of Permitted Encumbrance; (ii) Borrower is the legal owner of the Investment Property, if any, pledged by it hereunder, which is registered in the name of Borrower, the Custodian (as hereinafter defined) or a nominee; (iii) the Investment Property is free and clear of any security interests, pledges, liens, encumbrances, charges, agreements, claims or other arrangements or restrictions of any kind, except as referenced in clause (i) above; (iv) Borrower has the right to transfer the Investment Property free of any encumbrances and Borrower will defend its title to the Investment Property against the claims of all persons, and any registration with, or consent or approval of, or other action by, any Governmental Body which was or is necessary for the validity of the pledge of and grant of the security interest in the Investment Property has been obtained; (v) the pledge of and grant of the security interest in the Investment Property and delivery of the original certificates evidencing same is effective to vest in the Agent a valid and perfected first priority security interest, superior to the rights of any other person, in and to the Investment Property as set forth herein (subject to the Intercreditor Agreement) and (vi) none of the operating agreements, limited partnership agreements or other agreements governing any Investment Property provide that the Equity Interests governed thereby are securities governed by Article 8 of the Uniform Commercial Code as in effect in any relevant jurisdiction.
 
(b)                                  Borrower covenants that it shall: (i) not incur, create, assume or permit to exist any pledge, security interest, lien, charge or other encumbrance of any nature whatsoever on any of the Investment Property or assign, pledge or otherwise encumber any right to receive income from the Investment Property, other than in favor of the Agent and Liens and encumbrances described in clause (a) above; (ii) if the Investment Property includes securities or any other financial or other asset maintained in a securities account, then Borrower agrees to use commercially reasonable efforts to cause the securities intermediary on whose books and records the ownership interest of Borrower in such Investment Property appears (the “ Custodian ”) to execute and deliver, (a) within 60 days of Borrower becoming a party hereto with respect to Investment Property existing on the Closing Date and (b) within 60 days of receipt of Investment Property received after the Closing Date, a notification and control agreement or other agreement (the “ Control Agreement ”) satisfactory to the Agent in order to perfect and protect the Agent’s security interest in such Investment Property; (iii) not make or consent to any amendment or other modification or waiver with respect to any operating agreement or limited partnership agreement constituting or giving rise to any Investment Property, unless expressly permitted under this Agreement or where such amendment, modification or waiver is not materially adverse to the Lenders; and (iv) not permit any of the operating agreements, limited partnership
 
83 

 
agreements or other agreements governing any Investment Property in respect of limited liability company or partnership interests to provide that such Equity Interests governed thereby are securities governed by Article 8 of the Uniform Commercial Code as in effect in any relevant jurisdiction.
 
(c)                                   At any bona fide public sale, and to the extent permitted by Law, at any private sale, Agent shall be free to purchase all or any part of the Collateral consisting of Investment Property, free of any right or equity of redemption in Borrower, which right or equity is hereby waived and released. Any such sale may be on cash or credit.  Agent shall be authorized at any such sale (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to persons who will represent and agree that they are purchasing the Investment Property Collateral for their own account in compliance with Regulation D of the Securities Act of 1933 (the “ Act ”) or any other applicable exemption available under such Act.  Agent will not be obligated to make any sale if it determines not to do so, regardless of the fact that notice of the sale may have been given. Agent may adjourn any sale and sell at the time and place to which the sale is adjourned.  If the Collateral consisting of Investment Property is customarily sold on a recognized market or threatens to decline speedily in value, Agent may sell such Collateral consisting of Investment Property at any time without giving prior notice to Borrower. Whenever notice is otherwise required by law to be sent by Agent to any grantor of any sale or other disposition of the Collateral consisting of Investment Property, ten (10) days written notice sent to Borrower at its address specified in Section 15.6 will be reasonable.
 
(d)                                  Borrower recognizes that Agent may be unable to effect or cause to be effected a public sale of the Collateral consisting of Investment Property by reason of certain prohibitions contained in the Act, so that Agent may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obligated to agree, among other things, to acquire the Collateral consisting of Investment Property for their own account, for investment and without a view to the distribution or resale thereof.  Borrower understands that private sales so made may be at prices and on other terms less favorable to the seller than if the Collateral consisting of Investment Property was sold at public sales, and agrees that Agent has no obligation to delay or agree to delay the sale of any of the Collateral consisting of Investment Property for the period of time necessary to permit the issuer of the securities which are part of the Collateral consisting of Investment (even if the issuer would agree), to register such securities for sale under the Act.
 
(e)                                   If any demand is made at any time upon Agent for the repayment or recovery of any amount received by it in payment or on account of any of the Obligations and if Agent repays all or any part of such amount by reason of any judgment, decree or order of any court or administrative body or by reason of any settlement or compromise of any such demand, Borrower will be and remain liable for the amounts so repaid or recovered to the same extent as if such amount had never been originally received by Agent.  The provisions of this section will be and remain effective notwithstanding the release of any of the Collateral consisting of Investment Property by Agent in reliance upon such payment (in which case Borrower’s liability will be limited to an amount equal to the fair market value of the Collateral consisting of Investment Property determined as of the date such Collateral consisting of Investment Property was released) and any such release will be without prejudice to Agent’s rights hereunder and will
 
84 

 
be deemed to have been conditioned upon such payment having become final and irrevocable. This section shall survive the termination of this Agreement.
 
(f)                                    Prior to the occurrence of an Event of Default, Borrower will have the right to exercise all voting rights with respect to the Collateral consisting of Investment Property.  At any time after the occurrence and during the continuance of an Event of Default, Agent may (subject to the Intercreditor Agreement) transfer any or all of the Collateral consisting of Investment Property into its name or that of its nominee and may exercise all voting rights with respect to the Collateral consisting of Investment Property, but no such transfer shall constitute a taking of such Collateral consisting of Investment Property in satisfaction of any or all of the Obligations unless Agent expressly so indicates by written notice to Borrower.
 
(g)                                   Borrower will have the right to receive all cash dividends, interest and premiums declared and paid on the Collateral consisting of Investment Property prior to the occurrence of any Event of Default. In the event any additional shares are issued to Borrower as a stock dividend or in lieu of interest on any of the Collateral consisting of Investment Property, as a result of any split of any of the Collateral consisting of Investment Property, by reclassification or otherwise, any certificates evidencing any such additional shares will be promptly delivered to Agent and such shares will be subject to this Agreement and a part of the Collateral consisting of Investment Property to the same extent as the original Collateral constituting Investment Property.  At any time after the occurrence and during the continuance of an Event of Default, Agent shall be entitled to receive (subject to the Intercreditor Agreement), and upon Agent’s request Borrower shall deliver, for application to the Obligations, all cash or stock dividends, interest and premiums declared or paid on the Collateral consisting of Investment Property.
 
V.                                     REPRESENTATIONS AND WARRANTIES.
 
Each Loan Party hereby represents and warrants to Agent and the Lenders as follows:
 
5.1                                Authority .  Such Loan Party has full power, authority and legal right to enter into this Agreement and the Other Documents and to perform all its respective obligations hereunder and thereunder. This Agreement and the Other Documents have been duly executed and delivered by such Loan Party, and this Agreement and the Other Documents constitute the legal, valid and binding obligation of such Loan Party enforceable in accordance with their terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally.  The execution, delivery and performance of this Agreement and of the Other Documents on the Closing Date (a) are within such Loan Party’s corporate or limited liability company powers, as applicable, have been duly authorized by all necessary corporate or limited liability company action, as applicable, do not violate the terms of such Loan Party’s by-laws, operating agreement, articles or certificate of incorporation or formation or other documents relating to such Loan Party’s formation, (b) will not violate any material law or regulation, or any judgment, order or decree of any Governmental Body in any material respect, (c) will not require any Consent of any Governmental Body or any other Person the lack of which would have a Material Adverse Effect, except those Consents set forth on Schedule 5.1 hereto, all of which will have been duly obtained, made or compiled prior to the Closing Date and which are in full force and effect and (d) will not result in any breach of,
 
85 

 
or constitute a default under, which breach or default could reasonably be expected to have a Material Adverse Effect, or result in the creation of any Lien (except Permitted Encumbrances) upon any asset of such Loan Party pursuant to, the provisions of any agreement or instrument to which such Loan Party is a party or by which it or its property is bound.
 
5.2                                Formation and Qualification; Subsidiaries; Compliance with Laws .
 
(a)                                  Such Loan Party and each of its Subsidiaries is duly incorporated, validly existing and in good standing under the laws of the states listed on Schedule 5.2(a)  and, as of the Closing Date, is qualified to do business and is in good standing in the states listed on Schedule 5.2(a)  which constitute all states in which qualification and good standing are necessary for such Loan Party to conduct its business and own its property and where the failure to so qualify could reasonably be expected to have a Material Adverse Effect.  Such Loan Party has delivered to Agent true and complete copies of its articles or certificate of incorporation and by-laws (or similar constituent documents) and will promptly notify Agent of any material amendment or changes thereto.
 
(b)                                  The only Subsidiaries of such Loan Party as of the Closing Date are listed on Schedule 5.2(b) .
 
(c)                                   As of the Closing Date, such Loan Party and each of its Subsidiaries is in compliance with all Applicable Laws, except where the failure to comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
 
5.3                                Survival of Representations and Warranties .  All representations and warranties of each Loan Party contained in this Agreement and the Other Documents shall survive the execution, delivery and acceptance thereof by the parties thereto and the closing of the transactions described therein or related thereto.
 
5.4                                Tax Returns .  Each Loan Party’s federal tax identification number is set forth on Schedule 5.4 .  Each Loan Party has filed all material federal, state and local tax returns and other reports it is required by law to file and has paid (or has timely requested an extension of the deadline to pay) all material Taxes, assessments, fees and other governmental charges that are due and payable.  Subject to Schedule 5.4 , the provision for Taxes on the books of each Loan Party is adequate for all years not closed by applicable statutes, and for its current fiscal year, and no Loan Party has any knowledge of any deficiency or additional assessment in connection therewith not provided for on its books, and, except as set forth on Schedule 5.4 , as of the Closing Date, there is no action, suit, proceeding, investigation, audit or claim now pending or threatened by any authority regarding any taxes relating to any of the Loan Parties or any of their respective Subsidiaries, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or result in material liability to any of the Loan Parties or any of their respective Subsidiaries.  Except as described on Schedule 5.4 , as of the Closing Date, no Loan Party and no Subsidiary of a Loan Party has executed or filed with the Internal Revenue Service or any other governmental agency any agreement or other document extending, or having the effect of extending, the period for assessment or collection of any Charges.  As of the Closing Date, none of the Loan Parties, any of their respective Subsidiaries or any of their respective predecessors are liable for any Charges: (a) under any agreement
 
86 

 
(including any tax sharing agreements) or (b) to each Loan Party’s knowledge, as a transferee.  As of the Closing Date, no Loan Party has agreed or been requested to make any adjustment under Code Section 481(a), by reason of a change in accounting method or otherwise, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
 
5.5                                Financial Statements and Projections .  The audited consolidated balance sheets of Baskins, its Subsidiaries and such other Persons described therein as of December 29, 2012, and the related statements of income, changes in stockholder’s equity, and changes in cash flow for the annual period ended on such date, all accompanied by reports thereon containing opinions without qualification by independent certified public accountants, copies of which have been delivered to Agent prior to the Closing Date, have been prepared in accordance with GAAP, consistently applied (except for changes in application in which such accountants concur) and present fairly the financial position of Baskins and its Subsidiaries at such date and the results of their operations for such annual period.  Since December 29, 2012 there has been no change in the condition, financial or otherwise, of Baskins and its Subsidiaries as shown on the consolidated balance sheet as of such date that could reasonably be expected to have a “Company Material Adverse Effect” as defined in the Purchase Agreement.  The twelve-month cash flow and balance sheet projections of Topco and its Subsidiaries, copies of which have been delivered to the Agent prior to the Closing Date (the “ Projections ”) have been prepared by Borrower in light of the past operations of the Loan Parties and their Subsidiaries’ business, but including future payments of known contingent liabilities reflected on the Pro Forma Balance Sheet.  The Projections are based upon estimates and assumptions stated therein, all of which Borrower believes to be reasonable and fair in light of current conditions and current facts known to Borrower at the time made and, as of the Closing Date, reflect Borrower’s good faith and reasonable estimates of the future financial performance of the Loan Parties and their Subsidiaries and of the other information projected therein for the period set forth therein (it being acknowledged by Agent and Lenders that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by such projections may materially differ from the projected results).  The Pro Forma Balance Sheet delivered to Agent on the date hereof was prepared by Borrower giving pro forma effect to the Transactions and was based on (a) the unaudited consolidated balance sheets of the Loan Parties (other than Holdings and Baskins) and their Subsidiaries dated March 31, 2013 and (b) the unaudited consolidated balance sheets of Baskins and its Subsidiaries dated March 31, 2013.
 
5.6                                Entity Name .  As of the Closing Date, no Loan Party has been known by any other corporate name in the past five years nor does any Loan Party sell Inventory under any other name except as set forth on Schedule 5.6 , nor has any Loan Party been the surviving corporation of a merger or consolidation or except as set forth on Schedule 5.6 acquired all or substantially all of the assets of any Person during the preceding five (5) years.
 
5.7                                O.S.H.A.; Environmental Compliance; Flood Laws .
 
(a)                                  Each Loan Party has, at all times, duly complied in all material respects with, and its facilities, business, assets, property, leaseholds, Real Property and Equipment are in compliance in all material respects with, the provisions of the Federal Occupational Safety and Health Act, the Comprehensive Environmental Response, Compensation, and Liability Act
 
87 

 
(CERCLA) (42 U.S.C. § 9601 et seq. (1980)), RCRA and all other Environmental Laws; and, as of the Closing Date, there are no outstanding citations, notices or orders of non-compliance issued to Borrower or relating to its business, assets, property, leaseholds or Equipment under any such laws, rules or regulations.
 
(b)                                  Each Loan Party has been issued all required material federal, state and local licenses, certificates or permits relating to all applicable Environmental Laws.
 
(c)                                   To Borrower’s knowledge, (i) there are no visible signs of releases, spills, discharges, leaks or disposal (collectively referred to as “ Releases ”) of Hazardous Substances at, upon, under or within any Real Property; (ii) there are no underground storage tanks or polychlorinated biphenyls on the Real Property or any premises leased by any Loan Party; (iii) the Real Property has never been used as a treatment, storage or disposal facility of Hazardous Waste; and (iv) no Hazardous Substances are present on the Real Property, excepting such quantities as are handled in accordance in all material respects with all applicable manufacturer’s instructions and governmental regulations.
 
(d)                                  All Real Property owned by any Loan Party is insured pursuant to policies and other bonds which are valid and in full force and effect and which provide adequate coverage from reputable and financially sound insurers in amounts sufficient to insure the assets and risks of each such Loan Party in accordance with prudent business practice in the industry of such Loan Party.  Each Loan Party has taken all actions required under the Flood Laws and/or requested by Agent to assist in ensuring that each Lender is in compliance with the Flood Laws applicable to the Collateral, including, but not limited to, providing Agent with the address and/or GPS coordinates of each structure owned or leased by a Loan Party and located upon any Real Property that will be subject to a Mortgage, and, to the extent required by any Flood Laws, obtaining flood insurance for such property, structures and contents prior to such property, structures and contents becoming Collateral.
 
5.8                                Solvency; No Litigation, Violation, Indebtedness or Default .
 
(a)                                  After giving effect to the Transactions, Borrower and the other Loan Parties, taken as a whole, will be solvent, able to pay their respective debts as they mature, will have capital sufficient to carry on their respective businesses and all businesses in which they are about to engage, and (i) as of the Closing Date, the fair present saleable value of the assets of Borrower and the other Loan Parties taken as a whole, calculated on a going concern basis, is in excess of the amount of the liabilities of the Loan Parties and (ii) after giving effect to the Transactions, the fair saleable value of the assets of Borrower and the other Loan Parties taken as a whole, (calculated on a going concern basis) will be in excess of the amount of the liabilities of the Loan Parties.
 
(b)                                  As of the Closing Date, no action, claim, lawsuit, demand, investigation or proceeding is now pending or, to the knowledge of any Loan Party, threatened against any Loan Party or any of its Subsidiaries, before any Governmental Body or before any arbitrator or panel of arbitrators, which challenges the right or power of any Loan Party or any of its Subsidiaries to enter into or perform any of its obligations under the Related Transaction Documents to which it is a party, or the validity or enforceability of this Agreement, any Other Document or any
 
88 

 
Related Transaction Document or any action taken thereunder.  Except as disclosed in Schedule 5.8(b) , no Loan Party has any pending or, to the knowledge of any Loan Party, threatened litigation, arbitration, actions or proceedings which could reasonably be expected to have a Material Adverse Effect or, as of the Closing Date, result in injunctive relief or findings of criminal misconduct of any Loan Party or any of its Subsidiaries.
 
(c)                                   No Loan Party is in violation of any applicable statute, law, rule, regulation or ordinance in any respect which could reasonably be expected to have a Material Adverse Effect, nor is any Loan Party in violation of any order of any court, Governmental Body or arbitration board or tribunal.  As of the Closing Date, no Loan Party or any Subsidiary of any Loan Party is the subject of an audit or, to each Loan Party’s knowledge, any review or investigation by any Governmental Body concerning the violation or possible violation of any Applicable Law.
 
(d)                                  Except as could not reasonably be expected to result in a material liability to any Loan Party:  neither any Loan Party nor any Subsidiary of a Loan Party maintains or contributes to any Pension Benefit Plan other than (x) on the Closing Date, those listed on Schedule 5.8(d)  hereto and (y) thereafter, as permitted under this Agreement.  (i) no Pension Benefit Plan has incurred any “accumulated funding deficiency,” as defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether or not waived, and each Loan Party and each member of the Controlled Group has met all applicable minimum funding requirements under Section 302 of ERISA in respect of each Pension Benefit Plan; (ii) each Plan which is intended to be a qualified plan under Section 401(a) of the Code as currently in effect has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the Code and the trust related thereto is exempt from federal income tax under Section 501(a) of the Code; (iii) neither any Loan Party nor any member of the Controlled Group has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due which are unpaid; (iv) no Pension Benefit Plan has been terminated by the plan administrator thereof nor by the PBGC, and there is no occurrence which would cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Benefit Plan; (v) on the Closing Date, the current value of the assets of each Pension Benefit Plan exceeds the present value of the accrued benefits and other liabilities of such Pension Benefit Plan and neither any Loan Party nor any member of the Controlled Group knows of any facts or circumstances which would materially change the value of such assets and accrued benefits and other liabilities; (vi) neither any Loan Party nor any member of the Controlled Group has breached any of the material responsibilities, obligations or duties imposed on it by ERISA with respect to any Pension Benefit Plan; (vii) neither any Loan Party nor any member of a Controlled Group has incurred any material liability for any excise tax arising under Section 4972 or 4980B of the Code, and no fact exists which could give rise to any such liability; (viii) neither any Loan Party nor any member of the Controlled Group nor any fiduciary of, nor any trustee to, any Pension Benefit Plan, has engaged in a “prohibited transaction” described in Section 406 of the ERISA or Section 4975 of the Code nor taken any action which would constitute or result in a Termination Event with respect to any such Pension Benefit Plan which is subject to ERISA; (ix) each Loan Party and each member of the Controlled Group has made all material contributions due and payable with respect to each Pension Benefit Plan; (x) there exists no Reportable Event; (xi) neither any Loan Party nor any member of the Controlled Group has any fiduciary responsibility for investments with respect to any plan existing for the benefit of persons other than employees or
 
89 

 
former employees of such Loan Party and any member of the Controlled Group; (xii) neither any Loan Party nor any member of the Controlled Group maintains or contributes to any Plan which provides health, accident or life insurance benefits to former employees, their spouses or dependents, other than in accordance with Section 4980B of the Code; (xiii) neither any Loan Party nor any member of the Controlled Group has withdrawn, completely or partially, from any Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan Amendments Act of 1980 and there exists no fact which would reasonably be expected to result in any such withdrawal and liability; and (xiv) no Pension Benefit Plan fiduciary (as defined in Section 3(21) of ERISA) has any material liability for breach of fiduciary duty or for any failure in connection with the administration or investment of the assets of a Pension Benefit Plan.
 
5.9                                Patents, Trademarks, Copyrights and Licenses .  All issued patents, patent applications, trademark registrations, trademark applications, service mark registrations, service mark applications, registered copyrights and copyright applications owned by the Loan Parties as of the Closing Date are set forth on Schedule 5.9 , to the knowledge of the Loan Parties, are valid and have been duly registered or filed with all appropriate Governmental Bodies, except as set forth in Schedule 5.9 ; to the knowledge of the Loan Parties, there is no objection to or pending challenge to the validity of any material Patent, Trademark or Copyright owned by a Loan Party and no Loan Party is aware of any grounds for any such challenge, except as set forth in Schedule 5.9 hereto.  Except as set forth in Schedule 5.9 hereto, on the Closing Date, each material Patent, Trademark and Copyright owned or held by each Loan Party consists of original material or property developed by or on behalf of such Loan Party or was lawfully acquired or licensed by such Loan Party from a third party.  On the Closing Date, with respect to all material software owned by any Loan Party (other than off-the-shelf products), such Loan Party is in possession of all source and object codes related to each piece of software or is the beneficiary of a source code escrow agreement, each such source code escrow agreement being listed on Schedule 5.9 hereto.  Except as set forth on Schedule 5.9 or as could not reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect, on the Closing Date, all Intellectual Property material to the business of each Loan Party and each of its Subsidiaries (i) is subsisting in full force and effect, has not been terminated, cancelled, expired, or abandoned, and is valid and enforceable; (ii) has been prosecuted in accordance with all Applicable Laws; (iii) has been protected with adequate safeguards and security to maintain any trade secrets, and confidential or proprietary information; (iv) is not the subject of any third party challenge, whether judicial, administrative or otherwise, as to ownership, registerability, validity or enforceability; (v) has not been the subject of any written notice alleging that it is invalid or unenforceable or challenging ownership or registerability; and (vi) includes all the intellectual property rights reasonably required to conduct such Person’s business.  Except as set forth on Schedule 5.9 , on the Closing Date, no stockholder, officer, director or any Affiliate of any Loan Party or any of its Subsidiaries owns or possesses any rights in any Intellectual Property used by any of the Loan Parties or any of their Subsidiaries and material to the operations of their businesses.  Except as set forth on Schedule 5.9 or except for such allegations which, if proven to be true, individually or in the aggregate as could not reasonably be expected to result in a Material Adverse Effect, on the Closing Date, no Loan Party and no Subsidiary of a Loan Party has (i) received any written notice alleging (x) infringement or notice of any other complaint that its operations infringe or misappropriate rights under any intellectual property of any third party, or (y) unfair trade practices or passing off of counterfeit goods; (ii) knowledge of any such infringement, misappropriation, unfair trade practices or passing off of counterfeit goods, or (iii)
 
90 

wrongfully employed any trade secrets or any confidential information or documentation proprietary to any former employer, or any other Person.
 
5.10                         Licenses and Permits .  Except as set forth in Schedule 5.10 , each Loan Party (a) is in compliance with and (b) has procured and is now in possession of, all material licenses or permits required by any applicable federal, state or local law, rule or regulation for the operation of its business in each jurisdiction wherein it is now conducting or proposes to conduct business and where the failure to procure such licenses or permits is reasonably likely to have a Material Adverse Effect.
 
5.11                         Default of Indebtedness .  No Loan Party is in default in the payment of the principal of or interest on any Indebtedness in excess of $500,000 or under any instrument or agreement under or subject to which any such Indebtedness has been issued and no event has occurred under the provisions of any such instrument or agreement which with or without the lapse of time or the giving of notice, or both, constitutes or would constitute an event of default thereunder.
 
5.12                         No Default .  No Loan Party is in default in the payment or performance of any of its contractual obligations which individually or together with all such defaults, could reasonably be expected to have a Material Adverse Effect.
 
5.13                         No Burdensome Restrictions .  No Loan Party is a party to any contract or agreement the performance of which is reasonably likely to have a Material Adverse Effect.  No Loan Party has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien which is not a Permitted Encumbrance.
 
5.14                         Labor Matters .  Other than as set forth on Schedule 5.14 hereto, no Loan Party is involved in any material labor dispute; there are no strikes or walkouts or union organization of any Loan Party’s employees threatened or in existence and no labor contract is scheduled to expire during the Term.
 
5.15                         Margin Regulations .  No Loan Party is engaged, nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. No part of the proceeds of any Advance will be used for “purchasing” or “carrying” “margin stock” as defined in Regulation U of such Board of Governors.
 
5.16                         [ Reserved ].
 
5.17                         Disclosure .  No representation or warranty made by Borrower in this Agreement, in any Other Agreement or in any financial statement, report, certificate or any other document furnished in connection herewith or therewith contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not materially misleading; provided , that all financial performance projections delivered to the Agent, including the financial performance projections delivered on or prior to the Closing Date, represent the
 
91 

 
Borrower’s estimates of future financial performance and are based on assumptions believed by the Borrower, in good faith, to be reasonable in light of current market conditions, it being acknowledged and agreed by the Agent and Lenders that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by such projections may differ from the projected results.
 
5.18                         Swaps .  On the Closing Date, no Loan Party is a party to any swap agreement whereby such Loan Party has agreed to swap interest rates or currencies.
 
5.19                         Conflicting Agreements .  No provision of any mortgage, indenture, contract, agreement, judgment, decree or order binding on any Loan Party or the Collateral requires any Consent which has not already been obtained to, or would in any way prevent the execution, delivery or performance of, the terms of this Agreement or the Other Documents, except where the failure to obtain such Consent could not reasonably be expected to have a Material Adverse Effect.
 
5.20                         Application of Certain Laws and Regulations .  Neither any Loan Party nor any Affiliate of any Loan Party is subject to any law, statute, rule or regulation which regulates the incurrence of any Indebtedness, including laws, statutes, rules or regulations relative to common or interstate carriers or to the sale of electricity, gas, steam, water, telephone, telegraph or other public utility services.
 
5.21                         Business and Property of Borrower .  The Loan Parties do not propose to engage in any business other than the retail sale of clothing, shoes and accessories, reasonable extensions thereof and any business reasonably related, ancillary or complementary thereto.
 
5.22                         Section 20 Subsidiaries .  Borrower does not intend to use and shall not use any portion of the proceeds of the Advances, directly or indirectly, to purchase during the underwriting period, or for 30 days thereafter, Ineligible Securities being underwritten by a Section 20 Subsidiary.
 
5.23                         No Brokers or Agents .  No Loan Party or Subsidiary thereof uses any brokers or other agents acting in any capacity for such Loan Party or Subsidiary in connection with the Obligations.
 
5.24                         [ Reserved ].
 
5.25                         Federal Securities Laws .  Neither Parent Holdco nor any of its Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii) has any securities registered under the Exchange Act or (iii) has filed a registration statement that has not yet become effective under the Securities Act.
 
5.26                         Collateral .  As of the Closing Date, this Agreement and the Other Documents are effective to create in favor of the Agent for the ratable benefit of the Lenders a legal, valid and enforceable security interest in the Collateral (as defined herein and therein), and when UCC financing statements in appropriate form are filed (to the extent not already filed as of the Closing Date) in the appropriate filing offices, this Agreement and the Other Documents shall constitute a fully perfected Lien (to the extent that such Lien may be perfected by the filing of a
 
92 

 
UCC financing statement) on, and security interest in, all right, title and interest of the grantors thereunder in such Collateral, in each case prior and superior in right to any other Person, other than with respect to the Permitted Encumbrances.
 
5.27                         [ Reserved ].
 
5.28                         Ventures, Subsidiaries and Affiliates; Outstanding Stock .  Except as set forth in Schedule 5.28 , as of the Closing Date, no Loan Party has any Subsidiaries, is engaged in any joint venture or partnership with any other Person, or is an Affiliate of any other Person.  As of the Closing Date, all of the issued and outstanding Equity Interests of each Loan Party and each of its Subsidiaries is owned by each of the stockholders, partners or members, as applicable and in the amounts set forth on Schedule 5.28 .  Except as set forth on Schedule 5.28 , as of the Closing Date, there are no outstanding rights to purchase, options, warrants or similar rights or agreements pursuant to which any Loan Party or any of its Subsidiaries may be required to issue, sell, repurchase or redeem any of its Equity Interests or other equity securities or any Equity Interests or other equity securities of such Person’s Subsidiaries.
 
5.29                         Government Regulation .  No Loan Party and no Subsidiary of a Loan Party is an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” as such terms are defined in the Investment Company Act of 1940 as amended.  No Loan Party and no Subsidiary of a Loan Party is subject to regulation under the Federal Power Act or any other federal, state, local or foreign statute that restricts or limits its ability to incur Indebtedness or to perform its obligations hereunder.  The making of the Advances by Lenders and Issuer to Borrower, the application of the proceeds thereof and the repayment thereof and the consummation of the Transactions will not violate any provision of any such statute or any rule, regulation or order issued by the Securities and Exchange Commission.
 
5.30                         Other Environmental Matters .  Except as set forth in Schedule 5.30 , as of the Closing Date, (a) the Loan Parties and their Subsidiaries are and have been in compliance with all Environmental Laws, except for such noncompliance which would not reasonably be expected to have a Material Adverse Effect; (b) the Loan Parties and their Subsidiaries have obtained, and are in compliance with, all Environmental Permits required by Environmental Laws for the operations of their respective businesses as presently conducted or as proposed to be conducted, except where the failure to so obtain or comply with such Environmental Permits would not reasonably be expected to have a Material Adverse Effect, and all such Environmental Permits are valid, uncontested and in good standing; (c) no Loan Party and no Subsidiary of a Loan Party is involved in operations or knows of any facts, circumstances or conditions, including any Releases of Hazardous Materials, that are likely to result in a Material Adverse Effect, and no Loan Party and no Subsidiary of a Loan Party has permitted any current or former tenant or occupant of the Real Property to engage in any such operations; (d) no notice has been received by any Loan Party or any of its Subsidiaries identifying it as a “potentially responsible party” or requesting information under CERCLA or analogous laws, and to the knowledge of the Loan Parties, there are no facts, circumstances or conditions that could reasonably be expected to result in any Loan Party or any Subsidiary of a Loan Party being identified as a “potentially responsible party” under CERCLA or analogous laws; and (e) the Loan Parties have provided to Agent copies of all existing environmental reports, reviews and audits and all written information
 
93 

 
pertaining to actual or potential Environmental Liabilities, in each case relating to any Loan Party and its Subsidiaries.
 
5.31                         Insurance .  As of the Closing Date, Schedule 5.31 lists all insurance policies of any nature maintained for current occurrences by each Loan Party and each of its Subsidiaries, as well as a summary of the terms of each such policy.  As of the Closing Date, no Loan Party and no Subsidiary of a Loan Party is in default of any obligation under any such policy.  As of the Closing Date, to the extent any insurance policy has a cash surrender, rebate or similar value, there is no restriction, Lien or other encumbrance affecting the receipt or claim of such value by any Loan Party or any of its Subsidiaries, and no obligation or agreement to pay, directly or indirectly, such value to any other party exists other in favor of the Lenders.
 
5.32                         [ Reserved ].
 
5.33                         Transaction Documents .  Borrower has delivered to Agent a complete and correct copy of the Purchase Agreement, all other Related Transaction Documents (in each case, including all schedules, exhibits, amendments, supplements, modifications, assignments, side letters and all other documents delivered pursuant thereto or in connection therewith by any Loan Party or any Affiliate thereof).  As of the Closing Date, no Loan Party is in default in the performance or compliance with any provisions of any Related Transaction Document.  As of the Closing Date, the Purchase Agreement and each other Purchase Document comply with, and the Acquisition and the other Transactions have been (or contemporaneously with the initial funding of the Advances hereunder will be) consummated in accordance with, all Applicable Laws.  As of the Closing Date, the Purchase Agreement, each other Purchase Document, this Agreement and the Other Documents are in full force and effect and have not been terminated, rescinded or withdrawn.  As of the Closing Date, all requisite approvals by governmental authorities having jurisdiction over the sellers under the Purchase Agreement, any Loan Party and other Persons referenced therein, with respect to the transactions contemplated by the Purchase Agreement, have been obtained, and no such approvals impose any conditions to the consummation of the transactions contemplated by the Purchase Agreement or to the conduct by any Loan Party or any of its Subsidiaries of its business thereafter.  As of the Closing Date, each of the representations and warranties given by any Loan Party in the Purchase Documents is true and correct in all material respects (without duplication of any materiality qualifiers).
 
VI.                                AFFIRMATIVE COVENANTS.
 
Each Loan Party shall, and shall cause each of its Subsidiaries to, until the date on or following the date upon which all of the Obligations have been paid in full in cash.
 
6.1                                [ Reserved ].
 
6.2                                Conduct of Business and Maintenance of Existence and Assets .  (a) Conduct and operate its business according to good business practices and maintain all of its material properties in good working order and condition (reasonable wear and tear and damage from a casualty event excepted and except as may be disposed of in accordance with the terms of this Agreement and, with respect to leased Real Property, except with respect to maintenance obligations which are the responsibility of the landlord and not such Loan Party), and take all
 
94 

 
actions reasonably necessary to protect the validity of any material Intellectual Property right owned by such Loan Party and included in the Collateral (except as may be abandoned or disposed of in accordance with the terms of this Agreement); (b) keep in full force and effect its existence and comply in all material respects with the laws and regulations governing the conduct of its business where the failure to do so could reasonably be expected to have a Material Adverse Effect; and (c) make all such reports and pay all such franchise and other taxes and license fees and do all such other acts and things as may be lawfully required to maintain its rights, licenses, leases, powers and franchises under the laws of the United States or any political subdivision thereof where the failure to do so could reasonably be expected to have a Material Adverse Effect.
 
6.3                                [ Reserved ].
 
6.4                                Government Receivables .  Take all steps reasonably requested by Agent to protect Agent’s interest in the Collateral under the Federal Assignment of Claims Act, the Uniform Commercial Code, the PPSA and all other Applicable Laws and deliver to Agent, appropriately endorsed, any instrument or chattel paper connected with any Receivable arising out of contracts between such Loan Party and the United States, any state or any department, agency or instrumentality of any of them.
 
6.5                                Financial Covenant .  If a Covenant Compliance Period has commenced and is continuing, maintain, when measured as of the last day of the fiscal quarter in which such Covenant Compliance Period first commenced and as of the last day of each fiscal quarter ending during such Covenant Compliance Period, a Fixed Charge Coverage Ratio for the four fiscal quarters ending on each such measurement date, of no less than 1.10:1.00.
 
6.6                                Execution of Supplemental Instruments .  Execute and deliver to Agent (or Term Loan Agent with respect to the delivery of Term Loan Priority Collateral) from time to time, upon demand, such supplemental agreements, statements, assignments and transfers, or instructions or documents relating to the Collateral, and such other instruments as Agent may reasonably request, in order that the full intent of this Agreement may be carried into effect.
 
6.7                                Payment of Indebtedness .  Pay, discharge or otherwise satisfy at or before maturity (subject, where applicable, to specified grace periods and, in the case of the trade payables, to normal payment practices) all its Indebtedness, except when the failure to do so could not reasonably be expected to have a Material Adverse Effect or when the amount or validity thereof is currently being contested in good faith by appropriate proceedings and the applicable Loan Party shall have provided for adequate reserves, subject at all times to any applicable subordination arrangement in favor of Lenders.
 
6.8                                Standards of Financial Statements .  Cause all financial statements referred to in Sections 9.7, 9.8, 9.9 and 9.12 as to which GAAP is applicable to be complete and correct in all material respects (subject, in the case of interim financial statements, to normal year-end audit adjustments and the absence of footnote disclosures) and to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein.
 
6.9                               [ Reserved ].
 
95 

 
6.10                         Intellectual Property .
 
(a)                                  Upon the reasonable request of Agent, in order to facilitate filings with the United States Patent and Trademark Office and the United States Copyright Office, each Loan Party shall execute and deliver to Agent one or more security agreements substantially in the form of Exhibit 6.10(a)  to evidence Agent’s Lien on such Loan Party’s Patents, Trademarks, and/or Copyrights registered by or filed with such Office.
 
(b)                                  Each Loan Party shall have the duty, to the extent reasonably necessary or economically desirable in the operation of such Loan Party’s business, as determined by such Loan Party, (i) to promptly sue for infringement, misappropriation, or dilution and to endeavor to recover any and all damages for such infringement, misappropriation, or dilution of any material Intellectual Property owned by such Loan Party, (ii) to prosecute diligently any material trademark application or material service mark application that is part of the Trademarks owned by such Loan Party pending as of the date hereof or hereafter until the termination of this Agreement, (iii) to prosecute diligently any material patent application that is part of the Patents owned by such Loan Party pending as of the date hereof or hereafter until the termination of this Agreement, and (iv) to take all reasonably necessary action to preserve and maintain all of such Loan Party’s material Trademarks, Patents, Copyrights, License Agreements, and its rights therein, including , with respect to any Trademarks, Patents or Copyrights owned by such Loan Party that are the subject of a registration issued by or an application filed with any Governmental Body, the filing of applications for renewal, affidavits of use, affidavits of noncontestability and opposition and interference and cancellation proceedings.  Each Loan Party shall promptly file an application with the United States Copyright Office for any material Copyright of such Loan Party that has not been registered with the United States Copyright Office if such Loan Party determines that the registration of such Copyright is necessary in connection with the operation of such Loan Party’s business.  Any expenses incurred in connection with the foregoing shall be borne by the Loan Parties.  The Loan Parties further agree not to abandon any Trademark, Patent, Copyright owned by such Loan Party, or License Agreement that is necessary in the operation of any Loan Party’s business without the prior written consent of Agent, not to be unreasonably withheld, conditioned or delayed; provided, that the Loan Parties may take such abandonment actions, so long as the Trademark, Patent, Copyright or License Agreement proposed to be abandoned is no longer material to the operation of the business as determined by the Loan Parties.
 
(c)                                   The Loan Parties acknowledge and agree that the Agent and the Lenders shall have no duties with respect to the Trademarks, Patents, Copyrights, or License Agreements. Without limiting the generality of this Section 6.10(c), the Loan Parties acknowledge and agree that neither the Agent nor any Lender shall be under any obligation to take any steps necessary to preserve rights in the Trademarks, Patents, Copyrights, or License Agreements against any other Person, but Agent may do so at its option from and after the occurrence and during the continuance of an Event of Default, and all expenses incurred in connection therewith (including reasonable fees and expenses of attorneys and other professionals) shall be for the sole account of the Loan Parties and shall be chargeable to the Loan Parties.
 
(d)                                  With respect to the Intellectual Property rights owned by the Loan Parties which are material to the conduct of the Loan Parties’ respective businesses and the subject of a
 
96 

 
registration issued by or application filed with a Governmental Body, each Loan Party agrees to take all necessary steps, including making all necessary payments and filings in connection with registration, maintenance, and renewal of Copyrights, Trademarks, and Patents in the United States Copyright Office, the United States Patent and Trademark Office, any other appropriate Governmental Bodies in foreign jurisdictions or in any court, to maintain each such Intellectual Property right; provided, however, no Loan Party shall, either itself or through any agent, employee, licensee, or designee, file an application for the registration of any Copyright with the United States Copyright Office or any similar office or agency, except in compliance with the provisions of Sections 6.10(e).  Each Loan Party hereby agrees to take, or cause to be taken, corresponding steps with respect to each new or acquired Intellectual Property right to which it is now or later becomes entitled that are material to the conduct of their businesses. Any expenses incurred in connection with such activities shall be borne solely by the Loan Parties.
 
(e)                                   Without limiting any other provision hereof, within twenty (20) Business Days following the date of registration of or recordation of transfer of ownership, as applicable, to a Loan Party of any registered Copyrights, such Loan Party shall cause to be prepared, executed, and delivered to Agent (i) a Copyright security agreement or supplemental schedules to an existing registered Copyright security agreement reflecting the security interest of Agent in such registered Copyrights, which supplemental schedules shall be in form and content suitable for recordation with the United States Copyright Office (or any similar office of any other jurisdiction in which registered Copyrights are used) so as to give constructive notice, when so recorded, of the transfer by such Loan Party to Agent of a security interest in such registered Copyrights and (ii) any other documentation as Agent reasonably deems necessary in order to perfect, and confirm and continue the perfection of, Agent’s Liens on such registered Copyrights following such recordation.
 
The Loan Parties shall ensure that each of the representations and warranties contained in Section 5.9 remain true and correct at all times.
 
6.11                         Keepwell .  If it is a Qualified ECP Loan Party, then jointly and severally, together with each other Qualified ECP Loan Party, hereby absolutely unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by any Non-Qualifying Loan Party to honor all of such Non-Qualifying Loan Party’s obligations under this Agreement or any Other Document in respect of Swap Obligations (provided, however, that each Qualified ECP Loan Party shall only be liable under this Section 6.11 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 6.11, or otherwise under this Agreement or any Other Document, voidable under applicable law, including applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount).  The obligations of each Qualified ECP Loan Party under this Section 6.11 shall remain in full force and effect until payment in full of the Obligations and termination of this Agreement and the Other Documents.  Each Qualified ECP Loan Party intends that this Section 6.11 constitute, and this Section 6.11 shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell, support, or other agreement” for the benefit of each other Loan Party.
 
6.12                         Lien Waiver Agreements .  Use commercially reasonable efforts to, on or before the date that is ninety (90) days (or such longer period as Agent may agree to) after the Closing
 
97 

 
Date, deliver to Agent Lien Waiver Agreements executed by each of MSW Promenade, L.P., TX-SW #1, LP, Ambassador Way Associates, LP and Bluecap, Ltd. with respect to the leases between Baskins and such lessors.
 
6.13                         Exercise of Rights under Related Transaction Documents .  Each Loan Party shall, and shall cause each of its Subsidiaries to, enforce all of its material rights, including, without limitation, all material indemnification rights, and pursue all material remedies available to it with diligence and in good faith in connection with the enforcement of any such rights under the Related Transaction Documents.
 
VII.                           NEGATIVE COVENANTS.
 
No Loan Party shall, nor shall any Loan Party permit any of its Subsidiaries to, until the date on or following the date upon which all of the Obligations have been paid in full in cash:
 
7.1                                Merger, Consolidation, Acquisition and Disposition of Assets .
 
(a)                                  Enter into any merger, consolidation or other reorganization with or into any other Person (other than (i) pursuant to a Permitted Acquisition where a Loan Party is the surviving entity, or where the surviving entity becomes a Loan Party; provided, however that, in all cases, Borrower shall be the surviving entity of any Permitted Acquisition that it is a party to and (ii) transactions between (A) any Loan Party or Subsidiary and Borrower so long as Borrower is the surviving entity, (B) any Loan Party and any other Loan Party; provided, that, if Borrower is a party thereto, Borrower is the surviving entity, (C) any Subsidiary of a Loan Party and any Loan Party or Domestic Subsidiary thereof; provided, that, if a Loan Party is a party thereto, such Loan Party is the surviving entity, (D) any Foreign Subsidiary and another Foreign Subsidiary, or (E) any Domestic Subsidiary that is not a Loan Party and any other Domestic Subsidiary that is not a Loan Party)) or acquire all or a substantial portion of the assets or Equity Interests of any Person (other than as permitted by Sections 7.4, 7.6 and 7.9 and clause (e) of the definition of the definition of Permitted Dispositions).
 
(b)                                  Sell, lease, transfer or otherwise dispose of any of its properties or assets, except (subject to Section 7.10) Permitted Dispositions.
 
(c)                                   Convert into any other organizational form.
 
7.2                                Creation of Liens .  Create or suffer to exist any Lien upon or against any of its property or assets now owned or hereafter acquired, except Permitted Encumbrances.
 
7.3                                Guarantees .  Become liable for any Guaranteed Indebtedness (other than to Lenders) except (a) the endorsement of checks in the Ordinary Course of Business, (b) as otherwise permitted by Section 7.8, and (c) guarantees of obligations and liabilities of other Loan Parties not otherwise prohibited by this Agreement.
 
7.4                                Investments .  Purchase or acquire, or make any commitment to purchase or acquire, obligations, assets or Equity Interests of, or other interest in, any Person, except the following (“ Permitted Investments ”) (a) obligations issued or guaranteed by the United States of America or any agency thereof, (b) commercial paper with maturities of not more than 180 days
 
98 

 
and a published rating of not less than A-1 or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers’ acceptances having maturities of not more than 180 days and repurchase agreements backed by United States government securities of a commercial bank if (i) such bank has a combined capital and surplus of at least $500,000,000, or (ii) its debt obligations, or those of a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating) by a nationally recognized investment rating agency, (d) U.S. money market funds that invest substantially all of their assets in obligations issued or guaranteed by the United States of America or an agency thereof, (e) as permitted by Section 7.1(a), 7.8 and 7.12 and (f) Permitted Acquisitions.
 
7.5                                Loans .  Make or commit to make advances, loans or extensions of credit or capital contributions to any Person, including any Parent, Subsidiary or Affiliate, or make, accrue or permit to exist loans or advances of money to, any Person, including any Parent, Subsidiary or Affiliate, through the direct or indirect lending of money, holding of securities or otherwise, in each case, except (a) advances, loans or extensions of credit by any Loan Party to another Loan Party, (b) with respect to the extension of commercial trade credit in connection with the sale of Inventory in the Ordinary Course of Business and (c) to directors, officers, employees and consultants in an amount not to exceed $500,000 in the aggregate at any time outstanding.
 
7.6                                [ Reserved ].
 
7.7                                Restricted Payments .  Make any Restricted Payments except for (a) such to be used to pay director fees and expenses and overhead of Parent Holdco or Topco directly attributable to its direct or indirect ownership of Borrower and its Subsidiaries, (b) dividends and distributions by Subsidiaries of a Loan Party paid to such Loan Party (other than Parent Holdco); provided, that dividends and distributions by a non-wholly owned Subsidiary of a Loan Party shall only be made with the prior written consent of Agent if any Person other than a Loan Party would be entitled to receive any portion of such dividend or distribution, (c) tax distributions to allow Parent Holdco or Topco to pay franchise and other Taxes owed by either of them, but excluding any Taxes payable with respect to business activities of or income earned by any Person (other than income attributable to Topco as a member of the consolidated tax group that includes Borrower and its Subsidiaries) that is not a Loan Party or Subsidiary thereof, as well as the consolidated, combined, unitary or other group taxes owed by Topco with respect to Parent Holdco and its Subsidiaries, (d) the purchase, redemption or other retirement of any common or preferred Equity Interests, or of any options to purchase or acquire any such shares of common or preferred Equity Interests of such Loan Party or Topco other than ( provided that (i) no Default or Event of Default has occurred and is continuing or would arise as a result of such Restricted Payment, (ii) after giving effect to such Restricted Payment, the Loan Parties and their Subsidiaries are in compliance on a pro forma basis with the financial covenant set forth in Section 6.5, recomputed for the most recent fiscal quarter for which financial statements have been delivered to Agent and Lenders pursuant to the terms of this Agreement, (iii) the aggregate Restricted Payments permitted under this clause (d) shall not exceed $2,500,000 during the term of this Agreement plus the amount of any net cash proceeds received from additional issuances of Equity Interests to other employees, officers or directors, and (iv) both before and after giving effect to such Restricted Payment, no Covenant Compliance Period shall then be in effect) from employees, officers, directors and consultants, (e) (i) the Baskins Earnout Payment and (ii) any other earnout or other similar deferred purchase price payment obligations incurred pursuant to a
 
99 

 
Permitted Acquisition ( provided that (w) the earnout or other similar deferred purchase price payment obligations with respect to which such Restricted Payment described in clause (e)(ii) is made are unsecured, (x) no Default or Event of Default has occurred and is continuing or would arise as a result of such Restricted Payment, (y) after giving effect to such Restricted Payment, the Loan Parties and their Subsidiaries are in compliance on a pro forma basis with the financial covenant set forth in Section 6.5 , recomputed for the most recent fiscal quarter for which financial statements have been delivered to Agent and Lenders pursuant to the terms of this Agreement, and (z) the aggregate Restricted Payments permitted under this clause (e)(ii) shall not exceed $2,000,000 during any fiscal year), and (f) any other Restricted Payment otherwise expressly permitted by the terms of this Agreement and the Term Loan Agreement.  For the avoidance of doubt, the Baskins Earnout Payment may be made as and when due pursuant to the terms of the Purchase Agreement.
 
7.8                                Indebtedness .  Create, incur, assume or suffer to exist any Indebtedness (exclusive of trade debt) except in respect of (i) the Obligations; (ii) Indebtedness owed by one Loan Party to another Loan Party; (iii) Capital Financing Indebtedness; provided , that, the total amount of all Indebtedness incurred pursuant to this clause (iii) at any time outstanding shall not exceed $5,000,000; (iv) Indebtedness incurred in connection with Permitted Investments, (v) unsecured Indebtedness in an aggregate outstanding principal amount at any time not to exceed $500,000, (vi) Indebtedness existing on the Closing Date and identified on Schedule 7.8 , (vii) Permitted Subordinated Debt in an aggregate principal amount not to exceed $5,000,000 (which amount, for avoidance of doubt, shall not include any Permitted Freeman Spogli Investment constituting Indebtedness and any Indebtedness between Loan Parties) and, to the extent not exceeding, in principal amount, the Maximum Principal Amount of Term Loan Debt (as defined in the Intercreditor Agreement) Indebtedness under the Term Loan Documents, (viii) Indebtedness arising from the endorsement of instruments for deposit, the honoring by a bank or other institution of a check, draft or similar instrument drawn against insufficient funds, so long as the same is covered within 5 Business Days, or consisting of obligations in respect of cash management services or overdraft protection, (ix) Indebtedness owing to any insurance company in connection with the financing of any insurance premiums permitted by such insurance company in the ordinary course of business, (x) Indebtedness arising as an account party in respect of trade letters of credit issued in the ordinary course of business, (xi) unsecured Indebtedness arising under Hedge Agreements entered into for bona fide hedging purposes and not for speculation, (xii) refinancings of any of the foregoing Indebtedness which do not increase the principal amount of such Indebtedness and are on terms (including pricing) not less favorable to the applicable Loan Party than the existing Indebtedness being refinanced, (xiii) the Baskins Earnout Payment and any other earnout or other similar deferred purchase price payment obligations incurred in connection with a Permitted Acquisition to the extent permitted by Section 7.7 and (xiv) Permitted Freeman Spogli Investments to the extent constituting Indebtedness.
 
7.9                                Nature of Business .  Substantially change the nature of the business in which it is presently engaged or businesses otherwise reasonably related or complementary thereto, nor except as specifically permitted hereby purchase or invest, directly or indirectly, in any assets or property other than (a) in the Ordinary Course of Business for assets or property which are useful in, necessary for and are to be used in its business as presently conducted and (b) as permitted by Sections 7.1(a) and 7.6.
 
100 

7.10                         Transactions with Affiliates .  Except as disclosed on Schedule 7.10 and with respect to transactions that are otherwise expressly permitted herein, directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property to, or otherwise enter into any transaction or deal with, any Affiliate thereof or any present or former shareholder thereof, except:
 
(a)                                  transactions which are in the Ordinary Course of Business, on an arm’s-length basis on fair and reasonable terms and conditions no less favorable than terms and conditions which would have been obtainable in a comparable arm’s length transaction from a Person other than an Affiliate or a present or former shareholder of such Loan Party or such Loan Party and, if such transaction involves payments from the Loan Parties or any of their Subsidiaries to such Affiliate in excess of $500,000 per fiscal year, such transaction shall have been disclosed to Agent in writing.  All such transactions existing as of the Closing Date are described on Schedule 7.10 ;
 
(b)                                  reasonable and customary director, board observer, officer, employee and member of management compensation (including bonuses), documented expense reimbursement and other benefits (including retirement, health, severance, stock option and other benefit plans) and employment, severance, change of control and indemnification arrangements, in the case of the officers or directors;
 
(c)                                   customary indemnity and expense reimbursement paid to or on behalf of Freeman Spogli in connection with Freeman Spogli’s performance of financial, advisory, monitoring, oversight and similar services; provided, that Borrower shall provide to Agent, upon Agent’s request in its Permitted Discretion, a reasonably detailed explanation of the indemnities and expenses so reimbursed and the purpose therefor;
 
(d)                                  the Transactions and related transactions contemplated by the Purchase Agreement (as in effect on the Closing Date) and the payment of the fee payable to Freeman Spogli or one of its Affiliates in connection therewith;
 
(e)                                   sales of Equity Interests of Parent Holdco to Freeman Spogli and Permitted Holders permitted by this Agreement and the granting of registration and other customary rights in connection therewith; and
 
(f)                                    the payment of fees to Freeman Spogli (or its affiliated entities) for any financial or mergers and acquisitions advisory, financing, underwriting or placement services (whether structured as a fee or an underwriting discount) in connection with Permitted Acquisitions or permitted equity Investments; provided that the fees for any such Permitted Acquisition shall not exceed the greater of (i) 2% of the transaction value and (ii) 5% of the amount of any new equity invested by Freeman Spogli or its Affiliates in connection with such Permitted Acquisition or equity Investment.
 
7.11                         Management Fees .  Except as disclosed on Schedule 7.11 , pay any management, consulting, administrative or similar fees to any Affiliate of any Loan Party, any officer, director or employee of any Loan Party, any Affiliate of any Loan Party or Freeman Spogli (or its affiliated entities) during the term of this Agreement, other than as provided in Section 7.10.
 
101 

 
7.12                         Subsidiaries .
 
(a)                                  Subject to Section 4.1, form or acquire any Subsidiary unless:
 
(i)                                      such Subsidiary executes and delivers, or causes to be delivered (as applicable) to Agent promptly: (A) either, at the election of Agent, a joinder to this Agreement in the form of Exhibit 7.12 or a joinder to the Guaranty and the Guarantor Security Agreement, (B) if such Subsidiary has any Subsidiaries, (1) certificates evidencing all of the Equity Interests of any Person owned by such Subsidiary, (2) undated stock powers executed in blank with signature guaranteed, and (3) such opinion of counsel as Agent may reasonably request, (C) if requested by Agent, with respect to owned Real Property of such Subsidiary with a fair market value in excess of $250,000 (1) a fully executed Mortgage in form and substance reasonably satisfactory to Agent together with an A.L.T.A. lender’s title insurance policy issued by a title insurer reasonably satisfactory to Agent, in form and substance and in an amount reasonably satisfactory to Agent insuring that the Mortgage is a valid and enforceable first priority (subject to the terms of the Intercreditor Agreement) Lien on such Real Property, free and clear of all defects, encumbrances and Liens other than Permitted Encumbrances, (2) then current A.L.T.A. surveys, certified to Agent by a licensed surveyor sufficient to allow the issuer of the lender’s title insurance policy to issue such policy without a survey exception and (3) an environmental site assessment prepared by a qualified firm reasonably acceptable to Agent, in form and substance satisfactory to Agent, and (D) such other agreements, instruments, approvals, legal opinions or other documents reasonably requested by Agent in order to create, perfect, establish the first priority (subject to Permitted Encumbrances and the terms of the Intercreditor Agreement) of or otherwise protect any Lien purported to be covered by any such security agreement, pledge agreement or Mortgage or otherwise to effect the intent that such Subsidiary shall become bound by all of the terms, covenants and agreements contained in this Agreement and the Other Documents and that all property and assets of such Subsidiary constituting “Collateral” shall become Collateral for the Obligations; and
 
(ii)                                   each owner of the Equity Interests of any such Subsidiary, at the reasonable request of Agent, executes and delivers promptly a pledge agreement in form and substance reasonably satisfactory to Agent, together with (A) certificates evidencing all of the Equity Interests of such Subsidiary, (B) undated stock powers or other appropriate instruments of assignment executed in blank with signature guaranteed, and (C) such other agreements, instruments, approvals, legal opinions or other documents reasonably requested by Agent.
 
(b)                                  Enter into any partnership, joint venture or similar arrangement.
 
7.13                         Fiscal Year and Accounting Changes; Change of Jurisdiction or Corporate Name .  Change its fiscal year or make any significant change (i) in accounting treatment and reporting practices except as required by GAAP or (ii) in tax reporting treatment except as required by law.  Except in the case of the non-surviving entity in a merger or other transaction permitted under Section 7.1, change its chief executive office, principal place of business or the location of its primary records concerning the Collateral, in any case without at least ten (10) days’ prior written notice to Agent and after Agent’s written acknowledgment that any reasonable action requested by Agent in connection therewith, including to continue the perfection of any Liens in favor of Agent, on behalf of itself and the other Lenders, in any Collateral, has been completed
 
102 

 
or taken, and provided that any such new location of a Loan Party or any of its domestic Subsidiaries shall be in the continental United States or Canada. Without limiting the foregoing, (a) in no event shall any Borrower be or become a Person that is not a “United States person” as defined in Section 7701(a)(30) of the Code and (b) no Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to, change its jurisdiction of organization, name, identity or organizational structure in any manner which might make any financing or continuation statement filed in connection herewith seriously misleading within the meaning of Section 9-506 of the Uniform Commercial Code or any other then applicable provision of the Uniform Commercial Code or PPSA except upon prior written notice to Agent and after Agent’s written acknowledgment that any reasonable action requested by Agent in connection therewith, including to continue the perfection of any Liens in favor of Agent, on behalf of itself and the other Lenders, in any Collateral, has been completed or taken.
 
7.14                         Pledge of Credit .  Now or hereafter pledge Agent’s or any Lender’s credit on any purchases or for any purpose whatsoever or use any portion of any Advance in or for any business other than as permitted by Section 7.9.
 
7.15                         Amendments of Certain Documents .  Amend, modify or waive (a) any material term or provision of its Certificate of Incorporation or By-Laws (or other similar constituent documents) other than in connection with a Permitted Equity Issuances if such amendment, modification or waiver could reasonably be expected to have a Material Adverse Effect or would otherwise be materially adverse to the interest of the Agent or any Lender (as reasonably determined by the Agent), (b) any documents or instruments evidencing or giving rise to Permitted Subordinated Debt except to the extent permitted under the terms of the subordination agreement with respect thereto and, in any event, if such modification or waiver is material to the interests of the Lenders, without promptly delivering a copy thereof to the Agent, (c) any Term Loan Document except to the extent permitted under the terms of the Intercreditor Agreement and, in any event, if such modification or waiver is material to the interests of the Lenders, without promptly delivering a copy thereof to the Agent or (d) any provision of any lease between any Loan Party and any of Frontier Mall Associates Limited Partnership, MSW Promenade, L.P., TX-SW #1, LP, Ambassador Way Associates, LP or Bluecap, Ltd. with respect to any Lien granted to any such lessor in a manner adverse to the interests of the Lenders.  Permit any of its Subsidiaries to, amend, modify or alter, or permit to be amended, modified or altered, or enter into any new agreement or document with respect to, any Purchase Document, including without limitation any schedule, exhibit, amendment, supplement, modification, assignment, side letter or any other document delivered pursuant thereto or in connection therewith by any Loan Party, Subsidiary or any other Affiliate, in each case, to the extent the same (i) could reasonably be expected to have a Material Adverse Effect, (ii) would cause or result in a Default or Event of Default hereunder or (iii) is adverse to the interests of Agent or any Lender in their capacities as such.
 
7.16                         Compliance with ERISA .  If any material liability could reasonably be expected to be imposed on any Loan Party:  (i) (x) maintain, or permit any Subsidiary of a Loan Party to maintain, or (y) become obligated to contribute, or permit any Subsidiary of a Loan Party to become obligated to contribute, to any Pension Benefit Plan, other than those Pension Benefit Plans disclosed on Schedule 5.8(d)  or any other Pension Benefit Plan for which Agent has provided its prior written consent, (ii) engage, or permit any member of the Controlled Group to
 
103 

 
engage, in any non-exempt “prohibited transaction,” as that term is defined in section 406 of ERISA and Section 4975 of the Code, (iii) incur, or permit any member of the Controlled Group to incur, any “accumulated funding deficiency,” as that term is defined in Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any member of the Controlled Group to terminate, any Pension Benefit Plan where such event could result in any liability of any Loan Party or the imposition of a lien on the property of any Loan Party pursuant to Section 4068 of ERISA, (v) assume, or permit any Subsidiary of a Loan Party to assume, any obligation to contribute to any Multiemployer Plan not disclosed on Schedule 5.8(d) , (vi) incur, or permit any member of the Controlled Group to incur, any withdrawal liability to any Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of any Termination Event, (viii) fail to comply, or permit a member of the Controlled Group to fail to comply, with the requirements of ERISA or the Code or other Applicable Laws in respect of any Pension Benefit Plan, (ix) fail to meet, or permit any member of the Controlled Group to fail to meet, all minimum funding requirements under ERISA or the Code, or postpone or delay or allow any member of the Controlled Group to postpone or delay any funding requirement with respect of any Pension Benefit Plan.
 
7.17                         Payment of Indebtedness .  Cancel any claim or debt owing to it, except in the Ordinary Course of Business consistent with past practice.  At any time, directly or indirectly: (a) voluntarily prepay, repurchase, redeem, retire or otherwise acquire any Indebtedness under the Term Loan Documents except to the extent that (i) immediately prior and after giving effect to such payment, no Event of Default shall exist or would arise under this Agreement or the Term Loan Agreement and (ii) average Undrawn Availability for the period of thirty (30) consecutive days prior to the date such payment is made has been, and immediately after giving effect to such payment Undrawn Availability will be, equal to or greater than the greater of (A) $7,500,000 or (B) 12.5% of the then applicable Maximum Revolving Advance Amount; or (b) make any payment of any type with respect to, repurchase, redeem, retire or otherwise acquire, any Indebtedness that is subordinated to the Obligations in right of payment except as permitted under the subordination agreement related thereto or as otherwise expressly permitted under this Agreement.
 
7.18                         [ Reserved ].
 
7.19                         Membership/Partnership Interests .  Elect to permit any of its Subsidiaries to (x) treat its limited liability company membership interests or partnership interests, as the case may be, as securities as contemplated by the definition of “security” in Section 8-102(15) and by Section 8-103 of Article 8 of Uniform Commercial Code or (y) certificate its limited liability company membership interests or partnership interests, as the case may be.
 
7.20                         Bank Accounts .  Close any bank account at a depository institution other than PNC without providing at least 10 days’ prior notice to Agent.
 
7.21                         Limitation on Issuance of Equity Interests .  Issue or sell, or permit any of its Subsidiaries to issue or sell, any shares of its Equity Interests, any securities convertible into or exchangeable for its Equity Interests or any warrants; provided that the following issuances and sales shall be permitted:
 
104 

 
(a)                                  Parent Holdco may issue shares of its Equity Interests that are not Disqualified Equity Interests to any director, officer, consultant or employee of Parent Holdco or its Subsidiaries pursuant to a written plan or agreement approved by the Board of Directors of Parent Holdco;
 
(b)                                  the Loan Parties (other than Parent Holdco) may issue Equity Interests to other Loan Parties so long as the requirements set forth in Section 7.12(a)(ii) are complied with;
 
(c)                                   Permitted Equity Issuances; and
 
(d)                                  new Subsidiaries of Loan Parties may issue Equity Interests to Loan Parties so long as the requirements set forth in Section 7.12 are complied with.
 
7.22                         Limitations on Negative Pledges .  Enter into, incur or permit to exist, or permit any Subsidiary to enter into, incur or permit to exist, directly or indirectly, any agreement, instrument, deed, lease or other arrangement that prohibits, restricts or imposes any condition upon the ability of any Loan Party or any Subsidiary of any Loan Party to create, incur or permit to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, or that requires the grant of any security for an obligation if security is granted for another obligation, except the following:
 
(a)                                  this Agreement and the Other Documents;
 
(b)                                  the Term Loan Documents;
 
(c)                                   any agreement entered into in connection with Permitted Subordinated Debt;
 
(d)                                  negative pledges and restrictions on Liens in favor of any holder of Capital Financing Indebtedness permitted under clause (iii) of Section 7.8, but solely to the extent such negative pledge or restriction extends solely to the property financed by such Indebtedness, accessions thereto and the proceeds and the products thereof;
 
(e)                                   any customary restrictions and conditions contained in agreements relating to the sale or other disposition of assets or of a Subsidiary pending such sale or other disposition, provided, that such restrictions and conditions apply only to the assets or Subsidiary to be sold or disposed of and such sale or disposition is permitted hereunder;
 
(f)                                    customary provisions restricting assignments, subletting or other transfers contained in leases, licenses, joint venture agreements and other agreements entered into in the Ordinary Course of Business; and
 
(g)                                   restrictions that exist in any agreement in effect at the time a Subsidiary becomes a Subsidiary of a Loan Party, so long as such agreement was not entered into in contemplation of such person becoming a Subsidiary.
 
7.23                        [ Reserved ].
 
105 

 
7.24                         Capital Structure and Business .  Except as permitted in Section 7.1, make any change in its capital structure as described on Schedule 5.28 , including the issuance of any shares of Equity Interests, warrants or other securities convertible into Equity Interests or any revision of the terms of its outstanding Equity Interests to the extent any such change could be adverse to the interests of Lenders in any material respect; provided, in no event shall any Loan Party, nor shall any Loan Party permit any of its Subsidiaries to, become, create, form or acquire a Domestic Holding Company of the type described in clause (ii) of the definition of “Domestic Holding Company” set forth in this Agreement.  Parent Holdco shall not engage in any business activities other than (i) ownership of the Equity Interests of Borrower, (ii) activities incidental to the maintenance of its corporate existence and (iii) performance of its obligations under the Related Transaction Documents to which it is a party.
 
7.25                         [ Reserved ].
 
7.26                         Sale-Leasebacks .  Engage in any sale leaseback, synthetic lease or similar transaction involving any of its assets.
 
7.27                         No Impairment of Intercompany Transfers .  Directly or indirectly enter into or become bound by any agreement, instrument, indenture or other obligation (other than this Agreement and the other Loan Documents) which could directly or indirectly restrict, prohibit or require the consent of any Person with respect to the payment of dividends or distributions or the making or repayment of intercompany loans by a Subsidiary of a Loan Party to such Loan Party, except for such restrictions, prohibitions or requirements existing under applicable mandatory legal requirements or this Agreement and the Other Documents or the Revolving Loan Documents.
 
7.28                         No Speculative Transactions .  Engage in any transaction involving commodity options, futures contracts or similar transactions, except for Cash Management Products and Services, Lender-Provided Interest Rate Hedges and other Hedge Agreements expressly permitted hereunder.
 
VIII.                      CONDITIONS PRECEDENT.
 
8.1                                Conditions to Initial Advances .  The effectiveness of this Agreement and the obligation of Lenders to make the Advances requested to be made on the Closing Date is subject to the satisfaction (in a manner reasonably satisfactory to Lenders), or waiver thereby by all Lenders, immediately prior to or concurrently with the making of such Advances, of the following conditions precedent:
 
(a)                                  Loan Documents .  Agent shall have received this Agreement, the Revolving Credit Note and each of the Other Documents listed on Schedule 8.1(a) , in each case, duly executed and delivered by an authorized officer of each Loan Party contemplated to be party thereto;
 
(b)                                  Filings, Registrations and Recordings .  Each Uniform Commercial Code financing statement listed on Schedule 8.1(a)  and required in order to create, in favor of Agent, a perfected security interest in or lien upon the Collateral of Baskins to the extent the same can be perfected by filing shall have been properly filed (or Baskins shall have consented to such filing),
 
106 

 
in each jurisdiction in which the filing, thereof is so required and Agent shall have received UCC, tax and judgment lien searches and other appropriate evidence (including reasonably satisfactory payoff letters from (i) Frost National Bank as to the existing debt of Baskins, (ii) Diamond State Ventures II Limited Partnership, Banyan Mezzanine Fund II, L.P., Midstates Capital Fund II, L.P., Capsource 2000 Fund, L.P. and Cgp Baskins, LLC as to the Indebtedness of Baskins held by such Persons and (iii) Capital South Partners SBIC Fund III, LP and the other holders of the Indebtedness under the Mezzanine Credit Agreement as to the debt under the Mezzanine Credit Agreement), evidencing the absence of any other liens on such Collateral, other than Permitted Encumbrances;
 
(c)                                   Corporate Proceedings .  Agent shall have received a copy of the resolutions in form and substance reasonably satisfactory to Agent, of the Board of Directors of each Loan Party authorizing (i) the execution, delivery and performance of this Agreement, the Revolving Credit Note and each of the Other Documents listed on Schedule 8.1(a)  to the extent such Loan Party is contemplated to be a party thereto, and (ii) the granting by such Loan Party of the security interests in and liens upon the Collateral in each case certified by the Secretary or an Assistant Secretary of such Loan Party as of the Closing Date; and, such certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded as of the date of such certificate;
 
(d)                                  Incumbency Certificates .  Agent shall have received a certificate of the Secretary or an Assistant Secretary of each Loan Party, dated the Closing Date, as to the incumbency and signature of the officers of such Loan Party executing this Agreement, the Other Documents listed on Schedule 8.1(a) , any certificate or other documents to be delivered by it pursuant hereto, in each case to the extent such Loan Party is contemplated to be party thereto, together with evidence of the incumbency of such Secretary or Assistant Secretary;
 
(e)                                   Organizational Documents .  Agent shall have received a copy of the Certificate of Incorporation of each Loan Party, and all amendments thereto, certified by the Secretary of State or other appropriate official of its jurisdiction of incorporation together with copies of the By-Laws of each Loan Party and all agreements of each Loan Party’s shareholders certified as accurate and complete by the Secretary of each Loan Party;
 
(f)                                    Good Standing Certificates .  Agent shall have received good standing certificates for each Loan Party dated not more than 30 days prior to the Closing Date, issued by the Secretary of State or other appropriate official of each Loan Party’s jurisdiction of incorporation and each jurisdiction where the conduct of each Loan Party’s business activities or the ownership of its properties necessitates qualification except where the failure to so qualify would not reasonably be expected to result in a Material Adverse Effect;
 
(g)                                   Legal Opinion .  Agent shall have received the executed legal opinions of Bingham McCutchen LLP and Gunderson Palmer Nelson Ashmore, LLP, each in form and substance satisfactory to Agent, which shall cover such matters incident to the transactions contemplated by this Agreement, the Revolving Credit Note, the rest of the Other Documents and all related agreements as Agent may reasonably require and the Loan Parties hereby authorize and direct such counsel to deliver such opinion to Agent and Lenders;
 
107 

 
(h)                                  Financial Condition Certificate .  Agent shall have received a certificate (the “ Financial Condition Certificate ”), in form and substance reasonably satisfactory to Agent certifying that the ratio of total Funded Debt outstanding as of the Closing Date (after giving effect to the Transactions) to Closing Date Adjusted EBITDA is not greater than 3.50:1.00;
 
(i)                                      Fees and Expenses .  Agent shall have received all fees payable on the Closing Date and all expenses requested to be reimbursed on or prior to the Closing Date, in each case owing to Agent and/or the Lenders pursuant to the terms hereof, including pursuant to Article III hereof, the Fee Letter and Section 15.9 hereof;
 
(j)                                     Insurance .  To the extent that assets of Baskins are included in the Formula Amount as of the Closing Date, Agent shall have received in form and substance satisfactory to Agent, certified copies of the casualty insurance policies covering Baskins, together with loss payable endorsements on Agent’s standard form of loss payee endorsement naming Agent as loss payee, and certified copies of the liability insurance policies covering Baskins, together with endorsements naming Agent as a co-insured;
 
(k)                                  Acquisition .  Substantially simultaneously with the making of the Advances hereunder on the Closing Date, the Transactions contemplated by the Purchase Agreement shall have been consummated in accordance with the terms set forth in the Purchase Agreement with only those amendments, supplements and modifications thereto or waivers of conditions precedent provided therein as are not materially adverse to the interest of the Agent or the Lenders or which have been approved by the Agent (such approval shall not be unreasonably withheld or delayed) (any change to the definition of “Company Material Adverse Effect” contained in the Purchase Agreement or any change to the amount of the purchase price payable thereunder in excess of ten percent (10%) of such purchase price shall be deemed to be material and adverse to the Agent and Lenders);
 
(l)                                      Closing Certificate .  Agent shall have received a closing certificate signed by an authorized officer of Borrower dated as of the date hereof, certifying that (i) each of the conditions set forth in clauses (b) (solely with respect to the authorization to file financing statements), (k), (m) and (n) of this Section 8.1 have been satisfied in all material respects and (ii) attached thereto are true, correct and complete copies of Purchase Documents and Term Loan Documents, in each case, as in effect on the Closing Date;
 
(m)                              Term Loan Facility .  The Term Loan Facility shall have closed pursuant to the terms of the Term Loan Agreement, which shall be in form reasonably consistent with those set forth in the Commitment Letter, dated May 8, 2013, issued to Borrower by Term Loan Agent, or otherwise satisfactory to Agent, and Borrower shall have received gross cash proceed therefrom of no less than $100,000,000;
 
(n)                                  Representations and Warranties .
 
(i)                                      Each of the representations and warranties made by each Loan Party other than Baskins in or pursuant to this Agreement, the Other Documents, any related agreements to which it is a party, in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement, the Other Documents or any
 
108 

 
related agreement, shall be true and correct in all material respects (or in all respects as to any such representations and warranties which, by their terms, are qualified as to materiality) on and as of the Closing Date as if made on and as of the Closing Date (except for any such representations and warranties which are specifically made as of a prior date, in which case such representations and warranties shall be true and correct as of such prior date); and
 
(ii)                                   Each of the (i) representations and warranties in the Purchase Agreement and the other documents and agreements pertaining to the Acquisition as are material to the interests of Agent shall be true and correct in all material respects (or in all respects as to any such representations and warranties which, by their terms, are qualified as to materiality) on and as of the Closing Date as if made on and as of the Closing Date (except for any such representations and warranties which are specifically made as of a prior date, in which case such representations and warranties shall be true and correct as of such prior date), but only to the extent that Boot Barn has the right to terminate its obligations under the Purchase Agreement (or the right not to consummate the Acquisition pursuant to the Purchase Agreement) or to not close thereunder as a result of a failure of such representations and warranties to be true and correct; provided that , if Boot Barn’s right to terminate its obligations under the Purchase Agreement to consummate the Acquisition (or a right not to consummate the Acquisition pursuant to the Purchase Agreement) is unavailable because Boot Barn is then in violation or breach of any of its covenants, obligations, representations or warranties set forth in the Purchase Agreement or otherwise as the result of an act or omission by Boot Barn, the foregoing exclusion of the accuracy of representations and warranties material to the interests of the Agent shall not apply) and (ii) Specified Representations shall be true and correct in all material respects (or in all respects as to any such representations and warranties which, by their terms, are qualified as to materiality) on and as of the Closing Date as if made on and as of the Closing Date (except for any such representations and warranties which are specifically made as of a prior date, in which case such representations and warranties shall be true and correct as of such prior date);
 
(o)                                  Material Adverse Effect .  Since December 29, 2012, there shall have been no Company Material Adverse Effect (as defined in the Purchase Agreement);
 
(p)                                  Intercreditor Agreement .  Agent shall have received the executed Intercreditor Agreement, duly executed by all Persons contemplated to be parties thereto in the form attached hereto as Exhibit 8.1(p) ;
 
(q)                                  Borrowing Base .  To the extent that any assets of Baskins are included in the Formula Amount as of the Closing Date, Agent shall have received an updated Borrowing Base Certificate evidencing that the aggregate amount of Eligible Receivables and Eligible Inventory is sufficient in value and amount to support Advances in the amount requested by Borrower on the Closing Date; and
 
(r)                                     Undrawn Availability .  After giving effect to the initial Advances hereunder on the Closing Date, Borrower shall have Undrawn Availability of at least $15,000,000 including all cash of the Loan Parties on the Closing Date.
 
8.2                               Conditions to Each Advance .  Except as to clause (c) below, which is a condition to the Lenders making any Advance requested hereunder, the agreement of Lenders to make any
 
109 

 
Advance requested to be made on any date after the Closing Date, is subject to the satisfaction of the following conditions precedent as of the date such Advance is made:
 
(a)                                  Representations and Warranties .  Each of the representations and warranties made by each Loan Party in or pursuant to this Agreement, the Other Documents, any related agreements to which it is a party, in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement, the Other Documents or any related agreement, shall be true and correct in all material respects (or in all respects as to any such representations and warranties which, by their terms, are qualified as to materiality) on and as of such date as if made on and as of such date (except for any such representations and warranties which are specifically made as of a prior date, in which case such representations and warranties shall be true and correct as of such prior date);
 
(b)                                  No Default .  No Event of Default or Default shall have occurred and be continuing on such date, or would exist after giving effect to the Advances requested to be made, on such date; provided, however that Agent, in its sole discretion, may continue to make Advances notwithstanding the existence of an Event of Default or Default and that any Advances so made shall not be deemed a waiver of any such Event of Default or Default;
 
(c)                                   Maximum Advances .  Except as set forth in clause (b), in the case of any type of Advance requested to be made, after giving effect thereto, the aggregate amount of such type of Advance shall not exceed the maximum amount of such type of Advance permitted under this Agreement; and
 
(d)                                  Material Adverse Effect .  Since the delivery of the latest financial statements of Borrower, there shall not have occurred any event, condition or event, condition or state of facts which would have or could reasonably be expected to have a Material Adverse Effect.
 
Each request for an Advance by Borrower hereunder (other than Advances to be made on the Closing Date) shall constitute a representation and warranty by Borrower as of the date of such Advance that the conditions contained in this subsection, to the extent such conditions are applicable to such Advance, shall have been satisfied (other than clause (b) if Agent exercises its rights set forth in the proviso thereto).
 
IX.                                INFORMATION AS TO THE LOAN PARTIES.
 
Each Loan Party shall, until satisfaction in full of the Obligations and the termination of this Agreement:
 
9.1                                Disclosure of Material Matters .  Promptly upon learning thereof, report to Agent all matters materially affecting the value, enforceability or collectability of any material portion of the Collateral, including such Loan Party’s reclamation or repossession of, or the return to such Loan Party of, a material amount of goods or claims or disputes asserted by any Customer or other obligor.
 
110 

9.2                                Schedules .  Deliver to Agent:
 
(a)                                  monthly, on or before the fifteenth (15th) day of each month as and for the prior month, or upon the occurrence and during the continuance of an Event of Default, more frequently as required by Agent, (i) a detailed accounts receivable aging inclusive of reconciliations to the general ledger, (ii) a detailed accounts payable aging, inclusive of reconciliations to the general ledger, (iii) a day-by-day report as to application of cash and credits to the Collateral and Borrower’s Account, (iv) same-store sales reports with respect to each Store for such month, (v) a report of all sales tax paid and payable for such month and (vi) to the extent that Agent has not received a Lien Waiver Agreement from any of Frontier Mall Associates Limited Partnership, MSW Promenade, L.P., TX-SW #1, LP, Ambassador Way Associates, LP or Bluecap, Ltd., evidence that the rental or other payments owing to such Person which are secured by a Lien on the assets of any Loan Party have been paid for such prior month;
 
(b)                                  weekly, on or before Tuesday of each week, (i) inventory perpetual reports in form and substance reasonably satisfactory to Agent, and (ii) a Borrowing Base Certificate in form and substance reasonably satisfactory to Agent (which shall be calculated as of the immediately preceding Sunday and which shall not be binding upon Agent or restrictive of Agent’s rights under this Agreement);
 
(c)                                   (i) no less frequently than once during each 12-month period, an Inventory count conducted by a third party reasonably acceptable to Agent and (ii) the results of any physical verification or appraisal of the Inventory requested by Term Loan Agent, as and when delivered to Term Loan Agent; and
 
(d)                                  at such intervals as Agent may reasonably require, (i) confirmatory assignment schedules and (ii) such further schedules, documents and/or information regarding the Collateral as Agent may require including trial balances and test verifications.
 
Agent shall have the right to confirm and verify all Receivables by any manner and through any medium it considers reasonably advisable and do whatever it may deem reasonably necessary to protect its interests hereunder. The items to be provided under this Section are to be in form reasonably satisfactory to Agent and executed by Borrower and delivered to Agent from time to time solely for Agent’s convenience in maintaining records of the Collateral, and Borrower’s failure to deliver any of such items to Agent shall not affect, terminate, modify or otherwise limit Agent’s Lien with respect to the Collateral.
 
9.3                                Environmental Matters .
 
(a)                                  Furnish Agent, concurrently with the delivery of the financial statements referred to in Sections 9.7 and 9.8, with an environmental certificate in substantially the form of Exhibit 9.3, signed by the President or Chief Financial Officer of Parent Holdco stating, to the best of his knowledge, that the Loan Parties are in compliance in all material respects with all federal, state and local Environmental Laws. To the extent any Loan Party is not in compliance with the foregoing laws in all material respects, the certificate shall set forth with specificity all areas of such non-compliance and the proposed action such Loan Party will implement in order to achieve compliance in all material respects.
 
111 

 
(b)                                  In the event Borrower obtains, gives or receives notice of any Release or threat of Release of any Hazardous Substances at the Real Property (any such event being hereinafter referred to as a “ Hazardous Discharge ”) or receives any notice of violation, request for information or notification that it is potentially responsible for investigation or cleanup of environmental conditions at the Real Property, demand letter or complaint, order, citation, or other written notice with regard to any Hazardous Discharge or violation of Environmental Laws affecting the Real Property or Borrower’s interest therein (any of the foregoing is referred to herein as an “ Environmental Complaint ”) from any Person, including any state agency responsible in whole or in part for environmental matters in the state in which the Real Property is located or the United States Environmental Protection Agency (any such person or entity hereinafter the “ Environmental Authority ”), then Borrower shall, within five (5) Business Days thereafter, give written notice of same to Agent detailing facts and circumstances of which Borrower is aware giving rise to the Hazardous Discharge or Environmental Complaint. Such information is to be provided to allow Agent to protect its security interest in and Lien on the Real Property and the Collateral and is not intended to create nor shall it create any obligation upon Agent or any Lender with respect thereto.
 
(c)                                   Borrower shall promptly forward to Agent copies of any request for information, notification of potential liability, demand letter relating to potential responsibility with respect to the investigation or cleanup of Hazardous Substances at any other site owned, operated or used by Borrower to dispose of Hazardous Substances. Borrower shall promptly forward to Agent copies of all documents and reports concerning a Hazardous Discharge at the Real Property that Borrower is required to file under any Environmental Laws. Such information is to be provided solely to allow Agent to protect Agent’s security interest in and Lien on the Real Property and the Collateral.
 
9.4                                Litigation; Violations .
 
(a)                                  Promptly notify Agent in writing of any written claim, litigation, suit or administrative proceeding against any Loan Party, whether or not the claim is covered by insurance, which in any such case (i) seeks damages in excess of $5,000,000 not otherwise covered by insurance, (ii) seeks injunctive relief, which would reasonably be expected to result in liability in excess of $5,000,000 not otherwise covered by insurance, (iii) is asserted or instituted against any Loan Party in connection with any Plan, (iv) alleges criminal misconduct by any Loan Party or Subsidiary of a Loan Party or which would reasonably be expected to result in liability in excess of $5,000,000 not otherwise covered by insurance or (v) alleges the violation of any Law regarding, or seeks remedies in connection with, any Environmental Liabilities which, in each of cases (iii) and (v) would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
 
(b)                                  Promptly notify Agent in writing of any violation of any law, statute, regulation or ordinance of any Governmental Body, or of any agency thereof, applicable to such Loan Party which could reasonably be expected to have a Material Adverse Effect.
 
9.5                                Material Occurrences .  Upon Borrower’s knowledge thereof, promptly notify Agent in writing of (a) any Event of Default or Default specifying the nature of such Default or Event of Default, including the anticipated effect thereof; (b) any default or event of default
 
112 

 
under any of the Term Loan Documents; (c) any event, development or circumstance whereby any financial statements or other reports furnished to Agent fail in any material respect to present fairly, in accordance with GAAP consistently applied (subject, in the case of interim financial statements, to normal year-end adjustments and the absence of footnote disclosures), the financial condition or operating results of the Loan Parties as of the date of such statements; (d) any accumulated retirement plan funding deficiency which, if such deficiency continued for two plan years and was not corrected as provided in Section 4971 of the Code, could subject any Loan Party to a material tax imposed by Section 4971 of the Code; (e) each and every default by any Loan Party which could reasonably be expected to result in the acceleration of the maturity of any Indebtedness in excess of $500,000, including the names and addresses of the holders of such Indebtedness, and the amount of such Indebtedness; and (f) any other development in the business or affairs of any Loan Party which could reasonably be expected to have a Material Adverse Effect; in each case describing the nature thereof and the action such Loan Party proposes to take with respect thereto.
 
9.6                                Government Receivables .  Notify Agent promptly if any of its Receivables in excess of $250,000 in the aggregate arise out of contracts between a Borrowing Base Party and the United States, any state, or any department, agency or instrumentality of any of them.
 
9.7                                Annual Financial Statements .  Furnish Agent and Lenders within one hundred twenty (120) days after the end of each fiscal year of Topco, financial statements of Topco and its Subsidiaries on a consolidated basis including, but not limited to, a balance sheet and statement of income and retained earnings and cash flows, setting forth in comparative form in each case to the figures for the previous fiscal year, which financial statements shall be prepared in accordance with GAAP consistently applied, certified without qualification (except for a qualification that results solely from the Obligations being classified as short term Indebtedness during the one year period prior to the maturity date of such indebtedness) by Deloitte & Touche or another independent certified public accounting firm of recognized national standing selected by Topco (the “ Accountants ”).  Such financial statements shall be accompanied by (i) a report from the Accountants to the effect that, in connection with their audit examination, nothing has come to their attention to cause them to believe that a Default or Event of Default has occurred (or specifying those Defaults and Events of Default that they became aware of), it being understood that such audit examination extended only to accounting matters and that no special investigation was made with respect to the existence of Defaults or Events of Default, (ii) the annual letters to such accountants in connection with their audit examination detailing contingent liabilities and material litigation matters and (iii) the certification of the President, Chief Financial Officer, Controller or equivalent officer of Borrower that (A) except as described in such certificate, the results reported in such financial statements do not include any income of Topco or Subsidiaries of Topco that are not Subsidiaries of Borrower and, if any such income is included, providing a calculation of EBITDA for Borrower and its Subsidiaries on a consolidated basis, and (B) all such financial statements present fairly in accordance with GAAP the financial position, results of operations and statements of cash flows of Topco and its Subsidiaries on a consolidated basis, as at the end of such year and for the period then ended, and that there was no Default or Event of Default in existence as of such time or, if a Default or Event of Default shall have occurred and be continuing, describing the nature thereof and all efforts undertaken to remedy such Default or Event of Default.  The report of the Accountants shall be accompanied by a copy of any management letter of the Accountants issued in connection with such financial
 
113 

 
statements addressed to Topco.  In addition, the reports shall be accompanied by a Compliance Certificate.
 
9.8                                Quarterly Financial Statements .  Furnish Agent within forty-five (45) days after the end of each fiscal quarter, an unaudited consolidated balance sheet of Topco and its Subsidiaries and unaudited statements of income and stockholders’ equity and cash flow of Topco and its Subsidiaries reflecting results of operations from the beginning of the fiscal year to the end of such quarter and for such quarter, complete and correct in all material respects, subject to normal year-end adjustments that individually and in the aggregate are not material to Borrower’s and/or its Subsidiaries’ business.  The reports shall be accompanied by a Compliance Certificate.
 
9.9                                Monthly Financial Statements .  Furnish Agent within thirty (30) days after the end of each fiscal month, an unaudited balance sheet of Topco and its Subsidiaries on a consolidated basis and unaudited statements of income and stockholders’ equity and cash flow of Topco and its Subsidiaries on a consolidated basis reflecting results of operations from the beginning of the fiscal year to the end of such month and for such month, prepared on a basis consistent with prior practices and complete and correct in all material respects, subject to normal year-end adjustments that individually and in the aggregate are not material to the business of Borrower and its Subsidiaries.
 
9.10                         Additional Information .  Furnish Agent with (a) such additional financial and other information respecting any business or financial condition of a Loan Party or any of its Subsidiaries as Agent or any Lender shall, from time to time, reasonably request, including, including such additional information as Agent shall reasonably request in order to enable Agent to determine whether the terms, covenants, provisions and conditions of this Agreement and the Notes have been complied with by the Loan Parties including, without the necessity of any request by Agent, (i) copies of all environmental audits and reviews, (ii) at least ten (10) days prior thereto, notice of any Loan Party’s opening of any new office or place of business or any Loan Party’s closing of any existing office or place of business, (iii) promptly upon any Loan Party’s knowledge thereof, notice of any material labor dispute to which any Loan. Party may become a party, any strikes or walkouts relating to any of its plants or other facilities, and the expiration of any organized labor contract to which any Loan Party is a party or by which any Loan Party is bound and (b) upon request of Agent or any Lender, forms and information required by the U.S. Small Business Administration, including, without limitation, SBA Forms 480 and 652, properly completed and duly executed where applicable.
 
9.11                         Projected Operating Budget .  Furnish Agent, no later than thirty (30) days after the beginning of each of Topco’s fiscal years commencing with the fiscal year beginning on April 1, 2014, a month-by-month projected operating budget and cash flow of Topco on a consolidated basis for such fiscal year (including an income statement for each month and a balance sheet as at the end of the last month in each fiscal quarter), prepared based on reasonable assumptions as of the date thereof, which will include a statement of all of the material assumptions on which such plan is based, will a monthly budget for the following year and will integrate sales, gross profits, operating expenses, operating profit, cash flow projections and liquidity projections all prepared on the same basis and in similar detail as that on which operating results are reported (and in the case of cash flow projections, representing
 
114 

 
management’s good faith estimates of future financial performance based on historical performance), and including plans for Capital Expenditures and facilities.
 
9.12                         Variances from Operating Budget and Prior Financial Statement Comparisons .  Furnish Agent, concurrently with the delivery of the annual, quarterly and monthly financial statements referred to in Sections 9.7, 9.8 and 9.9, respectively, an analysis of all material variances from budgets submitted by the Loan Parties pursuant to Section 9.11 and from Topco’s consolidated financial statements for the prior fiscal year (or for the corresponding monthly or quarterly period of such prior fiscal year, as applicable).
 
9.13                         Notice of Suits, Adverse Events .  Furnish Agent with prompt written notice of (i) any lapse or other termination of any Consent issued to any Loan Party by any Governmental Body or any other Person that is material to the operation of such Loan Party’s business, (ii) any refusal by any Governmental Body or any other Person to renew or extend any such Consent; and (iii) copies of any periodic or special reports filed by any Loan Party with any Governmental Body or Person, if such reports indicate any material change in the business, operations, affairs or condition of any Loan Party, or if copies thereof are reasonably requested by Agent, and (iv) copies of any material notices and other communications from any Governmental Body or Person which specifically relate to any Loan Party.
 
9.14                         ERISA Notices and Requests .  If any material liability could reasonably be expected to be imposed on any Loan Party, furnish Agent with prompt written notice in the event that (a) any Loan Party or any member of the Controlled Group knows or has reason to know that a Termination Event has occurred, together with a written statement describing such Termination Event and the action, if any, which such Loan Party or any member of the Controlled Group has taken, is taking, or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, Department of Labor or PBGC with respect thereto, (b) any Loan Party or any member of the Controlled Group knows or has reason to know that, with respect to a Pension Benefit Plan, a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred together with a written statement describing such transaction and the action which such Loan Party or any member of the Controlled Group has taken, is taking or proposes to take with respect thereto, (c) a funding waiver request has been filed with respect to any Pension Benefit Plan together with all communications received by such Loan Party or any member of the Controlled Group with respect to such request, (d) any increase in the benefits of any existing Pension Benefit Plan or the establishment of any new Pension Benefit Plan or the commencement of contributions to any Pension Benefit Plan to which such Loan Party or any member of the Controlled Group was not previously contributing shall occur, (e) any Loan Party shall receive from the PBGC a notice of intention to terminate a Pension Benefit Plan or to have a trustee appointed to administer a Pension Benefit Plan, together with copies of each such notice, (f) any Loan Party shall receive any favorable or unfavorable determination letter from the Internal Revenue Service regarding the qualification of a Plan under Section 401(a) of the Code, together with copies of each such letter; (g) any Loan Party or any member of the Controlled Group shall receive a notice regarding the imposition on it of withdrawal liability, together with copies of each such notice; (h) any Loan Party or any member of the Controlled Group shall fail to make a required installment or any other required payment under Section 412 of the Code on or before the due date for such installment or payment; (i) any Loan Party or any member of the Controlled Group
 
115 

 
knows that (x) a Multiemployer Plan has been terminated, (y) the administrator or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (z) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan.
 
9.15                         Federal Securities Laws .  Promptly notify Agent in writing if such Loan Party or any of its Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii) registers any securities under the Exchange Act or (iii) files a registration statement under the Securities Act.
 
9.16                         IP Notices .  As soon as practicable, and in any event within five (5) Business Days after a claim is made or action is commenced (or with respect to a threatened claim or action, after an authorized officer of a Loan Party has knowledge thereof), notice of any claim or action by any Person pending, or to the knowledge of any Loan Party, threatened, against any Loan Party or any of its Subsidiaries with respect to any of the Intellectual Property that (i) seeks damages in excess of $1,000,000 not otherwise covered by insurance, or (ii) seeks injunctive relief.  With the delivery of a Compliance Certificate, notify Agent of each application for the registration of any Patent, Trademark, or Copyright with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency made by any Loan Party, either itself or through any agent, employee, licensee, or designee. Promptly upon any such filing, the Loan Parties shall comply with Section 6.10(a) hereof.
 
9.17                         Notices Relating to Related Transactions .  Within three (3) Business Days after receipt thereof by any Loan Party or any of its Subsidiaries, copies of all amendments, consent letters, waivers or modifications to, and any material notices or reports provided by any Person to any Loan Party or any of its Subsidiaries pursuant to the terms of or in connection with, any Purchase Document, any agreement, document or instrument governing a Permitted Acquisition or any formation or organizational document of any Loan Party or any of its Subsidiaries, or by any Loan Party or Subsidiary of a Loan Party to any such Person.
 
9.18                         Additional Documents .  Execute and deliver to Agent, upon request, such documents and agreements as Agent may, from time to time, reasonably request to carry out the purposes, terms or conditions of this Agreement.
 
X.                                     EVENTS OF DEFAULT.
 
The occurrence of any one or more of the following events shall constitute an “ Event of Default ”:
 
10.1                         Nonpayment .  Failure by Borrower to pay any principal or interest on the Obligations when due, whether at maturity or by reason of acceleration pursuant to the terms of this Agreement, or by required prepayment or failure to pay any other liabilities or make any other payment, fee or charge provided for herein or in any Other Document, in each case, when due;
 
10.2                         Breach of Representation .  Any representation or warranty made by or on behalf of any Loan Party or by any officer of the foregoing under or in connection with this Agreement, any Other Document or any related agreement or in any certificate, document or financial or
 
116 

 
other statement furnished at any time in connection herewith or therewith shall prove to have been misleading in any material respect on the date when made;
 
10.3                         Financial Information .  Failure by any Loan Party to (a) furnish financial information (i) when due, or (ii) when requested, within fifteen (15) days after such request, or (b) permit the inspection of its books or records in accordance with this Agreement;
 
10.4                         Judicial Actions .  Issuance of a notice of Lien, levy, assessment, injunction or attachment against any Loan Party’s Inventory or Receivables with an aggregate fair market value in excess of $100,000, or against a material portion of any Loan Party’s other property which is not stayed or lifted within thirty (30) days;
 
10.5                         Noncompliance .  Except as otherwise provided for in this Article X:
 
(a)                                  failure of any Loan Party to perform, keep or observe any term, provision, condition, covenant applicable to such Loan Party herein contained;
 
(b)                                  failure of any Loan Party to perform, keep or observe any term, provision, condition or covenant contained in any Other Document or in Sections 4.6, 4.7, 4.9, 4.17, 4.19, 6.7, 6.8, 7.4, 9.3, 9.4, 9.5 or 9.7 hereof which is not cured within thirty (30) days after notice from Agent of the occurrence of such failure; or
 
(c)                                   failure of any Loan Party to perform, keep or observe any term, provision, condition or covenant contained in Section 6.5 (a “ Financial Covenant Default ”); provided , that , Borrower shall have the right to cure a Financial Covenant Default on the following terms and conditions (the “ Equity Cure ”):
 
(i)                                      In the event Borrower desires to cure a Financial Covenant Default, Borrower shall deliver to the Agent irrevocable written notice of its intent to cure (a “ Cure Notice ”) at any time during the period commencing on the date that the financial statements and corresponding Compliance Certificate as of and for the period ending on the last day of the fiscal quarter as of which such Financial Covenant Default occurred (the “ Testing Dates ”) are delivered to Agent and Lenders and ending on the tenth (10th) Business Day after Agent’s and Lenders’ receipt of such financial statements and Compliance Certificate.  The Cure Notice shall set forth the calculation of the Financial Covenant Cure Amount (as hereinafter defined.
 
(ii)                                   In the event Borrower delivers a Cure Notice, a Permitted Freeman Spogli Investment shall be made in an amount not less than the Financial Covenant Cure Amount at any time during the period commencing on the date of Agent’s receipt of such Cure Notice and ending on the tenth (10th) Business Day following the date on which the relevant financial statements and Compliance Certificate were required to be delivered to Agent and the Lenders (such tenth (10th) Business Day, the “ Required Contribution Date ”).  The proceeds of such Permitted Freeman Spogli Investment equal to the Financial Covenant Cure Amount shall be immediately contributed by Parent Holdco to the capital of Borrower and (x) to the extent necessary to cure a financial covenant default under Section 6.5 of the Term Loan Agreement, deposited with the Term Loan Agent to be applied to the repayment of the Term Loan and (y) to the extent necessary for any other purpose permitted hereby, deposited in a Collection Account
 
117 

 
for application to the Obligations pursuant to Section 4.15(h) or, if applicable, Section 11.5.  The “ Financial Covenant Cure Amount ” shall be the sum of (A) the amount which, if added to the amount of EBITDA as of the applicable Testing Date, would result in the Loan Parties being in pro forma compliance with the Fixed Charge Coverage Ratio as of such Testing Date plus (B) if a “Financial Covenant Default” or “Capex Covenant Default” has also occurred under the Term Loan Agreement as of such Testing Date, then the sum (as applicable) of (1) the “Financial Covenant Cure Amount” required under the Term Loan Agreement with respect to such “Financial Covenant Default” and (2) the “Capex Covenant Cure Amount” required under the Term Loan Agreement (it being understood and agreed that the Financial Covenant Cure Amount shall equal the largest amount necessary to cure all applicable financial covenant defaults under this Agreement and the Term Loan Agreement).
 
(iii)                                In no event shall the Permitted Freeman Spogli Investment made to cure a Financial Covenant Default exceed the Financial Covenant Cure Amount.  No Equity Cure may be exercised if after giving effect thereto the aggregate amount of all Permitted Freeman Spogli Investments actually funded under this Section 10.5(c) to effectuate one or more Equity Cures would exceed $12,500,000.
 
(iv)                               The Equity Cure may not be exercised (A) more than twice in any four (4) consecutive fiscal quarter period or (B) more than four (4) times during the Term.
 
(v)                                  The Equity Cure and the effects thereof on EBITDA and the Fixed Charge Coverage Ratio will be disregarded for all other purposes under this Agreement and the Other Documents; provided that for purposes of determining compliance with Section 6.5, the Financial Covenant Cure Amount shall be deemed added to EBITDA for the fiscal quarter ending as of the applicable Testing Date and any subsequent measurement period that includes such fiscal quarter.
 
(vi)                               So long as (A) the Cure Notice is delivered to Agent with ten (10) Business Days after Agent’s and Lenders’ receipt of the financial statements and Compliance Certificate evidencing the Financial Covenant Default, (B) on or before the Required Contribution Date, the Permitted Freeman Spogli Investment is received by Borrower in the required Financial Covenant Cure Amount and remitted to Agent for application to the Obligations as set forth above and (C) the limitations in clauses (iii) and (iv) are not exceeded, the Financial Covenant Default shall be deemed cured, the requirements of Section 6.5 shall be deemed to have been satisfied as of the applicable Testing Date with the same effect as though there had been no Financial Covenant Default at such date or thereafter and neither Agent nor any Lender shall impose default interest, accelerate the Obligations or exercise any enforcement remedy against any Loan Party or any Collateral solely on the basis of the Financial Covenant Default (and any such action improperly commenced during the period commencing on the date the Agent shall have received the Cure Notice and ending on the date the Financial Covenant Cure Amount is remitted to Agent shall be immediately rescinded and of no force and effect); provided that, until all the terms of this Section 10.5(c) are met with respect to a Financial Covenant Default, a Default shall exist and an Event of Default shall be deemed to exist for all other purposes of this Agreement, including, without limitation, Article VII and Article VIII hereof and any term or provision of hereof or of any Other Document which prohibits any action to be taken by a Loan Party or any of its Subsidiaries during the existence of an Event of Default;
 
118 

 
10.6                         Judgments .  Any judgment or judgments are rendered against a Loan Party or any of its Subsidiaries,  or any Loan Party or any Subsidiary thereof agrees to settle any litigation for an aggregate amount in excess of $1,000,000 and, in the case of any such judgment, (a) enforcement proceedings shall have been commenced by a creditor upon such judgment, or (b) any such judgment results in the creation of a Lien upon any of the Collateral (other than a Permitted Encumbrance), and (c) there shall be any period of thirty (30) consecutive days during which a stay of enforcement of such judgment or such Lien, by reason of a pending appeal or otherwise, shall not be in effect;
 
10.7                         Bankruptcy .  Any Loan Party shall (a) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (b) make a general assignment for the benefit of creditors, (c) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (d) be adjudicated a bankrupt or insolvent, (e) file a petition seeking to take advantage of any other law providing for the relief of debtors, (f) acquiesce to, or fail to have dismissed, within sixty (60) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (g) take any action for the purpose of effecting any of the foregoing;
 
10.8                         Inability to Pay .  Any Loan Party shall admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business;
 
10.9                         Cash Management .  Any bank at which any deposit account of any Loan Party is maintained shall fail to comply with any of the terms of any control agreement to which such bank is a party (and which such deposit account is required to be subject), or any securities intermediary, commodity intermediary or other financial institution at any time in custody, control or possession of any investment property of any Loan Party shall fail to comply with any of the terms of any investment property control agreement to which such Person is a party and such failure continues for more than 30 days after Borrower receives notice thereof;
 
10.10                  Restraint of Business Activities .  Any Loan Party or any of its Subsidiaries is enjoined, restrained or in any way prevented by the order of any court or any Governmental Body from conducting all or any material part of the business of the Loan Parties (taken as a whole) for more than fifteen (15) consecutive days if such enjoinment or restraint could reasonably be expected to result in a Material Adverse Effect;
 
10.11                  Lien Priority .  Any Lien created hereunder or provided for hereby or under any related agreement for any reason ceases to be or is not a valid and perfected Lien having a first priority (subject to the terms of the Intercreditor Agreement) interest subject to Permitted Encumbrances;
 
10.12                  Cross Default .  (a) A default in one or more agreements to which any Loan Party is a party with one or more Persons (other than another Loan Party) relative to Funded Debt of such Loan Party involving an aggregate principal amount of $1,000,000 (including undrawn committed or available amounts) or more (other than Indebtedness under the Term Loan Facility) (i) occurs at the final maturity of the obligations thereunder, or (ii) occurs prior to the final maturity thereof and results in a right by such Person(s), irrespective of whether exercised,
 
119 

 
to accelerate the maturity of such Loan Party’s obligations thereunder; provided, however, that the cure or waiver of such default (and the corresponding rescission of such acceleration if commenced) shall constitute a cure or waiver of such Event of Default hereunder; or (b) with respect to the Term Loan Facility (i) any Indebtedness thereunder is accelerated, (ii) the Term Loan Agent or Term Loan Lenders commence the exercise of their remedies against all or a material portion of the Term Loan Priority Collateral (as defined in the Intercreditor Agreement), (iii) receipt by Agent of notice of Term Loan Agent’s intention to exercise rights and remedies (A) against the Revolving Loan Priority Collateral (as defined in the Intercreditor Agreement) following expiration of the standstill period applicable under the Intercreditor Agreement or (B) as otherwise required by the Intercreditor Agreement, or (iv) any “Event of Default” under Section 10.1 of the Term Loan Agreement which has continued beyond any applicable grace period set forth therein (a “ Term Loan Specified Default ”); provided , that, so long as (x) the Obligations under this Agreement have not been accelerated and no remedies have been exercised in accordance with Section 11.1 as a result of an Event of Default arising solely under this subsection 10.12(b) and (y) the Agent is satisfied in its sole discretion that the obligations under the Term Loan Agreement have not been accelerated and no remedies have been exercised by the Term Loan Agent or Term Loan Lenders as a result of such Term Loan Specified Default, then upon the waiver of such Term Loan Specified Default that gave rise to such Event of Default solely as a result of the application of this subsection 10.12(b), such Event of Default shall be considered waived hereunder;
 
10.13                  Breach of Guaranty .  Termination or breach of any Guaranty or Guaranty Security Agreement executed and delivered to Agent in connection with the Obligations of Borrower, or if any Guarantor attempts to terminate, challenges the validity of, or its liability under, any such Guaranty or Guaranty Security Agreement;
 
10.14                  Change of Control .  Any Change of Control shall occur;
 
10.15                  Invalidity .  Any material provision of this Agreement or any Other Document shall, for any reason, cease to be valid, binding and enforceable in accordance with its terms (or any Loan Party or Subsidiary of a Loan Party shall challenge the enforceability of any Other Document or shall assert in writing, or engage in any action or inaction based on any such assertion, that any provision of any of the Other Documents has ceased to be or otherwise is not valid, binding and enforceable in accordance with its terms), or any security interest created under any Other Document shall cease to be a valid and perfected first priority security interest or Lien (except as otherwise permitted herein or therein, or, as to priority, in the Intercreditor Agreement) in any of the Collateral purported to be covered thereby;
 
10.16                  Licenses .  (a) Any Governmental Body shall (i) revoke, terminate, suspend or adversely modify any license or permit of any Loan Party, the continuation of which is material to the continuation of any Loan Party’s business, or (ii) commence proceedings to suspend, revoke, terminate or adversely modify any such license or permit and such proceedings shall not be dismissed or discharged within sixty (60) days, or (iii) schedule or conduct a hearing on the renewal of any license or permit necessary for the continuation of such Loan Party’s business and the staff of such Governmental Body issues a report recommending the termination, revocation, suspension or material, adverse modification of such license or permit; or (b) any agreement which is necessary or material to the operation of such Loan Party’s business shall be
 
120 

revoked or terminated and not replaced by a substitute reasonably acceptable to Agent within thirty (30) days after the date of such revocation or termination, and in the case of (a) or (b), such would reasonably be expected to have a Material Adverse Effect;
 
10.17                  Seizures .  Any portion of the Collateral shall be seized or taken by a Governmental Body, or any Loan Party or the title and rights of any Loan Party which is the owner of any material portion of the Collateral shall have become the subject matter of claim, litigation, suit or other proceeding which is reasonably likely to result in a Material Adverse Effect;
 
10.18                  Operations .  Any cessation of a substantial part of the business of the Loan Parties if such cessation could reasonably be expected to result in a Material Adverse Effect as determined by Agent in its Permitted Discretion;
 
10.19                  Pension Plans .  An event or condition specified in Sections 7.16 or 9.15 hereof shall occur or exist with respect to any Pension Benefit Plan and, as a result of such event or condition, together with all other such events or conditions, any Loan Party or any member of the Controlled Group shall incur, or in the reasonable opinion of Agent be reasonably likely to incur, a liability to a Plan or the PBGC (or both) which is reasonably likely to have a Material Adverse Effect;
 
10.20                  Invalidity or Breach of Certain Agreements .  The Intercreditor Agreement or any subordination agreement with respect to any Permitted Subordinated Debt shall cease to be in full force and effect, or any Person (other than Agent or any Lender) party to any such intercreditor or subordination agreement shall breach the provisions thereof or shall contest in any manner the validity, binding nature or enforceability of any such provision or a proceeding shall be commenced by any such Person or any Governmental Body having jurisdiction over such Person, seeking to establish the invalidity or unenforceability thereof;
 
10.21                  Material Assets .  There shall occur any material damage to, or loss, theft or destruction of, any material assets of any Loan Party or any Subsidiary of a Loan Party or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty, or any order or injunction of any court or any administrative or regulatory agency which in any such case causes, for more than ten (10) consecutive days, the cessation or substantial curtailment of revenue producing activities of the Loan Parties, taken as a whole, if such event or circumstance is not covered by business interruption insurance and could reasonably be expected to have a Material Adverse Effect.
 
10.22                  Reportable Compliance Event .  The occurrence of any Reportable Compliance Event, or any Loan Party’s failure to immediately report a Reportable Compliance Event in accordance with Section 15.18 hereof.
 
XI.                                LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.
 
11.1                         Rights and Remedies .
 
(a)                                  Upon the occurrence of: (i) an Event of Default pursuant to Section 10.7 all Obligations shall be immediately due and payable and this Agreement and the obligation of
 
121 

 
Lenders to make Advances shall be deemed terminated other than, with respect to clause (f) thereof, as may be required by an appropriate order of the bankruptcy court having jurisdiction over such Loan Party; and (ii) any of the other Events of Default and at any time thereafter (such default not having previously been cured pursuant to Section 10.5(c) or otherwise or waived), at the option of Required Lenders, all Obligations shall be immediately due and payable and Lenders shall have the right to terminate this Agreement and to terminate the obligation of Lenders to make Advances.  Upon the occurrence of any Event of Default, Agent shall have the right to exercise any and all rights and remedies provided for herein, under the Other Documents, under the Uniform Commercial Code, the PPSA and at law or equity generally, including the right to foreclose the security interests granted herein and to realize upon any Collateral by any available judicial procedure and/or to take possession of and sell any or all of the Collateral with or without judicial process.  Agent may, subject to the terms of leases and the rights of the parties thereunder, enter any of any Loan Party’s premises or other premises without legal process and without incurring liability to any Loan Party therefor, and Agent may thereupon, or at any time thereafter, in its discretion without notice or demand, take the Collateral and remove the same to such place as Agent may deem advisable and Agent may require the Loan Parties to make the Collateral available to Agent at a convenient place.  With or without having the Collateral at the time or place of sale, Agent may sell the Collateral, or any part thereof, at public or private sale, at any time or place, in one or more sales, at such price or prices, and upon such terms, either for cash, credit or future delivery, as Agent may elect.  Except as to that part of the Collateral which is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Agent shall give the Loan Parties reasonable notification of such sale or sales, it being agreed that in all events written notice mailed to the Loan Parties at least ten (10) days prior to such sale or sales is reasonable notification.  At any public sale Agent or any Lender may bid for and become the purchaser, and Agent, any Lender or any other purchaser at any such sale thereafter shall hold the Collateral sold absolutely free from any claim or right of whatsoever kind, including any equity of redemption and all such claims, rights and equities are hereby expressly waived and released by the.  Loan Parties. In connection with the exercise of the foregoing remedies, including the sale of Inventory, Agent is granted (but only to the extent it is necessary to exercise the foregoing remedies) a royalty free, nonexclusive license and Agent is granted permission to use all of each Loan Party’s (a) Trademarks, trade styles, trade names, patents, patent applications, copyrights, service marks, licenses, franchises and other Intellectual Property rights (to the extent permitted by the applicable license, franchise or other governing instrument) which are reasonably used or useful in connection with Inventory for the sole purpose of marketing, advertising for sale and selling or otherwise disposing of such Inventory and (b) Equipment for the purpose of completing the manufacture of unfinished goods.  The cash proceeds realized from the sale of any Collateral shall be applied to the Obligations in the order set forth in Section 11.5 hereof.  Noncash proceeds will only be applied to the Obligations as they are converted into cash. If any deficiency shall arise, the Loan Parties shall remain liable to Agent and Lenders therefor.
 
(b)                                  To the extent that Applicable Law imposes duties on the Agent to exercise remedies in a commercially reasonable manner, each Loan Party acknowledges and agrees that it is not commercially unreasonable for the Agent (i) to fail to incur expenses reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not
 
122 

 
required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Customers or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against Customers and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as the Loan Parties, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by the Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Agent in the collection or disposition of any of the Collateral. The Loan Parties acknowledge that the purpose of this Section 11.1(b) is to provide non-exhaustive indications of what actions or omissions by the Agent would not be commercially unreasonable in the Agent’s exercise of remedies against the Collateral and that other actions or omissions by the Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 11.1(b). Without limitation upon the foregoing, nothing contained in this Section 11.1(b) shall be construed to grant any rights to any Loan Party or to impose any duties on Agent that would not have been granted or imposed by this Agreement or by Applicable Law in the absence of this Section 11.1(b).
 
(c)                                   Agent’s and Lender’s rights and obligations under this Section 11.1 shall be subject to the provisions of the Intercreditor Agreement in all respects.
 
11.2                         Agent’s Discretion .  Agent shall have the right in its sole discretion to determine which rights, Liens, security interests or remedies Agent may at any time pursue, relinquish, subordinate, or modify or to take any other action with respect thereto and such determination will not in any way modify or affect any of Agent’s or Lenders’ rights hereunder.
 
11.3                         Setoff .  Subject to Section 14.12, in addition to any other rights which Agent or any Lender may have under Applicable Law, upon the occurrence of an Event of Default hereunder, Agent and such Lender shall have a right, immediately and without notice of any kind, to apply any Loan Party’s property held by Agent and such Lender to reduce the Obligations.
 
11.4                         Rights and Remedies not Exclusive .  The enumeration of the foregoing rights and remedies is not intended to be exhaustive and the exercise of any rights or remedy shall not preclude the exercise of any other right or remedies provided for herein or otherwise provided by law, all of which shall be cumulative and not alternative.
 
123 

 
11.5                         Allocation of Payments After Event of Default .  Notwithstanding any other provisions of this Agreement to the contrary, after the occurrence and during the continuance of an Event of Default, all amounts collected or received by Agent on account of the Obligations (including without limitation any amounts on account of any of Cash Management Liabilities or Hedge Liabilities), or in respect of the Collateral may, at Agent’s discretion, be paid over or delivered as follows:
 
FIRST, to the payment of all costs and expenses of Agent in connection with enforcing its rights and the rights of Lenders under this Agreement and the Other Documents for which Sections 15.5 or 15.9 requires reimbursement, and any Out-of-Formula Loans and Protective Advances funded by Agent with respect to the Collateral under or pursuant to the terms of this Agreement;
 
SECOND, to payment of any fees owed to the Agent;
 
THIRD, to the payment of all costs and expenses of each of the Lenders to the extent owing to such Lender pursuant to the terms of Sections 15.5 or 15.9 this Agreement;
 
FOURTH, to the payment of all Obligations arising under this Agreement and the Other Documents consisting of accrued fees and interest;
 
FIFTH, to the payment of the outstanding principal amount of the Obligations arising under this Agreement (other than Cash Management Liabilities and Hedge Liabilities) (including the payment or cash collateralization of any outstanding Letters of Credit in accordance with Section 3.2(b) hereof);
 
SIXTH, to all other Obligations arising under this Agreement or any Other Document (including Cash Management Liabilities and Hedge Liabilities) which shall have become due and payable and not repaid pursuant to clauses “FIRST” through “FIFTH” above; and
 
SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus.
 
In carrying out the foregoing, (i) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; (ii) each of the Lenders shall receive (so long as it is not a Defaulting Lender) an amount equal to its pro rata share (based on the proportion that the then outstanding Advances, Cash Management Liabilities and Hedge Liabilities, as applicable, held by such Lender bears to the aggregate then outstanding Advances, Cash Management Liabilities and Hedge Liabilities, respectively) of amounts available to be applied pursuant to clauses “THIRD,” “FOURTH,” “FIFTH,” “SIXTH” and “SEVENTH” above; (iii) notwithstanding anything to the contrary in this Section 11.5, no Swap Obligation of any Non-Qualified Party shall be paid with amounts received from such Non-Qualified Party under its Guaranty (including sums received as a result of the exercise of remedies with respect to such Guaranty) or from the proceeds of such Non-Qualified Party’s Collateral if such Swap Obligation would constitute an Excluded Hedge Liability (but subject to the final sentence of the definition of Excluded Hedge Liabilities); provided , that, to the extent possible, appropriate adjustments shall be made with respect to payments and/or the proceeds of Collateral from other Loan Parties that are Eligible Contract Participants with respect to such
 
124 

 
Swap Obligations to preserve the allocation to Obligations otherwise set forth above in this Section 11.5 and (iv) to the extent that any amounts available for distribution pursuant to clause “FIFTH” above are attributable to the issued but undrawn amount of outstanding Letters of Credit, such amounts shall be held by the Agent in a cash collateral account and applied (A) first, to reimburse the Issuer from time to time for any drawings under such Letters of Credit and (B) then, following the expiration of all Letters of Credit, to all other Obligations in the manner provided in this Section 11.5.
 
XII.                           WAIVERS AND JUDICIAL PROCEEDINGS.
 
12.1                         Waiver of Notice .  Each Loan Party hereby waives notice from Agent or any Lender of non-payment of any of the Receivables, demand, presentment, protest and notice thereof with respect to any and all instruments, notice of acceptance hereof, notice of loans or advances made, credit extended, Collateral received or delivered, or any other action taken in reliance hereon, and all other demands and notices of any description, except such as are expressly provided for herein.
 
12.2                         Delay .  No delay or omission on Agent’s or any Lender’s part in exercising any right, remedy or option shall operate as a waiver of such or any other right, remedy or option or of any Default or Event of Default.
 
12.3                         Jury Waiver .  EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
 
XIII.                      EFFECTIVE DATE AND TERMINATION.
 
13.1                         Term .  This Agreement, which shall inure to the benefit of and shall be binding upon the respective successors and permitted assigns of the Loan Parties party hereto, Agent and each Lender, shall become effective on the date hereof and shall continue in full force and effect until May 31, 2018 (the “ Term ”) unless sooner terminated as herein provided.  Borrower may terminate this Agreement at any time upon prior written notice upon payment in full of the Obligations.  In the event the Obligations are prepaid in full prior to the last day of the Term (the date of such prepayment hereinafter referred to as the “ Early Termination Date ”), Borrower shall
 
125 

 
pay to Agent for the benefit of Lenders an early termination fee in the following applicable amount:
 
(x)                                  2% of the then applicable Maximum Revolving Advance Amount if the Early Termination Date occurs on or after the date hereof to and including the date immediately preceding the first anniversary of the Closing Date;
 
(y)                                  1% of the then applicable Maximum Revolving Advance Amount if the Early Termination Date occurs on or after the first anniversary of the Closing Date to and including the date immediately preceding the second anniversary of the Closing Date; and
 
(z)                                   $0 if the Early Termination Date occurs on or after the second anniversary of the Closing Date.
 
Notwithstanding the foregoing, Borrower shall have no obligation to pay Agent for the benefit of Lenders a prepayment fee under this Section 13.1 in connection with a termination of this Agreement and prepayment of the Obligations occurring as a result of a refinancing transaction with respect to which PNC is the sole lender or the administrative agent for a lending syndicate.
 
13.2                         Termination .  The termination of the Agreement shall not affect any Loan Party’s, Agent’s or any Lender’s rights, or any of the Obligations having their inception prior to the effective date of such termination, and the provisions hereof shall continue to be fully operative until all transactions entered into, rights or interests created or Obligations have been fully and indefeasibly paid, disposed of, concluded or liquidated. The security interests, Liens and rights granted to Agent and Lenders hereunder and the financing statements filed hereunder shall continue in full force and effect, notwithstanding the termination of this Agreement or the fact that Borrower’s Account may from time to time be temporarily in a zero or credit position, until all of the Obligations of Borrower have been paid in full in cash after the termination of this Agreement or Borrower has furnished Agent and Lenders with an indemnification satisfactory to Agent and Lenders with respect thereto.  Accordingly, each Loan Party waives any rights which it may have under the Uniform Commercial Code or PPSA to demand the filing of termination statements with respect to the Collateral, and Agent shall not be required to send such termination statements to the Loan Parties, or to file them with any filing office, unless and until this Agreement shall have been terminated in accordance with its terms and all Obligations have been paid in full in cash. All representations, warranties, covenants, waivers and agreements contained herein shall survive termination hereof until all Obligations are paid in full in cash.
 
XIV.                       REGARDING AGENT.
 
14.1                         Appointment .  Each Lender hereby designates PNC to act as Agent for such Lender under this Agreement and the Other Documents. Each Lender hereby irrevocably authorizes Agent to take such action on its behalf under the provisions of this Agreement and the Other Documents and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto and Agent shall hold all Collateral, payments of principal and interest, fees (except the fees set forth in Section 3.3 and the Fee Letter), charges and collections (without giving effect to any collection days) received pursuant
 
126 

 
to this Agreement, for the ratable benefit of Lenders. Agent may perform any of its duties hereunder by or through its agents or employees. As to any matters not expressly provided for by this Agreement (including collection of the Revolving Credit Note) Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding; provided, however, that Agent shall not be required to take any action which exposes Agent to liability or which is contrary to this Agreement or the Other Documents or Applicable Law unless Agent is furnished with an indemnification reasonably satisfactory to Agent with respect thereto.
 
14.2                         Nature of Duties .  Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and the Other Documents. Neither Agent nor any of its officers, directors, employees or agents shall be (i) liable for any action taken or omitted by them as such hereunder or in connection herewith, unless caused by their gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), or (ii) responsible in any manner for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement, or in any of the Other Documents or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any of the Other Documents or for the value, validity, effectiveness, genuineness, due execution, enforceability or sufficiency of this Agreement, or any of the Other Documents or for any failure of any Loan Party to perform its obligations hereunder. Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any of the Other Documents, or to inspect the properties, books or records of any Loan Party. The duties of Agent as respects the Advances to Borrower shall be mechanical and administrative in nature; Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent any obligations in respect of this Agreement except as expressly set forth herein.
 
14.3                         Lack of Reliance on Agent and Resignation .  Independently and without reliance upon Agent or any other Lender, each Lender has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of Borrower and each Guarantor in connection with the making and the continuance of the Advances hereunder and the taking or not taking of any action in connection herewith, and (ii) its own appraisal of the creditworthiness of Borrower and each Guarantor. Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before making of the Advances or at any time or times thereafter except as shall be provided by Borrower pursuant to the terms hereof. Agent shall not be responsible to any Lender for any recitals, statements, information, representations or warranties herein or in any agreement, document, certificate or a statement delivered in connection with or for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency of this Agreement or any Other Document, or of the financial condition of Borrower or any Guarantor, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement,
 
127 

 
the Revolving Credit Note, the Other Documents or the financial condition of any Loan Party, or the existence of any Event of Default or any Default.
 
Agent may resign on thirty (30) days’ written notice to each of Lenders and Borrower and upon such resignation, the Required Lenders will promptly designate a successor Agent reasonably satisfactory to Borrower.
 
Any such successor Agent shall succeed to the rights, powers and duties of Agent, and the term “Agent” shall mean such successor agent effective upon its appointment, and the former Agent’s rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent. After any Agent’s resignation as Agent, the provisions of this Article XIV shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.
 
14.4                         Certain Rights of Agent .  If Agent shall request instructions from Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any Other Document, Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from the Required Lenders; and Agent shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, Lenders shall not have any right of action whatsoever against Agent as a result of its acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders.
 
14.5                         Reliance .  Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, order or other document or telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to this Agreement and the Other Documents and its duties hereunder, upon advice of counsel selected by it. Agent may employ agents and attorneys-in-fact and shall not be liable for the default or misconduct of any such agents or attorneys-in-fact selected by Agent with reasonable care.
 
14.6                         Notice of Default .  Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder or under the Other Documents, unless Agent has received notice from a Lender or a Loan Party referring to this Agreement or the Other Documents, describing such Default or Event of Default and stating that such notice is a “notice of default.” In the event that Agent receives such a notice, Agent shall give notice thereof to Lenders. Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of Lenders.
 
14.7                         Indemnification .  To the extent Agent is not reimbursed and indemnified by the any Loan Parties, each Lender will reimburse and indemnify Agent in proportion to its respective portion of the Advances (or, if no Advances are outstanding, according to its Commitment Percentage), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever
 
128 

 
which may be imposed on, incurred by or asserted against Agent in performing its duties hereunder, or in any way relating to or arising out of this Agreement or any Other Document; provided that, Lenders shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent’s gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment).
 
14.8                         Agent in its Individual Capacity .  With respect to the obligation of Agent to lend under this Agreement, the Advances made by it shall have the same rights and powers hereunder as any other Lender and as if it were not performing the duties as Agent specified herein; and the term “Lender” or any similar term shall, unless the context clearly otherwise indicates, include Agent in its individual capacity as a Lender. Agent may engage in business with Borrower as if it were not performing the duties specified herein, and may accept fees and other consideration from Borrower for services in connection with this Agreement or otherwise without having to account for the same to Lenders.
 
14.9                         Delivery of Documents .  To the extent Agent receives financial statements required under Sections 9.7, 9.8, 9.9, 9.11 and 9.12 or Borrowing Base Certificates from the Loan Parties pursuant to the terms of this Agreement which the Loan Parties are not obligated to deliver to each Lender, Agent will promptly furnish such documents and information to Lenders.
 
14.10                  Borrower’s Undertaking to Agent .  Without prejudice to its obligations to Lenders under the other provisions of this Agreement, Borrower hereby undertakes with Agent to pay to Agent from time to time on demand all amounts from time to time due and payable by it for the account of Agent or Lenders or any of them pursuant to this Agreement to the extent not already paid. Any payment made pursuant to any such demand shall pro tanto satisfy the relevant Borrower’s obligations to make payments for the account of Lenders or the relevant one or more of them pursuant to this Agreement.
 
14.11                  No Reliance on Agent’s Customer Identification Program .  Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA Patriot Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “ CIP Regulations ”), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with Borrower, its Affiliates or its agents, this Agreement, the Other Documents or the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2) any record-keeping, (3) comparisons with government lists, (4) customer notices or (5) other procedures required under the CIP Regulations or such other laws.
 
14.12                  Other Agreements .  Each of the Lenders agrees that it shall not, without the express consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the request of Agent, set off against the Obligations, any amounts owing by such Lender to any Loan Party or any deposit accounts of any Loan Party now or hereafter maintained with such Lender. Anything in this Agreement to the contrary notwithstanding, each of the Lenders further agrees that it shall not, unless specifically requested to do so by Agent, take any action to protect or
 
129 

 
enforce its rights arising out of this Agreement or the Other Documents, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the Other Documents shall be taken in concert and at the direction or with the consent of Agent or Required Lenders.
 
14.13                  Collateral Matters .
 
(a)                                  The Lenders hereby irrevocably authorize Agent, at its option and in its discretion, to release any Lien granted to or held by Agent upon any Collateral upon the payment in full in cash of all Obligations; or constituting property being sold or disposed of in compliance with the terms of this Agreement and the Other Documents; or constituting property to be financed with Indebtedness permitted under Section 7.8(iii) hereof; or constituting property in which any Loan Party (as applicable) owned no interest at the time the Lien was granted or at any time thereafter; or if approved, authorized or ratified in writing by the Required Lenders. Upon request by Agent at any time, the Lenders will confirm in writing Agent’s authority to release particular types or items of Collateral pursuant to this Section 14.13(a).
 
(b)                                  Without in any manner limiting Agent’s authority to act without any specific or further authorization or consent by the Lenders (as set forth in Section 14.13(a)), each Lender agrees to confirm in writing, upon request by Agent, the authority to release Collateral conferred upon Agent under Section 14.13(a). Either without such confirmation (if Agent has not requested such confirmation) or upon receipt by Agent of such confirmation (if Agent has requested such confirmation), and upon prior written request by Borrower, Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to Agent to the extent permitted by Section 14.13; provided, however, that (i) Agent shall not be required to execute any such document on terms which, in Agent’s opinion, would expose Agent to liability or create any obligations or entail any consequence other than the release of such Liens without recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any Lien upon (or obligations of any Loan Party in respect of) all interests in the Collateral retained by such Loan Party (as applicable).
 
(c)                                   Agent shall have no obligation whatsoever to any Lender to assure that the Collateral exists or is owned by any Loan Party or is cared for, protected or insured or has been encumbered or that the Lien granted to Agent pursuant to this Agreement or any Other Document has been properly or sufficiently or lawfully created, perfected, protected or enforced or is entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent in this Section 14.13 or in any Other Document, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, Agent may act in any manner it may deem appropriate, in its sole discretion, given Agent’s own interest in the Collateral as one of the Lenders and that Agent shall have no duty or liability whatsoever to any other Lender, except as otherwise provided herein.
 
(d)                                  Each Loan Party and each Lender each hereby irrevocably authorizes Agent, based upon the written instruction of the Required Lenders, to bid and purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral at any
 
130 

sale thereof conducted (i) by Agent under the provisions of the Code, including pursuant to Sections 9-610 or 9-620 of the Code, (ii) under the provisions of the Federal Bankruptcy Reform Act of 1978, including Section 363, 365 and/or 1129 thereof, or (iii) conducted by Agent (whether by judicial action or otherwise, including a foreclosure sale) in accordance with Applicable Law (clauses (i), (ii) an (iii), a “ Collateral Sale ”); and in connection with any Collateral Sale, Agent may accept non-cash consideration, including debt and equity securities issued by such acquisition vehicle under the direction or control of Agent and Agent may offset all or any portion of the Obligations against the purchase price of such Collateral.
 
XV.                            MISCELLANEOUS.
 
15.1                         Governing Law .  This Agreement shall be governed by and construed in accordance with the laws of the State of New York applied to contracts to be performed wholly within the State of New York. Any judicial proceeding brought by or against any Loan Party with respect to any of the Obligations, this Agreement, the Other Documents or any related agreement may be brought in any court of competent jurisdiction in the State of New York, United States of America, and, by execution and delivery of this Agreement, each Loan Party accepts for itself and in connection with its properties, generally and unconditionally, the nonexclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. Each Loan Party hereby waives personal service of any and all process upon it and consents that all such service of process may be made by registered mail (return receipt requested) directed to such Loan Party at its address set forth in Section 15.6 and service so made shall be deemed completed five (5) days after the same shall have been so deposited in the mails of the United States of America. Nothing herein shall affect the right to serve process in any manner permitted by law or shall limit the right of Agent or any Lender to bring proceedings against any Loan Party in the courts of any other jurisdiction. Each Loan Party waives any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. Each Loan Party waives the right to remove any judicial proceeding brought against such Loan Party in any state court to any federal court. Any judicial proceeding by any Loan Party against Agent or any Lender involving, directly or indirectly, any matter or claim in any way arising out of, related to or connected with this Agreement or any related agreement, shall be brought only in a federal or state court located in the Borough of Manhattan, County of New York, State of New York.
 
15.2                         Entire Understanding .
 
(a)                                  This Agreement and the documents executed concurrently herewith contain the entire understanding between the Loan Parties, Agent and each Lender and supersedes all prior agreements and understandings, if any, relating to the subject matter hereof. Any promises, representations, warranties or guarantees not herein contained and hereinafter made shall have no force and effect unless in writing, signed by the Loan Parties, Agent’s and each Lender’s respective officers. Neither this Agreement nor any portion or provisions hereof may be changed, modified, amended, waived, supplemented, discharged, cancelled or terminated orally or by any course of dealing, or in any manner other than by an agreement in writing, signed by the party to be charged. Each Loan Party acknowledges that it has been advised by counsel in connection with the execution of this Agreement and Other Documents and is not
 
131 

 
relying upon oral representations or statements inconsistent with the terms and provisions of this Agreement.
 
(b)                                  The Required Lenders, Agent with the consent in writing of the Required Lenders, and the Loan Parties may, subject to the provisions of this Section 15.2(b), from time to time enter into written supplemental agreements to this Agreement or the Other Documents executed by the Loan Parties, for the purpose of adding or deleting any provisions or otherwise changing, varying or waiving in any manner the rights of Lenders, Agent or the Loan Parties thereunder or the conditions, provisions or terms thereof or waiving any Event of Default thereunder, but only to the extent specified in such written agreements; provided, however, that no such supplemental agreement shall, without the consent of all Lenders:
 
(i)                                      increase the Commitment Percentage, the maximum dollar commitment of any Lender or the Maximum Revolving Advance Amount (other than as permitted pursuant to Section 2.25);
 
(ii)                                   extend the maturity of the Revolving Credit Note or the due date for any amount payable hereunder, or decrease the rate of interest or reduce any fee payable by Borrower to Lenders pursuant to this Agreement;
 
(iii)                                alter the definition of the term Required Lenders or alter, amend or modify this Section 15.2(b);
 
(iv)                               release all or substantially all of the Collateral (other than in accordance with the terms of this Agreement and in connection with a permitted transfer or sale thereof) or as required by the terms of the Intercreditor Agreement;
 
(v)                                  materially change the rights and duties of Agent (provided Agent’s consent is obtained);
 
(vi)                               increase the Advance Rates above the Advance Rates in effect on the Closing Date; or
 
(vii)                            release any Guarantor from its obligations under its Guaranty other than in connection with a permitted transfer or sale thereof Any such supplemental agreement shall apply equally to each Lender and shall be binding upon the Loan Parties, Lenders and Agent and all future holders of the Obligations. In the case of any waiver, the Loan Parties, Agent and Lenders shall be restored to their former positions and rights, and any Event of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific Event of Default shall extend to any subsequent Event of Default (whether or not the subsequent Event of Default is the same as the Event of Default which was waived), or impair any right consequent thereon.
 
In the event that Agent requests the consent of a Lender pursuant to this Section 15.2 and such consent is denied, then PNC or Borrower may, at its option, require such Lender to assign its interest in the Advances to PNC (with PNC’s consent) or to another Lender or to any other Person designated by the Agent (the “ Designated Lender ”), for a price equal to the then outstanding principal amount thereof plus accrued and unpaid interest and fees due such Lender,
 
132 

 
which interest and fees shall be paid when collected from Borrower. In the event PNC or Borrower elects to require any Lender to assign its interest to PNC or to the Designated Lender, PNC will so notify such Lender in writing within forty five (45) days following such Lender’s denial, and such Lender will assign its interest to PNC or the Designated Lender no later than five (5) days following receipt of such notice pursuant to a Commitment Transfer Supplement executed by such Lender, PNC or the Designated Lender, as appropriate, and Agent.
 
Notwithstanding (a) the existence of a Default or an Event of Default, (b) that any of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied or (c) any other provision of this Agreement, Agent may at its discretion and without the consent of the Required Lenders, voluntarily permit the sum of the outstanding Revolving Advances and the Maximum Undrawn Amount at any time to exceed the Formula Amount (the “ Overadvance Threshold Amount ”) by up to ten percent (10%) of the Overadvance Threshold Amount for up to sixty (60) consecutive Business Days (the “ Out-of-Formula Loans ”); provided , that, such outstanding Advances do not exceed the Maximum Revolving Advance Amount. If Agent is willing in its sole and absolute discretion to make such Out-of-Formula Loans, such Out-of-Formula Loans shall be payable on demand and shall bear interest at the Default Rate for Revolving Advances consisting of Domestic Rate Loans; provided that, if Lenders do make Out-of-Formula Loans, neither Agent nor Lenders shall be deemed thereby to have changed the limits of Section 2.1(a). For purposes of this paragraph, the discretion granted to Agent hereunder shall not preclude involuntary overadvances that may result from time to time due to the fact that the Overadvance Threshold Amount was unintentionally exceeded for any reason, including, but not limited to, Collateral previously deemed to be either “Eligible Receivables” or “Eligible Inventory,” as applicable, becomes ineligible, collections of Receivables applied to reduce outstanding Revolving Advances are thereafter returned for insufficient funds or overadvances are made to protect or preserve the Collateral. In the event Agent involuntarily permits the outstanding Revolving Advances to exceed the Overadvance Threshold Amount by more than ten percent (10%), Agent shall use its efforts to have Borrower decrease such excess in as expeditious a manner as is practicable under the circumstances and not inconsistent with the reason for such excess. Revolving Advances made after Agent has determined the existence of involuntary overadvances shall be deemed to be involuntary overadvances and shall be decreased in accordance with the preceding sentence.
 
In addition to (and not in substitution of) the discretionary Revolving Advances permitted above in this Section 15.2, the Agent is hereby authorized by the Loan Parties and the Lenders, from time to time in the Agent’s sole discretion, (A) after the occurrence and during the continuation of a Default or an Event of Default, or (B) at any time that any of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied, to make Revolving Advances to Borrower on behalf of the Lenders which Agent, in its reasonable business judgment, deems necessary or desirable (a) to preserve or protect the Collateral, or any portion thereof, (b) to enhance the likelihood of, or maximize the amount of, repayment of the Advances and other Obligations, or (c) to pay any other amount chargeable to Borrower pursuant to the terms of this Agreement; provided, that at any time after giving effect to any such Revolving Advances the outstanding Revolving Advances do not exceed one hundred and ten percent (110%) of the Formula Amount.
 
133 

 
15.3                         Successors and Assigns; Participations; New Lenders .
 
(a)                                  This Agreement shall be binding upon and inure to the benefit of the Loan Parties, Agent, each Lender, all future holders of the Obligations and their respective successors and permitted assigns, except that no Loan Party hereto may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of Agent and each Lender.
 
(b)                                  (i) Borrower acknowledges that in the regular course of commercial banking business one or more Lenders may at any time and from time to time sell participating interests in the Advances to other financial institutions (each such transferee or purchaser of a participating interest, a “ Participant ”), provided that so long as no Event of Default exists, the sale of any such participating interests shall require the consent of Borrower, which shall not be unreasonably withheld. Each Participant may exercise all rights of payment (including rights of set-off) with respect to the portion of such Advances held by it or other Obligations payable hereunder as fully as if such Participant were the direct holder thereof; provided that such Participant shall agree, for the benefit of the Borrower, to comply with Section 3.10(e) and 3.11 as though it were a Lender; and provided, further, that Borrower shall not be required to pay to any Participant more than the amount which it would have been required to pay to Lender which granted an interest in its Advances or other Obligations payable hereunder to such Participant had such Lender retained such interest in the Advances hereunder or other Obligations payable hereunder and in no event shall Borrower be required to pay any such amount arising from the same circumstances and with respect to the same Advances or other Obligations payable hereunder to both such Lender and such Participant. Borrower hereby grants to any Participant a continuing security interest in any deposits, moneys or other property actually or constructively held by such Participant as security for the Participant’s interest in the Advances.
 
(ii)                                   Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Advances or other Obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.  For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.
 
(c)                                   Any Lender, with the consent of Agent and, if no Event of Default then exists, Borrower, which shall not be unreasonably withheld or delayed, may sell, assign or transfer all or any part of its rights and obligations under or relating to Advances under this Agreement and the Other Documents to one or more additional banks or financial institutions
 
134 

 
and one or more additional banks or financial institutions may commit to make Advances hereunder (each a “ Purchasing Lender ”), in minimum amounts of not less than $5,000,000, pursuant to a Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor Lender, and Agent and delivered to Agent for recording. Upon such execution, delivery, acceptance and recording, from and after the transfer effective date determined pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder with a Commitment Percentage as set forth therein, and (ii) the transferor Lender thereunder shall, to the extent provided in such Commitment Transfer Supplement, be released from its obligations under this Agreement, the Commitment Transfer Supplement creating a novation for that purpose. Such Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender and the resulting adjustment of the Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents. Borrower shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing.
 
(d)                                  Any Lender, with the consent of Agent which shall not be unreasonably withheld or delayed, may directly or indirectly sell, assign or transfer all or any portion of its rights and obligations under or relating to Advances under this Agreement and the Other Documents to an entity, whether a corporation, partnership, trust, limited liability company or other entity that (i) is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and (ii) is administered, serviced or managed by the assigning Lender or an Affiliate of such Lender (a “ Purchasing CLO ” and together with each Participant and Purchasing Lender, each a “ Transferee ” and collectively the “ Transferees ”), pursuant to a Commitment Transfer Supplement modified as appropriate to reflect the interest being assigned (“ Modified Commitment Transfer Supplement ”), executed by any intermediate purchaser, the Purchasing CLO, the transferor Lender, and Agent as appropriate and delivered to Agent for recording. Upon such execution and delivery, from and after the transfer effective date determined pursuant to such Modified Commitment Transfer Supplement, (i) Purchasing CLO thereunder shall be a party hereto and, to the extent provided in such Modified Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder and (ii) the transferor Lender thereunder shall, to the extent provided in such Modified Commitment Transfer Supplement, be released from its obligations under this Agreement, the Modified Commitment Transfer Supplement creating a novation for that purpose.  Such Modified Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing CLO. Borrower hereby consents to the addition of such Purchasing CLO. Borrower shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing.
 
(e)                                   Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at its address in the United States a copy of each Commitment Transfer Supplement and Modified Commitment Transfer Supplement delivered to it and a register (the “ Register ”) for the recordation of the names and addresses of each Lender and the outstanding principal, accrued and unpaid interest and other fees due hereunder. The entries in the Register
 
135 

 
shall be conclusive, in the absence of manifest error, and Borrower, Agent and Lenders may treat each Person whose name is recorded in. the Register as the owner of the Advance recorded therein for the purposes of this Agreement. The Register shall be available for inspection by Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. Agent shall receive a fee in the amount of $3,500 payable by the applicable Purchasing Lender and/or Purchasing CLO upon the effective date of each transfer or assignment (other than to an intermediate purchaser) to such Purchasing Lender and/or Purchasing CLO.
 
(f)                                    Each Loan Party authorizes each Lender to disclose to any Transferee and any prospective Transferee any and all financial information in such Lender’s possession concerning the Loan Parties and their Subsidiaries which has been delivered to such Lender by or on behalf of any Loan Party pursuant to this Agreement or in connection with such Lender’s credit evaluation of Borrower, provided that such Transferee or prospective Transferee agrees to keep such financial information confidential.
 
(g)                                   Notwithstanding anything to the contrary contained in this Agreement, any Lender may at any time and from time to time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
 
15.4                         Application of Payments .  Agent shall have the continuing and exclusive right to apply or reverse and re-apply any payment and any and all proceeds of Collateral to any portion of the Obligations. To the extent any Loan Party makes a payment or Agent or any Lender receives any payment or proceeds of the Collateral for any Loan Party’s benefit, which are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver, custodian or any other party under any bankruptcy law, common law or equitable cause, then, to such extent, the Obligations or part thereof intended to be satisfied shall be revived and continue as if such payment or proceeds had not been received by Agent or such Lender.
 
15.5                         Indemnity .  Each Loan Party shall indemnify Agent, each Lender and each of their respective officers, directors, Affiliates, attorneys, employees and agents (each an “ Indemnitee ”) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including reasonable fees and disbursements of counsel) (collectively, “ Losses ”) which may be imposed on, incurred by, or asserted against any Indemnitee in any claim, litigation, proceeding or investigation instituted or conducted by any Governmental Body or instrumentality or any other Person with respect to any aspect of, or any transaction contemplated by, or referred to in, or any matter related to, this Agreement or the Other Documents, whether or not Agent or any Lender is a party thereto, except to the extent that any of the foregoing arises out of the gross negligence, bad faith or willful misconduct of the Indemnitee (as determined by a court of competent jurisdiction in a final and non-appealable judgment).  Without limiting the generality of the foregoing, each Loan Party shall indemnify each Indemnitee from and against all Losses, suffered or incurred by any Indemnitee under or on account of any Environmental Laws, including the assertion of any Lien thereunder, with respect to any Hazardous Discharge, the
 
136 

 
presence of any Hazardous Substances affecting the Real Property, whether or not the same originates or emerges from the Real Property or any contiguous real estate, except to the extent such loss, liability, damage and expense is attributable to any Hazardous Discharge resulting from actions on the part of Agent or any Lender.  Each Loan Party’s indemnity obligations shall arise upon the discovery of the presence of any material Hazardous Substances in violation of Applicable Laws at the Real Property, whether or not any federal, state, or local environmental agency has taken or threatened any action in connection with the presence of any Hazardous Substances.
 
15.6                         Notice .  Any notice or request hereunder may be given to the Loan Parties or to Agent or any Lender at their respective addresses set forth below or at such other address as may hereafter be specified in a notice designated as a notice of change of address under this Section. Any notice, request, demand, direction or other communication (for purposes of this Section 15.6 only, a “ Notice ”) to be given to or made upon any party hereto under any provision of this Loan Agreement shall be given or made by telephone or in writing (which includes by means of electronic transmission (i.e., “e-mail”) or facsimile transmission in accordance with this Section 15.6. Any such Notice must be delivered to the applicable parties hereto at the addresses and numbers set forth under their respective names in this Section 15.6 or in accordance with any subsequent unrevoked Notice from any such party that is given in accordance with this Section 15.6. Any Notice shall be effective:
 
(a)                                  In the case of hand-delivery, when delivered;
 
(b)                                  If given by mail, five (5) days after such Notice is deposited with the United States Postal Service, by registered mail, return receipt requested;
 
(c)                                   In the case of a telephonic Notice, when a party is contacted by telephone, if delivery of such telephonic Notice is confirmed no later than the next Business Day by hand delivery, a facsimile or electronic transmission, or an overnight courier delivery of a confirmatory Notice (received at or before noon on such next Business Day);
 
(d)                                  In the case of a facsimile transmission, when sent to the applicable party’s facsimile machine’s telephone number, if the party sending such Notice receives confirmation of the delivery thereof from its own facsimile machine;
 
(e)                                   In the case of electronic transmission, when actually received; and
 
(f)                                    If given by any other means (including by overnight courier), when actually received.
 
Any Lender giving a Notice to any Loan Party shall concurrently send a copy thereof to the Agent, and the Agent shall promptly notify the other Lenders of its receipt of such Notice.
 
137 

 

(A)	If to Agent or PNC at:
 
PNC Bank, National Association
c/o PNC Business Credit
2 North Lake Avenue, Suite 440
Pasadena, California 91101
Attention:                                          Kevin J. Gimber
Telephone:                                    (626) 432-6133
Facsimile:                                          (626) 432-4589
 	
 	with a copy to:
 
PNC Bank, National Association
PNC Agency Services PNC
Firstside Center
500 First Avenue, 4th Floor
Pittsburgh, Pennsylvania 15219
Attention:                                          Lisa Pierce
Telephone:                                    (412) 762-6442
Facsimile:                                          (412) 762-8672
 	
 	with an additional copy (which shall not constitute Notice) to:
 
Blank Rome, LLP
 
1925 Century Park East, Suite 1900
Los Angeles, California 90067
Attention:                                          Danielle V. Garcia
Telephone:                                    (424) 239-3412
Facsimile:                                          (424) 239-3394
 
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Attention:                                          Lawrence F. Flick II
Telephone:                                    (212) 885-5556
Facsimile:                                          (215) 832-5556
 	
(B)	If to a Lender other than PNC, as specified on the signature pages hereof	
 
138 

 

(C)	If to any Loan Party:
 
Boot Barn, Inc.
15776 Laguna Canyon Road
Irvine, California 92618
Attention:                                          Paul Iacono
Telephone:                                    (949) 453-4400
Facsimile:                                          (949) 453-4401
 	
 	with a copy to:
 
Freeman Spogli & Co.
11100 Santa Monica Boulevard
Suite 1900
Los Angeles, California  90025
Attention:                                          Brad Brutocao
Telephone:                                    (310) 444-1865
Facsimile:                                          (310) 546-9726
 	
 	with an additional copy to (which shall not constitute Notice):
 
Bingham McCutchen LLP
355 S. Grand Avenue
Suite 4400
Los Angeles, California  90071
Attention:                                          Roger H. Lustberg, Esq.
Telephone:                                    (213) 229-8407
Facsimile:                                          (213) 830-8601	
 
15.7                         Survival .  The obligations of the Loan Parties under Sections 2.2(e), 2.2(f), 2.2(g), 2.17, 3.7, 3.8, 3.9, 3.10, 15.5 and 15.9, and the obligations of Lenders under Sections 2.2, 2.13(b), 2.14, 2.16, 2.18, 14 and 15.5, shall survive termination of this Agreement and the Other Documents and payment in full of the Obligations.
 
15.8                         Severability .  If any part of this Agreement is contrary to, prohibited by, or deemed invalid under Applicable Laws, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible.
 
15.9                         Expenses .  All reasonable and documented (to the extent available) costs and expenses including reasonable and documented attorneys’ fees (including the allocated costs of in house counsel) and disbursements incurred by Agent on its behalf or on behalf of Lenders (a) in all efforts made to enforce payment of any Obligation or effect collection of any Collateral, or (b) in connection with the entering into, modification, amendment, administration and enforcement of this Agreement, any Other Document or any Related Transaction Documents or any consents or waivers hereunder or thereunder, including in connection with any work-out or restructuring of the Loans during the pendency of one or more Events of Default; or (c) in
 
139 

 
instituting, maintaining, preserving, enforcing and foreclosing on Agent’s security interest in or Lien on any of the Collateral, or maintaining, preserving or enforcing any of Agent’s or any Lender’s rights hereunder and under any Other Document, including any attempt to enforce any such remedies in the course of, and in respect of any litigation, contest, dispute, suit, proceeding or action arising in connection with, any work-out or restructuring of the Advances during the pendency of one or more Events of Default, or (d) in defending or prosecuting any actions or proceedings arising out of or relating to the Transactions, Agent’s or any Lender’s transactions with any Loan Party, or pursuant to the Intercreditor Agreement or any other intercreditor agreement or subordination agreement or (e) in connection with any advice given to Agent with respect to its rights and obligations under this Agreement and all Other Documents, may be charged to Borrower’s Account and shall be part of the Obligations.
 
15.10                  Injunctive Relief .  Each Loan Party recognizes that, in the event any Loan Party fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, or threatens to fail to perform, observe or discharge such obligations or liabilities, any remedy at law may prove to be inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving that actual damages are not an adequate remedy.
 
15.11                  Consequential Damages .  Neither Agent nor any Lender, nor any agent or attorney for any of them, shall be liable to any Loan Party (or any Affiliate of any such Person) for indirect, punitive, exemplary or consequential damages arising from any breach of contract, tort or other wrong relating to the establishment, administration or collection of the Obligations or as a result of any transaction contemplated under this Agreement or any Other Document.
 
15.12                  Captions .  The captions at various places in this Agreement are intended for convenience only and do not constitute and shall not be interpreted as part of this Agreement.
 
15.13                  Counterparts; Facsimile Signatures .  This Agreement may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any signature delivered by a party by facsimile or other similar form of electronic transmission shall be deemed to be an original signature hereto.
 
15.14                  Construction .  The parties acknowledge that each party and its counsel have reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits thereto. In the event of a direct conflict between the provisions of this Agreement and the provisions contained in any Other Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Agreement shall control and govern.
 
15.15                  Confidentiality; Sharing Information .  Agent, each Lender and each Transferee shall hold all non-public information obtained by Agent, such Lender or such Transferee pursuant to the requirements of this Agreement in accordance with Agent’s, such Lender’s and
 
140 

 
such Transferee’s customary procedures for handling confidential information of this nature; provided, however, Agent, each Lender and each Transferee may disclose such confidential information (a) to its examiners, Affiliates, outside auditors, counsel and other professional advisors, so long as they agree to hold such information confidential, (b) to Agent, any Lender or to any prospective Transferees (so long as such prospective Transferees agree to hold such information confidential in accordance with this Section 15.15), and (c) as required or requested by any Governmental Body or representative thereof or pursuant to legal process; provided, further that (i) unless specifically prohibited by Applicable Law, Agent, each Lender and each Transferee shall use its reasonable best efforts prior to disclosure thereof, to notify Borrower of the applicable request for disclosure of such non-public information (A) by a Governmental Body or representative thereof (other than any such request in connection with an examination of the financial condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant to legal process and (ii) in no event shall Agent, any Lender or any Transferee be obligated to return any materials furnished by any Loan Party other than those documents and instruments in possession of Agent or any Lender in order to terminate its Lien on the Collateral once the Obligations have been paid in full and this Agreement has been terminated. Each Loan Party acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to any Loan Party or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender and each Loan Party hereby authorizes each Lender to share any information delivered to such Lender by any Loan Party or its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of such Lender, it being understood that any such Subsidiary or Affiliate of any Lender receiving such information shall be bound by the provisions of this Section 15.15 as if it were a Lender hereunder. Such authorization shall survive the repayment of the other Obligations and the termination of this Agreement.
 
15.16                  Publicity .  Subject to the prior review and approval of Borrower, not to be unreasonably withheld, conditioned or delayed, each Loan Party and each Lender hereby authorizes Agent to make appropriate announcements of the financial arrangement entered into among the Loan Parties, Agent and Lenders, including announcements which are commonly known as tombstones, in such publications and to such selected parties as Agent shall in its reasonable discretion deem appropriate using a Loan Party’s or its Subsidiary’s name, product photographs, logo, trademark or related information.
 
15.17                  Certifications From Banks and Participants; USA PATRIOT Act .
 
(a)                                  Each Lender or assignee or participant of a Lender that is not incorporated under the Laws of the United States of America or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA PATRIOT Act and the applicable regulations because it is both (i) an affiliate of a depository institution or foreign bank that maintains a physical presence in the United States or foreign country, and (ii) subject to supervision by a banking authority regulating such affiliated depository institution or foreign bank) shall deliver to the Agent the certification, or, if applicable, recertification, certifying that such Lender is not a “shell” and certifying to other matters as required by Section 313 of the USA PATRIOT Act and the applicable regulations: (1) within ten (10) days after the Closing Date, and (2) as such other times as are required under the USA PATRIOT Act.
 
141 

 
(b)                                  The USA PATRIOT Act requires all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an “account” with such financial institution.  Consequently, Lender may from time to time request, and each Loan Party shall provide to Lender, such Loan Party’s name, address, tax identification number and/or such other identifying information as shall be necessary for Lender to comply with the USA PATRIOT Act and any other Anti-Terrorism Law.
 
15.18                  Anti-Money Laundering/International Trade Law Compliance .  Each Loan Party represents and warrants to Agent, as of the date of this Agreement, the date of each Advance, the date of any renewal, extension or modification of this Agreement, and at all times until this Agreement has been terminated and all Obligations have been indefeasibly paid in full, that: (a) no Covered Entity (i) is a Sanctioned Person; (ii) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person; or (iii) does business in or with, or derives any of its operating income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law enforced by any Compliance Authority; (b) the Advances will not be used to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law enforced by any Compliance Authority; (c) the funds used to repay the Obligations are not derived from any unlawful activity; and (d) each Covered Entity is in compliance with, and no Covered Entity engages in any dealings or transactions prohibited by, any Anti-Terrorism Laws.  Each Loan Party covenants and agrees that it shall immediately notify Agent in writing upon obtaining knowledge of the occurrence of a Reportable Compliance Event.
 
15.19                  Intercreditor Agreement .  Notwithstanding anything herein to the contrary, the priority of the Liens granted to Agent in the Collateral pursuant to this Agreement and the Other Documents and the exercise, after the occurrence and during the continuance of an Event of Default, of any right or remedy by Agent or any Lender with respect to certain of the Collateral hereunder or under any Other Document are subject to the provisions of the Intercreditor Agreement.  In the event of any direct and irreconcilable conflict between the terms of the Intercreditor Agreement and this Agreement with respect to (a) the priority of Liens granted to Agent in the Collateral pursuant to this Agreement and the Other Documents or (b) the rights of Agent or any Lender under this Agreement with respect to certain Collateral after the occurrence and during the continuance of an Event of Default, the terms of the Intercreditor Agreement shall govern and control.  Any reference in this Agreement or any Other Document to “first priority lien” or words of similar effect in describing the Liens created hereunder or under any Other Document shall be understood to refer to such priority as set forth in the Intercreditor Agreement.  Nothing in this Section 15.19 shall be construed to provide that any Loan Party is a third party beneficiary of the provisions of the Intercreditor Agreement other than as expressly set forth therein and each Loan Party (x) agrees that, except as expressly otherwise provided in the Intercreditor Agreement, nothing in the Intercreditor Agreement is intended or shall impair the obligation of any Loan Party to pay the obligations under this Agreement or any Other Document as and when the same become due and payable in accordance with their respective terms, or to affect the relative rights of the creditors of any Loan Party, other than Agent and the Lenders as between themselves and (y) except to the extent that any exercise of remedies by Agent against Term Loan Priority Collateral is not permitted under the Intercreditor Agreement and such exercise would cause the Loan Parties to be in breach of the terms of the Term Loan
 
142 

 
Agreement requiring the Loan Parties to deliver possession or control of Term Loan Priority Collateral to Term Loan Agent, if Agent shall enforce its rights or remedies in violation of the terms of the Intercreditor Agreement, agrees that it shall not use such violation as a defense to any enforcement of remedies otherwise made in accordance with the terms of this Agreement and the Other Documents by Agent or any Lender or assert such violation as a counterclaim or basis for set-off or recoupment against Agent or any Lender and agrees to abide by the terms of this Agreement and to keep, observe and perform the several matters and things herein intended to be kept, observed and performed by it.  In furtherance of the foregoing, notwithstanding anything to the contrary set forth herein, prior to the Term Loan Termination Date (each term as defined in the Intercreditor Agreement) to the extent that any Loan Party is required to (i) give physical possession over any Term Loan Priority Collateral (as defined in the Intercreditor Agreement) to Agent under this Agreement or the Other Documents, such requirement to give possession shall be satisfied if such Collateral is delivered to and held by the Term Loan Agent pursuant to the Intercreditor Agreement and (ii) take any other action with respect to the Collateral or any proceeds thereof, including delivery of such Collateral or proceeds thereof to Agent, such action shall be deemed satisfied to the extent undertaken with respect to the Term Loan Agent.
 
[Rest of page intentionally left blank; signature page follows]
 
143 

 
Each of the parties has signed this Agreement as of the day and year first above written.

 	BOOT BARN, INC.,	
 	a Delaware Corporation	

 	By:	/s/ Paul J. Iacono	
 	Name:  Paul J. Iacono	
 	Title:  Chief Financial Officer	

 	BOOT BARN HOLDING CORPORATION	
 	a Delaware Corporation	

 	By:	/s/ Christian B. Johnson	
 	Name:  Christian B. Johnson	
 	Title:  Treasurer	
 
Signature Page to Second Amended and Restated Revolving Credit and Security Agreement

 

 	PNC BANK, NATIONAL ASSOCIATION,	
 	as Lender and as Agent	

 	By:	/s/ Kevin J. Gimber	
 	Name:  Kevin J. Gimber	
 	Title:  Assistant Vice President	
 	 	
 	Commitment Percentage: 100%	
 	Commitment Amount:  $60,000,000	
 
Signature Page to Second Amended and Restated Revolving Credit and Security Agreement

 
EXHIBIT 1.2(a)
 
FORM OF COMPLIANCE CERTIFICATE
 
[                       , 20    ]
 
TO :        PNC BANK, NATIONAL ASSOCIATION , as Agent
 
The undersigned [President] [Chief Financial Officer] [Controller] of Boot Barn Holding Corporation, a Delaware corporation (“ Parent Holdco ”), solely in such capacity and not in any individual capacity, certifies that, under the terms and conditions of the Second Amended and Restated Revolving Credit and Security Agreement dated as of May 31, 2013, among Boot Barn, Inc., a Delaware corporation (“ Borrower ”), Parent Holdco, Agent and the lenders from time to time party thereto (as amended, modified and supplemented from time to time, the “ Agreement ”), (i) the Loan Parties are in complete compliance for the period ending [                                    ] with all of the below-listed covenants set forth in the Agreement, except as may be noted below, (ii) all representations and warranties of the Loan Parties in the Agreement are true and correct in all material respects on this date (except to the extent they relate to a specified date), except as set forth on Schedule B hereto, (iii) other than as set forth on Schedule C hereto, no Default or Event of Default exists, and (iv) the most recent financial statements provided to Agent include all adjustments necessary for a fair presentation in all material respects of the consolidated financial position and results of operations of Parent Holdco and its Subsidiaries for the period presented. Attached hereto as Schedule A are covenant calculations with respect to Section 6.5 of the Agreement.  Attached hereto as Schedule D is each application for the registration of any Patent, Trademark, or Copyright with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency made by any Loan Party, either itself or through any agent, employee, licensee, or designee, since the delivery of the last Compliance Certificate.  Attached hereto as Schedule E is each deposit account or investment account opened or maintained by any Loan Party since the delivery of the last Compliance Certificate, which deposit accounts and/or investment accounts shall be deemed added to Schedule 4.12(h)(2) to the Agreement for all purposes under the Agreement and the Other Documents. Capitalized terms used in this Certificate which are not defined herein shall have the meanings set forth in the Agreement.  Nothing herein limits or modifies any of the terms or provisions of the Agreement.
 
Compliance status is indicated by circling Yes/No under “Complies” column.

[Financial Covenant	 	Required	 	Actual	 	Complies	
 	 	 	 	 	 	 	
Section 6.5 - Fixed Charge Coverage Ratio	 	1.1:1.0	 	                :1.0	 	Yes       No](1)	

(1)    Only to be completed if this Certificate is being delivered at a Covenant Compliance Period

 

Negative Covenants	 	Complies	
 	 	 	
Section 7.4 - Investments	 	Yes     No	
Section 7.5 - Loans	 	Yes     No	
Section 7.7 - Dividends	 	Yes     No	
Section 7.8 - Indebtedness	 	Yes     No	

Affirmative Covenant	 	Complies	 	
 	 	 	 	
Section 4.14 - Leasehold Obligations	 	Yes     No	 	
 
[signature page follows]

 
Comments Regarding Exceptions:

Sincerely,
 
BOOT BARN HOLDING CORPORATION

By:	 	 	
 	Name:	 	
 	Title: [President] [Chief Financial Officer] [Controller]	 	
 
[Signature Page to Compliance Certificate]

 
Schedule A to Compliance Certificate
Covenant Calculations
 
(Include calculations of Unfinanced Capital Expenditures, EBITDA, and Fixed Charges (including each sub-component of each such calculation), as well as the Fixed Charge Coverage Ratio).
 
[Schedule A to Compliance Certificate]

 
Schedule B to Compliance Certificate
Exceptions to Representations and Warranties
 
[Schedule B to Compliance Certificate]

 
Schedule C to Compliance Certificate
Defaults and Events of Default
 
[Schedule C to Compliance Certificate]

 
Schedule D to Compliance Certificate
Intellectual Property Applications
 
[Schedule D to Compliance Certificate]

 
Schedule E to Compliance Certificate
Deposit Accounts and Investment Accounts
 
[Schedule E to Compliance Certificate]

 
EXHIBIT 1.2(b)
 
FORM OF BORROWING BASE CERTIFICATE
 
On file with Agent

 
EXHIBIT 2.1
 
FORM OF THIRD AMENDED AND RESTATED
REVOLVING CREDIT NOTE

$[                          ]	May 31, 2013	
 
This Third Amended and Restated Revolving Credit Note (this “ Note ” is executed and delivered under and pursuant to the terms of that certain Second Amended and Restated Revolving Credit and Security Agreement dated as of the date hereof (as amended, restated, supplemented or modified from time to time the “ Credit Agreement ”) by and among BOOT BARN, INC., a Delaware corporation with a place of business at 15776 Laguna Canyon Road, Irvine, California 92618 (“ Borrower ”), BOOT BARN HOLDING CORPORATION, a Delaware Corporation, as a Guarantor, PNC BANK, NATIONAL ASSOCIATION (“ PNC ”), the various financial institutions named therein or which hereafter become a party thereto (together with PNC collectively, “ Lenders ”) and PNC as agent for Lenders (in such capacity, “ Agent ”). Capitalized terms not otherwise defined herein shall have the meanings provided in the Credit Agreement.
 
FOR VALUE RECEIVED, Borrower hereby promises to pay to the order of [                                            ] (the “ Holder ”), at the office of Agent located at PNC Bank Center Two Tower Center, 8th Floor East Brunswick, New Jersey 08816 or at such other place as Agent may from time to time designate to Borrower in writing:
 
(i)            the outstanding principal sum of the Revolving Advances up to [                                      ] Dollars ($[                                      ]) or, if less, the unpaid principal balance of the Holder’s Commitment Percentage of the Revolving Advances as may be due and owing under the Credit Agreement payable in accordance with the provisions of the Credit Agreement subject to acceleration upon the occurrence of an Event of Default under the Credit Agreement or earlier termination of the Credit Agreement pursuant to the terms thereof; and
 
(ii)           interest on the principal amount of this Note from time to time outstanding until such principal amount is paid in full at the applicable Revolving Interest Rate in accordance with the provisions of the Credit Agreement.  In no event however shall interest exceed the maximum interest rate permitted by law.  Upon and after the occurrence of an Event of Default and during the continuation thereof, at the option of Agent or at the direction of the Required Lenders, following written notice from Agent to Borrower and provided that such Event of Default is not cured or waived within 15 Business Days after Agent sends such notice, interest shall be payable at the Default Rate.
 
This Note is one of the Revolving Credit Notes referred to in the Credit Agreement and is secured, inter alia , by the liens granted pursuant to the Credit Agreement and the Other Documents, is entitled to the benefits of the Credit Agreement and the Other Documents and is subject to all of the agreements, terms and conditions therein contained.
 
1 

 
This Note is subject to mandatory prepayment on the terms and conditions set forth in the Credit Agreement and may be voluntarily prepaid, in whole or in part, on the terms and conditions set forth in the Credit Agreement.
 
This Note amends and restates in its entirety and without novation that certain Second Amended and Restated Revolving Credit Note dated as of August 31, 2012 in the principal sum of Fifty Million Dollars ($50,000,000) executed and delivered by Borrower in favor of PNC.
 
This Note shall be construed and enforced in accordance with the laws of the State of New York.
 
Borrower expressly waives any presentment, demand, protest, notice of protest, or notice of any kind except as expressly provided in the Credit Agreement.
 
[remainder of page intentionally blank]
 
2 

 
IN WITNESS WHEREOF , this Note has been executed and delivered as of the date first written above.

 	BOOT BARN, INC. ,	
 	a Delaware corporation	

 	By:	 	
 	 	Name:	
 	 	Title:	
 
[Signature Page to Third Amended and Restated Revolving Credit Note]

 
EXHIBIT 6.10(a)
 
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT (2)
 
THIS [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT, dated as of                        , 20    , is made by each of the entities listed on the signature pages hereof (each a “ Grantor ” and, collectively, the “ Grantors ”), in favor of PNC BANK, NATIONAL ASSOCIATION as agent for the Lenders (in such capacity, together with its successors and assigns, “ Agent ”) for the Lenders (as defined in the Credit Agreement referred to below).
 
W I T N E S S E T H
 
WHEREAS , pursuant to that certain Second Amended and Restated Revolving Credit and Security Agreement, dated as of May 31, 2013 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Boot Barn, Inc., Delaware corporation (“ Borrower ”), Boot Barn Holding Corporation, a Delaware corporation (“ Parent Holdco ”), the financial institutions which are now or which hereafter become party thereto (the “ Lenders ”) and Agent, the Lenders have severally agreed to make financial accommodations to the Borrower subject to the conditions set forth therein;
 
WHEREAS , each Grantor (other than the Borrower) has agreed, pursuant to an Amended and Restated Guaranty and Suretyship Agreement, dated even date herewith in favor of the Agent (the “ Guaranty ”), to guarantee the Obligations (as defined in the Credit Agreement) of the Borrower; and
 
WHEREAS , pursuant to the Credit Agreement, the Guaranty and that certain Amended and Restated Pledge and Security Agreement, dated as of even date herewith (the “ Pledge and Security Agreement ”), by and between the Grantors and the Agent, the Grantors are required to execute and deliver this [Copyright] [Patent] [Trademark] Security Agreement;
 
NOW, THEREFORE , in consideration of the premises and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each Grantor hereby agrees with the Agent as follows:
 
1.             Defined Terms .  Capitalized terms used herein without definition are used as defined in the Credit Agreement.
 
2.             Grant of Security Interest in [Copyright] [Trademark] [Patent] Collateral .  Each Grantor, as collateral security for the prompt payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Guaranteed Obligations

(2)  Separate agreements should be executed relating to each Grantor’s respective Copyrights, Patents, and Trademarks.
 
1 

 
of such Grantor, hereby assigns, pledges and grants to the Agent for its benefit and for the ratable benefit of each Lender a continuing security interest in and to and a Lien on all of its right, title and interest in, to and under the following Collateral of such Grantor (the “ [Copyright] [Patent] [Trademark] Collateral ”):
 
a.             [all of its Copyrights, including, without limitation, those referred to on Schedule 1 hereto;
 
b.             all renewals, reversions and extensions of the foregoing; and
 
c.             all income, royalties and proceeds at any time due or payable or asserted under and with respect to any of the foregoing, including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, dilution, violation or other impairment thereof.]
 
or
 
a.             [all of its Patents, including, without limitation, those referred to on Schedule 1 hereto;
 
b.             all reissues, reexaminations, continuations, continuations-in-part, divisionals, renewals and extensions of the foregoing; and
 
c.             all income, royalties and proceeds at any time due or payable or asserted under and with respect to any of the foregoing, including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, dilution, violation or other impairment thereof.]
 
or
 
a.             [all of its Trademarks, including, without limitation, those referred to on Schedule 1 hereto;
 
b.             all renewals and extensions of the foregoing;
 
c.             all goodwill of the business connected with the use of, and symbolized by, each such Trademark; and
 
d.             all income, royalties and proceeds at any time due or payable or asserted under and with respect to any of the foregoing, including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, dilution, violation or other impairment thereof.]
 
3.             Credit Agreement and Pledge and Security Agreement .  The security interest granted pursuant to this [Copyright] [Patent] [Trademark] Security Agreement is granted in conjunction with the security interest granted to the Agent pursuant to the Credit Agreement and the Pledge and Security Agreement, and each Grantor hereby
 
2 

 
acknowledges and agrees that the rights and remedies of the Agent with respect to the security interest in the [Copyright] [Patent] [Trademark] Collateral made and granted hereby are more fully set forth in the Credit Agreement and the Pledge and Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein; provided, however that in no event shall the [Copyright] [Patent] [Trademark] Collateral include any property or asset of Grantor which is excluded from the definition of “Collateral” pursuant to Section 4.1 of the Credit Agreement or Section 1 of the Pledge and Security Agreement.
 
4.             Grantor Remains Liable .  Each Grantor hereby agrees that, anything herein to the contrary notwithstanding, such Grantor shall assume full and complete responsibility for the prosecution, defense, enforcement or any other necessary or desirable actions in connection with their [Copyrights] [Patents] [Trademarks] subject to a security interest hereunder.
 
5.             Counterparts .  This [Copyright] [Patent] [Trademark] Security Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Signature pages may be detached from multiple separate counterparts and attached to a single counterpart.
 
6.             Governing Law .  This [Copyright] [Patent] [Trademark] Security Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.
 
[signature pages follow]
 
3 

 
IN WITNESS WHEREOF , each Grantor has caused this [Copyright] [Patent] [Trademark] Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

 	Very truly yours,	
 	 	
 	[ GRANTOR ],	
 	as Grantor	
 	 	
 	By:	 	
 	 	Name:	
 	 	Title:	
 
[SIGNATURE PAGE TO [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT]

 
ACCEPTED AND AGREED
 as of the date first above written:
 
PNC BANK, NATIONAL ASSOCIATION ,
as Agent

By:	 	 	
 	Name:	 	
 	Title:	 	
 
[SIGNATURE PAGE TO [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT]

 
Schedule I
to
[Copyright] [Patent] [Trademark] Security Agreement
 
[Copyright] [Patent] [Trademark] Registrations
 
REGISTERED [COPYRIGHTS] [PATENTS] [TRADEMARKS]
 
[Include Registration Number and Date]
 
[COPYRIGHT] [PATENT] [TRADEMARK] APPLICATIONS
 
[Include Application Number and Date]
 
SCHEDULE I TO [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT]

 
EXHIBIT 7.12
 
JOINDER AGREEMENT
 
This Joinder Agreement (this “ Joinder ”) is executed and delivered as of this [    ] day of [            ], 20[    ] by [                                                        ], a [                                        ] (“ New Borrower ”), BOOT BARN, INC., a Delaware corporation (“ Boot Barn ”) and BOOT BARN HOLDING CORPORATION, a Delaware corporation (“ Parent Holdco ”), in favor of PNC BANK, NATIONAL ASSOCIATION (“ PNC ”), as administrative and collateral agent (in such capacity, the “ Agent ”) for itself and the Lenders under and as defined in the Credit Agreement referred to below.
 
Reference is hereby made to that certain Second Amended and Restated Revolving Credit and Security Agreement dated as of May 31, 2013 (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the “ Credit Agreement ”) among Boot Barn, each other Person joined as a party thereto as a “Borrower” in accordance with Section 7.12 thereof, and all of their respective permitted successors and assigns (together with Boot Barn, “ Borrower ”), Parent Holdco, the financial institutions from time to time party thereto (the “ Lenders ”) and the Agent.
 
New Borrower hereby agrees to join the Credit Agreement as a Borrower, and hereby agrees that it shall be deemed a party to the Credit Agreement as if New Borrower were originally signatory thereto. New Borrower hereby agrees to be bound by, and a maker and obligor of, all representations, warranties, indemnities, undertakings, covenants, limitations, waivers, exclusions, acknowledgements and agreements under the Credit Agreement relating to, pertaining to, or binding upon, Borrower or made or agreed to by Borrower to or for the benefit of the Agent and/or the Lenders.
 
Without limiting the foregoing, New Borrower, as security for the payment and performance in full of the Obligations does hereby grant, assign, and pledge to the Agent, for the benefit of the Lenders, a security interest in and Lien on all personal property of the New Borrower including all property of the type described in the Credit Agreement as “Collateral.” The information on the attached Schedules [  ] hereto is hereby added to Schedules [  ] to the Credit Agreement.  This Joinder is a supplement to, and not a novation of, the Credit Agreement, which remains in full force and effect, and the provisions of which are incorporated herein by reference.
 
New Borrower hereby irrevocably appoints Boot Barn as its borrowing agent and attorney-in-fact for all purposes under the Credit Agreement and the Other Documents which appointment shall remain in full force and effect unless and until the Agent shall have received prior written notice signed by New Borrower that such appointment has been revoked and that another Borrower has been appointed as agent for all Borrowers.  New Borrower hereby irrevocably appoints and authorizes Boot Barn to, notwithstanding anything in the Credit Agreement to the contrary, (i) provide the Agent with all notices with respect to Advances and Letters of Credit obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and (ii) take such action as Boot Barn deems appropriate on its behalf to obtain Advances and Letters of Credit and to exercise such other powers as are reasonably

 
incidental thereto to carry out the purposes of the Credit Agreement and the Other Documents.  It is understood that the handling of the Borrower’s Account and Collateral of Borrowers in a combined fashion is done solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient and economical manner and at their request, and that neither the Agent nor any Lender shall incur liability to any Borrower as a result thereof.  New Borrower expects to derive benefit, directly or indirectly from the handling of the Borrower’s Account and the Collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful performance of the integrated group.  To induce the Agent and the Lenders to do so, and in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify the Agent and each Lender and hold the Agent and each Lender harmless against any and all liability, expense, loss or claim of damage or injury, made against the Agent or any Lender by any Borrower or by any third party whosoever arising from or incurred by reason of (a) the handling of the Borrower’s Account and Collateral of Borrowers as herein provided, (b) the Agent and Lenders reliance on any instructions of Boot Barn or (c) any other action taken by the Agent or any Lender hereunder or under the Other Documents except that Borrowers will have no liability to the Agent or the relevant Lender with respect to any liability that has been determined by a court of competent jurisdiction (pursuant to a final judgment which is no longer appealable) to have resulted solely from the gross negligence, bad faith or willful misconduct of the Agent or such Lender, as the case may be.
 
[signature page follows]
 
2 

 
IN WITNESS WHEREOF , New Borrower and Boot Barn have executed and delivered this Joinder as part of the Credit Agreement as of the date and year first set forth above.

 	[                                                          ] ,	
 	a	
 	 	
 	By:	 	
 	 	Name:	
 	 	Title:	
 	 	 	
 	BOOT BARN, INC. ,	
 	a Delaware corporation, as Borrower	

 	By:	 	
 	 	Name:	
 	 	Title:	
 	 	 	
 	BOOT BARN HOLDING CORPORATION ,	
 	a Delaware corporation, as Parent Holdco	

 	By:	 	
 	 	Name:	
 	 	Title:	
 
ACCEPTED AND AGREED
 
PNC BANK, NATIONAL ASSOCIATION ,
as Agent

By:	 	 	
 	Name:	 	
 	Title:	 	
 
[Signature Page To Joinder Agreement]

 
EXHIBIT 8.1(p)
 
INTERCREDITOR AGREEMENT
 
THIS INTERCREDITOR AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof, this “Agreement”) is entered into as of May 31, 2013, by and among PNC BANK, NATIONAL ASSOCIATION , as Revolving Agent (as defined below), and GOLUB CAPITAL LLC , as Term Loan Agent (as defined below).  Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in Section 1 hereof.
 
RECITALS
 
A.             Boot Barn, Inc., a Delaware corporation (“Borrower”), Boot Barn Holding Corporation, a Delaware corporation (“Holdco”), the other “Loan Parties” party thereto from time to time, Term Loan Agent and Term Loan Lenders (as defined below) have entered into a Term Loan and Security Agreement of even date herewith (as the same may be amended, restated, supplemented or otherwise modified from time to time as permitted hereunder, the “Term Loan Credit Agreement”) pursuant to which, among other things, Term Loan Lenders have agreed, subject to the terms and conditions set forth in the Term Loan Credit Agreement, to make certain loans and financial accommodations to Borrower.  All of the Obligors’ (as defined below) obligations to the Term Loan Agent and Term Loan Lenders under the Term Loan Credit Agreement and the other Term Loan Financing Documents (as defined below) are secured by the Term Loan Collateral (as defined below).
 
B.             Borrower, Holdco, the other “Loan Parties” party thereto from time to time, Revolving Agent and Revolving Loan Lenders (as defined below) have entered into a Second Amended and Restated Revolving Credit and Security Agreement of even date herewith (as the same may be amended, restated, supplemented or otherwise modified from time to time as permitted hereunder, the “Revolving Loan Credit Agreement”) pursuant to which, among other things, Revolving Loan Lenders have agreed, subject to the terms and conditions set forth in the Revolving Loan Credit Agreement, to make certain revolving loans and financial accommodations available to Borrower.  All of the Obligors’ obligations to the Revolving Agent and Revolving Loan Lenders under the Revolving Loan Credit Agreement and the other Revolving Loan Financing Documents (as defined below) are secured by the Revolving Loan Collateral (as defined below).
 
C .             As an inducement to and as one of the conditions precedent to the agreement of Term Loan Agent and Term Loan Lenders to consummate the transactions contemplated by the Term Loan Credit Agreement, and to the agreement of Revolving Agent and Revolving Loan Lenders to consummate the transactions contemplated by the Revolving Loan Credit Agreement, each of such Persons has required the execution and delivery of this Agreement by the other parties hereto in order to set forth the relative rights and priorities of the Term Loan Creditors and the Revolving Loan Creditors in respect of the Collateral.
 
NOW, THEREFORE , in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows:

 
1.              Definitions .
 
1.1.          UCC Definitions .  The following terms which are defined in Article 9 of the Uniform Commercial Code in effect from time to time in the State of New York are used herein as so defined: Account, Chattel Paper, Commercial Tort Claims, Deposit Account, Documents, General Intangible, Instrument, Inventory, Letter of Credit Rights, Proceeds, Securities Account and Supporting Obligations.
 
1.2.          General Terms .   As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and the plural forms of the terms defined:
 
“Access Period” has the meaning set forth in Section 5(a) .
 
“Access Termination Date” has the meaning set forth in Section 5(a) .
 
“Agent” shall mean either or both of Revolving Agent and Term Loan Agent, as context requires.
 
“Bankruptcy Code” shall mean the provisions of Title 11 of the United States Code, 11 U.S.C. §§101 et   seq .
 
“Borrower” has the meaning set forth in the preamble hereof and includes its successors and assigns, including without limitation, any receiver, trustee or debtor-in-possession on behalf of the Borrower or on behalf of any successor or assign.
 
“Business Day” shall mean any day that is not a Saturday, a Sunday or a day on which commercial banks in Chicago, Illinois or East Brunswick, New Jersey are authorized by law to close.
 
“Cash Management Liabilities” shall have the meaning set forth in the Revolving Loan Credit Agreement.
 
“Collateral” shall mean the Term Loan Collateral and the Revolving Loan Collateral, collectively.
 
“DIP Financing” shall mean financing provided to any Obligor or Obligors as debtor(s)-in-possession (or a trustee appointed on behalf of such Obligor or Obligors) pursuant to Section 364 of the Bankruptcy Code.
 
“Distribution” shall mean, with respect to any indebtedness or obligation, (a) any payment or distribution by any Person of cash, securities or other property, by set-off or otherwise, on account of such indebtedness or obligation or (b) any redemption, purchase or other acquisition of such indebtedness or obligation by any Person.
 
“Documents” shall mean the Term Loan Financing Documents and the Revolving Loan Financing Documents, collectively.
 
2 

 
“Enforcement Action” shall mean, upon the occurrence and during the continuation of an Event of Default, the exercise of remedies by a Secured Creditor consisting of: (i) any action by any Secured Creditor to foreclose on the Lien of such Person in any Collateral, (ii) any action by any Secured Creditor to take possession of, or sell or otherwise realize upon, or to exercise any other rights or remedies with respect to, any Collateral, including, without limitation, a sale or other disposition of any Collateral by an Obligor with the consent of, or at the direction of, a Secured Creditor, including, but not limited to, taking, or directing the disposition of, cash in deposit, securities and other similar accounts, or otherwise exercising control over such accounts, in each case, pursuant to account control agreements, (iii) the taking of any other actions by a Secured Creditor to collect or enforce all or any part of the Obligations payable to such Secured Creditor or any claims in respect thereof against any of any Obligor’s property or assets, including the taking of control or possession of, or the exercise of any right of setoff with respect to, any property or assets of any Obligor or the sale or other disposition of any interest in such property or assets (other than, in each case, as an unsecured creditor of any Obligor), and/or (iv) the commencement by any Secured Creditor of any legal proceedings or actions against or with respect to any of any Obligor’s property or assets or any Collateral to facilitate the actions described in clauses (i), (ii) and (iii) above, including any Insolvency Proceeding and action to have the automatic stay lifted in any Insolvency Proceeding of an Obligor (other than as an unsecured creditor of any Obligor); provided , that none of the following shall be deemed to be an Enforcement Action: (A) the filing of any notice of or voting any claim in any Insolvency Proceeding involving an Obligor as an unsecured creditor thereof or otherwise not initiated or joined in violation of this Agreement, (B) the making of any argument, or the filing of any objection, pleading or motion, by any Secured Creditor to preserve or protect its Lien on the Collateral that is not otherwise in contravention of this Agreement, (C) the establishment of reserves against the Formula Amount (as defined in the Revolving Loan Credit Agreement), excluding assets from the Formula Amount provided for under the Revolving Loan Credit Agreement, or the establishment of other terms or conditions for revolving loans and letters of credit under the Revolving Loan Credit Agreement in accordance with the terms thereof, (D) making a demand for payment or accelerating any indebtedness in accordance with the terms of the applicable Documents, (E) the imposition of a default rate of interest or, subject to the limitations set forth in Section 6.2, increase in “grid” pricing or a late fee, (F) the taking of any action in connection with the verification of Accounts or the attempt to receive, or the receipt of, collections of Accounts by Revolving Agent as contemplated by Section 4.15 of the Revolving Loan Credit Agreement, and (G) the suspension or termination of the commitments to lend under the Revolving Loan Financing Documents, including upon the occurrence of a default or the existence of an overadvance.
 
“Event of Default” shall mean each “Event of Default” or similar term, as such term is defined in any Term Loan Financing Document or any Revolving Loan Financing Document.
 
“Hedge Liabilities” shall have the meaning set forth in the Revolving Loan Credit Agreement.
 
3 

 
“Insolvency Proceeding” shall mean, as to any Obligor, any of the following:  (i) any case or proceeding with respect to such Person under the Bankruptcy Code or any other bankruptcy, insolvency, reorganization or other law affecting creditors’ rights or any other or similar proceedings seeking any stay, reorganization, arrangement, composition or readjustment of the obligations and indebtedness of such Obligor; (ii) any proceeding seeking the appointment of any trustee, receiver, liquidator, custodian or other insolvency official with similar powers with respect to such Obligor or any of its assets; (iii) any proceeding for liquidation, dissolution or other winding up of the business of such Obligor; or (iv) any assignment for the benefit of creditors or any marshaling of assets of such Obligor.
 
“Junior Agent” shall mean (a) with respect to any Revolving Loan Priority Collateral, the Term Loan Agent and (b) with respect to any Term Loan Priority Collateral, the Revolving Agent.
 
“Junior Collateral” shall mean with respect to any Junior Creditor, any Collateral on which it has a Junior Lien.
 
“Junior Creditors” shall mean (a) with respect to the Revolving Loan Priority Collateral, all Term Loan Creditors and (b) with respect to the Term Loan Priority Collateral, all Revolving Loan Creditors.
 
“Junior Documents” shall mean, collectively, with respect to any Junior Obligations, the Documents relating to, or otherwise evidencing, such Junior Obligations.
 
“Junior Liens” shall mean (a) with respect to the Revolving Loan Priority Collateral, all Liens held by any Term Loan Creditor securing the Term Loan Obligations and (b) with respect to the Term Loan Priority Collateral, all Liens held by any Revolving Loan Creditor securing the Revolving Loan Obligations.
 
“Junior Obligations” shall mean (a) with respect to any Revolving Loan Priority Collateral, all Term Loan Obligations and (b) with respect to any Term Loan Priority Collateral, all Revolving Loan Obligations.
 
“Junior Security Documents” shall mean with respect to any Junior Creditor, the Documents that secure the Junior Obligations.
 
“Lien” shall mean any mortgage, deed of trust, pledge, lien (statutory or otherwise), security interest, charge or other encumbrance or security or preferential arrangement of any nature, including any conditional sale or title retention arrangement, any capitalized lease and any assignment, deposit arrangement or financing lease intended as, or having the effect of, security.
 
“Maximum Principal Amount of Revolving Loan Debt” shall mean, as of any date of determination, the sum of (1) the aggregate outstanding principal amount of advances and undrawn face amount of letters of credit made or issued pursuant to the Revolving Loan Financing Documents not exceeding (a) the lesser of (i) 120% of the Formula Amount (as defined in the Revolving Loan Credit Agreement) and (ii) $72,000,000 minus (b) any permanent reductions of the Maximum Revolving Advance Amount (as defined in the Revolving Loan Credit Agreement) (other than any such reduction due to the occurrence of any Insolvency
 
4 

 
Proceeding or due to a refinancing or replacement of the Revolving Loan Credit Agreement), plus (c) protective advances provided for under the Revolving Loan Credit Agreement of up to $2,000,000 in principal amount, plus (d) following the commencement and continuation of any Insolvency Proceeding, 10% of the Maximum Revolving Advance Amount in effect immediately prior to the commencement of such Insolvency Proceeding to the extent such additional amount is used by Revolving Creditors to provide a DIP Financing to the Obligors which is not prohibited by this Agreement plus (2) $2,000,000 in the aggregate with respect to Cash Management Liabilities and Hedge Liabilities.
 
“Maximum Principal Amount of Term Loan Debt” shall mean, as of any date of determination, the aggregate outstanding principal amount of loans (other than payments made in kind) made pursuant to the Term Loan Financing Documents equal to $120,000,000, reduced by the amount of any principal repayments to the extent that such repayments may not be reborrowed.
 
“Obligations” shall mean the Term Loan Obligations and the Revolving Loan Obligations, collectively.
 
“Obligor” shall mean the Borrower, Holdco and each other Person that becomes liable on or in respect of any of the Obligations, and each other Person that has granted a Lien on any Collateral for any Obligations, together with each such Person’s successors and assigns, including a receiver, trustee or debtor-in-possession on behalf of such Person.
 
“Paid in Full” shall mean, with respect to any Obligations, that:  (a) all of such Obligations (other than contingent indemnification obligations as to which no claim has been made) have been, subject only to Section 8.4 below, paid, performed or discharged in full in cash or cash equivalents acceptable to the Secured Creditor to whom such Obligations are owed, (b) no Person has any further right to obtain any loans, letters of credit, bankers’ acceptances, or other extensions of credit under the Documents relating to such Obligations and (c) with respect to the applicable Revolving Loan Obligations, Revolving Agent has received the Required Cash Collateral.
 
“Permitted Collateral Sale” shall mean (i) any sale or other disposition of Collateral permitted under both the Term Loan Credit Agreement and the Revolving Loan Credit Agreement, each as in effect on the date hereof, and (ii) any other sales or dispositions of Collateral permitted by the Term Loan Required Lenders and the Revolving Loan Required Lenders, other than any such sale or disposition occurring or effected under any circumstance or condition described in the definition of the term “Release Event.”
 
“Permitted Reorganization Securities” shall mean any debt or equity securities which are distributed to the Junior Creditors in an Insolvency Proceeding which are subordinated to the Junior Obligations as to Liens and have payment terms no less favorable to the Senior Creditors than the terms of the Junior Obligations related thereto.
 
“Person” shall mean an individual, corporation, partnership, limited liability company, limited liability partnership, association, joint-stock company, trust, unincorporated organization, joint venture, governmental authority or other regulatory body.
 
5 

 
“Pledged Collateral” has the meaning set forth in Section 3.4(a) .
 
“Purchase Notice” has the meaning set forth in Section 6.1 .
 
“Release Documents” has the meaning set forth in Section 6.5 .
 
“Release Event” shall mean (i) the occurrence and continuance of an Event of Default and the taking of any Enforcement Action by the Senior Agent or any Senior Creditor against any Senior Collateral, which such Enforcement Action is conducted in a commercially reasonable manner, or (ii) after the occurrence and during the continuance of an Insolvency Proceeding by or against any Obligor, the entry of an order of the court having jurisdiction over such Insolvency Proceeding authorizing the sale of all or any portion of any Senior Collateral, including, without limitation, any such order entered by a bankruptcy court pursuant to Section 363 or Section 1129 of the Bankruptcy Code authorizing the sale of all or any portion of any Senior Collateral, in each case, which sale has been consented to by the Senior Agent with respect thereto.
 
“Required Cash Collateral” shall mean, as of any date of determination, either (a) cash collateral in the sum of (i) 105% of the maximum undrawn face amount of all letters of credit then outstanding under the Revolving Loan Credit Agreement plus (ii) the lesser of (A) $2,000,000 and (B) the amount determined by Revolving Agent as the exposure of the applicable Revolving Loan Creditors with respect to Cash Management Liabilities and Hedge Liabilities then outstanding under the Revolving Loan Financing Documents or (b) if consented to by Revolving Agent, a stand-by letter of credit in form, and issued by a bank, satisfactory to Revolving Loan Agent in the face amount of the sum set forth in the foregoing clause (a).
 
“Revolving Agent” shall mean PNC Bank, National Association, as Agent under the Revolving Loan Credit Agreement and its successors and assigns in such capacity (including one or more other similar agents or similar contractual representatives for one or more lenders that at any time succeeds to or refinances, replaces or substitutes for any or all of the Revolving Loan Obligations at any time and from time to time).
 
“Revolving Loan Collateral” shall mean all assets and properties of any Obligor or its estate of any kind whatsoever, real or personal, tangible or intangible and wherever located (including any stock, partnership interest, membership interests or other equity securities), whether now owned or hereafter acquired, upon which a Lien is now or hereafter granted or purported to be granted by such Person in favor of any or all of the Revolving Loan Creditors, as security for all or any part of the Revolving Loan Obligations, and the Proceeds (including insurance proceeds) thereof.
 
“Revolving Loan Credit Agreement” has the meaning set forth in the recitals hereto.
 
“Revolving Loan Creditors” shall mean the Revolving Agent, the Revolving Loan Lenders and any other Person holding any portion of the Revolving Loan Obligations, collectively.
 
6 

 
“Revolving Loan Default Notice” shall mean with respect to any Event of Default under the Revolving Loan Financing Documents, a written notice from the Revolving Agent to the Term Loan Agent describing such Event of Default in reasonable detail and stating that the Revolving Agent, or any other applicable Revolving Loan Creditors, intend to take Enforcement Actions with respect thereto.
 
“Revolving Loan Financing Documents” shall mean the Revolving Loan Credit Agreement, all “Other Documents” (as such term is defined in the Revolving Loan Credit Agreement) and all other agreements, documents and instruments at any time executed and/or delivered by any Obligor or any other Person with, to or in favor of the Revolving Loan Creditors in connection therewith or related thereto, including such documents evidencing successive refundings or refinancings of the Revolving Loan Obligations in whole or in part, in each case, as amended, restated, supplemented or otherwise modified from time to time as permitted hereunder.
 
“Revolving Loan Lender” shall mean all lenders from time to time party to the Revolving Loan Credit Agreement in their capacities as such.
 
“Revolving Loan Obligations” shall mean all “Obligations” as defined in the Revolving Loan Credit Agreement, and all other obligations, liabilities and indebtedness of every kind, nature and description owing by the Borrower or any other Obligor to the Revolving Loan Creditors evidenced by or arising under one or more of the Revolving Loan Financing Documents, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including principal, interest, charges, fees, costs, indemnities and reasonable expenses, however evidenced, and whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Revolving Loan Credit Agreement, whether arising before, during or after the commencement of any Insolvency Proceeding with respect to any Obligor (and including the payment of interest, fees, costs, expenses, charges and other amounts which would accrue and become due but for the commencement of such Insolvency Proceeding, but only to the extent such interest is allowed in whole or in part in any such Insolvency Proceeding).
 
“Revolving Loan Priority Collateral” shall mean all Revolving Loan Collateral consisting of Accounts, Inventory, related Documents, Instruments, books and records, Deposit Accounts and Securities Accounts (except to the extent established to hold proceeds of Term Loan Priority Collateral), contracts giving rise to Accounts, Supporting Obligations for Accounts, payment intangibles related to any of the foregoing, claims arising from or with respect to any of the foregoing, and all products and Proceeds (in any form, including insurance proceeds) of any of the foregoing (but excluding any of the foregoing to the extent arising from the sale, lease, license, assignment or other disposition of, or constituting the identifiable Proceeds of, Term Loan Priority Collateral).
 
“Revolving Loan Required Lenders” shall mean “Required Lenders” as such term is defined in the Revolving Loan Credit Agreement except with respect matters requiring the approval of all affected or all Revolving Loan Lenders in accordance with the Revolving Loan Credit Agreement, in which case, Revolving Loan Required Lenders shall mean such affected or all Revolving Loan Lenders.
 
7 

 
“Revolving Loan Termination Date” shall mean the date on which all Revolving Loan Obligations have been Paid in Full.
 
“Revolving Loan Standstill Period” shall mean each period commencing on the date of the occurrence of an Event of Default under any Revolving Loan Financing Document and ending upon the date which is 120 days after the date the Term Loan Agent has received a Revolving Loan Default Notice with respect to such Event of Default.  For the avoidance of doubt, the term “Revolving Loan Standstill Period” shall have no application with respect to, and shall in no way delay, actions taken solely with respect to the Revolving Loan Priority Collateral or which would otherwise constitute Enforcement Actions or other actions taken by Revolving Loan Creditors as unsecured creditors of the Obligors.
 
“Secured Creditors” shall mean the Term Loan Creditors and the Revolving Loan Creditors, collectively.
 
“Senior Agent” shall mean (a) with respect to any Revolving Loan Priority Collateral, the Revolving Agent and (b) with respect to any Term Loan Priority Collateral, the Term Loan Agent.
 
“Senior Collateral” shall mean with respect to any Senior Creditor, any Collateral on which it has a Senior Lien.
 
“Senior Creditors” shall mean (a) with respect to the Revolving Loan Priority Collateral, all Revolving Loan Creditors and (b) with respect to the Term Loan Priority Collateral, all Term Loan Creditors.
 
“Senior Documents” shall mean (a) with respect to Revolving Loan Priority Collateral, all Revolving Loan Financing Documents and (b) with respect to the Term Loan Priority Collateral, the Term Loan Financing Documents.
 
“Senior Liens” shall mean (a) with respect to the Revolving Loan Priority Collateral, all Liens granted to any Revolving Loan Creditor securing the Revolving Loan Obligations and (b) with respect to the Term Loan Priority Collateral, all Liens granted to any Term Loan Creditor securing the Term Loan Obligations.
 
“Senior Loan Termination Date” shall mean with respect to any Senior Obligations, the date on which such Obligations have been Paid In Full.
 
“Senior Obligations” shall mean (a) with respect to any Revolving Loan Priority Collateral, all Revolving Loan Obligations and (b) with respect to any Term Loan Priority Collateral, all Term Loan Obligations.
 
“Senior Security Documents” shall mean with respect to any Senior Creditor, the Documents that secure the Senior Obligations.
 
8 

 
“Standstill Period” shall mean (a) as to any Enforcement Action to be taken by Revolving Agent with respect to Term Loan Priority Collateral, the Revolving Loan Standstill Period and (b) as to any Enforcement Action to be taken by Term Loan Agent with respect to Revolving Loan Priority Collateral, the Term Loan Standstill Period.
 
“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the equity interests having ordinary voting power for the election of directors or other governing body are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.
 
“Term Loan Agent” shall mean Golub Capital LLC, a Delaware limited liability company, in its capacity as Administrative Agent for the Term Loan Lenders under the Term Loan Financing Documents, and its successors and assigns in such capacity (including one or more other similar agents or similar contractual representatives for one or more lenders that at any time succeeds to or refinances, replaces or provides substitute funding for any or all of the Term Loan Obligations at any time and from time to time).
 
“Term Loan Collateral” shall mean all assets and properties of any Obligor or its estate of any kind whatsoever, real or personal, tangible or intangible and wherever located (including any stock, partnership interest, membership interests or other equity securities), whether now owned or hereafter acquired, upon which a Lien is now or hereafter granted or purported to be granted by such Person in favor of any or all of the Term Loan Creditors, as security for all or any part of the Term Loan Obligations, and the Proceeds (including insurance proceeds) thereof.
 
“Term Loan Credit Agreement” has the meaning set forth in the recitals hereof.
 
“Term Loan Creditors” means the Term Loan Agent and the Term Loan Lenders, collectively.
 
“Term Loan Default Notice” means with respect to any Event of Default under the Term Loan Financing Documents, a written notice from the Term Loan Agent to the Revolving Agent describing such Event of Default in reasonable detail and stating that the Term Loan Agent, or any other applicable Term Loan Creditors, intend to take Enforcement Actions with respect thereto.
 
“Term Loan Financing Documents” means the Term Loan Credit Agreement, all “Other Documents” (as such term is defined in the Term Loan Credit Agreement) and all other agreements, documents and instruments at any time executed and/or delivered by any Obligor or any other Person with, to or in favor of the Term Loan Agent or any other Term Loan Creditor in connection therewith or related thereto, including documents evidencing a replacement, substitution, renewal or refinancing of the Term Loan Obligations, in each case, as amended, restated, supplemented or otherwise modified from time to time as permitted hereunder.
 
“Term Loan Lenders” means all lenders from time to time party to the Term Loan Credit Agreement in their capacities as such.
 
9 

 
“Term Loan Obligations” means all obligations, liabilities and indebtedness of every kind, nature and description owing by the Borrower, or any other Obligor to the Term Loan Creditors evidenced by or arising under the Term Loan Financing Documents, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including principal, interest, charges, fees, costs, indemnities and expenses, however evidenced, and whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Term Loan Credit Agreement whether arising before, during or after the commencement of any Insolvency Proceeding with respect to any Obligor (and including the payment of any principal, interest, fees, cost, expenses, charges and other amounts which would accrue and become due but for the commencement of such Insolvency Proceeding but only to the extent that such amounts are allowed in whole or in part in any such Insolvency Proceeding).
 
“Term Loan Priority Collateral” means all Term Loan Collateral other than the Revolving Loan Priority Collateral.
 
“Term Loan Required Lenders” shall mean “Required Lenders” as such term is defined in the Term Loan Credit Agreement except with respect matters requiring the approval of all affected or all Term Loan Lenders in accordance with the Term Loan Credit Agreement, in which case, Term Loan Required Lenders shall mean such affected or all Term Loan Lenders.
 
“Term Loan Standstill Period” means each period commencing on the date of the occurrence of an Event of Default under any Term Loan Financing Document and ending upon the date which is 120 days after the date the Revolving Agent has received a Term Loan Default Notice with respect to such Event of Default.  For the avoidance of doubt, the term “Term Loan Standstill Period” shall have no application with respect to actions taken solely with respect to the Term Loan Priority Collateral or which would otherwise constitute Enforcement Actions or other actions taken by Term Loan Creditors as unsecured creditors of the Obligors.
 
“Term Loan Termination Date” means the date on which all Term Loan Obligations have been Paid in Full.
 
“Trigger Event” has the meaning set forth in Section 6.1 .
 
“UCC” means the UCC as in effect from time to time in the State of New York.
 
1.3.          Certain Matters of Construction .  The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement and section references are to this Agreement unless otherwise specified.  For purposes of this Agreement, the following additional rules of construction shall apply:  (i) wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter; (ii) the term “including” shall not be limiting or exclusive, unless specifically indicated to the contrary; (iii) all references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations; and (iv) unless otherwise specified, all references to any instruments or agreements, including references to any of this Agreement and the Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof, in each case, to the extent permitted under the terms hereof.
 
10 

2.                                       Security Interests; Priorities .
 
2.1.                             Priorities .   The Term Loan Creditors hereby acknowledge that the Revolving Agent has been granted Liens upon the Collateral to secure the Revolving Loan Obligations.  The Revolving Loan Creditors hereby acknowledge that the Term Loan Agent has been granted Liens upon the Collateral to secure the Term Loan Obligations.  Any Senior Lien in respect of any Collateral is and shall be senior and prior to the Junior Lien in respect of such Collateral.  The priorities of the Liens provided in this Section 2.1 shall not be altered or otherwise affected by any amendment, modification, supplement, extension, renewal, restatement, replacement or refinancing of any of the Obligations, nor by any action or inaction which any of the Secured Creditors or any Obligor may take or fail to take in respect of the Collateral.  The priorities given to the Senior Liens pursuant to this Section 2.1 and the terms of this Agreement shall continue to govern the relative rights and priorities of the Liens of the Secured Creditors in and to the Collateral even if all or any part of such Senior Liens are subordinated, avoided, disallowed, unperfected, set aside or otherwise invalidated, whether pursuant to an Insolvency Proceeding, any other judicial proceeding or otherwise, and this Agreement shall be reinstated if at any time any payment of any of the Obligations is rescinded or must be returned by any holder thereof or any representative of such holder in connection with any such Insolvency Proceeding, any other judicial proceeding or otherwise.
 
2.2.                             No Alteration of Priority .   The priorities set forth in this Agreement are applicable irrespective of the order or time of attachment, or the order, time or manner of grant, or the order, time or manner of perfection, or the order or time of filing or recordation of any document or instrument, or other method of perfecting a Lien, if any, in favor of each Secured Creditor in any of the Collateral, or the failure of any Lien granted in any of the Collateral to be perfected, and notwithstanding any conflicting terms or conditions which may be contained in any of the Documents.  Except as to any “Permitted Encumbrance” (as defined in the Senior Documents as in effect on the date hereof) or in connection with any plan in an Insolvency Proceeding which does not conflict with this Agreement and has been duly approved in accordance with the laws governing such Insolvency Proceeding, Senior Agent agrees not to enter into any agreement with another creditor of the Borrower or any Obligor to subordinate the Senior Lien of the Senior Creditors in any Senior Collateral under the Senior Security Documents to the Lien of such other creditor in the Senior Collateral, or to subordinate the right of the Senior Creditors to the payment of the Senior Obligations to the payment of the indebtedness or claim of any other creditor of the Borrower or any Obligor, in each case without the prior written consent of Junior Required Lenders.
 
2.3.                             Perfection .   Except as provided in Section 3.4 , each Secured Creditor shall be solely responsible for perfecting and maintaining the perfection of its Lien in and to each item constituting the Collateral in which such Secured Creditor has been granted a Lien.  The provisions of this Agreement are intended solely to govern the respective Lien priorities as among the Secured Creditors and shall not impose on any Secured Creditor any obligations in
 
11 

 
respect of the disposition of proceeds of any Collateral that would conflict with prior perfected claims therein in favor of any other Person other than the Secured Creditors or any order or decree of any court or governmental authority or any applicable law.  Each Secured Creditor agrees that it will not institute, solicit or join in any contest of the validity, perfection, priority or enforceability of the Liens of the other Secured Creditors in the Collateral.
 
2.4.                             Proceeds of Collateral .   All net proceeds of any Senior Collateral (including insurance proceeds) received by the Junior Agent or any other Junior Creditor in connection with or pursuant to an Enforcement Action, or otherwise in a manner not permitted by the terms of this Agreement, shall be forthwith paid over, in the funds and currency received, to the Senior Agent for application to the Senior Obligations.  All net proceeds of any Senior Collateral received by the Senior Agent after the Senior Loan Termination Date shall be forthwith paid over, in the funds and currency received (with any necessary endorsements), to the Junior Creditors for application to the Junior Obligations.
 
2.5.                             Release of Collateral Upon Permitted Collateral Sale .  The Junior Agent shall at any time in connection with any Permitted Collateral Sale:  (i) upon the request of the Senior Agent with respect to the Senior Collateral subject to such Permitted Collateral Sale, release or otherwise terminate its Liens on such Senior Collateral; (ii) deliver such terminations of financing statements, partial lien releases, mortgage satisfactions and discharges, endorsements, guarantee releases, assignments or other instruments of transfer, termination or release (collectively, “Release Documents”) and take such further actions as the Senior Agent shall reasonably require in order to release and/or terminate such Junior Agent’s Liens on the Senior Collateral subject to such Permitted Collateral Sale; provided , that , if the closing of the sale or disposition of the Senior Collateral is not consummated, the Senior Agent shall promptly return all Release Documents to the Junior Agent; and (iii) be deemed to have consented (along with the other Junior Creditors) under the Junior Documents to such Permitted Collateral Sale free and clear of the Junior Agent’s Liens thereon; provided , that , the Junior Creditors shall, subject to the provisions of Section 4 of this Agreement, retain their rights with respect to the proceeds of such Senior Collateral.
 
2.6.                             Release of Collateral Upon Release Event .   The Junior Agent shall at any time in connection with a Release Event with respect to any Senior Collateral:  (i) upon the request of the Senior Agent with respect to the Senior Collateral subject to such Release Event (which request will generally describe the Senior Collateral to be sold, and, if known to the Senior Agent, specify the proposed terms of the sale and the type and amount of consideration expected to be received in connection therewith, unless such information has already been forwarded to the Junior Agent by the applicable Obligor), release or otherwise terminate its Liens on such Senior Collateral, to the extent such Senior Collateral is to be sold or otherwise disposed of either by (A) the Senior Agent or its agents or representatives, or (B) any Obligor with the consent or at the direction of the Senior Creditors; (ii) be deemed to have consented (along with the other Junior Creditors) under the Junior Documents to such Release Event free and clear of the Junior Agent’s Liens (and waived the provisions of the Junior Documents to the extent necessary to permit such transaction); provided , that , the Junior Creditors shall, subject to the provisions of Section 4 of this Agreement, retain their rights with respect to the proceeds of such Senior Collateral and (iii) the Junior Agent shall deliver such Release Documents and take such
 
12 

 
further actions as the Senior Agent may reasonably require in connection therewith; provided , that , no such release and/or authorization documents shall be required to be delivered (1) to any Obligor or (2) more than two (2) Business Days prior to the date of the closing of such Release Event; provided, further, if the closing of the sale or disposition of the Senior Collateral subject to such Release Event is not consummated, the Senior Agent shall promptly return all Release Documents to the Junior Agent.
 
2.7.                             Power of Attorney .   With respect to any Senior Collateral, Junior Agent hereby irrevocably constitutes and appoints the Senior Agent and any officer of the Senior Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Junior Agent and in the name of the Junior Agent or in the Senior Agent’s own name, from time to time in the Senior Agent’s discretion, for the purpose of carrying out the terms of Sections 2.6 and 2.10 hereof, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of such Sections, including any Release Documents and, in addition, to take any and all other appropriate and commercially reasonable action for the purpose of carrying out the terms of such Sections.  The Junior Agent, as applicable, on behalf of itself and each of the other Junior Creditors, hereby ratifies all that said attorneys shall lawfully do or cause to be done pursuant to the power of attorney granted in this Section 2.7 .  No Person to whom this power of attorney is presented, as authority for the Senior Agent to take any action or actions contemplated hereby, shall be required to inquire into or seek confirmation from the Junior Agent as to the authority of the Senior Agent to take any action described herein, or as to the existence of or fulfillment of any condition to this power of attorney, which is intended to grant to the Senior Agent unconditionally the authority to take and perform the actions contemplated herein.  The Junior Agent, on behalf of itself and each of the other Junior Creditors, irrevocably waives any right to commence any suit or action, in law or equity, against any Person which in good faith acts in reliance upon or acknowledges the authority granted under this power of attorney.
 
2.8.                             Waiver .   Subject to the other terms and conditions of this Agreement, each of the Junior Creditors waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations under the Senior Documents and notice of or proof of reliance by the Senior Creditors upon this Agreement and protest, demand for payment or notice except to the extent otherwise specified herein.  Each of the Junior Creditors acknowledges and agrees the Senior Creditors have relied upon the Lien priority and other provisions hereof in entering into the Senior Documents and in making funds available the Borrower thereunder.  The Senior Agent acknowledges and agrees the Junior Creditors have relied upon the lien priority and other provisions hereof in entering into the Junior Documents and in making funds available to the Borrower thereunder.
 
2.9.                             Notice of Interest In Collateral .   This Agreement is intended, in part, to constitute an authenticated notification of a claim by each Agent to the other Agent of an interest in all or a portion of the Collateral in accordance with the provisions of Sections 9-611 and 9-621 of the UCC.
 
13 

 
2.10.                      Insurance Matters .   Until the Senior Obligations have been Paid in Full, the Senior Agent shall have the sole and exclusive right, as against the Junior Creditors, to adjust settlement of insurance claims in a commercially reasonable manner in the event of any covered loss, theft or destruction of any Senior Collateral.  All proceeds of such insurance shall be applied as set forth in Section 4 .  The Junior Creditors shall cooperate (if necessary) in a reasonable manner in effecting the payment of insurance proceeds to the holders of Senior Obligations (or any representative thereof), including without limitation, providing any necessary endorsements.  In the event the Senior Documents as in effect on the date hereof permits any Obligor to utilize the proceeds of insurance to replace Senior Collateral, the Junior Creditors shall be deemed to have consented to such use of proceeds.
 
2.11.                      Similar Liens and Agreements .   The parties hereto agree, subject to the other provisions of this Agreement:
 
(a)                                  upon request by the Term Loan Agent or the Revolving Agent, to cooperate in good faith (and to direct their counsel to cooperate in good faith) from time to time in order to determine the specific items included in the Collateral and the steps taken to perfect their respective Liens thereon and the identity of the respective parties obligated under the Term Loan Financing Documents and the Revolving Loan Financing Documents;
 
(b)                                  that the provisions of the documents and agreements creating or evidencing the granting of Liens in Collateral securing the Term Loan Obligations and the Revolving Loan Obligations shall be in all material respects the same form other than with respect to the priority of the Obligations thereunder; and
 
(c)                                   notwithstanding this Section 2.11 , the parties hereto agree that any failure by any party to comply with this Section 2.11 shall not impair or alter the priorities or rights of the parties hereto with respect to the other terms and conditions of this Agreement.
 
2.12.                      No New Liens .   The parties hereto agree that no additional Liens shall be granted or permitted on any asset of the Borrower or any other Obligor to secure any Obligation unless each Agent shall have been afforded the opportunity to, immediately after giving effect to such grant or concurrently therewith, also receive a Lien on such asset to secure its Obligations (with the priorities set forth in this Agreement and, in any event, subject to all of the terms and provisions of this Agreement).  To the extent that the foregoing provisions are not complied with for any reason, without limiting any other rights and remedies available to any Person, the parties hereto hereby agree that (a) the Secured Creditor holding such Lien on such asset shall be deemed to be holding such Lien for the benefit of the other Secured Creditors as a non-fiduciary agent for such other Secured Creditors in order to ensure the creation and perfection of such Lien on such assets as Collateral for the Obligations of such other Secured Creditors and (b) amounts received by or distributed to any of them pursuant to or as a result of Liens granted in contravention of this Section 2.12 shall be subject to Section 4 .
 
14 

 
3.                                       Enforcement of Security .
 
3.1.                             Management of Collateral .  Subject to the other terms and conditions of this Agreement, the Senior Creditors shall have the exclusive right, in accordance with applicable law, to manage, perform and enforce the terms of the Senior Documents with respect to the Senior Collateral, to exercise and enforce all privileges and rights thereunder according to their discretion and the exercise of their sole business judgment, including the exclusive right to take or retake control or possession of the Senior Collateral and to hold, prepare for sale, process, sell, lease, dispose of, or liquidate the Senior Collateral and to incur expenses in connection with such sale or disposition and to exercise all the rights and remedies of a secured lender under the UCC of any applicable jurisdiction.  In conducting any public or private sale under the UCC, the Senior Agent shall give the Junior Agent such notice of such sale as may be required by the applicable UCC; provided , however , ten (10) days prior written notice shall be deemed to be commercially reasonable notice.  Junior Agent hereby agrees it shall not, directly or indirectly, take any Enforcement Actions with respect to any Senior Collateral during any Standstill Period and Term Loan Agent hereby agrees any Enforcement Action taken by Term Loan Agent or any other Term Loan Creditor with respect to Term Loan Priority Collateral during the Access Period shall be subject to, and shall not materially interfere with, Revolving Agent’s rights under Section 5 .  Subject at all times to the provisions of Section 2 and Section 6.4 , upon the expiration of the applicable Standstill Period, the Junior Agent may take any Enforcement Action with respect to Senior Collateral; provided , the Junior Agent may not take Enforcement Actions even after the expiration of the Standstill Period so long as either (a) the Senior Agent is pursuing diligently and in good faith an Enforcement Action with respect to any material portion of the Senior Collateral, or diligently attempting in good faith to vacate any stay prohibiting such an Enforcement Action or (b) an Insolvency Proceeding is continuing.  Subject at all times to the provisions of Section 2 and to the preceding sentence, if the Junior Agent commences any Enforcement Action with respect to any Senior Collateral after the Standstill Period and upon not less than ten (10) days prior written notice to Senior Agent of such intended Enforcement Action (which notice may be given during the Standstill Period) against Senior Collateral with respect to all or any material portion of the Senior Collateral, then the Senior Agent shall not take any Enforcement Action of a similar nature with respect to such Senior Collateral so long as (i) the Junior Agent is diligently pursuing in good faith such Enforcement Action and (ii) the cash proceeds from such Enforcement Action are applied in accordance with Section 4 hereof.
 
3.2.                             Notices of Default .   Each Agent shall give to the other Agent (or the agent therefor) concurrently with the giving thereof to any Obligor (i) a copy of any written notice by such Agent of an Event of Default under any of its Documents or a written notice of acceleration of the Obligations and demand for payment thereof by any Obligor, and (ii) a copy of any written notice sent by such Agent to any Obligor stating such Agent’s intention to take any Enforcement Actions with respect to all or any portion of the Collateral; provided , that , except for notices expressly required to be provided by an Agent to another Agent under any other section of this Agreement or applicable law (a) no Agent shall have any obligation to provide any such notice which, in the good faith judgment of such Agent, would result in the breach of any confidentiality provisions binding on such Agent or would be prejudicial or otherwise adverse to the interests of the Secured Creditors it is acting for, (b) no Agent shall have any liability whatsoever for the failure to provide any such notice, and (c) failure to provide such notice shall not affect the validity or effectiveness of any such notice as against any Obligor.  Each Agent will provide such information as it may have to the other as the other Agent may from time to time reasonably request concerning the status of the exercise of any Enforcement Action; provided , that (a) no Agent shall have any obligation to provide any information which, in the good faith
 
15 

 
judgment of such Agent, would result in the breach of any confidentiality provisions binding on such Agent or would be prejudicial or otherwise adverse to the interests of the Secured Creditors it is acting for, (b) no Agent shall have any liability whatsoever for the failure to provide any such information and (c) failure to provide such information shall not affect the validity or effectiveness of any action taken by Agent against any Obligor or Collateral.
 
3.3.                             Permitted Actions .   Nothing in this Agreement shall be construed to limit or impair in any way:  (i) the right of any Secured Creditor to bid for or purchase Collateral at any private or judicial foreclosure upon such Collateral initiated by any Secured Creditor, (ii) the right of any Secured Creditor to join (but not control) any foreclosure or other judicial lien enforcement proceeding with respect to the Senior Collateral initiated by another Secured Creditor for the sole purpose of protecting such Secured Creditor’s Lien on the Senior Collateral, so long as it does not delay or interfere with the exercise by such other Secured Creditor of its rights under this Agreement, the Documents and under applicable law, (iii) any right of the Junior Creditors to receive any remaining proceeds of Senior Collateral after the Senior Obligations have been Paid in Full, (iv) any right the Junior Creditors may have as unsecured creditors against any of the Borrower and other Obligors in accordance with the Junior Documents and applicable law (for purposes hereof, the rights of an unsecured creditor do not include a creditor that holds a judgment lien), or (v) any right the Senior Creditors may have as unsecured creditors against any of the Borrower and other Obligors in accordance with the Senior Documents or applicable law.
 
3.4.                             Collateral In Possession; Deposit and Securities Accounts .
 
(a)                                  Each Secured Creditor agrees to hold any Collateral that can be perfected by the possession or control (within the meaning of the UCC) of such Collateral or of any deposit, securities or other similar account in which such Collateral is held, and if such Collateral or any such account is in fact in the possession or under the control of a Secured Creditor, or of agents or bailees of such Secured Creditor (such Collateral being referred to herein as the “Pledged Collateral”) as bailee and agent for and on behalf of the other Secured Creditors solely for the purpose of perfecting the security interest granted to the other Secured Creditors in such Pledged Collateral (including, but not limited to, any securities or any deposit accounts or securities accounts, if any) pursuant to the Revolving Loan Financing Documents or Term Loan Financing Documents, as applicable, subject to the terms and conditions of this Agreement.  Prior to the Revolving Loan Termination Date, any Collateral (other than Term Loan Priority Collateral) in the possession or under the control of any Term Loan Creditor shall be forthwith delivered to the Revolving Agent, except as otherwise may be required by applicable law or court order. Prior to the Term Loan Termination Date, any Collateral (other than Revolving Loan Priority Collateral) in the possession or under the control of any Revolving Loan Creditor shall be forthwith delivered to the Term Loan Agent, except as otherwise may be required by applicable law or court order.
 
16 

 
(b)                                  Until the Revolving Loan Termination Date has occurred, the Revolving Loan Creditors shall be entitled to deal with the Pledged Collateral consisting of Revolving Loan Priority Collateral in accordance with the terms of the Revolving Loan Financing Documents as if the Liens of the Term Loan Agent did not exist. The rights of the Term Loan Agent under this Section 3.4 shall at all times be subject to the terms of this Agreement and to the Revolving Loan Creditors’ rights under the Revolving Loan Financing Documents.  Until the Term Loan Termination Date has occurred, the Term Loan Creditors shall be entitled to deal with the Pledged Collateral consisting of Term Loan Priority Collateral in accordance with the terms of the Term Loan Financing Documents as if the Liens of the Revolving Agent did not exist. The rights of the Revolving Agent under this Section 3.4 shall at all times be subject to the terms of this Agreement and to the Term Loan Creditors’ rights under the Term Loan Financing Documents.
 
(c)                                   Each Secured Creditor shall have no obligation whatsoever to the other Secured Creditors to assure that the Pledged Collateral is genuine or owned by any of the Obligors or to preserve rights or benefits (including perfection of any Lien) of any Person except as expressly set forth in this Section 3.4 . The duties or responsibilities of each Secured Creditor under this Section 3.4 shall be limited solely to holding the Pledged Collateral as bailee and agent for and on behalf of the other Secured Creditors for purposes of perfecting the Lien held by such other Secured Creditors.
 
(d)                                  Each Secured Creditor shall not have by reason of the Revolving Loan Financing Documents, the Term Loan Financing Documents or this Agreement or any other document a fiduciary relationship in respect of the other Secured Creditors and shall not have any liability to the other Secured Creditors in connection with its holding the Pledged Collateral, other than for its gross negligence or willful misconduct as determined by a final, non-appealable order of a court of competent jurisdiction.
 
(e)                                   Revolving Agent agrees that (i) in connection with any Pledged Collateral consisting of Deposit Accounts, Securities Accounts or similar Collateral for which perfection is obtained by control (within the meaning of the UCC) which is under Revolving Agent’s control, upon Revolving Agent’s receipt of a Term Loan Default Notice, Revolving Agent shall, at the request of Term Loan Agent, instruct the depository bank, securities intermediary or other financial institution where such account is maintained to remit funds or other Pledged Collateral in such accounts consisting of identifiable Term Loan Priority Collateral (or Proceeds thereof) to Term Loan Agent to be applied in accordance with Section 4 .
 
(f)                                    Term Loan Agent agrees that in connection with any Pledged Collateral consisting of Deposit Accounts, Securities Accounts or similar Collateral for which perfection is obtained by control (within the meaning of the UCC) which is under Term Loan Agent’s control, upon Term Loan Agent’s receipt of a Revolving Loan Default Notice, Term Loan Agent shall, at the request of Revolving Agent, instruct the depository bank, securities intermediary or other financial institution where such account is maintained to remit funds or other Pledged Collateral in such accounts consisting of identifiable Revolving Loan Priority Collateral (or Proceeds thereof) to Revolving Agent to be applied in accordance with Section 4 .
 
17 

 
(g)                                   Upon the Revolving Loan Termination Date, to the extent permitted under applicable law, upon the request of the Term Loan Agent, the Revolving Agent shall, without recourse or warranty, transfer the possession and control of the Pledged Collateral, if any, then in its possession or control to Term Loan Agent, except in the event and to the extent (i) the Revolving Loan Creditors have retained or otherwise acquired such Collateral in full or partial satisfaction of any of the Revolving Loan Obligations and otherwise not in contravention of this Agreement, (ii) such Collateral is sold or otherwise disposed of free of Term Loan Agent’s Liens thereon by Revolving Loan Creditors or by an Obligor as provided herein or (iii) they are required to do otherwise by any order of any court or other governmental authority or applicable law. The foregoing provision shall not impose on Revolving Loan Creditors any obligations which would conflict with prior perfected claims therein in favor of any other Person or any order or decree of any court or other governmental authority or any applicable law.  In connection with any transfer described herein to Term Loan Agent, Revolving Agent agrees to take reasonable actions in its power (with all reasonable costs and expenses in connection therewith to be for the account of the Term Loan Creditors and to be paid by Borrower) as shall be reasonably requested by the Term Loan Agent to permit the Term Loan Agent to obtain, for its benefit and the benefit of the Term Loan Creditors, a first priority perfected security interest in such Pledged Collateral.
 
(h)                                  Upon the Term Loan Termination Date, to the extent permitted under applicable law, upon the request of Revolving Agent, the Term Loan Agent shall, without recourse or warranty, transfer the possession and control of the Pledged Collateral, if any, then in its possession or control to Revolving Agent, except in the event and to the extent (i) the Term Loan Creditors have retained or otherwise acquired such Collateral in full or partial satisfaction of any of the Term Loan Obligations and otherwise not in contravention of this Agreement, (ii) such Collateral is sold or otherwise disposed of free of Revolving Agent’s Liens by Term Loan Creditors or by an Obligor as provided herein or (iii) they are required to do otherwise by any order of any court or other governmental authority or applicable law.  The foregoing provision shall not impose on Term Loan Creditors any obligations which would conflict with prior perfected claims therein in favor of any other Person or any order or decree of any court or other governmental authority or any applicable law.  In connection with any transfer described herein to Revolving Agent, Term Loan Agent agrees to take reasonable actions in its power (with all reasonable costs and expenses in connection therewith to be for the account of the Revolving Loan Creditors, to be due and payable by Borrower and constitute Revolving Loan Obligations) as shall be reasonably requested by the Revolving Agent to permit the Revolving Agent to obtain a first priority security interest in such Pledged Collateral.
 
3.5.                             Waiver of Marshaling and Similar Rights .   Each Secured Creditor, to the fullest extent permitted by applicable law, waives as to each other Secured Creditor any requirement regarding, and agrees not to demand, request, plead or otherwise claim the benefit of, any marshaling, appraisement, valuation or other similar right that may otherwise be available under applicable law.
 
18 

 
3.6.                             Effect of Default Waiver .  In the event that any Term Loan Default shall have occurred solely as a result of a Revolving Default, and if such Revolving Default shall have been cured by any Borrower or any Obligor or waived by the Revolving Agent or the Revolving Lender (as applicable), then (i) such Term Loan Default shall be deemed to be automatically cured by the Borrowers or such Obligor or waived by the Term Loan Agent and the Term Loan Lenders, as the case may be, and (ii) any period under Section 2.7 commenced solely on the basis of such Revolving Default and then in existence shall terminate (unless at such time the Term Loan Agent and the Term Loan Lenders shall be entitled to commence such a period on the basis of any other Term Loan Default) for all purposes hereunder and the Term Loan Agent and the Term Loan Lenders shall cease any remedial actions commenced and then continuing in connection with such Term Loan Default.  In the event that any Revolving Default shall have occurred solely as a result of a Term Loan Default, and if such Term Loan Default shall have been cured by any Borrower or any Obligor or waived by the Term Loan Agent or the Term Loan Lenders (as applicable), then (i) such Revolving Default shall be deemed to be automatically cured by the Borrowers or such Obligor or waived by the Revolving Agent and the Revolving Lenders, as the case may be, and (ii) any period under Section 2.7 commenced solely on the basis of such Term Loan Default and then in existence shall terminate (unless at such time the Revolving Lender shall be entitled to commence such a period on the basis of any other Revolving Default) for all purposes hereunder and the Revolving Lender shall cease any remedial actions commenced and then continuing in connection with such Revolving Default.
 
4.                                       Application of Proceeds of Senior Collateral .  The Senior Agent and Junior Agent hereby agree that, as between the Senior Creditors, on the one hand, and the Junior Creditors, on the other hand, all Senior Collateral, and all Proceeds thereof, received by any of them in connection with any Enforcement Action, Release Event, Permitted Collateral Sale, Insolvency Proceeding or any other collection, sale or disposition of any Senior Collateral made by or at the direction of any Secured Creditor shall be applied as follows (and the Senior Agent agrees to remit promptly to the Junior Agent any Senior Collateral and Proceeds necessary to effect such application):
 
(i)                                      first , to the payment of costs and expenses (including reasonable attorneys fees and expenses and court costs) of the Senior Agent in connection with such Enforcement Action, Release Event, Permitted Collateral Sale or Insolvency Proceeding,
 
(ii)                                   second , to the permanent repayment of the Senior Obligations in accordance with (and to the extent at such time required by) the Senior Documents until the Senior Loan Termination Date; provided that , (A) with respect to the Revolving Loan Obligations, (w) amounts shall be applied thereto in the order of priority set forth in Section 11.5 of the Revolving Loan Credit Agreement as in effect on the date hereof or as may from time to time thereafter be modified in a manner that is not adverse to the Term Loan Creditors, (x) amounts applied to the principal balance of revolving advances shall be accompanied by a permanent reduction to the Maximum Revolving Advance Amount and related commitments of the Revolving Loan Lenders under the Revolving Loan Credit Agreement, (y) cash collateral shall not exceed the
 
19 

 
Required Cash Collateral Amount and (z) any (1) principal balance of the Revolving Loan Obligations in excess of the applicable components of the Maximum Principal Amount of Revolving Loan Debt and (2) any other Revolving Loan Obligations remaining outstanding after giving effect to the entirety of this proviso, shall not be deemed to constitute Senior Obligations for purposes of this clause (ii) and instead shall be paid pursuant to clause (iv) below and (B) any principal balance of the Term Loan Obligations in excess of the Maximum Principal Amount of Term Loan Debt shall not be deemed to constitute Senior Obligations for purposes of this clause (ii) and instead shall be paid pursuant to clause (iv) below,
 
(iii)                                third , to the payment of the Junior Obligations in accordance with (and to the extent at such time required by) the Junior Documents, and
 
(iv)                               fourth , the balance, if any, to the Obligors or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.
 
5.                                       Access Rights .
 
(a)                                  As between the Revolving Agent and the Term Loan Agent, the Revolving Agent may enter upon any real property of an Obligor, whether leased or owned, and without obligation to pay rent or compensation to the Term Loan Creditors, may use (at Revolving Agent’s sole expense) any of the Term Loan Priority Collateral to collect Accounts and remove, sell or otherwise dispose of any of the Revolving Loan Priority Collateral until the date (as such date may be extended pursuant to the last sentence of this Section 5(a) , the “Access Termination Date”) that is 120 days after the earlier to occur of (i) the date of receipt by the Revolving Agent of a Term Loan Default Notice and (ii) the date Revolving Agent is first entitled to exercise remedies with respect to the Revolving Loan Priority Collateral (such 120-day period, as same may be extended pursuant to the last sentence of this Section 5(a) , the “Access Period”); provided that (v) in connection with such use of Term Loan Priority Collateral, the Term Loan Creditors shall have no responsibility for payment of any, and the Revolving Agent shall pay all, utilities, taxes, insurance and other operating costs of such usage of (1) any leased or owned real property of an Obligor subject to a mortgage in favor of the Term Loan Agent and (2) any other real property, to the extent the landlord thereof may require such payments during Revolving Agent’s access and use of such real property and failure by Revolving Agent to make such payments would be prejudicial to the Term Loan Agent’s interest in the Term Loan Collateral or it’s rights to also access such real property, (w) to the extent the Term Loan Creditors shall not have been indemnified by the Obligors, Revolving Agent shall indemnify (it being understood that any amounts expended are for the account of the Borrower and shall constitute Revolving Loan Obligations) the Term Loan Creditors against third party claims resulting from such usage, including, but not limited to, claims that such Term Loan Priority Collateral was used or otherwise dealt with by Revolving Agent in violation of applicable law, (x) the Revolving Agent shall, to the extent not provided by the Obligors, provide the Term Loan Agent with evidence of
 
20 

the continued effectiveness of the Obligors’ casualty and liability insurance as to the Term Loan Priority Collateral used by Reveling Agent which consists of leased or owned real property of an Obligor subject to a mortgage in favor of the Term Loan Agent, which such insurance shall satisfy the applicable requirements therefor set forth in the Term Loan Credit Agreement, (y) Revolving Agent shall reimburse (it being understood that any amounts expended are for the account of the Borrower and shall constitute Revolving Loan Obligations) Term Loan Agent, on demand, for the cost and expense to repair any physical damage to the Term Loan Priority Collateral (ordinary wear and tear excepted) to the extent directly caused by the Revolving Agent or its agents or designees and to the extent insurance proceeds are not otherwise available to reimburse Term Loan Agent for such damage and (z) no Term Loan Priority Collateral may be removed from the premises at which such Term Loan Priority Collateral was theretofore located without the prior written consent of the Term Loan Agent.  In the event that Revolving Agent is unable to exercise its rights as a secured creditor as a result of any stay in any Insolvency Proceeding or of any temporary restraining order or preliminary injunction with respect to any Obligor, any Revolving Loan Collateral or Revolving Agent, such Access Period shall be extended by the number of days that the Revolving Agent’s or its designees’ access to the Revolving Loan Collateral has been prevented.
 
(b)                                  In the event that Revolving Agent shall, in the exercise of its rights under the Revolving Loan Financing Documents, as the case may be, or otherwise, receive and retain possession or control of any books and records of any Obligor which contain information identifying or pertaining to the Term Loan Priority Collateral, Revolving Agent shall, upon request from the Term Loan Agent (at the Term Loan Agent’s expense) and as promptly as practicable thereafter, either make available to the Term Loan Agent such books and records for inspection and duplication or provide copies thereof.  In the event that Term Loan Agent shall, in the exercise of its rights under the Term Loan Financing Documents, as the case may be, or otherwise, receive and retain possession or control of any books and records of any Obligor which contain information identifying or pertaining to the Revolving Loan Priority Collateral, Term Loan Agent shall, upon request from the Revolving Agent (at the Revolving Agent’s expense) and as promptly as practicable thereafter, either make available to the Revolving Agent such books and records for inspection and duplication or provide copies thereof.
 
(c)                                   The Term Loan Agent, for itself and each of the Term Loan Creditors, hereby grants in favor of the Revolving Agent, a nonexclusive right to use, license and/or sublicense any now existing or hereafter acquired Term Loan Priority Collateral consisting of intellectual property, including trademarks and trade names, during the Access Period for the purpose of enabling the Revolving Agent to assemble, prepare for sale, advertise, market and dispose of any and all Revolving Loan Priority Collateral, wherever such Revolving Loan Priority Collateral may be located, including the license and right to access all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof.  The license and right herein shall continue in full force and effect as a burden on the Term Loan Priority Collateral until the earlier to occur of (i) expiration of the Access Period and (ii) the date all Revolving Loan Priority Collateral has been sold, transferred
 
21 

 
or otherwise disposed of (at which time such license and right contemplated hereon shall immediately terminate without any further action required of any party hereto) notwithstanding (x) any exercise of remedies by the Term Loan Creditors with respect to any Term Loan Priority Collateral or (y) any voluntary or involuntary transfer or assignment of any of such Term Loan Priority Collateral consisting of intellectual property or any rights therein (whether by any Obligor, by any Term Loan Creditor or otherwise).  This license right shall inure to the benefit of the Revolving Agent and its successors, assigns and transferees, whether by voluntary conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of foreclosure or otherwise.  Such license right is granted free of charge, without requirement that any monetary payment whatsoever including, without limitation, any royalty or license fee, be made to the applicable Term Loan Creditors or any other Person by the Revolving Agent or any other Person.  The Term Loan Agent, for itself and each of the Term Loan Creditors, agrees not to interfere, hinder, restrict or delay the exercise by the Revolving Agent of any such license and right granted herein during the effectiveness thereof and agrees to execute such documentation and complete such other acts as may reasonably be required by the Revolving Agent to provide Revolving Agent with the license and right contemplated herein.
 
(d)                                  The rights and remedies of the Revolving Agent in this Section 5 are in addition to and not in limitation of the rights and remedies under the Revolving Loan Financing Documents or applicable law.  The provisions of this Section 5 are agreed to solely as among Term Loan Agent and Revolving Agent and shall not be deemed to limit, expand or otherwise modify any rights granted by any Obligor to any Revolving Loan Creditor or Term Loan Creditor under any of the Documents, as applicable.
 
6.                                       Covenants .
 
6.1.                             Amendment of Term Loan Financing Documents .  Term Loan Creditors may at any time and from time to time and without consent of or notice to any Revolving Loan Creditor, without incurring any liability to any Revolving Loan Creditor and without impairing or releasing any rights or obligations hereunder or otherwise, amend, restate, supplement or otherwise modify any or all of the Term Loan Financing Documents; provided , however, without the consent of Revolving Loan Required Lenders or the Revolving Agent (with the consent of Revolving Loan Required Lenders), the Term Loan Creditors shall not amend, restate, supplement or otherwise modify any or all of the Term Loan Financing Documents to (i) increase any interest rate margins (or, as applicable, any interest rate floors) in respect of Term Loan Obligations by more than 2.50% per annum above the interest rate margins (or, as applicable, interest rate floors) set forth in the Term Loan Credit Agreement as in effect on the date hereof (excluding fluctuations in underlying rate indices and the imposition of a 2.0% per annum default rate), (ii) shorten the final scheduled maturity of the Term Loan Obligations or otherwise modify the amortization schedule with respect to the repayment of the principal balance of the Term Loan Obligations or the calculation or other requirements in connection with the excess cash flow sweep and related mandatory prepayment required pursuant to the Term Loan Financing Documents, in each case, in a manner adverse to Borrower, (iii) modify or add any covenant, condition or event of default under the Term Loan Financing Documents which
 
22 

 
directly restricts one or more Obligors from making payments under the Revolving Loan Financing Documents which would otherwise be permitted under the Term Loan Financing Documents as in effect on the date hereof, (iv) increase the principal amount of the loans constituting Term Loan Obligations to an amount in excess of the Maximum Principal Amount of Term Loan Debt or (v) modify or add any covenant, condition or event of default under the Term Loan Financing Documents in a manner adverse to any Obligor except to the extent the Revolving Creditors shall be afforded the opportunity to make a confirming modification or addition to the applicable Revolving Loan Financing Document.
 
6.2.                             Amendments to Revolving Loan Financing Documents .   Revolving Loan Creditors may at any time and from time to time and without consent of or notice to any Term Loan Creditor, without incurring any liability to any Term Loan Creditor and without impairing or releasing any rights or obligations hereunder or otherwise, amend, restate, supplement or otherwise modify any or all of the Revolving Loan Financing Documents; provided , however, without the consent of the Term Loan Required Lenders, the Revolving Loan Creditors shall not amend, restate, supplement or otherwise modify any or all of the Revolving Loan Financing Documents to (i) increase the interest rate margins (or, as applicable, any interest rate floors) in respect of Revolving Loan Obligations by more than 2.50% per annum above the interest rate margins (or, as applicable, interest rate floors) set forth in the Revolving Loan Credit Agreement as in effect on the date hereof (excluding fluctuations in underlying rate indices, fluctuations based on the pricing grid set forth in the Revolving Loan Credit Agreement and the imposition of a 2.0% per annum default rate), (ii) shorten the final scheduled maturity of the Revolving Loan Obligations, (iii) alter the definition of Formula Amount in a manner that increases the stated advance rates against Eligible Accounts or Eligible Inventory (as such terms are defined in the Revolving Loan Credit Agreement) as set forth therein on the date hereof, (iv) increase the commitments to lend under the Revolving Loan Credit Agreement in excess of, or otherwise cause the aggregate outstanding principal balance of the Revolving Loan Obligations to exceed the applicable components of the definition of Maximum Principal Amount of Revolving Loan Debt, (v) modify or add any covenant, condition or event of default under the Revolving Loan Financing Documents which directly restricts one or more Obligors from making payments under the Term Loan Financing Documents which would otherwise be permitted under the Revolving Loan Financing Documents as in effect on the date hereof or (vi) modify or add any covenant, condition or event of default under the Revolving Loan Financing Documents in a manner adverse to any Obligor except to the extent the Term Loan Creditors shall be afforded the opportunity to make a confirming modification or addition to the applicable Term Loan Financing Document.
 
6.3.                             [Reserved].
 
6.4.                             Enforcement Actions by the Junior Creditors .   Junior Agent shall give the Senior Agent (i) at least ten (10) days written notice prior to taking any Enforcement Action with respect to the Senior Collateral, which notice may be given during the pendency of any Standstill Period, and (ii) prior written notice of any action or commencement of proceedings which constitute “Enforcement Actions” in all respects.
 
23 

 
6.5.                             Turnover .
 
(a)                                  Any prepayments of principal or payments of interest on the Junior Obligations not permitted to be accepted by any Junior Creditor under this Agreement but so received shall be forthwith paid over, in the funds and currency received, if any, by each such Junior Creditor to the Senior Agent for application against the Senior Obligations.
 
(b)                                  So long as the Revolving Loan Termination Date has not occurred, whether or not any Insolvency Proceeding has been commenced by or against any Obligor, Term Loan Agent agrees, for itself and on behalf of the other Term Loan Creditors, that any Revolving Loan Priority Collateral or Proceeds thereof or payment with respect thereto received by a Term Loan Creditor as a result of an Enforcement Action (including any right of set-off) with respect to such Collateral, and including in connection with any insurance policy claim or any condemnation award (or deed in lieu of condemnation) with respect to Revolving Loan Priority Collateral, shall be promptly transferred or paid over to the Revolving Agent for the benefit of the Revolving Loan Creditors in the same form as received, with any necessary endorsements or assignments or as a court of competent jurisdiction may otherwise direct, for application to the Revolving Loan Obligations and Term Loan Obligations in accordance with Section 4 .  Revolving Agent is hereby authorized to make any such endorsements or assignments as agent for the Term Loan Creditors.  This authorization is coupled with an interest and is irrevocable.
 
(c)                                   So long as the Term Loan Termination Date has not occurred, whether or not any Insolvency Proceeding has been commenced by or against any Obligor, the Revolving Agent agrees that any Term Loan Priority Collateral or Proceeds thereof or payment with respect thereto received by such a Revolving Loan Creditor as a result of an Enforcement Action (including any right of set-off) with respect to such Collateral, and including in connection with any insurance policy claim or any condemnation award (or deed in lieu of condemnation) with respect to Term Loan Priority Collateral, shall be promptly transferred or paid over to the Term Loan Agent for the benefit of the Term Loan Creditors in the same form as received, with any necessary endorsements or assignments or as a court of competent jurisdiction may otherwise direct, for application to the Term Loan Obligations and Revolving Loan Obligations in accordance with Section 4 .  Term Loan Agent is hereby authorized to make any such endorsements or assignments as agent for the Revolving Loan Creditors.  This authorization is coupled with an interest and is irrevocable.
 
(d)                                  Nothing in this Agreement shall prohibit the receipt by any Secured Creditor of the payments of interest and payments of principal required under the Documents (as in effect as of the date hereof or modified in accordance with the terms of this Agreement) so long as such receipt is not the direct or indirect result of an Enforcement Action against Collateral in contravention of this Agreement; provided, however, that Revolving Agent, on behalf of itself and the other Revolving Loan Creditors, hereby acknowledge and agree that (i) Revolving Loan Creditors shall not accept or retain a voluntary prepayment of the Revolving Loan Obligations that is made with the proceeds of Term Loan Priority Collateral that are required to be used to make a
 
24 

 
mandatory prepayment of the Term Loan Obligations in accordance with the terms of the Term Loan Credit Agreement (and Revolving Loan Creditors shall promptly remit such proceeds to the Term Loan Agent for application to the Term Loan Obligations) and (ii) Term Loan Creditors shall not accept or retain a voluntary prepayment of the Term Loan Obligations that is made with the proceeds of Revolving Loan Priority Collateral that are required to be used to make a mandatory prepayment (including payments required under Section 4.15(h) of the Revolving Loan Credit Agreement) of the Revolving Loan Obligations in accordance with the terms of the Revolving Loan Credit Agreement (and Term Loan Creditors shall promptly remit such proceeds to the Revolving Agent for application to the Revolving Loan Obligations), except to the extent the Revolving Loan Creditors shall have waived such mandatory prepayment in writing.
 
7.                                       Term Loan Lenders Purchase Option .
 
7.1.                             Purchase Notice .   Within ten (10) Business Days after (i) each date, if any, that the Revolving Agent delivers a notice to the Term Loan Agent stating that an Event of Default has occurred and is continuing under the Revolving Loan Credit Agreement due to the Borrower’s failure to timely pay principal or interest thereunder or that any of the Revolving Loan Creditors intend to (x) commence an Enforcement Action (it being agreed to and understood that Revolving Loan Creditors shall be obligated to deliver to Term Loan Agent a notice that they intend to commence an Enforcement Action with respect to all or any portion of the Revolving Loan Collateral) no less than five (5) days prior to the actual commencement of such Enforcement Action, which notice shall be deemed timely given if given in accordance with Section 3.1(b) or any other provision of this Agreement or applicable law requiring notice of such action by Revolving Agent), (y) accelerate all or a substantial portion of the Revolving Loan Obligations as a result of a then existing Event of Default under the Revolving Loan Credit Agreement or (z) terminate the commitment to lend under the Revolving Loan Credit Agreement, (ii) the commencement of any Insolvency Proceeding, (iii) the occurrence and continuance of an Event of Default under the Term Loan Credit Agreement due to the Borrower’s failure to timely pay principal or interest thereunder, or (iv) the Revolving Lenders shall have ceased providing revolving loans and/or letters of credit that the Borrower is otherwise entitled to under the Revolving Loan Credit Agreement for a period of five (5) consecutive Business Days following Borrower’s initial and unfulfilled request therefor (the occurrence of any such event described in clauses (i) — (iv) is referred to herein as a “Trigger Event”), one or more Term Loan Lenders (and/or, at the election of the applicable Term Loan Lenders, their respective affiliates and approved investment funds) (all such Term Loan Lenders, affiliates and approved funds being referred to herein individually as a “Term Loan Purchaser” and collectively as the “Term Loan Purchasers”) shall have an option to purchase from the Revolving Loan Creditors all, but not less than all, of the Revolving Loan Obligations owing to them at par and provide the Required Cash Collateral by giving a written notice (the “Purchase Notice”) to the Revolving Agent prior to the expiration of such ten (10) Business Day period.  The Purchase Notice from the applicable Term Loan Lenders, on behalf of the Term Loan Purchasers, to the Revolving Agent shall be irrevocable.  If no such Purchase Notice is received from a Term Loan Lender, with respect to any Trigger Event, within such ten (10) Business Day period, the option granted pursuant to this Section 6 with respect to such Trigger Event to such Term Loan Lender to purchase such Revolving Loan Obligations shall irrevocably expire and such Term Loan Lender shall have no further rights under this Section 6 with respect to such Trigger Event.
 
25 

 
7.2.                             Purchase Option Closing .   On the date specified by the applicable Term Loan Lenders in the Purchase Notice (which shall not be less than three (3) Business Days nor more than fifteen (15) calendar days, after the receipt by the Revolving Agent of the Purchase Notice), each Revolving Loan Lender shall sell to the applicable Term Loan Purchasers, and the applicable Term Loan Purchasers shall purchase from each Revolving Loan Lender, all, but not less than all, of the Revolving Loan Obligations (excluding all such obligations for which Required Cash Collateral is to be provided) owing to such Revolving Loan Lender at par and provide the Required Cash Collateral, and during such period, subject to Section 7.5 , the Revolving Loan Creditors shall not take any Enforcement Action and shall not accelerate (if the Revolving Obligations have not already been accelerated) all or any part of the Revolving Loan Obligations without the consent of the Term Loan Required Lenders.
 
7.3.                             Purchase Price .   Such purchase and sale shall be made by execution and delivery by the applicable Secured Creditors of a Commitment Transfer Supplement in the form attached to the Revolving Loan Credit Agreement (provided, the Term Loan Purchasers shall not be required to take promissory notes evidencing their respective interests in the Revolving Loan Obligations).  Upon the date of such purchase and sale (or date thereafter, as applicable), the applicable Term Loan Purchasers shall:
 
(a)                                  pay or provide to the Revolving Agent for the benefit of the Revolving Loan Lenders as the purchase price therefor the sum of (i) the full amount of all of the Revolving Loan Obligations then outstanding and unpaid (including principal, accrued and unpaid interest, unpaid fees, and expenses, including reasonable attorneys’ fees and expenses, in each case in accordance with the Revolving Loan Financing Documents) but excluding (y) all such obligations for which Required Cash Collateral is to be provided and (z) except as otherwise provided below, any early termination fee or prepayment fee payable pursuant to the Revolving Loan Credit Agreement, plus (ii) the Required Cash Collateral plus (iv) solely to the extent actually collected by Term Loan Agent or such Term Loan Purchasers within forty five (45) calendar days following the consummation of the purchase and sale described in this Section 7 , the early termination fee provided for in Section 13.1 of the Revolving Loan Credit Agreement (it being understood and agreed that payment of such early termination fee shall not be a condition to the purchase and sale described herein and the Term Loan Purchasers sole obligation with respect to such fee shall be to deliver such fee to the Revolving Agent to the extent actually received from the Borrower or any other Obligor, as required by the foregoing clause (iv));
 
(b)                                  be deemed to have agreed not to amend, modify or waive the provisions of (i) Section 13.1 of the Revolving Loan Credit Agreement so as to waive or reduce the early termination fee set forth therein or (ii) Sections 2.9 through 2.18 thereof unless and until the earlier to occur of (1) all letters of credit issued under the Revolving Loan Credit Agreement having terminated or expired or been cancelled and (2) the Borrower and the applicable Revolving Loan Creditors shall have entered into separate, independent letter of credit facility agreements (“Independent LC Agreements”) reflecting, in all material respects, the terms of Sections 2.9 through 2.18 of the Revolving Loan Credit Agreement; and
 
26 

 
(c)                                   be deemed to have agreed to reimburse (or if required by any Revolving Loan Creditor, backed by stand-by letters of credit or cash collateral in an amount and in a manner reasonably satisfactory to the Revolving Agent) the Revolving Loan Creditors in respect of indemnification obligations of Obligors under the Revolving Loan Financing Documents owed to a Revolving Loan Creditor as to matters or circumstances for which a claim has been asserted in good faith by the Revolving Agent or another Revolving Loan Creditor in writing on or before the date of such purchase and sale; provided , in no event will Term Loan Lenders or any Term Loan Purchaser have any liability for such amounts in excess of proceeds of Term Loan Collateral received by Term Loan Lenders or any other Term Loan Purchaser.
 
Such purchase price and cash collateral shall be remitted by wire transfer of immediately available funds to such bank account of the Revolving Agent as the Revolving Agent may designate in writing to the applicable Term Loan Purchasers for such purpose.  Interest and fees shall be calculated to but excluding the Business Day on which such purchase and sale shall occur if the amounts so paid by the applicable Term Loan Purchasers to the bank account designated by the Revolving Agent are received in such bank account prior to 1:00 p.m. New York, New York time and interest shall be calculated to and including such Business Day if the amounts so paid by the applicable Term Loan Purchasers to the bank account designated by the Revolving Agent are received in such bank account later than 1:00 p.m. New York, New York time.
 
7.4.                             Nature of Sale .   Such purchase and sale shall be expressly made without representation or warranty of any kind by the Revolving Loan Creditors as to the Revolving Loan Obligations or otherwise and without recourse to the Revolving Loan Creditors, except for several (not joint) representations and warranties as to the following:  (i) the notional amount of the Revolving Loan Obligations being purchased (including as to the principal of and accrued and unpaid interest on such Revolving Loan Obligations, fees and expenses thereof, and other amounts set forth in Section 7.3 ), (ii) that the Revolving Loan Lenders own the Revolving Loan Obligations free and clear of any Liens, and (iii) each Revolving Loan Lender has the full right and power to assign its Revolving Loan Obligations and such assignment has been duly authorized by all necessary corporate action by such Revolving Loan Lender.  Upon the consummation of such purchase and sale, all letters of credit, Cash Management Liabilities and Hedge Liabilities originally issued under or secured by the Revolving Loan Financing Documents, including all such obligations in respect of which Required Cash Collateral shall have been provided, shall, in each case, no longer be secured by or under the Revolving Loan Financing Documents or constitute Revolving Loan Obligations under the Revolving Loan Financing Documents and the applicable Revolving Loan Creditors and the Borrower shall enter into Independent LC Agreements for all outstanding letters of credit promptly following the consummation of such purchase and sale.  Notwithstanding anything to the contrary set forth herein, from and after the date of such purchase and sale, the claims of the Revolving Loan Creditors for contingent indemnification obligations of the Obligors, if any, that survive the termination of the Revolving Loan Credit Agreement which have not been paid as set forth in Section 7.3 above will continue in full force and effect to the same extent available to any Person that was at any time party to the Revolving Loan Financing Documents as a Revolving Loan Creditor.
 
27 

 
7.5.                             Notice of Intended Action .   The Revolving Agent shall not be required to refrain from taking Enforcement Actions or accelerating all or any portion of the Revolving Loan Obligations during the pendency of a Purchase Option transaction, if in the good faith determination of Revolving Agent, (i) a fraud has been committed by any Obligor in connection with the Revolving Loan Obligations, or (ii) delay of the Enforcement Actions or acceleration, as the case may be, by Revolving Agent would have a reasonable likelihood of (A) causing a diminution in value of the Revolving Loan Collateral (or, after receipt by the Revolving Agent of the irrevocable Purchase Notice from the applicable Term Loan Lenders pursuant to Section 7.1 above, a material diminution in value of the Revolving Loan Collateral taken as a whole), or (B) jeopardizing the Revolving Loan Creditors’ ability to realize on the Revolving Loan Collateral (or, after receipt by the Revolving Agent of the irrevocable Purchase Notice from the applicable Term Loan Lenders pursuant to Section 7.1 above, their ability to realize on a material portion of the Revolving Loan Collateral).
 
7.6.                             Release and Resignation .  Upon the consummation of any purchase and sale provided for in this Section 7, the Revolving Loan Creditors shall be released from and discharged of their respective duties, responsibilities and obligations under or in connection with the Revolving Loan Financing Documents, and, notwithstanding any notice, consent or other requirements to the contrary in the Revolving Loan Credit Agreement, concurrently with the closing of such purchase and sale, the Revolving Agent shall be deemed to have resigned as “Agent” under the Revolving Loan Credit Agreement and the Term Loan Agent or any designee of the Term Loan Creditors shall be deemed to have succeeded to the role of “Agent” under the Revolving Loan Credit Agreement.
 
8.                                       Bankruptcy Matters .
 
8.1.                             Bankruptcy .   This Agreement shall be applicable both before and after the filing of any petition by or against any Obligor under the Bankruptcy Code or any other Insolvency Proceeding and all converted or succeeding cases in respect thereof, and all references herein to any Obligor shall be deemed to apply to the trustee for such Obligor and such Obligor as a debtor-in-possession.  This Agreement shall constitute a subordination agreement within the meaning of Section 510(a) of the Bankruptcy Code.  The relative rights of the Term Loan Creditors and the Revolving Loan Creditors in or to any Distributions from or in respect of any Collateral or proceeds of Collateral shall continue after the filing of such petition on the same basis as prior to the date of such filing, subject to any court order approving the financing of, or use of cash collateral by, any Obligor as debtor-in-possession in accordance with the terms hereof.
 
28 

 
8.2.                             Post Petition Financing .
 
(a)                                  If any Obligor or Obligors shall become subject to a case under the Bankruptcy Code and such Obligor or Obligors as debtor(s)-in-possession (or a trustee appointed on behalf of such Obligor or Obligors) shall move for approval of DIP Financing to be provided by one or more of the Term Loan Lenders or one of their affiliates with the consent of the Term Loan Agent, each Revolving Loan Creditor agrees that no Revolving Loan Creditor shall contest or oppose in any manner such DIP Financing (except to the extent expressly permitted pursuant to this Section 8.2(c) ) or such use of cash collateral and shall be deemed to have waived any objections to such financing or such use of cash collateral as long as (i) to the extent such DIP Financing is secured by Liens on the Revolving Loan Priority Collateral, unless the Revolving Loan Agent provides prior written consent to the contrary, such DIP Financing is secured by Liens that are subordinate to the Liens of the Revolving Loan Agent on the Revolving Loan Priority Collateral in a manner consistent with the terms and provisions of this Agreement, (ii) the Revolving Loan Creditors retain a Lien on the Revolving Loan Collateral (including proceeds thereof arising after the commencement of such Insolvency Proceeding) with the same relative priority as provided for under this Agreement, (iii) the Revolving Loan Creditors are permitted to seek (without objection from the Term Loan Creditors) additional or replacement Liens on post-petition assets consisting of Revolving Loan Collateral, with the same relative priority as provided for under this Agreement and adequate protection in the form of cash payments of interest, fees and expenses (provided that the inability of the Revolving Loan Creditors to receive such a Lien or adequate protection shall not affect the agreements and waivers set forth in this Section 8.2(a) ), (iv) the aggregate principal amount of such DIP Financing (including letters of credit issued or arranged under such facility), assuming the full funding of loans and commitments for such DIP Financing, together with the then-outstanding principal amount of the Term Loan Obligations does not exceed the Maximum Principal Amount of Term Loan Debt, unless the Revolving Loan Agent provides prior written consent to the contrary, and (v) such DIP Financing or use of such cash collateral is subject to the terms of this Agreement.  Each Revolving Loan Creditor hereby agrees it shall not, directly or through an affiliate, seek to provide DIP Financing secured by Liens on Term Loan Priority Collateral equal or senior to the Liens of the Term Loan Creditors thereon unless the Term Loan Agent shall have consented to such DIP Financing.  To the extent any DIP Financing proposed by one or more Term Loan Creditors does not comply with this Section 8.2(a) , the Revolving Loan Creditors may object to such non-compliant terms on any grounds available, including on grounds available to a secured creditor and to an unsecured creditor.
 
(b)                                  In any Insolvency Proceeding, (i) no Revolving Loan Creditor will oppose the Term Loan Creditors’ motions to receive adequate protection payments, or post-petition interest, or additional collateral in connection with any use of cash collateral or DIP Financing meeting the requirements of Section 8.2(a)  or otherwise in connection with the Term Loan Collateral and (ii) until the Term Loan Termination Date, any adequate protection payments received by Revolving Loan Creditors from the proceeds of any Term Loan Priority Collateral shall, absent the consent or direction of Term Loan Agent, be applied as set forth in Section 4 hereof.
 
29 

 
(c)                                   If any Obligor or Obligors shall become subject to a case under the Bankruptcy Code and such Obligor or Obligors as debtor(s)-in-possession (or a trustee appointed on behalf of such Obligor or Obligors) shall move for approval of DIP Financing to be provided by one or more of the Revolving Loan Lenders or one of their affiliates with the consent of the Revolving Loan Agent, each Term Loan Creditor agrees that no Term Loan Creditor shall contest or oppose in any manner such DIP Financing (except to the extent expressly permitted pursuant to this Section 8.2(c) ) or such use of cash collateral and shall be deemed to have waived any objections to such financing or such use of cash collateral as long as (i) to the extent such DIP Financing is secured by Liens on the Term Loan Priority Collateral, unless the Term Loan Agent provides prior written consent to the contrary, such DIP Financing is secured by Liens that are subordinate to the Liens of the Term Loan Agent on the Term Loan Priority Collateral in a manner consistent with the terms and provisions of this Agreement, (ii) the Term Loan Creditors retain a Lien on the Term Loan Collateral (including proceeds thereof arising after the commencement of such Insolvency Proceeding) with the same relative priority as provided for under this Agreement, (iii) the Term Loan Creditors are permitted to seek (without objection from the Revolving Loan Creditors) additional or replacement Liens on post-petition assets consisting of Term Loan Collateral, with the same relative priority as provided for under this Agreement and adequate protection in the form of cash payments of interest, fees and expenses (provided that the inability of the Term Loan Creditors to receive such a Lien or adequate protection shall not affect the agreements and waivers set forth in this Section 8.2(a) ), (iv) the aggregate principal amount of such DIP Financing (including letters of credit issued or arranged under such facility), assuming the full funding of loans and commitments for such DIP Financing, together with the then-outstanding principal amount of the Revolving Loan Obligations does not exceed the applicable components of the Maximum Principal Amount of Revolving Loan Debt, unless the Term Loan Agent provides prior written consent to the contrary, and (v) such DIP Financing or use of such cash collateral is subject to the terms of this Agreement.  Each Term Loan Creditor hereby agrees it shall not, directly or through an affiliate, seek to provide DIP Financing secured by Liens on Revolving Loan Priority Collateral equal or senior to the Liens of the Revolving Loan Creditors thereon unless the Revolving Loan Agent shall have consented to such DIP Financing.  To the extent any DIP Financing proposed by one or more Revolving Loan Creditors does not comply with this Section 8.2(c) , the Term Loan Creditors may object to such non-compliant terms on any grounds available, including on grounds available to a secured creditor and to an unsecured creditor.
 
(d)                                  In any Insolvency Proceeding, (i) no Term Loan Creditor will oppose the Revolving Loan Creditors’ motions to receive adequate protection payments, or post-petition interest, or additional collateral in connection with any use of cash collateral or DIP Financing meeting the requirements of Section 8.2(c)  or otherwise in connection with the Revolving Loan Collateral and (ii) until the Revolving Loan Termination Date, any adequate protection payments received by Term Loan Creditors from the proceeds of any Revolving Loan Priority Collateral shall, absent the consent or direction of Revolving Agent, be applied as set forth in Section 4 hereof.
 
30 

8.3.                             Sale of Collateral; Waivers .   Each Revolving Loan Creditor agrees it will consent to and otherwise will not object to or oppose a sale or other disposition of any Term Loan Priority Collateral securing the Obligations under the Term Loan Financing Documents (or any portion thereof) free and clear of Liens or other claims under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code if the Term Loan Agent has consented to such sale or disposition of such assets, it being understood that the Revolving Loan Creditors shall be entitled to a second priority Lien with respect to the net proceeds of such sale subject to the terms and conditions of this Agreement.  Each Term Loan Creditor agrees it will consent to and otherwise will not object to or oppose a sale or other disposition of any Revolving Loan Priority Collateral securing the Obligations under the Revolving Loan Financing Documents (or any portion thereof) free and clear of Liens or other claims under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code if the Revolving Agent has consented to such sale or disposition of such assets, it being understood that the Term Loan Creditors shall be entitled to a second priority Lien with respect to the net proceeds of such sale subject to the terms and conditions of this Agreement.  Each Revolving Loan Creditor waives any claim any such Revolving Loan Creditor may now or hereafter have arising out of the Term Loan Creditors’ election in any proceeding instituted under Chapter 11 of the Bankruptcy Code of the application of Section 1111(b)(2) of the Bankruptcy Code.  Each Term Loan Creditor waives any claim any such Term Loan Creditor may now or hereafter have arising out of the Revolving Loan Creditors’ election in any proceeding instituted under Chapter 11 of the Bankruptcy Code of the application of Section 1111(b)(2) of the Bankruptcy Code.  Each Revolving Loan Creditor agrees, following commencement of an Insolvency Proceeding, not to initiate or prosecute or join with any other Person to initiate or prosecute any claim, action or other proceeding (i) challenging the validity or enforceability of the Term Loan Creditors’ claim as a fully secured claim with respect to all or part of the Term Loan Obligations, or opposing any action by the Term Loan Creditors to enforce their rights or remedies under, or relating to, the Term Loan Financing Documents (except to the extent restricted or prohibited under this Agreement with respect to Revolving Loan Priority Collateral), (ii) challenging the enforceability, validity, priority or perfected status of any or all of the Term Loan Obligations or any Liens of the Term Loan Creditors on the Term Loan Collateral, (iii) asserting any claims which the Obligors may hold with respect to the Term Loan Creditors, (iv) seeking to lift any automatic stay relating to the Term Loan Priority Collateral, or (v) opposing a motion by the Term Loan Creditors to lift any automatic stay relating exclusively to the Term Loan Priority Collateral.  Each Term Loan Creditor agrees, following commencement of an Insolvency Proceeding, not to initiate or prosecute or join with any other Person to initiate or prosecute any claim, action or other proceeding (i) challenging the validity or enforceability of the Revolving Loan Creditors’ claim as a fully secured claim with respect to all or part of the Revolving Loan Obligations, or opposing any action by the Revolving Loan Creditors to enforce their rights or remedies under, or relating to, the Revolving Loan Financing Documents (except to the extent restricted or prohibited under this Agreement with respect to Term Loan Priority Collateral), (ii) challenging the enforceability, validity, priority or perfected status of any or all of the Revolving Loan Obligations or any Liens of the Revolving Loan Creditors on the Revolving Loan Collateral, (iii) asserting any claims which the Obligors may hold with respect to the Revolving Loan Creditors, (iv) seeking to lift any automatic stay relating to the Revolving Loan Priority Collateral, or (v) opposing a motion by the Revolving Loan Creditors to lift any automatic stay relating exclusively to the Revolving Loan Priority Collateral.
 
31 

 
8.4.                             Invalidated Payments .   To the extent any Term Loan Creditor receives payments on, or proceeds of, Term Loan Collateral for the Term Loan Obligations which are subsequently invalidated, avoided as or declared to be fraudulent or preferential transfers, otherwise set aside, and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law, or equitable cause, then (a) to the extent of such payment or proceeds received, such Term Loan Obligations, or part thereof, intended to be satisfied shall be revived and continue in full force and effect as if such payments or proceeds had not been received by such Term Loan Creditor and (b) the Term Loan Termination Date shall not be deemed to have occurred and this Agreement shall continue in full force and effect.  To the extent any Revolving Loan Creditor has received proceeds of Term Loan Priority Collateral or a Distribution from Term Loan Priority Collateral to which such Revolving Loan Creditor would not have been entitled under this Agreement had such reinstatement occurred prior to receipt of such proceeds or such Distribution, such Revolving Loan Creditor shall turn over such proceeds or such Distributions to the Term Loan Agent for reapplication to the Term Loan Obligations in accordance with this Agreement.  To the extent any Revolving Loan Creditor receives payments on, or proceeds of, Revolving Loan Collateral for the Revolving Loan Obligations which are subsequently invalidated, avoided as or declared to be fraudulent or preferential transfers, otherwise set aside, and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law, or equitable cause, then (x) to the extent of such payment or proceeds received, such Revolving Loan Obligations, or part thereof, intended to be satisfied shall be revived and continue in full force and effect as if such payments or proceeds had not been received by such Revolving Loan Creditor and (y) the Revolving Loan Termination Date shall not be deemed to have occurred and this Agreement shall continue in full force and effect.  To the extent any Term Loan Creditor has received proceeds of Revolving Loan Priority Collateral or a Distribution from Revolving Loan Priority Collateral to which such Term Loan Creditor would not have been entitled under this Agreement had such reinstatement occurred prior to receipt of such proceeds or such Distribution, such Term Loan Creditor shall turn over such proceeds or such Distributions to the Revolving Agent for reapplication to the Revolving Loan Obligations in accordance with this Agreement.
 
8.5.                             Payments .  In the event of any Insolvency Proceeding:
 
(a)                                  Subject to Section 2.4 , (1) (x) all net proceeds of Term Loan Priority Collateral (other than Permitted Reorganization Securities) shall be applied pursuant to Section 4 hereof to permanently reduce the Term Loan Obligations until all Term Loan Obligations are Paid in Full before any Distribution with the proceeds thereof, whether in cash, securities or other property, shall be made to one or more Revolving Loan Creditors on account of any Revolving Loan Obligations, and (y) any Distribution from Term Loan Priority Collateral, whether in cash, securities or other property which would otherwise, but for the terms hereof, be payable or deliverable in respect of the Revolving Loan Obligations (other than Permitted Reorganization Securities) shall be paid or delivered directly to the Term Loan Agent to be applied pursuant to Section 4 hereof until all Term Loan Obligations are Paid In Full and (2) (x) all net proceeds of Revolving Loan Priority Collateral (other than Permitted Reorganization Securities) shall be applied pursuant to Section 4 hereof to permanently reduce the Revolving Loan Obligations until all Revolving Loan Obligations are Paid in Full before any Distribution with the proceeds thereof, whether in cash, securities or other property, shall be made to one or more Term Loan Creditors on account of any Term Loan Obligations, and (y) any Distribution from
 
32 

 
Revolving Loan Priority Collateral, whether in cash, securities or other property which would otherwise, but for the terms hereof, be payable or deliverable in respect of the Term Loan Obligations (other than Permitted Reorganization Securities) shall be paid or delivered directly to the Revolving Agent to be applied pursuant to Section 4 hereof until all Revolving Loan Obligations are Paid In Full.
 
(b)                                  Each Revolving Loan Creditor irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise deliver all such Distributions described in Section 8.5(a)  from Term Loan Priority Collateral to the Term Loan Agent.  Each of the Revolving Loan Creditors also irrevocably authorizes and empowers the Term Loan Agent, in the name of such Revolving Loan Creditor, to demand, sue for, collect and receive any and all such Distributions from Term Priority Loan Collateral.  Each Term Loan Creditor irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise deliver all such Distributions described in Section 8.5(a)  from Revolving Loan Priority Collateral to the Revolving Agent.  Each of the Term Loan Creditors also irrevocably authorizes and empowers the Revolving Agent, in the name of such Term Loan Creditor, to demand, sue for, collect and receive any and all such Distributions from Revolving Loan Priority Collateral.
 
8.6.                             Notice of Claims .   The parties acknowledge and agree that (i) the claims and interests of the Term Loan Creditors under the Term Loan Financing Documents are substantially different from the claims and interests of the Revolving Loan Creditors under the Revolving Loan Financing Documents and (ii) such claims and interests should be treated as separate classes for purposes of Section 1122 of the Bankruptcy Code and, in any Insolvency Proceeding, no Term Loan Creditor and no Revolving Loan Creditor shall, in any case, object to such treatment of such claims and interests or make any assertion to the contrary.
 
8.7.                             Rights as Unsecured Creditors .   Except as otherwise provided herein, in any Insolvency Proceeding, the Revolving Loan Creditors may exercise rights and remedies as unsecured creditors against any of the Borrower and other Obligors in accordance with the Revolving Loan Financing Documents and applicable law.  Except as otherwise provided herein, in any Insolvency Proceeding, the Term Loan Creditors may exercise rights and remedies as unsecured creditors against any of the Borrower and other Obligors in accordance with the Term  Loan Financing Documents and applicable law.
 
9.                                       Miscellaneous .
 
9.1.                             Termination .   Subject to Section 8.4 , this Agreement shall terminate and be of no further force and effect upon either (a) the Term Loan Termination Date, or (b) the Revolving Loan Termination Date; provided , the provisions of Section 2.7 shall survive the termination of this Agreement.
 
33 

 
9.2.                             Successors and Assigns .  This Agreement shall be binding upon each Secured Creditor and its respective successors and assigns and shall inure to the benefit of each Secured Creditor and its respective successors, participants and assigns.  In connection with any participation or other transfer or assignment of the Revolving Loan Obligations or the Term Loan Obligations, the applicable Secured Creditor shall disclose to such participant or other transferee or assignee the existence and terms and conditions of this Agreement.  In the case of any participation or other transfer or assignment the participant, assignee or transferee acquiring any interest in the Term Loan Obligations or the Revolving Loan Obligations, as the case may be, shall execute and deliver to the Revolving Agent or Term Loan Agent, respectively, a written acknowledgment of receipt of a copy of this Agreement and the written agreement by such Person to be bound by the terms of this Agreement (unless the Revolving Loan Credit Agreement or Term Loan Credit Agreement, as applicable, contains express provisions providing that such Person agrees to be bound by the terms of this Agreement upon become a party thereto).  The Revolving Loan Credit Agreement and Term Loan Credit Agreement shall provide that at all times the respective Agent has the power and authority to bind the respective Secured Creditors for which it acts as agent to the terms of this Agreement and to act as agent for the applicable Secured Creditors in respect of receiving all notices to be delivered to a Secured Creditor hereunder.
 
9.3.                             Notices .   All notices and other communications provided for hereunder shall be in writing and shall be mailed, sent by overnight courier, facsimile, or delivered, as follows:
 
If to any Term Loan Creditor, to it at the following address:
 
Golub Capital LLC, as Term Loan Agent 
666 Fifth Avenue
New York, NY  10103
Attention:                                        Nicholas Chan
Facsimile:                                        (212) 750-3756
and
 
Katten Muchin Rosenman LLP
525 West Monroe Street
Chicago, Illinois 60661
Attention:  Derek Ladgenski, Esq.
Facsimile:                                        (312) 902-1061
 
If to any Revolving Loan Creditor, to it at the following address
PNC Bank, National Association
c/o PNC Business Credit
2 North Lake Avenue, Suite 440
Pasadena, California 91101
Attention:                                        Kevin J. Gimber
Facsimile:                                        (626) 432-4589
 
34 

 
with a copy to:
 
PNC Bank, National Association
PNC Agency Services PNC
Firstside Center
500 First Avenue, 4th Floor
Pittsburgh, Pennsylvania 15219
Attention:                                        Lisa Pierce
Facsimile:                                        (412) 762-8672
and to
Blank Rome, LLP
 
1925 Century Park East, Suite 1900
Los Angeles, California 90067
Attention:                                        Danielle V. Garcia
Facsimile:                                        (424) 239-3394
 
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Attention:                                        Lawrence F. Flick II
Facsimile:                                        (215) 832-5556
 
or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties complying as to delivery with the terms of this Section 9.3 .  All such notices and other communications shall be effective (i) if sent by registered mail, return receipt requested, when received or three (3) Business Days after mailing, whichever first occurs, (ii) if sent by facsimile, when transmitted and a confirmation of successful delivery (including such a confirmation generated by the sender’s facsimile machine) is received, provided the same is accomplished prior to 5:00 PM, New York, New York time, on a Business Day and, if not, then such notice so delivered will be effective on the next Business Day, or (iii) if delivered by messenger or nationally recognized overnight courier with instructions to deliver the next Business Day, upon delivery, provided the same is on a Business Day and, if not, then such notice so delivered will be effective on the next Business Day.
 
9.4.                             Counterparts .   This Agreement may be executed by the parties hereto in several counterparts, and each such counterpart shall be deemed to be an original and all of which shall constitute together but one and the same agreement.  Signatures delivered by facsimile, email or other electronic transmission shall have the same force and effect as original signatures.
 
9.5.                             GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE .  THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW THAT WOULD RESULT IN THE IMPOSITION OF THE LAWS OF ANY OTHER STATE), AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
 
35 

 
AMERICA (WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES).  EACH OF THE PARTIES HERETO HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES AMONG THE PARTIES HERETO PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS; PROVIDED, NOTWITHSTANDING THE FOREGOING, IT IS HEREBY ACKNOWLEDGED AND AGREED THAT INSOLVENCY PROCEEDINGS MAY BE INITIATED IN JURISDICTIONS OTHER THAN THE FOREGOING AND MATTERS RELATING TO THIS AGREEMENT MAY BE LITIGATED IN THE BANKRUPTCY COURT HEARING SUCH INSOLVENCY PROCEEDING.  EACH OF THE PARTIES HERETO EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH OF THE PARTIES HERETO HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS.
 
9.6.                             MUTUAL WAIVER OF JURY TRIAL .   THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE PARTIES ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR THE TRANSACTIONS RELATED THERETO.
 
9.7.                             Amendments .  No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Person from the terms hereof, shall in any event be effective unless it is in writing and signed by the Term Loan Agent (with the consent of the Term Loan Required Lenders under the terms of the Term Loan Credit Agreement) and the Revolving Agent (with the consent of the Revolving Loan Required Lenders under the terms of the Revolving Loan Credit Agreement).  In no event shall the consent of any Obligor be required in connection with any amendment or other modification of this Agreement.
 
9.8.                             No Waiver .   No failure or delay on the part of any Secured Creditor in exercising any power or right under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right.
 
9.9.                             Severability .   Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provisions in any other jurisdiction.
 
36 

 
9.10.                      Further Assurances .  Each of the Agents agrees to cooperate fully with each other party hereto to effectuate the intent and provisions of this Agreement and, from time to time, to execute and deliver any and all other agreements, documents or instruments, and to take such other actions, as may be reasonably necessary or desirable to effectuate the intent and provisions of this Agreement.
 
9.11.                      Headings .   The section headings contained in this Agreement are and shall be without meaning or content whatsoever and are not part of this Agreement.
 
9.12.                      Lien Priority Provisions .  This Agreement and the rights and benefits hereunder shall inure solely to the benefit of the Term Loan Creditors and the Revolving Loan Creditors and their respective successors and permitted assigns and no other Person (including the Obligors, or any trustee, receiver, debtor in possession or bankruptcy estate in a bankruptcy or like proceeding) shall have or be entitled to assert rights or benefits hereunder.  Nothing contained in this Agreement is intended to or shall impair the obligation of any Obligor to pay the Obligations as and when the same shall become due and payable in accordance with their respective terms, or to affect the relative rights of the creditors of any Obligor, other than the Term Loan Creditors and the Revolving Loan Creditors as between themselves.
 
9.13.                      Credit Analysis .   The Secured Creditors shall each be responsible for keeping themselves informed of (i) the financial condition of the Obligors and all other endorsers, obligors and/or guarantors of the Obligations and (ii) all other circumstances bearing upon the risk of nonpayment of the Obligations.  No Secured Creditor shall have any duty to advise any other Secured Creditor of information known to it regarding such condition or any such other circumstances or otherwise.  No Secured Creditor assumes any liability to any other Secured Creditor or to any other Person with respect to:  (a) the financial or other condition of Obligors under any instruments of guarantee with respect to the Obligations, (b) the enforceability, validity, value or collectibility of the Obligations, any Collateral therefor, or any guarantee or security which may have been granted in connection with any of the Obligations or (c) any Obligor’s title or right to transfer any Collateral or security.
 
9.14.                      Waiver of Claims .   To the maximum extent permitted by law, each party hereto waives any claim it might have against any Secured Creditor with respect to, or arising out of, any action or failure to act or any error of judgment, negligence, or mistake or oversight other than such which constitutes gross negligence whatsoever on the part of the any party hereto or their respective directors, officers, employees or agents with respect to any exercise of rights or remedies under the Documents or any transaction relating to the Collateral.  None of the Secured Creditors, nor any of their respective directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or, except as specifically provided herein, shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Obligor or any Secured Creditor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof.
 
9.15.                      Conflicts .   In the event of any conflict between the provisions of this Agreement and the provisions of the Documents, the provisions of this Agreement shall govern.
 
37 

 
9.16.                      Representations and Warranties .  The Revolving Agent, on the one hand, and the Term Loan Agent, on the other hand, each hereby represents and warrants to the other that:  (i) the execution, delivery and performance of this Agreement by such Person is within the powers of such Person, have been duly authorized by such Person, and do not contravene any law, any provision of any of the Documents to which such Person is a party or any other agreement to which such Person is a party or by which it is bound, and (ii) this Agreement constitutes the legal, valid and binding obligations of such Person, enforceable in accordance with its terms and shall be binding on it (except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally and by equitable principles).
 
9.17.                      Roles of Secured Creditors .  The parties hereto agree that any limitations, restrictions or prohibitions imposed on any Secured Creditor in its capacity as Junior Agent or a Junior Creditor hereunder shall not apply to any such Secured Creditor in its capacity as a holder of debt or equity under documentation not subject to this Agreement.
 
- Remainder of Page Intentionally Blank; Signature Pages Follow —
 
38 

 
IN WITNESS WHEREOF , the Revolving Agent and Term Loan Agent have caused this Agreement to be executed as of the date first above written.

TERM LOAN AGENT :	
 	
GOLUB CAPITAL LLC	
 	
By:	 	 	
Name: Marc C. Robinson	
Title: Managing Director	
 
Intercreditor Agreement

 
IN WITNESS WHEREOF , the Revolving Agent and Term Loan Agent have caused this Agreement to be executed as of the date first above written.

REVOLVING AGENT :	 	
 	 	
PNC BANK, NATIONAL ASSOCIATION	 	

By:	 	 	
Name:	Kevin J. Gimber	 	
Title:	Assistant Vice President	 	
 
Intercreditor Agreement

 
ACKNOWLEDGMENT
 
Dated May 31, 2013
 
Each of the undersigned hereby acknowledges and agrees to the terms and provisions of the foregoing Intercreditor Agreement of even date herewith (as amended, restated, supplemented or otherwise modified from time to time pursuant to the terms hereof and thereof, the “Intercreditor Agreement”) by and among PNC Bank, National Association, as Revolving Agent, and Golub Capital LLC, as Term Loan Agent, including, without limitation, Sections 3.1 and  7.6 .  Capitalized terms used in this Acknowledgment and not otherwise defined herein shall have the meanings ascribed to such terms in the Intercreditor Agreement.
 
Each of the undersigned further acknowledges and agrees that:  (i) although it may sign this Acknowledgment it is not a party to the Intercreditor Agreement and does not and will not receive any right, benefit, priority or interest under or because of the existence of the foregoing Intercreditor Agreement other than as set forth in this Acknowledgement; (ii) it will execute and deliver such additional documents and take such additional action as may be necessary or desirable in the reasonable opinion of any of the Secured Creditors to effectuate the provisions and purposes of the foregoing Intercreditor Agreement, in each case, to the extent required by the terms of the applicable Documents; and (iii) each Secured Creditor may provide any information regarding the Obligors, the Documents or the Collateral to the other Secured Creditors and may take all actions described in the Intercreditor Agreement (subject to the terms of the Documents where applicable).  Notwithstanding any provision of this Acknowledgment or the Intercreditor Agreement to the contrary, no amendment, waiver, supplement or other modification of the Intercreditor Agreement shall (a) increase the obligations of the Obligors, (b) impair the rights granted to the Obligors under the Documents, or (c) amend, or have the effect of amending, in a manner adverse to the Obligors, (i) the definitions of “Maximum Principal Amount of Revolving Loan Debt,” “Maximum Principal Amount of Term Loan Debt,” “Revolving Loan Obligations,” “Term Loan Obligations” or “Obligations” or (ii)  Section 6.1 or Section 6.2 hereof,  without the prior written consent of the Borrower.

 	BOOT BARN, INC. , a Delaware corporation	
 	 	
 	By:	 	
 	Name:	 	
 	Title:	 	
 	 	
 	BOOT BARN HOLDING CORPORATION ,	
 	a Delaware corporation	
 	 	
 	By:	 	
 	Name:	 	
 	Title:	 	
 	 	
 	RCC WESTERN STORES, INC. ,	
 	a South Dakota corporation	
 	 	
 	By:	 	
 	Name:	 	
 	Title:	 	
 	 	
 	BASKINS ACQUISITION HOLDINGS, LLC ,	
 	a Delaware limited liability company	
 	 	
 	By:	 	
 	Name:	 	
 	Title:	 	
 
Intercreditor Agreement

 
EXHIBIT 9.3
 
ENVIRONMENTAL COMPLIANCE CERTIFICATE
 
[Parent Holdco’s Letterhead]
 
PNC Bank, National Association
2 North Lake Avenue, Suite 440
Pasadena California 91101
 
Gentlemen:
 
I hereby certify in my individual capacity as the [President] [Chief Financial Officer]  of Boot Barn Holding Corporation, a Delaware corporation (“ Parent Holdco ”) and not in any individual capacity, that, except as listed on Schedule A attached hereto, to the best of my knowledge Boot Barn, Inc., a Delaware corporation (“ Borrower ”), Parent Holdco, RCC Western Stores, Inc., a South Dakota corporation, and Baskins Acquisition Holdings, LLC, a Delaware limited liability company, are in compliance in all material respects with all federal, state and local Environmental Laws.  Capitalized terms used but not defined herein shall have the meanings set forth in the Second Amended and Restated Revolving Credit and Security Agreement dated as of May 31, 2013, among Borrower, Parent Holdco, the lenders from time to time party thereto, and PNC Bank, National Association, as agent.
 
IN WITNESS WHEREOF , the undersigned has caused this certificate to be duly executed as of this            day of                           , 20      .

 	BOOT BARN HOLDING CORPORATION ,	
 	a Delaware corporation	

 	By:	 	
 	 	Name:	
 	 	Title: [President] or [Chief Financial Officer]	

 
Schedule A to Environmental Compliance Certificate
Noncompliance with Environmental Laws

 
EXHIBIT 15.3
 
COMMITMENT TRANSFER SUPPLEMENT
 
This COMMITMENT TRANSFER SUPPLEMENT, dated as of [                            ], among [                                                                                            ] (the “ Transferor Lender ”), each Purchasing Lender executing this Commitment Transfer Supplement (each, a “ Purchasing Lender ”), and PNC Bank, National Association (“ PNC ”) as agent for the Lenders (as defined below) under the Credit Agreement (as defined below).
 
WHEREAS , this Commitment Transfer Supplement is being executed and delivered in accordance with Section 15.3 of the Second Amended and Restated Revolving Credit and Security Agreement dated as of May 31, 2013 (as from time to time amended, restated, supplemented or otherwise modified in accordance with the terms thereof, the “ Credit Agreement ”) among Boot Barn, Inc., a Delaware corporation (“ Borrower ”), Boot Barn Holding Corporation, a Delaware corporation, PNC and the various other financial institutions (collectively, the “ Lenders ”) and PNC as agent for Lenders (in such capacity, “ Agent ”) named in or which hereafter become a party to the Credit Agreement;
 
WHEREAS , each Purchasing Lender wishes to become a Lender party to the Credit Agreement; and
 
WHEREAS , the Transferor Lender is selling and assigning to each Purchasing Lender rights obligations and commitments under the Credit Agreement;
 
NOW, THEREFORE , the parties hereto hereby agree as follows:
 
1.             All capitalized terms used herein which are not defined shall have the meanings given to them in the Credit Agreement.
 
2.             Upon receipt by the Agent of four (4) counterparts of this Commitment Transfer Supplement, to each of which is attached a fully completed Schedule I , and each of which has been executed by the Transferor Lender and Agent, Agent will transmit to Transferor Lender and each Purchasing Lender a Transfer Effective Notice, substantially in the form of Schedule II to this Commitment Transfer Supplement (a “ Transfer Effective Notice ”). Such Transfer Effective Notice shall set forth, inter alia , the date on which the transfer effected by this Commitment Transfer Supplement shall become effective (the “Transfer Effective Date”), which date shall not be earlier than the first Business Day following the date such Transfer Effective Notice is received.  From and after the Transfer Effective Date, each Purchasing Lender shall be a Lender party to the Credit Agreement for all purposes thereof.
 
3.             At or before 12:00 Noon (New York City Time) on the Transfer Effective Date each Purchasing Lender shall pay to Transferor Lender, in immediately available funds, an amount equal to the purchase price, as agreed between Transferor Lender and such Purchasing Lender (the “ Purchase Price ”), of the portion of the Advances being purchased by such Purchasing Lender (such Purchasing Lender’s “ Purchased Percentage ”) of the outstanding

 
Advances and other amounts owing to the Transferor Lender under the Credit Agreement and the Revolving Credit Note, if any. Effective upon receipt by Transferor Lender of the Purchase Price from a Purchasing Lender, Transferor Lender hereby irrevocably sells, assigns, and transfers to such Purchasing Lender, without recourse, representation or warranty, and each Purchasing Lender hereby irrevocably purchases, takes and assumes from Transferor Lender, such Purchasing Lender’s Purchased Percentage of the Advances and other amounts owing to the Transferor Lender under the Credit Agreement and the Revolving Credit Note, if any, together with all instruments, documents and collateral security pertaining thereto.
 
4.             Transferor Lender has made arrangements with each Purchasing Lender with respect to (a) the portion, if any, to be paid, and the date or dates for payment, by Transferor Lender to such Purchasing Lender of any fees heretofore received by Transferor Lender pursuant to the Credit Agreement prior to the Transfer Effective Date, and (b) the portion, if any, to be paid and the date or dates for payment, by such Purchasing Lender to Transferor Lender of fees or interest received by such Purchasing Lender pursuant to the Credit Agreement from and after the Transfer Effective Date.
 
5.             (a) All principal payments that would otherwise be payable from and after the Transfer Effective Date to or for the account of Transferor Lender pursuant to the Credit Agreement and the Revolving Credit Note, if any, shall, instead, be payable to or for the account of Transferor Lender and Purchasing Lender, as the case may be, in accordance with their respective interests as reflected in this Commitment Transfer Supplement.
 
(b) All interest fees and other amounts that would otherwise accrue for the account of Transferor Lender from and after the Transfer Effective Date pursuant to the Credit Agreement and the Revolving Credit Note, if any, shall, instead, accrue for the account of, and be payable to, Transferor Lender and Purchasing Lender, as the case may be in accordance with their respective interests as reflected in this Commitment Transfer Supplement. In the event that any amount of interest, fees or other amounts accruing prior to the Transfer Effective Date was included in the Purchase Price paid by any Purchasing Lender, Transferor Lender and each Purchasing Lender will make appropriate arrangements for payment by Transferor Lender to such Purchasing Lender of such amount upon receipt thereof from Borrower.
 
6.             Concurrently with the execution and delivery hereof, Transferor Lender will provide to each Purchasing Lender conformed copies of the Credit Agreement and all related documents delivered to Transferor Lender. Each of the parties to this Commitment Transfer Supplement agrees that at any time and from time to time, upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Commitment Transfer Supplement.
 
7.             By executing and delivering this Commitment Transfer Supplement, Transferor Lender and each Purchasing Lender confirm to and agree with each other and Agent and Lenders as follows; (a) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned hereby free and clear of any adverse claim, Transferor Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or
 
2 

 
the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, the Revolving Credit Note, if any, or any other instrument or document furnished pursuant thereto; (b) Transferor Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or the performance or observance by Borrower of any of its Obligations under the Credit Agreement, the Revolving Credit Note, if any, or any other instrument or document furnished pursuant hereto; (c) each Purchasing Lender confirms that it has received a copy of the Credit Agreement, together with copies of such financial statements and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Commitment Transfer Supplement; (d) each Purchasing Lender will, independently and without reliance upon Agent, Transferor Lender or any other Lenders and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (e) each Purchasing Lender appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Agent by the terms thereof; (f) each Purchasing Lender agrees that it will perform all of its respective obligations as set forth in the Credit Agreement to be performed by each as a Lender; and (g) each Purchasing Lender represents and warrants to Transferor Lender, Lenders, Agent and Borrower that it is either (x) entitled to the benefits of any income tax treaty with the United States of America that provides for an exemption from the United States withholding tax on interest and other payments made by Borrower under the Credit Agreement and the Other Documents or (y) is engaged in trade or business within the United States of America.
 
8.             Schedule I hereto sets forth the revised Commitment Percentages of Transferor Lender and the Commitment Percentage of each Purchasing Lender as well as administrative information with respect to each Purchasing Lender.
 
This Commitment Transfer Supplement shall be governed by, and construed in accordance with, the laws of the State of New York.
 
[signature page follows]
 
3 

 
IN WITNESS WHEREOF , the parties hereto have caused this Commitment Transfer Supplement to be executed by their respective duly authorized offices on the date set forth above.

 	[                                                                          ]	
 	as Transferor Lender	

 	By:	 	
 	 	Name:	
 	 	Title:	

 	[                                                                          ]	
 	as a Purchasing Lender	

 	By:	 	
 	 	Name:	
 	 	Title:	

 	PNC BANK, NATIONAL ASSOCIATION	
 	as Agent	

 	By:	 	
 	 	Name:	
 	 	Title:	
 
[Acknowledged and agreed to:
 
BOOT BARN, INC. ,
as Borrower

By	 	 	
Name	 	 	
Title	 	 ](3)	

(3)  Include if required under the Credit Agreement.
 
[Signature Page to Commitment Transfer Supplement]

 
SCHEDULE I TO 
 COMMITMENT TRANSFER SUPPLEMENT
 
LIST OF OFFICES, ADDRESSES FOR NOTICE AND COMMITMENT AMOUNTS

[Transferor Lender]	Revised Commitment Amount	 	$	 	 	
 	 	 	 	 	
 	Revised Commitment Percentage	 	 	%	
 	 	 	 	 	
[Purchasing Lender]	Commitment Amount	 	$	 	 	
 	 	 	 	 	
 	Commitment Percentage	 	 	%	
 
Addresses for Notices:

 
Attention:
Telephone:
Telecopier:
 
[Schedule I to Commitment Transfer Supplement]

 
SCHEDULE II TO
COMMITMENT TRANSFER SUPPLEMENT
 
[Form of Transfer Effective Notice]

To:	 	, as Transferor Lender	
 	 	
And	 	
 	 	
 	, as Purchasing Lender:	
 
The undersigned, as Agent under the Second Amended and Restated Revolving Credit and Security Agreement dated as of May 31, 2013 among BOOT BARN, INC., a Delaware corporation (“ Borrower ”), BOOT BARN HOLDING CORPORATION, a Delaware corporation, the financial institutions named therein (the “ Lenders ”) and PNC BANK, NATIONAL ASSOCIATION, as a Lender and as agent for the Lenders, acknowledges receipt of four (4) executed counterparts of a completed Commitment Transfer Supplement in the form attached hereto. [Note: attach copy of Commitment Transfer Supplement].  Terms defined in such Commitment Transfer Supplement are used herein as therein defined.
 
Pursuant to such Commitment Transfer Supplement, you are advised that the Transfer Effective Date will be [Insert date of Transfer Effective Notice].

 	PNC BANK, NATIONAL ASSOCIATION ,	
 	as Agent	

 	By:	 	
 	 	Name:	
 	 	Title:	

ACCEPTED FOR RECORDATION	
IN REGISTER:	 	 	
 
[Schedule II to Commitment Transfer Supplement]

Exhibit 10.11
 
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED
REVOLVING CREDIT AND SECURITY AGREEMENT
 
This FIRST AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT (this “ Amendment ”) is entered into and effective as of September 23, 2013 by and among BOOT BARN, INC., a Delaware corporation (“ Borrower ”), BOOT BARN HOLDING CORPORATION, a Delaware corporation (“ Parent Holdco ”), BASKINS ACQUISITION HOLDINGS, LLC, a Delaware limited liability company (“ Baskins ”), RCC WESTERN STORES, INC., a South Dakota corporation (“ RCC ” and collectively with Baskins, Parent Holdco, and Borrower, the “ Loan Parties ” and each a “ Loan Party ”), PNC BANK, NATIONAL ASSOCIATION, as Agent (the “ Agent ”), and the Lenders party hereto.
 
W I T N E S S E T H:
 
WHEREAS, the Loan Parties party thereto, Agent and the lenders from time to time party thereto (the “ Lenders ”) have entered into that certain Second Amended and Restated Revolving Credit and Security Agreement, dated as of May 31, 2013 (as amended hereby, and as may be further amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”);
 
WHEREAS, the Loan Parties have requested that the Lenders amend the Credit Agreement in certain respects as more fully set forth herein; and
 
WHEREAS, the Agent and the Lenders are willing to accommodate such request subject to the terms, conditions and other provisions hereof.
 
NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties hereto agree as follows:
 
1.                                       Defined Terms . Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Credit Agreement.
 
2.                                       Amendments to Credit Agreement . Effective as of the First Amendment Effective Date (as defined herein), in reliance upon the representations and warranties of the Loan Parties set forth in this Amendment, the Credit Agreement is hereby amended as follows:
 
(a)                                  Section 1.2 of the Credit Agreement shall be amended by adding thereto the following defined term and its definition in the correct alphabetical order:
 
“ First State Bank Account ” shall have the meaning given to such term in Section 4.15(h)(ii).”
 
(b)                                  Section 4.15(h)(ii) of the Credit Agreement shall be amended and restated in its entirety to read as follows:
 
1 

 
“(ii) All deposit accounts and investment accounts of Borrowing Base Parties are set forth on Schedule 4.15(h)(2)  (as such schedule may be updated by the Loan Parties as set forth in the quarterly Compliance Certificate required to be delivered to Agent pursuant to Section 9.8.) Borrower shall ensure that, at all times on and after the date that is one hundred twenty (120) days (or such later date as Agent may agree to) after the Closing Date, Agent has received control agreements, in form and substance satisfactory to Agent in its Permitted Discretion, with respect to all such accounts, other than (A) those containing, at all times, less than $25,000 with respect to any one account or $100,000 in the aggregate for all such accounts, (B) those utilized solely for making payroll or employee benefit related payments, (C) so long as the funds maintained therein do not exceed $125,000 at any time, deposit account #220386039 maintained by the Loan Parties at JPMorgan Chase Bank, and (D) deposit account #1002831 maintained by the Loan Parties at First State Bank (the “ First State Bank Account ”) so long as such deposit account is closed (and any funds remaining therein transferred to another account or accounts maintained by the Loan Parties that is subject to a control agreement in form and substance satisfactory to Agent in its Permitted Discretion) on or prior to December 31, 2013 (it being agreed and understood that if the First State Bank Account remains open after December 31,
 
2013 the Loan Parties shall deliver to Agent a control agreement with respect to such account to the extent required hereunder).”
 
(c)                                          Exhibit 1.2(a)  to the Credit Agreement is hereby deleted in its entirety and Exhibit 1.2(a) attached hereto is substituted in lieu thereof.
 
(d)                                         Schedule 4.15(h)(2) to the Credit Agreement is hereby deleted in its entirety and Schedule 4.15(h)(2) attached hereto is substituted in lieu thereof.
 
3.                                       Conditions Precedent . The effectiveness of this Amendment is subject to the following conditions precedent:
 
(a)                                         the execution and delivery of this Amendment by the Loan Parties, Agent and Lenders;
 
(b)                                  receipt by Agent of an executed copy of a corresponding amendment to the Term Credit Agreement, in form and substance reasonably acceptable to Agent, executed by the Loan Parties, Term Loan Agent and the requisite Term Loan Lenders;
 
(c)                                   the truth and accuracy of the representations and warranties contained in Section 4 hereof; and
 
(d)                                  no Default or Event of Default shall have occurred and be continuing or would result immediately after giving effect to this Amendment on the First Amendment Effective Date.
 
The “ First Amendment Effective Date ” shall mean the first date on which all of the conditions set forth in this Section 3 have been satisfied.
 
2 

 
4.                                       Representations and Warranties . Each Loan Party hereby represents and warrants to Agent and each Lender as follows:
 
(a)                                  after giving effect to the transactions contemplated herein, each of the representations and warranties of the Loan Parties contained in the Other Documents are true and correct as of the date hereof in all material respects (or true and correct in all respects if such representation or warranty already contains any materiality qualifier), except to the extent that any such representation or warranty expressly relates to an earlier date;
 
(b)                                  Each Loan Party party hereto has full power, authority and legal right to enter into this Amendment and to perform all its respective obligations hereunder. This Amendment has been duly executed and delivered by such Loan Party, and this Amendment constitutes the legal, valid and binding obligation of such Loan Party enforceable in accordance with their terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally. The execution, delivery and performance of this Amendment on the First Amendment Effective Date (a) are within such Loan Party’s corporate or limited liability company powers, as applicable, have been duly authorized by all necessary corporate or limited liability company action, as applicable, do not violate the terms of such Loan Party’s by-laws, operating agreement articles or certificate of incorporation or formation or other documents relating to such Loan Party’s formation, (b) will not violate any material law or regulation, or any judgment, order or decree of any Governmental Body in any material respect, (c) will not require any Consent of any Governmental Body or any other Person the lack of which would have a Material Adverse Effect, all of which will have been duly obtained, made or compiled prior to the date hereof and which are in full force and effect and (d) will not result in any breach of, or constitute a default under, which breach or default could reasonably be expected to have a Material Adverse Effect, or result in the creation of any Lien (except Permitted Encumbrances) upon any asset of such Loan Party pursuant to, the provisions of any agreement or instrument to which such Loan Party is a party or by which it or its property is bound; and
 
(c)                                   no Default or Event of Default exists or would result immediately after giving effect to this Amendment.
 
5.                                       No Waiver . Nothing contained herein shall be deemed to constitute a waiver of compliance with any term or condition contained in the Credit Agreement or any of the Other Documents (except as specifically provided for herein) or constitute a course of conduct or dealing among the parties. Except as expressly stated herein, Agent and Lenders reserve all rights, privileges and remedies under the Other Documents. Except as amended or modified hereby, the Credit Agreement and the Other Documents remain unmodified and in full force and effect. All references in the Other Documents to the Credit Agreement shall be deemed to be references to the Credit Agreement as amended or modified hereby.
 
6.                                       Severability . If any part of this Amendment is contrary to, prohibited by, or deemed invalid under Applicable Laws, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible.
 
3 

 
7.                                       Headings . Headings and captions used in this Amendment (including the Exhibits, Schedules and Annexes hereto, if any) are included for convenience of reference only and shall not be given any substantive effect.
 
8.                                    GOVERNING LAW; WAIVER OF SERVICE OF PROCESS; SUBMISSION TO JURISDICTION . This Amendment shall be governed by and construed in accordance with the laws of the State of New York applied to contracts to be performed wholly within the State of New York. Any judicial proceeding brought by or against any Loan Party with respect to any of the Obligations, this Amendment, the Other Documents or any related agreement may be brought in any court of competent jurisdiction in the State of New York, United States of America, and, by execution and delivery of this Amendment, each Loan Party accepts for itself and in connection with its properties, generally and unconditionally, the nonexclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Amendment. Each Loan Party hereby waives personal service of any and all process upon it and consents that all such service of process may be made by registered mail (return receipt requested) directed to such Loan Party at its address set forth in Section 15.6 of the Credit Agreement and service so made shall be deemed completed five (5) days after the same shall have been so deposited in the mails of the United States of America. Nothing herein shall affect the right to serve process in any manner permitted by law or shall limit the right of Agent or any Lender to bring proceedings against any Loan Party in the courts of any other jurisdiction. Each Loan Party waives any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. Each Loan Party waives the right to remove any judicial proceeding brought against such Loan Party in any state court to any federal court. Any judicial proceeding by any Loan Party against Agent or any Lender involving, directly or indirectly, any matter or claim in any way arising out of, related to or connected with this Amendment or any related agreement, shall be brought only in a federal or state court located in the Borough of Manhattan, County of New York, State of New York.
 
9.                                       JURY WAIVER . EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AMENDMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AMENDMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
 
4 

 
10.                                Counterparts . This Amendment may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any signature delivered by a party by facsimile or other similar form of electronic transmission shall be deemed to be an original signature hereto.
 
11.                                Reaffirmation . Each of the Loan Parties as debtor, grantor, pledgor, guarantor, assignor, or in any other similar capacity in which such Loan Party grants liens or security interests in its property or otherwise acts as accommodation party or guarantor, as the case may be, hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Other Documents to which it is a party (after giving effect hereto) and (ii) to the extent such Loan Party granted liens on or security interests in any of its property pursuant to any such Other Document as security for or otherwise guaranteed the Borrower’s Obligations under or with respect to the Other Documents, ratifies and reaffirms such guarantee and grant of security interests and liens and confirms and agrees that such security interests and liens hereafter secure all of the Obligations as amended hereby. Each of the Loan Parties hereby consents to this Amendment and acknowledges that each of the Other Documents remains in full force and effect and is hereby ratified and reaffirmed. The execution of this Amendment shall not operate as a waiver of any right, power or remedy of the Agent or Lenders (except as expressly provided for herein), constitute a waiver of any provision of any of the Other Documents (except as expressly provided for herein) or serve to effect a novation of the Obligations.
 
[The remainder of the page intentionally is left blank; signature page follows.]
 
5 

 
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first set forth above.

 	LOAN PARTIES :	

 	BOOT BARN, INC., a Delaware corporation	

 	By:	/s/ Paul J. Iacono	
 	Name: Paul J. Iacono	
 	Title: Chief Financial Officer	

 	BOOT BARN HOLDING CORPORATION,	
 	a Delaware corporation	
 	 	 	
 	By:	/s/ Christian B. Johnson	
 	Name: Christian B. Johnson	
 	Title: Treasurer	

 	RCC WESTERN STORES, INC.,	
 	a South Dakota corporation	

 	By:	/s/ Paul J. Iacono	
 	Name: Paul J. Iacono	
 	Title: Chief Financial Officer	

 	BASKINS ACQUISITION HOLDINGS, LLC,	
 	a Delaware limited liability company	
 	 	
 	By: Boot Barn, Inc.
Its: Member	

 	By:	/s/ Paul J. Iacono	
 	Name: Paul J. Iacono	
 	Title: Chief Financial Officer	

First Amendment to Second Amended and Restated Revolving Credit and Security Agreement

 

 	AGENT AND LENDERS :	
 	 	
 	PNC BANK, NATIONAL ASSOCIATION, as Agent and as a Lender	

 	By:	/s/ Kevin J. Gimber	
 	Name: Kevin J. Gimber	
 	Title: Assistant Vice President	
 
First Amendment to Second Amended and Restated Revolving Credit and Security Agreement

 
EXHIBIT 1.2(a)
 
FORM OF COMPLIANCE CERTIFICATE
 
[                       , 20    ]
 
TO :        PNC BANK, NATIONAL ASSOCIATION , as Agent
 
The undersigned [President] [Chief Financial Officer] [Controller] of Boot Barn Holding Corporation, a Delaware corporation (“ Parent Holdco ”), solely in such capacity and not in any individual capacity, certifies that, under the terms and conditions of the Second Amended and Restated Revolving Credit and Security Agreement dated as of May 31, 2013, among Boot Barn, Inc., a Delaware corporation (“ Borrower ”), Parent Holdco, Agent and the lenders from time to time party thereto (as amended, modified and supplemented from time to time, the “ Agreement ”), (i) the Loan Parties are in complete compliance for the period ending [                         ] with all of the below-listed covenants set forth in the Agreement, except as may be noted below, (ii) all representations and warranties of the Loan Parties in the Agreement are true and correct in all material respects on this date (except to the extent they relate to a specified date), except as set forth on Schedule B hereto, (iii) other than as set forth on Schedule C hereto, no Default or Event of Default exists, and (iv) the most recent financial statements provided to Agent include all adjustments necessary for a fair presentation in all material respects of the consolidated financial position and results of operations of Parent Holdco and its Subsidiaries for the period presented. Attached hereto as Schedule A are covenant calculations with respect to Section 6.5 of the Agreement. Attached hereto as Schedule D is each application for the registration of any Patent, Trademark, or Copyright with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency made by any Loan Party, either itself or through any agent, employee, licensee, or designee, since the delivery of the last Compliance Certificate. Attached hereto as Schedule E is each deposit account or investment account opened or maintained by any Loan Party since the delivery of the last Compliance Certificate, which deposit accounts and/or investment accounts shall be deemed added to Schedule 4.12(h)(2) to the Agreement for all purposes under the Agreement and the Other Documents. Capitalized terms used in this Certificate which are not defined herein shall have the meanings set forth in the Agreement. Nothing herein limits or modifies any of the terms or provisions of the Agreement.
 
Compliance status is indicated by circling Yes/No under “Complies” column.

[Financial Covenant	 	Required	 	Actual	 	Complies	 	
 	 	 	 	 	 	 	 	 	
Section 6.5 - Fixed Charge Coverage Ratio	 	1.1:1.0	 	:1.0	 	Yes	No]	(1)	

(1) Only to be completed if this Certificate is being delivered at a Covenant Compliance Period

 

Negative Covenants	 	Complies	
Section 7.4 - Investments	 	Yes	 	No	
Section 7.5 - Loans	 	Yes	 	No	
Section 7.7 - Dividends	 	Yes	 	No	
Section 7.8 - Indebtedness	 	Yes	 	No	

Affirmative Covenant	 	Complies	
Section 4.14 - Leasehold Obligations	 	Yes	 	No	
 
[signature page follows]

 
Comments Regarding Exceptions:

Sincerely,	 	
 	 	
BOOT BARN HOLDING CORPORATION	 	

By:	 	 	
 	Name:	 	
 	Title: [President] [Chief Financial Officer] [Controller]	 	
 
[Signature Page to Compliance Certificate]

 
Schedule A to Compliance Certificate
Covenant Calculations
 
(Include calculations of Unfinanced Capital Expenditures, EBITDA, and Fixed Charges (including each sub-component of each such calculation), as well as the Fixed Charge Coverage Ratio).
 
[Schedule A to Compliance Certificate]

 
Schedule B to Compliance Certificate
Exceptions to Representations and Warranties

[Schedule B to Compliance Certificate]

 
Schedule C to Compliance Certificate
Defaults and Events of Default

[Schedule C to Compliance Certificate]

 
Schedule D to Compliance Certificate
Intellectual Property Applications

[Schedule D to Compliance Certificate]

 
Schedule E to Compliance Certificate
Deposit Accounts and Investment Accounts

[Schedule E to Compliance Certificate]

Exhibit 10.12
 
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
REVOLVING CREDIT AND SECURITY AGREEMENT
 
THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT (this “ Amendment ”), dated as of April 15, 2014, is entered into by and among BOOT BARN, INC., a Delaware corporation (“ Borrower ”), BOOT BARN HOLDING CORPORATION, a Delaware corporation (“ Parent Holdco ”), PNC BANK, NATIONAL ASSOCIATION (“ PNC ”), as the sole Lender on the date hereof, and PNC in its capacity as agent for the Lenders (in such capacity, “ Agent ”), with reference to the following facts (terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement defined below):
 
RECITALS
 
A.             The parties to this Amendment have previously entered into that certain Second Amended and Restated Revolving Credit and Security Agreement, dated as of May 31, 2013, as amended by that certain First Amendment to Second Amended and Restated Revolving Credit and Security Agreement, dated September 23, 2013 (as so amended, and as further amended, modified and supplemented from time to time, the “ Credit Agreement ”), pursuant to which the Lenders have made certain loans and financial accommodations available to Borrower.
 
B.             The parties to this Amendment now wish to further amend the Credit Agreement on the terms and conditions set forth herein.
 
C.             Borrower and Parent Holdco are entering into this Amendment with the understanding and agreement that, except as specifically provided herein, none of Agent’s or any Lender’s rights or remedies as set forth in the Credit Agreement or any Other Document is being waived or modified by the terms of this Amendment.
 
AGREEMENT
 
NOW, THEREFORE, the parties hereby agree as follows:
 
1.              Increase of Commitment Amount .  Upon the effectiveness of this Amendment, PNC’s (in its capacity as a Lender) Commitment Amount is $70,000,000 and it Commitment Percentage is 100%.
 
2.              Amendments to Credit Agreement .
 
(a)            The defined terms “Increasing Lender” and “New Lender” are hereby deleted from the Section 1.2 of the Credit Agreement in their entirety.
 
(b)            The following defined terms are hereby added to Section 1.2 of the Credit Agreement in their proper alphabetical order:
 
“ April 2014 Bonus Payments ” shall mean the payment of bonuses to employees and directors of Borrower or Parent Holdco who are holders of vested options of Parent Holdco to be made on made on or about April 22, 2014 in an aggregate amount not to
 
1 

 
exceed $1,500,000 plus any payroll tax and similar obligations payable in connection therewith.
 
“ April 2014 Dividend ” shall mean a dividend in an amount not to exceed $40,000,000 made on or about April 22, 2014 by Borrower to Parent Holdco and in turn by Parent Holdco to the owners of its Equity Interests.
 
“ April 2014 Transaction Documents ” shall mean, collectively, the Second Amendment, the Term Loan Agreement and the other Term Loan Documents entered into on or about the Second Amendment Effective Date
 
“ April 2014 Transactions ” shall mean, collectively, (a) the transactions under the April 2014 Transaction Documents, (b) the April 2014 Dividend and (c) the April 2014 Bonus Payments.
 
“ Second Amendment ” shall mean that certain Second Amendment to Second Amended and Restated Revolving Credit and Security Agreement, dated as of the Second Amendment Effective Date, which amends this Agreement.
 
“ Second Amendment Effective Date ” shall mean April 15, 2014.
 
(c)            The defined term “EBITDA” set forth in Section 1.2 of the Credit Agreement is hereby amended and restated to read in its entirety as follows:
 
“ “ EBITDA ” shall mean, with respect to any Loan Party for any specified period: (a) the Consolidated Net Income of Borrower and its Subsidiaries for such period, plus (b) without duplication, the sum of the following amounts of Borrower and its Subsidiaries, on a consolidated basis, in each case to the extent deducted in determining Consolidated Net Income of Borrower and its Subsidiaries for such period, the sum of: (i) Consolidated Net Interest Expense, plus (ii) depreciation and amortization and other non-cash charges (including any (A) non-cash charges relating to employee equity incentive programs, (B) non-cash charges attributable to inventory revaluations as a result of the Transactions, or any Permitted Acquisition and (C) non-cash write-offs relating to impairment of assets), all in accordance with GAAP, plus (iii) net income tax expense, to the extent a positive number (including franchise and foreign withholding taxes and any state business, unitary, gross receipts or similar tax), to the extent deducted in the calculation of Consolidated Net Income, plus (iv) payment-in-kind interest, plus (v) proceeds from business interruption insurance for loss of income (whether or not such loss of income was deducted in determining Consolidated Net Income), plus (vi) Pre-Opening Costs, plus (vii) amortized or deferred financing fee expenses to the extent not included in Consolidated Net Interest Expense, plus (viii) straight line non-cash rent adjustment to the extent rent expense included in Consolidated Net Income exceeds the applicable cash rent payments, plus (ix) [reserved], plus (x) expenses and charges (including premiums, discounts and Hedge Agreement settlement and termination costs) in such period attributable to any debt financings or refinancings, equity offerings, mergers, recapitalizations, acquisitions, investments, option buyouts, dispositions or similar transactions in an amount not to exceed $2,000,000 per fiscal year, provided that
 
2 

 
any such expenses and charges shall have been incurred prior to or no later than 180 days following the consummation of the applicable transaction, plus (xi) commencing on March 31, 2014, extraordinary or non-recurring losses not to exceed $500,000 in the aggregate or as otherwise approved by Agent, plus (xii) restructuring expenses and charges, plus (xiii) net income tax charges, plus (xiv) losses from discontinued operations not to exceed $500,000 per fiscal year, plus (xv) non-cash expenses relating to the Boot Barn Rewards Program, plus (xvi) the principal amount received from Permitted Freeman Spogli Investments (other than in respect of an Equity Cure for a default with respect to Section 7.6 of the Term Loan Agreement), plus (xvii) any earnout or other similar deferred purchase price payment obligations incurred in connection with a Permitted Acquisition, plus (xviii) non-recurring transaction costs, fees and expenses, including the April 2014 Bonus Payments, fees paid under the April 2014 Transaction Documents and costs and expenses incurred in negotiating the April 2014 Transaction Documents, incurred with respect to the April 2014 Transactions, in each case incurred prior to the Second Amendment Effective Date or within 90 days after the Second Amendment Effective Date, and minus (c) without duplication, (i) extraordinary or non-recurring gains, (ii) net income tax benefits, (iii) gains from discontinued operations and (iv) straight line non-cash rent adjustment to the extent cash rent payments exceed the applicable rent expense included in Consolidated Net Income.  Notwithstanding the foregoing, (x) it is agreed that quarterly EBITDA for the fiscal quarter ended June 29, 2013 shall be $7,259,869, quarterly EBITDA for the fiscal quarter ended September 28, 2013 shall be $6,603,834, quarterly EBITDA for the fiscal quarter ended December 28, 2013 shall be $20,281,482 and quarterly EBITDA for the fiscal quarter ended March 29, 2014 shall be $10,018,806; and (y) for purposes of this definition, EBITDA shall be determined on a pro forma basis to give effect to (i) any Permitted Acquisitions (computed utilizing the provisions of this definition together with adjustments reflecting anticipated cost savings and synergies projected by the Borrower in good faith to be realized as a result of specified actions taken or expected to be taken (which cost savings or synergies shall be subject to certification by a responsible officer of the Borrower and shall be calculated on a pro forma basis), in each case to the extent quantifiable and demonstrable and supported by a quality of earnings report prepared by an accounting firm reasonably acceptable to Agent, and in form and substance reasonably acceptable to Agent); provided, that the aggregate amount of adjustments reflecting such anticipated cost savings and synergies in any four fiscal quarter period shall not exceed ten percent (10%) of EBITDA for such period calculated prior to giving effect to such adjustments and (ii) any divestitures by Borrower or any of its Subsidiaries of all or substantially all the assets of, or all the Equity Interests in, a Person or division or line of business of a Person occurring during any period, in each case, as if such transaction had occurred on the first day of such period.”
 
(d)            The defined term “Fixed Charge Coverage Ratio” set forth in Section 1.2 of the Credit Agreement is hereby amended and restated to read in its entirety as follows:
 
“ “ Fixed Charge Coverage Ratio ” shall mean and include, with respect to any fiscal period, the ratio of (a) EBITDA for such period minus Unfinanced Capital Expenditures made during such period to (b) Fixed Charges for such period.”
 
3 

 
(e)            Clause (c) of the defined term “Fixed Charges” set forth in Section 1.2 of the Credit Agreement is hereby amended and restated to read in its entirety as follows:
 
“(c) cash dividends paid and permitted to be paid by the Loan Parties under the terms of this Agreement during such period other than the April 2014 Dividend.”
 
(f)             The defined term “Intercreditor Agreement” set forth in Section 1.2 of the Credit Agreement is hereby amended and restated to read in its entirety as follows:
 
“ “ Intercreditor Agreement ” shall mean that certain Intercreditor Agreement, dated as of May 31, 2013, by and between Agent and the Term Loan Agent, as amended by that certain First Amendment to and Reaffirmation of Intercreditor Agreement, dated the Second Amendment Effective Date, as further amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.”
 
(g)            The defined term “Maximum Revolving Advance Amount” set forth in Section 1.2 of the Credit Agreement is hereby amended and restated to read in its entirety as follows:
 
“ “ Maximum Revolving Advance Amount ” shall mean $70,000,000, as such amount may be increased pursuant to Section 2.25 hereof or decreased pursuant to Section 2.21 hereof.”
 
(h)            Clause (j) of the defined term “Permitted Acquisitions” is hereby amended to read as follows:
 
“(j) after giving effect to such acquisition, the Borrower and its Subsidiaries shall have Undrawn Availability of not less than the greater of (i) $15,000,000 or (ii) 20% of the Maximum Revolving Advance Amount; or”
 
(i)             The words “Frontier Mall Associates Limited Partnership” are hereby deleted from clause (g)(ii) of the defined term “Permitted Encumbrances” set forth in Section 1.2 of the Credit Agreement.
 
(j)             The defined term “Term Loan Agreement” set forth in Section 1.2 of the Credit Agreement is hereby amended and restated to read in its entirety as follows:
 
“ “ Term Loan Agreement ” shall mean that certain Amended and Restated Term Loan and Security Agreement, dated April 15, 2014, as further amended and restated, amended, supplemented, or otherwise modified from time to time as permitted under this Agreement.”
 
(k)            Clause (iv) of Section 2.22(a) of the Credit Agreement is hereby amended to read as follows:
 
“(iv) provide for working capital, Capital Expenditures, Permitted Acquisitions, permitted Restricted Payments and for other general corporate purposes of Borrower (including the payment of the April 2014 Dividend, the April 2014 Bonus Payments and
 
4 

 
costs and expense associated with the April 2014 Transactions), in each case to the extent not prohibited under this Agreement”
 
(l)             Section 2.25 of the Credit Agreement is hereby amended and restated to read in its entirety as follows:
 
“2.25       Increase in Maximum Revolving Advance Amount .
 
(a)            Borrower may, at any time request that the Maximum Revolving Advance Amount be increased by each current Lender increasing its Commitment Amount, on a pro rata basis, subject to the following terms and conditions:
 
(i)             There shall exist no Event of Default or Default on the effective date of such increase after giving effect to such increase;
 
(ii)            After giving effect to such increase, the Maximum Revolving Advance Amount shall not exceed $80,000,000;
 
(iii)           Borrower may not request an increase in the Maximum Revolving Advance Amount under this Section 2.25 more than once during the Term, and no such increase in the Maximum Revolving Advance Amount shall be for an amount less than $5,000,000;
 
(iv)           Borrower shall deliver to Agent on or before the effective date of such increase the following documents in form and substance satisfactory to Agent: (1) certification of its corporate secretary or other authorized officer with attached resolutions certifying that the increase in the Commitment Amounts has been approved by Borrower, (2) a certificate dated as of the effective date of such increase certifying that each of the conditions set forth in Section 8.2 hereof are then satisfied, (3) such other agreements, instruments and information (including supplements or modifications to this Agreement and/or the Other Documents executed by Borrower as Agent reasonably deems necessary in order to document the increase to the Maximum Revolving Advance Amount and to protect, preserve and continue the perfection and priority of the liens, security interests, rights and remedies of Agent and Lenders hereunder and under the Other Documents in light of such increase, and (4) an opinion of counsel in form and substance satisfactory to Agent which shall cover such matters related to such increase as Agent may reasonably require and Borrower hereby authorizes and directs such counsel to deliver such opinions to Agent and Lenders;
 
(v)            Borrower shall execute and deliver to each Lender who so requests, a replacement Revolving Credit Note reflecting the new amount of such Lender’s Commitment Amount after giving effect to the increase (and the prior Revolving Credit Note issued to such Lender, if any, shall be deemed to be cancelled);
 
(vi)           Each Lender shall confirm its agreement to increase its Commitment Amount pursuant to an acknowledgement in a form acceptable to Agent, signed by it and Borrower and delivered to Agent at least five (5) days before the effective date of such increase; and
 
5 

 
(vii)          Agent shall have received reimbursement for all reasonable and documented costs and expenses incurred by Agent and by each Lender in connection with the negotiations regarding, and the preparation, negotiation, execution and delivery of all agreements and instruments executed and delivered by any of Agent, Borrower and/or the Lenders in connection with, such increase (including all fees for any supplemental or additional public filings of any Other Documents necessary to protect, preserve and continue the perfection and priority of the liens, security interests, rights and remedies of Agent and Lenders hereunder and under the Other Documents in light of such increase).
 
(b)            On the effective date of such increase the Commitment Percentages of the Lenders shall be recalculated such that each such Lender’s Commitment Percentage is equal to (i) the Commitment Amount of such Lender divided by (ii) the aggregate of the Commitment Amounts of all Lenders.  Each Lender shall participate in any new Revolving Advances made on or after such date in accordance with its Commitment Percentage after giving effect to the increase in the Maximum Revolving Advance Amount and recalculation of the Commitment Percentages contemplated by this Section 2.25.”
 
(m)           Section 7.7 of the Credit Agreement is hereby amended by deleting the word “and” immediately prior to clause (f) thereof and adding the following at the end of clause (f) thereof:
 
“and (g) the April 2014 Dividend.”
 
(n)            Section 7.10 of the Credit Agreement is hereby amended by deleting the word “and” at the end of clause (e) thereof, replacing the “.” at the end of clause (f) thereof with “; and” and adding the following as clause (g) thereof:
 
“(g)          the April 2014 Bonus Payments and the April 2014 Dividend.”
 
(o)            Section 9.2(b) of the Credit Agreement is hereby amended and restated to read in its entirety as follows:
 
“(b)          monthly, on or before the fifteenth (15th) day of each month as and for the prior month, or, if a Covenant Compliance Period has commenced and is continuing, weekly, on or before Tuesday of each week for the prior week, (i) inventory perpetual reports in form and substance reasonably satisfactory to Agent, and (ii) a Borrowing Base Certificate in form and substance reasonably satisfactory to Agent (which shall be calculated as of the immediately preceding Sunday and which shall not be binding upon Agent or restrictive of Agent’s rights under this Agreement);”
 
(p)            The third address block of clause (A) of Section 15.6 is hereby amended to read as follows:
 
6 

 
“with an additional copy (which shall not constitute Notice) to:
 
Blank Rome, LLP
 
2029 Century Park East, 6 th  Floor
Los Angeles, California 90067
Attention:               Danielle V. Garcia
Telephone:             (424) 239-3412
Facsimile:               (424) 239-3394
 
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Attention:               Lawrence F. Flick II
Telephone:             (212) 885-5556
Facsimile:               (215) 832-5556”
 
(q)            Schedules 1.2(b), 4.5, 4.15(c), 4.15(h)(1), 4.15(h)(2), 5.2(a), 5.9, 5.31, 7.10 and 7.11 to the Credit Agreement are hereby replaced with Schedules 1.2(b), 4.5, 4.15(c), 4.15(h)(1), 4.15(h)(2), 5.2(a), 5.9, 5.31, 7.10 and 7.11 to this Amendment.
 
3.              Amendment Fee .  In consideration of the agreements set forth herein, Borrower hereby agrees to pay to Agent an amendment fee in the amount of $50,000 (the “ Amendment Fee ”), which fee is non-refundable when paid and is fully-earned as of and due and payable on the date of this Amendment.
 
4.              Effectiveness of this Amendment .  Agent must have received the following items, in form and content acceptable to Agent, before this Amendment is effective.
 
(a)            Amendment .  This Amendment duly executed by each party hereto.
 
(b)            Amendment Fee .  The Amendment Fee, which may be paid as a charge to Borrower’s Account.
 
(c)            Amended and Restated Note .  An amended Revolving Credit Note payable to PNC reflecting the Maximum Revolving Advance Amount after giving effect to this Amendment, duly executed by Borrower.
 
(d)            Term Loan Documents .  Agent shall have received copies of the fully executed and effective Term Loan Agreement as in effect on the Second Amendment Effective Date, and all Term Loan Documents executed and delivered on or about the Second Amendment Effective Date, certified by the secretary of the Borrower as being true, correct and complete copies thereof.
 
(e)            Amendment to Intercreditor Agreement .  Agent shall have received, duly executed by all parties thereto, an amendment to and reaffirmation of the Intercreditor Agreement in the form and substance reasonably satisfactory to Agent.
 
7 

(f)             Representations and Warranties .  The representations and warranties set forth in Section 5 must be true and correct.
 
(g)            Other Required Documentation.   All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered or executed or recorded, as required by Agent, including, without limitation, copies of the resolutions authorizing each Loan Party to enter into this Amendment and an executed legal opinion of Bingham McCutchen LLP, in form and substance satisfactory to Agent.
 
5.              Representations and Warranties .  Each Loan Party signatory hereto represents and warrants as follows:
 
(a)            Authority .  Such Loan Party has full power, authority and legal right to enter into this Amendment and to perform all its respective obligations hereunder and under the Credit Agreement as modified by this Amendment.  This Amendment has been duly executed and delivered by such Loan Party, and this Amendment constitutes the legal, valid and binding obligation of such Loan Party enforceable in accordance with its terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally.  The execution, delivery and performance of this Amendment (a) are within such Loan Party’s corporate or limited liability company powers, as applicable, have been duly authorized by all necessary corporate or limited liability company action, as applicable, do not violate the terms of such Loan Party’s by-laws, operating agreement, articles or certificate of incorporation or formation or other documents relating to such Loan Party’s formation, (b) will not violate any material law or regulation, or any judgment, order or decree of any Governmental Body in any material respect, (c) will not require any Consent of any Governmental Body or any other Person the lack of which would have a Material Adverse Effect, all of which will have been duly obtained, made or compiled prior to the date hereof and which are in full force and effect and (d) will not result in any breach of, or constitute a default under, which breach or default could reasonably be expected to have a Material Adverse Effect, or result in the creation of any Lien (except Permitted Encumbrances) upon any asset of such Loan Party pursuant to, the provisions of any agreement or instrument to which such Loan Party is a party or by which it or its property is bound.
 
(b)            Representations and Warranties .  Each of the representations and warranties made by each Loan Party in or pursuant to the Credit Agreement, the Other Documents, any related agreements to which it is a party, in any certificate, document or financial or other statement furnished at any time under or in connection with the Credit Agreement, the Other Documents or any related agreement, are true and correct in all material respects (or in all respects as to any such representations and warranties which, by their terms, are qualified as to materiality) on and as of the date hereof as if made on and as of such date (except for any such representations and warranties which are specifically made as of a prior date, in which case such representations and warranties shall be true and correct as of such prior date).
 
(c)            No Default .  No Event of Default or Default has occurred and is continuing on the date hereof, or would exist after giving effect to the Advances requested to be made on the date hereof.
 
8 

 
(d)            Material Adverse Effect .  Since the delivery of the latest financial statements of Borrower, there shall not have occurred any event, condition or event, condition or state of facts which would have or could reasonably be expected to have a Material Adverse Effect.
 
6.              Choice of Law .  This Amendment shall be governed by and construed in accordance with the laws of the State of New York applied to contracts to be performed wholly within the State of New York.
 
7.              Counterparts; Facsimile Signatures .  This Amendment may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement.  Any signature delivered by a party by facsimile or other similar form of electronic transmission shall be deemed to be an original signature hereto.
 
8.              Reference to and Effect on the Other Documents .
 
(a)            Upon and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the Other Documents to “the Credit Agreement”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified and amended hereby.
 
(b)            Except as specifically amended above, the Credit Agreement and all Other Documents, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed and shall constitute the legal, valid, binding and enforceable obligations of Borrower to Agent and the Lenders.
 
(c)            The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Agent and/or the Lenders under any of the Other Documents, nor constitute a waiver of any provision of any of the Other Documents.
 
(d)            To the extent that any terms and conditions in any of the Other Documents shall contradict or be in conflict with any terms or conditions of the Credit Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Credit Agreement as modified or amended hereby.
 
9.              Estoppel .  To induce Agent and the Lenders to enter into this Amendment and to continue to make advances to Borrower under the Credit Agreement, each Loan Party hereby acknowledges and agrees that, as of the date hereof, there exists no right of offset, defense, counterclaim or objection in favor of Borrower as against Agent or any Lender with respect to the Obligations.
 
10.           Integration .  This Amendment, together with the Credit Agreement and the Other Documents, incorporates all negotiations of the parties hereto with respect to the subject matter
 
9 

 
hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.
 
11.           Severability .  If any part of this Amendment is contrary to, prohibited by, or deemed invalid under Applicable Laws, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible.
 
12.           Submission of Amendment .  The submission of this Amendment to the parties or their agents or attorneys for review or signature does not constitute a commitment by Agent or the Lenders to modify the provisions of the Credit Agreement, and this Amendment shall have no binding force or effect until all of the conditions to the effectiveness of this Amendment have been satisfied as set forth herein.
 
13.           Guarantors’ Acknowledgment .  With respect to the amendments to the Credit Agreement effected by this Amendment, each Guarantor hereby acknowledges and agrees to this Amendment and confirms and agrees that its Guaranty (as modified and supplemented in connection with this Amendment) is and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects except that, upon the effectiveness of, and on and after the date of this Amendment, each reference in such Guaranty to the Credit Agreement, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended or modified by this Amendment.  Although Agent and the Lenders have informed the Guarantors of the matters set forth above, and each Guarantor has acknowledged the same, each Guarantor understands and agrees that neither Agent nor any Lender has any duty under the Credit Agreement, the Guaranty or any other agreement with any Guarantor to so notify any Guarantor or to seek such an acknowledgement, and nothing contained herein is intended to or shall create such a duty as to any transaction hereafter.
 
[ Rest of page intentionally left blank; signature pages follow ]
 
10 

 
IN WITNESS WHEREOF, the parties have entered into this Amendment by their respective duly authorized officers as of the date first above written.

 	BORROWER:	
 	 	
 	BOOT BARN, INC.,	
 	a Delaware corporation	

 	By:	/s/ Paul J. Iacono	
 	 	Name:  Paul J. Iacono	
 	 	Title:  Chief Financial Officer	
 
Signature Page to Second Amendment to
Second Amended and Restated Revolving Credit and Security Agreement

 

 	GUARANTORS:	

 	BOOT BARN HOLDING CORPORATION,	
 	a Delaware corporation	

 	By:	/s/ Christian B. Johnson	
 	 	Name:  Christian B. Johnson	
 	 	Title:  Secretary	

 	ACKNOWLEDGED AND AGREED:	
 	 	
 	RCC WESTERN STORES, INC.,	
 	a South Dakota corporation	

 	By:	/s/ Paul J. Iacono	
 	 	Name:  Paul J. Iacono	
 	 	Title:  Chief Financial Officer	

 	BASKINS ACQUISITION HOLDINGS, LLC,	
 	a Delaware limited liability company	
 	 	
 	 	By:BOOT BARN, INC.,	
 	 	      a Delaware corporation	
 	 	Its: Sole Member	

 	 	By:	/s/ Paul J. Iacono	
 	 	 	Name:  Paul J. Iacono	
 	 	 	Title:  Chief Financial Officer	
 
Signature Page to Second Amendment to
Second Amended and Restated Revolving Credit and Security Agreement

 

 	AGENT AND SOLE LENDER:	
 	 	
 	PNC BANK, NATIONAL ASSOCIATION	

 	By:	/s/ Kevin J. Gimber	
 	 	Name:  Kevin J. Gimber	
 	 	Title:  Assistant Vice President	

Exhibit 10.13

AMENDED AND RESTATED TERM LOAN
 
AND
 
SECURITY AGREEMENT
 
GOLUB CAPITAL LLC
(AS AGENT)
 
WITH
 
BOOT BARN, INC.
(AS BORROWER),
 
BOOT BARN HOLDING CORPORATION
(AS PARENT HOLDCO),
 
AND
 
THE LENDERS PARTY HERETO FROM TIME TO TIME (AS LENDERS)
 
April 15, 2014
 
GOLUB CAPITAL LLC acting as Sole Bookrunner

 
TABLE OF CONTENTS

 	 	 	Page	
 	 	 	
I.	DEFINITIONS	1	
 	 	 	 	
 	1.1	Accounting Terms	1	
 	1.2	General Terms	2	
 	1.3	Uniform Commercial Code Terms	37	
 	1.4	Certain Matters of Construction	37	
 	 	 	 	
II.	LOANS, PAYMENTS	38	
 	 	 	 	
 	2.1	[Reserved]	38	
 	2.2	Procedure for LIBOR Rate Loan Conversion/Continuation or Borrowing	38	
 	2.3	[Reserved]	40	
 	2.4	Term Loans	40	
 	2.5	[Reserved]	41	
 	2.6	Repayment of Loans	41	
 	2.7	[Reserved]	42	
 	2.8	Statement of Account	42	
 	2.9	[Reserved]	42	
 	2.10	[Reserved]	42	
 	2.11	[Reserved]	42	
 	2.12	[Reserved]	42	
 	2.13	[Reserved]	42	
 	2.14	[Reserved]	42	
 	2.15	[Reserved]	42	
 	2.16	[Reserved]	42	
 	2.17	[Reserved]	42	
 	2.18	[Reserved]	42	
 	2.19	[Reserved]	43	
 	2.20	Manner of Borrowing and Payment	43	
 	2.21	Mandatory Prepayments	43	
 	2.22	Use of Proceeds	45	
 	2.23	Defaulting Lender	46	
 	2.24	Joint and Several Liability, Waivers, etc.	47	
 	 	 	 	
III.	INTEREST AND FEES	50	
 	 	 	 	
 	3.1	Interest	50	
 	3.2	[Reserved]	50	
 	3.3	[Reserved]	50	
 	3.4	Fee Letters	50	
 	3.5	Computation of Interest and Fees	50	
 	3.6	Maximum Charges	50	
 	3.7	Increased Costs	51	
 	3.8	Basis For Determining Interest Rate Inadequate or Unfair	51	
 
i 

 
TABLE OF CONTENTS
(continued)

 	 	 	Page	
 	 	 	 	
 	3.9	Capital Adequacy	52	
 	3.10	Taxes	52	
 	3.11	Mitigation; Replacement of Lenders	55	
 	 	 	 	
IV.	COLLATERAL: GENERAL TERMS	56	
 	 	 	 	
 	4.1	Security Interest in the Collateral	56	
 	4.2	Perfection of Security Interest	57	
 	4.3	[Reserved]	57	
 	4.4	Preservation of Collateral	57	
 	4.5	Ownership of Collateral; Liens	58	
 	4.6	Defense of Agent’s and Lenders’ Interests	58	
 	4.7	Books and Records	59	
 	4.8	Financial Disclosure	59	
 	4.9	Compliance with Laws and Organization Documents	59	
 	4.10	Inspection of Premises	60	
 	4.11	Insurance	60	
 	4.12	Failure to Pay Insurance	61	
 	4.13	Payment of Taxes	61	
 	4.14	Payment of Leasehold Obligations	61	
 	4.15	Receivables	61	
 	4.16	Inventory	64	
 	4.17	Maintenance of Equipment	64	
 	4.18	Exculpation of Liability	64	
 	4.19	Environmental Matters	65	
 	4.20	Financing Statements	65	
 	4.21	Provisions with Respect to Investment Property	65	
 	 	 	 	
V.	REPRESENTATIONS AND WARRANTIES	68	
 	 	 	 	
 	5.1	Authority	68	
 	5.2	Formation and Qualification; Compliance with Law	68	
 	5.3	Survival of Representations and Warranties	69	
 	5.4	Tax Returns	69	
 	5.5	No Material Adverse Effect	69	
 	5.6	Entity Name	70	
 	5.7	O.S.H.A. and Environmental Compliance	70	
 	5.8	Solvency; No Litigation, Violation, Indebtedness or Default	70	
 	5.9	Patents, Trademarks, Copyrights and Licenses	72	
 	5.10	Licenses and Permits	73	
 	5.11	Default of Indebtedness	73	
 	5.12	No Default	73	
 	5.13	No Burdensome Restrictions	73	
 
ii 

 
TABLE OF CONTENTS
(continued)

 	 	 	Page	
 	 	 	 	
 	5.14	Labor Matters	73	
 	5.15	Margin Regulations	73	
 	5.16	[Reserved]	74	
 	5.17	Disclosure	74	
 	5.18	Swaps	74	
 	5.19	Conflicting Agreements	74	
 	5.20	Application of Certain Laws and Regulations	74	
 	5.21	Business and Property of Borrower	74	
 	5.22	Section 20 Subsidiaries	74	
 	5.23	No Brokers or Agents	74	
 	5.24	[Reserved]	74	
 	5.25	Federal Securities Laws	75	
 	5.26	Collateral	75	
 	5.27	[Reserved]	75	
 	5.28	Ventures, Subsidiaries and Affiliates; Outstanding Stock	75	
 	5.29	Government Regulation	75	
 	5.30	Other Environmental Matters	76	
 	5.31	Insurance	76	
 	5.32	[Reserved	76	
 	5.33	Transactions Documents	76	
 	 	 	 	
VI.	AFFIRMATIVE COVENANTS	76	
 	 	 	 	
 	6.1	[Reserved]	76	
 	6.2	Conduct of Business and Maintenance of Existence and Assets	76	
 	6.3	[Reserved]	77	
 	6.4	Government Receivables	77	
 	6.5	Financial Covenants	77	
 	6.6	Execution of Supplemental Instruments	79	
 	6.7	Payment of Indebtedness	79	
 	6.8	Standards of Financial Statements	79	
 	6.9	Board Observation Rights	79	
 	6.10	Intellectual Property	80	
 	6.11	Lien Waiver Agreements	81	
 	6.12	Exercise of Rights under Related Transaction Documents	81	
 	6.13	Keepwell	81	
 	 	 	 	
VII.	NEGATIVE COVENANTS	82	
 	 	 	 	
 	7.1	Merger, Consolidation, Acquisition and Sale of Assets	82	
 	7.2	Creation of Liens	82	
 	7.3	Guarantees	82	
 	7.4	Investments	82	
 	7.5	Loans	83	
 
iii 

 
TABLE OF CONTENTS
(continued)

 	 	 	Page	
 	 	 	 	
 	7.6	Capital Expenditures	83	
 	7.7	Restricted Payments	83	
 	7.8	Indebtedness	84	
 	7.9	Nature of Business	85	
 	7.10	Transactions with Affiliates	85	
 	7.11	Management Fees	86	
 	7.12	Subsidiaries	86	
 	7.13	Fiscal Year and Accounting Changes; Change of Jurisdiction, Corporate Name	87	
 	7.14	Pledge of Credit	87	
 	7.15	Amendment of Certificate of Incorporation, By-Laws and Other Documents	87	
 	7.16	Compliance with ERISA	88	
 	7.17	Prepayment of Indebtedness	88	
 	7.18	[Reserved]	88	
 	7.19	Membership/Partnership Interests	88	
 	7.20	[Reserved]	88	
 	7.21	Bank Accounts	88	
 	7.22	Limitation on Issuance of Equity Interests	89	
 	7.23	Limitations on Negative Pledges	89	
 	7.24	Capital Structure and Business	90	
 	7.25	[Reserved]	90	
 	7.26	Sale-Leasebacks	90	
 	7.27	No Impairment of Intercompany Transfers	90	
 	7.28	No Speculative Transactions	90	
 	7.29	Additional Store Leases	90	
 	 	 	 	
VIII.	CONDITIONS PRECEDENT	91	
 	 	 	 	
 	8.1	Conditions to Restatement Effective Date Term Loan	91	
 	 	 	 	
IX.	INFORMATION AS TO THE LOAN PARTIES	92	
 	 	 	 	
 	9.1	Disclosure of Material Matters	92	
 	9.2	Schedules	92	
 	9.3	Environmental Matters	93	
 	9.4	Litigation; Violations	94	
 	9.5	Material Occurrences	94	
 	9.6	Government Receivables	95	
 	9.7	Annual Financial Statements	95	
 	9.8	Quarterly Financial Statements	95	
 	9.9	Monthly Financial Statements	96	
 	9.10	Additional Information	96	
 	9.11	Projected Operating Budget	96	
 
iv 

 
TABLE OF CONTENTS
(continued)

 	 	 	Page	
 	 	 	 	
 	9.12	Variances from Operating Budget and Prior Financial Statement Comparisons	96	
 	9.13	Notice of Suits, Adverse Events	97	
 	9.14	ERISA Notices and Requests	97	
 	9.15	Federal Securities Laws	97	
 	9.16	IP Notices	98	
 	9.17	[Reserved]	98	
 	9.18	Notices Relating to Related Transactions	98	
 	9.19	Additional Documents	98	
 	 	 	 	
X.	EVENTS OF DEFAULT	98	
 	 	 	 	
 	10.1	Nonpayment	98	
 	10.2	Breach of Representation	98	
 	10.3	Financial Information	99	
 	10.4	Judicial Actions	99	
 	10.5	Noncompliance	99	
 	10.6	Judgments	99	
 	10.7	Bankruptcy	99	
 	10.8	Inability to Pay	99	
 	10.9	Cash Management	99	
 	10.10	Restraint of Business Activities	100	
 	10.11	Lien Priority	100	
 	10.12	Cross Default	100	
 	10.13	Breach of Guaranty	100	
 	10.14	Change of Control	100	
 	10.15	Invalidity	100	
 	10.16	Licenses	101	
 	10.17	Seizures	101	
 	10.18	Operations	101	
 	10.19	Pension Plans	101	
 	10.20	Invalidity of Intercreditor Agreement, Subordination Provisions, etc.	101	
 	10.21	Material Assets	101	
 	10.22	Reportable Compliance Event	102	
 	10.23	Equity Cure	102	
 	 	 	 	
XI.	LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT	104	
 	 	 	
 	11.1	Rights and Remedies	104	
 	11.2	Agent’s Discretion	105	
 	11.3	Setoff	106	
 	11.4	Rights and Remedies not Exclusive	106	
 	11.5	Allocation of Payments After Event of Default	106	
 
v 

 
TABLE OF CONTENTS
(continued)

 	 	 	Page	
 	 	 	
XII.	WAIVERS AND JUDICIAL PROCEEDINGS	107	
 	 	 	
 	12.1	Waiver of Notice	107	
 	12.2	Delay	107	
 	12.3	Jury Waiver	107	
 	 	 	 	
XIII.	EFFECTIVE DATE AND TERMINATION	107	
 	 	 	
 	13.1	Term	107	
 	13.2	Termination	108	
 	 	 	 	
XIV.	REGARDING AGENT	109	
 	 	 	
 	14.1	Appointment	109	
 	14.2	Nature of Duties	109	
 	14.3	Lack of Reliance on Agent and Resignation	110	
 	14.4	Certain Rights of Agent	110	
 	14.5	Reliance	110	
 	14.6	Notice of Default	111	
 	14.7	Indemnification	111	
 	14.8	Agent in its Individual Capacity	111	
 	14.9	Delivery of Documents	111	
 	14.10	Borrower’s Undertaking to Agent	112	
 	14.11	No Reliance on Agent’s Customer Identification Program	112	
 	14.12	Other Agreements	112	
 	14.13	Collateral Matters	112	
 	 	 	 	
XV.	MISCELLANEOUS	113	
 	 	 	
 	15.1	Governing Law	113	
 	15.2	Entire Understanding	114	
 	15.3	Successors and Assigns; Participations; New Lenders	116	
 	15.4	Application of Payments	118	
 	15.5	Indemnity	118	
 	15.6	Notice	119	
 	15.7	Survival	121	
 	15.8	Severability	121	
 	15.9	Expenses	121	
 	15.10	Injunctive Relief	122	
 	15.11	Consequential Damages	122	
 	15.12	Captions	123	
 	15.13	Counterparts; Facsimile Signatures	123	
 	15.14	Construction	123	
 	15.15	Confidentiality; Sharing Information	123	
 	15.16	Publicity	124	
 	15.17	Certifications From Banks and Participants; US Patriot Act	124	
 
vi 

 
TABLE OF CONTENTS
(continued)

 	 	 	Page	
 	 	 	 	
 	15.18	Anti-Money Laundering/International Trade Law Compliance	124	
 	15.19	Intercreditor Agreement	125	
 	15.20	Continued Effectiveness; No Novation	126	
 	15.21	Reaffirmation of Existing Other Documents	126	
 
vii 

 
List of Exhibits and Schedules

Exhibits	 	 	
 	 	 	
Exhibit 1.2(a)	 	Compliance Certificate	
Exhibit 2.4	 	Term Note	
Exhibit 6.10(a)	 	Intellectual Property Security Agreement	
Exhibit 7.12	 	Joinder Agreement	
Exhibit 8.1(s)	 	Intercreditor Agreement	
Exhibit 9.3	 	Environmental Compliance Certificate	
Exhibit 15.3	 	Assignment Agreement	
 	 	 	
Schedules	 	 	
 	 	 	
Schedule 1.2(a)	 	Permitted Encumbrances	
Schedule 1.2(b)	 	Permitted Holders	
Schedule 2.4(a)	 	Term Loan Commitments	
Schedule 4.5	 	Equipment and Inventory Location	
Scheduled 4.15(c)	 	Locations of Loan Parties	
Schedule 4.15(h)(2)	 	Deposit and Investment Accounts	
Schedule 5.1	 	Consents	
Schedule 5.2(a)	 	States of Qualification and Good Standing	
Schedule 5.2(b)	 	Subsidiaries	
Schedule 5.4	 	Taxes and Federal Tax Identification Number	
Schedule 5.6	 	Prior Names	
Schedule 5.8(b)	 	Litigation	
Schedule 5.8(d)	 	Plans	
Schedule 5.9	 	Intellectual Property, Source Code Escrow Agreements	
Schedule 5.10	 	Licenses and Permits	
Schedule 5.14	 	Labor Matters	
Schedule 5.28	 	Ventures, Subsidiaries and Affiliates; Outstanding Stock	
Schedule 5.30	 	Other Environmental Matters	
Schedule 5.31	 	Insurance	
Schedule 7.8	 	Indebtedness	
Schedule 7.10	 	Transactions with Affiliates	
Schedule 7.11	 	Management Fees	
Schedule 8.1(a)	 	Restatement Effective Date Loan Documents	
 
viii 

AMENDED AND RESTATED TERM LOAN
AND SECURITY AGREEMENT
 
This Amended and Restated Term Loan and Security Agreement, dated as of April 15, 2014, is entered into by and among BOOT BARN, INC., a corporation organized under the laws of the State of Delaware (“ Boot Barn ” and collectively with each other Person joined as a party to this Agreement as a “Borrower” in accordance with Section 7.12 hereof, and all of their respective permitted successors and assigns, “ Borrower ”), BOOT BARN HOLDING CORPORATION, a corporation organized under the laws of the State of Delaware (“ Parent Holdco ”), the financial institutions which are now or which hereafter become a party hereto (collectively, “ Lenders ” and individually, a “ Lender ”) and GOLUB CAPITAL LLC, as agent (in such capacity, “ Agent ”) for Lenders and as sole bookrunner, with reference to the following facts:
 
RECITALS
 
A.                                     Borrower, certain of the Loan Parties, Agent and certain of the Lenders (the “ Existing Lenders ”) are parties to a Term Loan and Security Agreement dated as of May 31, 2013 (as amended by the First Amendment, and as further amended, restated, supplemented or otherwise modified prior to the date hereof, the “ Existing Credit Agreement ”).
 
B.                                     Borrower has requested, and Agent and certain of the Lenders have agreed to make an additional term loan to Borrower, upon and subject to the terms and conditions set forth in this Agreement to, among other things, (i) fund a portion of a cash dividend to be made to Parent Holdco not later than April 22, 2014 in an amount not to exceed $40,000,000, the proceeds of which Parent Holdco shall promptly distribute to its direct and indirect equityholders (the “ Restatement Effective Date Dividend ”), (ii) pay a portion of the costs and expenses of the Restatement Effective Date Transactions, including, without limitation, costs and expenses required to be paid pursuant to Section 3.4(b), and any other costs and expenses (including the Restatement Effective Date Bonus Payments (as defined below)) related to the transactions contemplated by this Agreement and the Other Documents.
 
C.                                     Parent Holdco, Borrower, Agent and the Lenders desire to amend and restate in its entirety the Existing Credit Agreement, without constituting a novation, all on the terms and subject to the conditions contained herein.
 
NOW, THEREFORE, in consideration of the above premises and the mutual covenants and undertakings herein contained, Borrower, Parent Holdco, Lenders and Agent hereby agree to amend and restate the Existing Credit Agreement, without constituting a novation, as follows:
 
I.                                         DEFINITIONS.
 
1.1                                Accounting Terms .  As used in this Agreement, the Other Documents or any certificate, report or other document made or delivered pursuant to this Agreement, accounting terms not defined in Section 1.2 or elsewhere in this Agreement and accounting terms partly defined in Section 1.2 to the extent not defined, shall have the respective meanings given to them under GAAP; provided , however , that if Borrower notifies Agent that Borrower requests an amendment to Section 6.3 to eliminate or appropriately adjust for the effect of any change
 
1 

 
occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if Agent notifies Borrower that Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such provision is amended to eliminate or adjust for the effect of any such change in accordance herewith.  Notwithstanding the foregoing, for purposes of calculating the financial covenants and the covenants set forth in this Agreement, (a) no effect shall be given to FAS 141R or any subsequent codification thereof, and (b) any change to GAAP requiring leases which were previously classified as operating leases to be treated as capitalized leases shall be ignored for the purpose of determining Indebtedness hereunder and such leases shall continue to be treated as operating leases for such purposes consistent with GAAP as in effect on the date hereof.
 
1.2                                General Terms .  For the purpose of this Agreement, the following terms shall have the following respective meanings:
 
“ Accountants ” shall have the meaning set forth in Section 9.7 hereof.
 
“ Affiliate ” of any Person shall mean (a) any Person which, directly or indirectly, is in control of, is controlled by, or is under common control with such Person, or (b) any Person who is a director, managing member, general partner or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person described in clause (a) above. For purposes of this definition, control of a Person shall mean the power, direct or indirect, (x) to vote 5% or more of the Equity Interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for any such Person, or (y) to direct or cause the direction of the management and policies of such Person whether by ownership of Equity Interests, contract or otherwise. Notwithstanding the foregoing, the term “Affiliate” shall exclude Agent, any Lender, Freeman Spogli, and each portfolio company of Freeman Spogli (other than Borrower, Parent Holdco or any other Loan Party) or any purchaser of subordinated debt.
 
“ Agent ” shall have the meaning set forth in the preamble to this Agreement and shall include its successors and assigns.
 
“ Agreement ” shall mean this Amended and Restated Term Loan and Security Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.
 
“ Anti-Terrorism Laws ” shall mean any Laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering or bribery, all as amended, supplemented or replaced from time to time.
 
“ Applicable Law ” shall mean all Laws applicable to the Person, conduct, transaction, covenant, Other Document or contract in question, including, with respect to any Collateral located in Canada, the PPSA.
 
2 

 
“ Approved Fund ” shall mean any Fund that is administered, managed, advised or underwritten by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
 
“ Assignment Agreement ” shall mean a document in the form of Exhibit 15.3 hereto, properly completed and otherwise in form and substance satisfactory to Agent by which the Purchasing Lender purchases and assumes a portion of the obligation of Lenders to make Loans under this Agreement.
 
“ Base Rate ” shall mean, for any day, a floating rate equal to the greater of (x) the higher of (i) the per annum rate publicly quoted from time to time by The Wall Street Journal as the “Prime Rate” in the United States (or, if The Wall Street Journal ceases quoting a prime rate of the type described, either (a) the per annum rate quoted as the base rate on such corporate loans in a different national publication as reasonably selected by Agent or (b) the highest per annum rate of interest published by the Federal Reserve in Federal Reserve statistical release H.15 (519) entitled “Selected Interest Rates” as the Bank prime loan rate or its equivalent), and (ii) the Federal Funds Rate plus fifty (50) basis points per annum and (y) the sum of (a) the LIBOR Rate calculated for each such day based on an Interest Period of one (1) month determined two (2) Business Days prior to the first day of the then current month (but in no event less than one and one quarter percent (1.25%) per annum) plus (b) one percent (1.0%) per annum.  Each change in any interest rate provided for in this Agreement based upon the Base Rate shall take effect at the time of such change in the Base Rate.
 
“ Base Rate Loan ” shall mean any Loan that bears interest based upon the Base Rate.
 
“ Baskins ” shall mean Baskins Acquisition Holdings, LLC, a Delaware limited liability company.
 
“ Boot Barn ” shall have the meaning set forth in the preamble to this Agreement.
 
“ Borrower ” shall have the meaning set forth in the preamble to this Agreement.
 
“ Borrowing Base Party ” shall have the meaning set forth in the PNC Credit Agreement.
 
“ Business Day ” shall mean any day other than Saturday or Sunday or a legal holiday on which commercial banks are authorized or required by law to be closed for business in East Brunswick, New Jersey or Chicago, Illinois and, if the applicable Business Day relates to any LIBOR Rate Loans, such day must also be a day on which dealings are carried on in the London interbank market.
 
“ Capital Expenditures ” shall mean, with respect to any Person for any period, the aggregate of all expenditures for any fixed assets or improvements or for replacements, substitutions or additions thereto, that have a useful life of more than one (1) year and which are required to be capitalized under GAAP, including the total principal portion of Capital Lease Obligations and excluding any portion of Capital Expenditures made to replace or restore assets to the extent financed by (a) insurance proceeds paid on account of loss or damage to any assets of such Person, (b) awards of compensation arising in connection with an eminent domain or condemnation proceeding, (c) made as a reinvestment of proceeds pursuant to Section 2.21 or (d) to the extent the same would otherwise be treated as Capital Expenditures, consideration paid in a Permitted Acquisition.
 
3 

 
“ Capital Financing Indebtedness ” shall mean, as of any date of determination, Indebtedness (other than the Obligations, but including Capital Lease Obligations), incurred at the time of, or within 120 days after, the acquisition, purchase, construction, improvement or remodel (in each case, other than pursuant to a Permitted Acquisition) of any PP&E for the purpose of financing all or any part of the acquisition, purchase, construction, improvement or remodeling cost thereof; provided, that any such PP&E shall be sufficiently identified as the subject of such Capital Financing Indebtedness.
 
“ Capital Lease ” shall mean, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, would be required to be classified and accounted for as a capital lease on a balance sheet of such Person.
 
“ Capital Lease Obligation ” shall mean, with respect to any Capital Lease of any Person, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease.
 
“ CEA ” shall mean the Commodity Exchange Act (7 U.S.C.§1 et seq.), as amended from time to time, and any successor statute.
 
“ CERCLA ” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.
 
“ CFTC ” shall mean the Commodity Futures Trading Commission.
 
“ Change in Law ” shall mean the occurrence, after the Restatement Effective Date, of any of the following: (a) the adoption or taking effect of any Applicable Law; (b) any change in any Applicable Law or in the administration, implementation, interpretation or application thereof by any Governmental Body; or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Body; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines, interpretations or directives thereunder or issued in connection therewith (whether or not having the force of Applicable Law) and (y) all requests, rules, regulations, guidelines, interpretations or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities (whether or not having the force of law), in each case pursuant to Basel III, shall in each case be deemed to be a Change in Law regardless of the date enacted, adopted, issued, promulgated or implemented.
 
“ Change of Control ” shall mean (a) the occurrence of any event (whether in one or more transactions) which results in a transfer of control of Borrower to a Person who is not the Original Owner or a Person, directly or indirectly, controlled by Freeman Spogli, (b) any merger or consolidation of or with Borrower or sale of all or substantially all of the property or assets of Borrower or sale or transfer of all of the Equity Interests of Borrower to a Person who is not the
 
4 

 
Original Owner or a Person, directly or indirectly, controlled by Freeman Spogli, (c) Freeman Spogli ceases to own and control, directly or indirectly, at least seventy-five percent (75%) of the outstanding Equity Interests of Parent Holdco owned by Freeman Spogli on the Original Closing Date or Freeman Spogli ceases to own, directly or indirectly, a majority of the voting Equity Interests of Parent Holdco, (d) in one or more transactions, any Person (or such Person and its Affiliates) other than Freeman Spogli acquires the ability to elect a majority of the board of directors or equivalent governing body of Parent Holdco, or (e) except in connection with a merger or consolidation permitted under Section 7.1 , Borrower fails to own at any time one hundred percent (100%) of the Equity Interests of any of its Subsidiaries.  For purposes of this definition, “control of Borrower” shall mean the power, direct or indirect (x) to vote 50% or more of the Equity Interests having ordinary voting power for the election of directors (or the individuals performing similar functions) of Borrower or (y) to direct or cause the direction of the management and policies of Borrower by contract or otherwise.
 
“ Charges ” shall mean all taxes, charges, fees, imposts, levies or other assessments, including all net income, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation and property taxes, custom duties, fees, assessments, liens, claims and charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other authority, domestic or foreign (including the PBGC or any environmental agency or superfund), upon the Collateral, any Loan Party or any of its Affiliates.
 
“ Code ” shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.
 
“ Collateral ” shall mean and include, subject to the exclusions specified in Section 4.1, in each case with respect to Borrower or any Guarantor granting a lien on the following assets in favor of Agent:
 
(a)                                  all Receivables;
 
(b)                                  all Equipment;
 
(c)                                   all General Intangibles;
 
(d)                                  all Inventory;
 
(e)                                   all Investment Property;
 
(f)                                    all Real Property;
 
(g)                                   all Subsidiary Stock;
 
(h)                                  all of such Person’s right, title and interest in and to, whether now owned or hereafter acquired and wherever located, (i) its respective goods and other property including, but not limited to, all merchandise returned or rejected by Customers, relating to or securing any
 
5 

 
of the Receivables; (ii) all of such Person’s rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in transit, setoff, detinue, replevin, reclamation and repurchase; (iii) all additional amounts due to such Person from any Customer relating to the Receivables; (iv) other property, including warranty claims, relating to any goods securing the Obligations; (v) all of such Person’s contract rights, rights of payment which have been earned under a contract right, instruments (including promissory notes), documents, chattel paper (including electronic chattel paper), warehouse receipts, deposit accounts, letters of credit and money; (vi) all commercial tort claims (whether now existing or hereafter arising); (vii) if and when obtained by such Person, all real and personal property of third parties in which such Person has been granted a lien or security interest as security for the payment or enforcement of Receivables; (viii) all letter of credit rights (whether or not the respective letter of credit is evidenced by a writing); (ix) all supporting obligations; and (x) any other goods, personal property or real property now owned or hereafter acquired in which such Person has expressly granted a security interest or may in the future grant a security interest to Agent hereunder, or in any amendment or supplement hereto or thereto, or under any other agreement between Agent and such Person;
 
(i)                                      all of such Person’s ledger sheets, ledger cards, files, correspondence, records, books of account, business papers, computers, computer software (owned by such Person or in which it has an interest), computer programs, tapes, disks and documents relating to (a), (b), (c), (d), (e) or (f) of this Paragraph; and
 
(j)                                     all proceeds and products of (a), (b), (c), (d), (e), (f) and (g) in whatever form, including, but not limited to: cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim proceeds.
 
“ Commitment Percentage ” of any Lender shall mean the Original Closing Date Term Loan Commitment Percentage or the Restatement Effective Date Term Loan Commitment Percentage, as applicable, of such Lender.
 
“ Compliance Authority ” shall mean each and all of the (a) U.S. Treasury Department/Office of Foreign Assets Control, (b) U.S. Treasury Department/Financial Crimes Enforcement Network, (c) U.S. State Department/Directorate of Defense Trade Controls, (d) U.S. Commerce Department/Bureau of Industry and Security, (e) U.S. Internal Revenue Service, (f) the U.S. Justice Department, and (g) U.S. Securities and Exchange Commission.
 
“ Compliance Certificate ” shall mean a certificate in substantially the form of Exhibit 1.2(a)  hereto, duly executed by the President, Chief Financial Officer or Controller of Parent Holdco and delivered to Agent, appropriately completed.
 
“ Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
 
6 

 
“ Condemnation Event ” shall mean any actual condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, of any property or assets of a Person, or confiscation of such property or assets or the requisition of the use of such property or assets.
 
“ Consents ” shall mean all filings and all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Bodies (including, without limitation, Hart-Scott-Rodino clearance) and other third parties, domestic or foreign, necessary to carry on Borrower’s business or necessary (including to avoid a breach under any material agreement, instrument, other document, license, permit or other authorization) for the execution, delivery or performance of this Agreement and the Other Documents, including any Consents required under all applicable federal, state or other Applicable Law.
 
“ Consigned Inventory ” shall mean Inventory of a Person that is in the possession of another Person on a consignment, sale or return, or other basis that does not constitute a final sale and acceptance of such Inventory.
 
“ Consolidated Net Income ” shall mean, with respect to any Person for any period, the net income (loss) of such Person and its Subsidiaries for such period, determined on a consolidated basis and in accordance with GAAP.
 
“ Consolidated Net Interest Expense ” shall mean, with respect to any Person for any period, (a) Interest Expense (excluding interest paid-in-kind) of such Person and its Subsidiaries for such period determined on a consolidated basis and in accordance with GAAP, less (b) the sum of (i) interest income for such period and (ii) gains for such period on Hedge Agreements (to the extent not included in interest income above and to the extent not deducted in the calculation of gross interest expense), plus (c) the sum of (i) losses for such period on Hedge Agreements (to the extent not included in gross interest expense) and (ii) the upfront costs or fees for such period associated with Hedge Agreements (to the extent not included in gross interest expense), in each case, determined on a consolidated basis and in accordance with GAAP.
 
“ Controlled Group ” shall mean, at any time, Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with Borrower, are treated as a single employer under Section 414 of the Code.
 
“ Copyright ” shall mean all of the following (whether now owned or hereafter acquired by a Loan Party):  copyrights, copyright registrations and other works protectable by copyright registration, including the copyright registrations and recordings thereof and all applications in connection therewith listed on Schedule 5.9 attached hereto and made a part hereof, and (i) all restorations, reversions, renewals, reissues, continuations or extensions thereof, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, (iii) the right to sue for past, present and future infringements and dilutions thereof and (iv) all of such Person’s rights corresponding thereto throughout the world.
 
7 

 
“ Covered Entity ” shall mean (a) each Loan Party, each Loan Party’s Subsidiaries, all pledgors of Collateral, and (b) each Person which, directly or indirectly, is in control of the Person described in clause (a) above.  For purposes of this definition, control of a Person shall mean the, direct or indirect, (x) ownership of, or power to vote, 25% or more of the issued and outstanding Equity Interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for any such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of Equity Interests, contract or otherwise.
 
“ Credit Card Agreements ” shall mean all agreements now or hereafter entered into by and between any Borrowing Base Party and any Credit Card Issuer or Credit Card Processor, as the same may now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
 
“ Credit Card Issuer ” shall mean any Person who issues or whose members issue credit cards or debit cards used by Customers of any Borrowing Base Party to purchase goods, including, without limitation, Discover, MasterCard, VISA and American Express.
 
“ Credit Card Notices ” shall mean those certain notices, each in form and substance reasonably satisfactory to Agent in its Permitted Discretion, issued at the time and in the manner set forth in Section 4.15(h) pursuant to which such Credit Card Issuers and Credit Card Processors are notified of Agent’s security interest in all amounts due to the Borrowing Base Parties under any Credit Card Agreement and the collateral assignment by such Borrowing Base Parties to Agent of the right to collect and receive such amounts and are directed to make all such payments to the bank account set forth therein, which bank account shall be the subject of a deposit account control agreement in form and substance reasonably satisfactory to Agent.
 
“ Credit Card Processor ” shall mean any servicing or processing agent or any factor or financial intermediary who facilitates, services, processes or manages the credit authorization, billing transfer and/or payment with respect to Credit Card Receivables from a Credit Card Issuer and other procedures with respect to any sales transactions of a Borrowing Base Party involving credit card or debit card purchases by Customers using credit cards or debit cards issued by any Credit Card Issuer.
 
“ Credit Card Receivables ” shall mean all Receivables consisting of the present and future rights of a Borrowing Base Party to payment by Credit Card Issuers or Credit Card Processors for merchandise sold and delivered to Customers of such Borrowing Base Party who have purchased such goods using a credit card or a debit card issued by a Credit Card Issuer.
 
“ Current Assets ” at a particular date, for any Person, shall mean all accounts and inventory of Borrower and all other items (except cash and cash equivalents) which would, in conformity with GAAP, be included under current assets on a balance sheet of such Person as at such date; provided , however , that such amounts shall not include (a) any amounts for any Indebtedness owing by an Affiliate of such Person, unless such Indebtedness arose in connection with the sale of goods or rendition of services in the Ordinary Course of Business and would otherwise constitute current assets in conformity with GAAP, (b) any Equity Interests issued by an Affiliate of such Person, or (c) the cash surrender value of any life insurance policy.
 
8 

 
“ Current Liabilities ” at a particular date, for any Person, shall mean all amounts, other than Indebtedness payable within twelve (12) months which would, in conformity with GAAP, be included under current liabilities on a balance sheet of such Person, as at such date, but in any event including the amounts of all accruals for federal or other taxes measured by income payable within a twelve (12) month period.
 
“ Customer ” shall mean and include the account debtor (including Credit Card Processors and Credit Card Issuers) with respect to any Receivable and/or the prospective purchaser of goods, services or both with respect to any contract or contract right, and/or any party who enters into any contract or other arrangement with a Borrowing Base Party, pursuant to which such Borrowing Base Party is to deliver any Inventory or perform any services.
 
“ Customs ” shall have the meaning set forth in Section 2.11(b) hereof.
 
“ Default ” shall mean an event, circumstance or condition which, with the giving of notice or passage of time or both, would constitute an Event of Default.
 
“ Default Rate ” shall have the meaning set forth in Section 3.1 hereof.
 
“ Defaulting Lender ” shall have the meaning set forth in Section 2.23(a) hereof
 
“ Designated Lender ” shall have the meaning set forth in Section 15.2(b) hereof.
 
“ Disqualified Equity Interests ” shall mean any Equity Interest that, by its terms (or by the terms of any security or other Equity Interest into which it is convertible or for which it is exchangeable), (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the date which is six (6) months after the last day of the Term (other than to the extent mandatorily redeemable by the holder thereof upon the occurrence of a contingent event within a Loan Party’s control) in cash, (b) is convertible into or exchangeable for (i) debt securities or (ii) any Equity Interests referred to in clause (a) above, in each case at any time prior to the date which is six (6) months after the last day of the Term or (c) provides for scheduled payments or the payment of cash dividends or distributions prior to the date that is six (6) months after the last day of the Term.
 
“ Dollar ” and the sign “$” shall mean lawful money of the United States of America.
 
“ Domestic Holding Company ” shall mean any Domestic Subsidiary that is disregarded as an entity separate from its owner for U.S. federal income tax purposes and either (i) substantially all of its assets consist of Equity Interests of one or more Foreign Subsidiaries that are “controlled foreign corporations” (as defined in Section 957(a) of the Code) or (ii) a significant portion of its assets consist of Equity Interests in one or more Foreign Subsidiaries that are “controlled foreign corporations” as so defined and the direct or indirect pledge of more than sixty-six and two-thirds percent (66 2/3%) of the Equity Interests in such Foreign Subsidiaries, in the reasonable judgment of Borrower, would result in a materially adverse tax consequence to Borrower or its Affiliates.
 
“ Domestic Subsidiary ” is any Subsidiary other than a Foreign Subsidiary.
 
9 

 
“ Drawing Date ” shall have the meaning set forth in Section 2.12(b) hereof.
 
“ EBITDA ” shall mean, with respect to any Loan Party for any specified period: (a) the Consolidated Net Income of Borrower and its Subsidiaries for such period, plus (b) without duplication, the sum of the following amounts of Borrower and its Subsidiaries, on a consolidated basis, in each case, to the extent deducted in determining Consolidated Net Income of Borrower and its Subsidiaries for such period, the sum of: (i) Consolidated Net Interest Expense, plus (ii) depreciation and amortization and other non-cash charges (including any (A) non-cash charges relating to employee equity incentive programs, (B) non-cash charges attributable to inventory revaluations as a result of the Transactions or any Permitted Acquisition and (C) non-cash write-offs relating to impairment of assets), all in accordance with GAAP, plus (iii) net income tax expense, to the extent a positive number (including franchise and foreign withholding taxes and any state business, unitary, gross receipts or similar tax), to the extent deducted in the calculation of Consolidated Net Income, plus (iv) payment-in-kind interest, plus (v) proceeds from business interruption insurance for loss of income (whether or not such loss of income was deducted in determining Consolidated Net Income), plus (vi) Pre-Opening Costs, plus (vii) amortized or deferred financing fee expenses to the extent not included in Consolidated Net Interest Expense, plus (viii) straight line non-cash rent adjustment to the extent rent expense included in Consolidated Net Income exceeds the applicable cash rent payments, plus (ix) [reserved], plus (x) expenses and charges (including premiums, discounts and Hedge Agreement settlement and termination costs) in such period attributable to any debt financings or refinancings, equity offerings, mergers, recapitalizations, acquisitions, investments, option buyouts, dispositions or similar transactions in an amount not to exceed $2,000,000 per fiscal year, provided that any such expenses and charges shall have been incurred prior to or no later than 180 days following the consummation of the applicable transaction, plus (xi) commencing on March 31, 2014, extraordinary or non-recurring losses not to exceed $500,000 in the aggregate or as otherwise approved by Agent, plus (xii) restructuring expenses and charges, plus (xiii) net income tax charges, plus (xiv) losses from discontinued operations not to exceed $500,000 per fiscal year, plus (xv) non-cash expenses relating to the Boot Barn Rewards Program, plus (xvi) the principal amount received from Permitted Freeman Spogli Investments (other than in respect of an Equity Cure for a Capex Covenant Default), plus (xvii) any earnout or other similar deferred purchase price payment obligations incurred in connection with a Permitted Acquisition, plus (xviii) non-recurring transaction costs, fees and expenses, including the Restatement Effective Date Bonus Payments, fees paid under the Restatement Effective Date Transaction Documents and costs and expenses incurred in negotiating the Restatement Effective Date Transaction Documents, incurred with respect to the Restatement Effective Date Transactions, in each case incurred prior to the Restatement Effective Date or within 90 days after the Restatement Effective Date, and minus (c) without duplication, (i) extraordinary or non-recurring gains, (ii) net income tax benefits, (iii) gains from discontinued operations and (iv) straight line non-cash rent adjustment to the extent cash rent payments exceed the applicable rent expense included in Consolidated Net Income.  Notwithstanding the foregoing: (x) it is agreed that quarterly EBITDA for the fiscal quarter ended June 29, 2013 shall be $7,259,869, quarterly EBITDA for the fiscal quarter ended September 28, 2013 shall be $6,603,834, quarterly EBITDA for the fiscal quarter ended December 28, 2013 shall be $20,281,482 and quarterly EBITDA for the fiscal quarter ended March 29, 2014 shall be $10,018,806; and (y) for purposes of this definition, EBITDA shall be determined on a pro forma basis to give effect to (i) any Permitted Acquisitions (computed utilizing the provisions of this definition together with
 
10 

 
adjustments reflecting anticipated cost savings and synergies projected by the Borrower in good faith to be realized as a result of specified actions taken or expected to be taken (which cost savings or synergies shall be subject to certification by a responsible officer of the Borrower and shall be calculated on a pro forma basis), in each case to the extent quantifiable and demonstrable and supported by a quality of earnings report prepared by an accounting firm reasonably acceptable to Agent, and in form and substance reasonably acceptable to Agent); provided, that the aggregate amount of adjustments reflecting such anticipated cost savings and synergies in any four fiscal quarter period shall not exceed ten percent (10%) of EBITDA for such period calculated prior to giving effect to such adjustments and (ii) any divestitures by Borrower or any of its Subsidiaries of all or substantially all the assets of, or all the Equity Interests in, a Person or division or line of business of a Person occurring during any period, in each case, as if such transaction had occurred on the first day of such period.
 
“ Eligibility Date ” shall mean, with respect to each Loan Party and each Swap, the date on which this Agreement or any Other Document becomes effective with respect to such Swap (for the avoidance of doubt, the Eligibility Date shall be the date of the execution of such Swap if this Agreement or any Other Document is then in effect with respect to such Loan Party, and otherwise it shall be the date of execution and delivery of this Agreement and/or such Other Document(s) to which such Loan Party is a party).
 
“ Eligible Contract Participant ” shall mean an “eligible contract participant” as defined in the CEA and regulations thereunder.
 
“ Environmental Authority ” shall have the meaning set forth in Section 9.3(b) hereof.
 
“ Environmental Complaint ” shall have the meaning set forth in Section 9.3(b) hereof.
 
“ Environmental Laws ” shall mean all Applicable Laws relating to the environment, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating to the protection of the environment, preservation or reclamation of natural resources and/or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the rules, regulations, policies, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto.
 
“ Environmental Liabilities ” shall mean, with respect to any Person, all liabilities, obligations, responsibilities, response, remedial and removal costs, investigation and feasibility study costs, capital costs, operation and maintenance costs, losses, damages, punitive damages, property damages, natural resource damages, consequential damages, treble damages, costs and expenses (including all fees, disbursements and expenses of counsel, experts and consultants), fines, penalties, sanctions and interest incurred as a result of or related to any claim, suit, action, investigation, proceeding or demand by any Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law, arising under or related to any Environmental Laws, Environmental Permits, or in connection with any Release or threatened Release or presence of a Hazardous Substance whether on, at, in, under, from or about or in the vicinity of any real or personal property.
 
11 

“ Environmental Permits ” shall mean all permits, licenses, authorizations, certificates, approvals, registrations or other written documents required by any Governmental Body under any Environmental Laws.
 
“ Equipment ” shall mean and include all of Borrower’s goods (other than Inventory) whether now owned or hereafter acquired and wherever located including all equipment, machinery, apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all replacements and substitutions therefor or accessions thereto.
 
“ Equity Cure ” has the meaning set forth in Section 10.23 hereof.
 
“ Equity Interests ” of any Person shall mean any and all shares, rights to purchase, options, warrants, general, limited or limited liability partnership interests, member interests, participation or other equivalents of or interest in (regardless of how designated) equity of such Person, whether voting or nonvoting, including common stock, preferred stock, convertible securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).
 
“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time and the rules and regulations promulgated thereunder.
 
“ Event of Default ” shall have the meaning set forth in Article X hereof.
 
“ Excess Cash Flow ” for any fiscal period shall mean EBITDA of the Loan Parties and their Subsidiaries on a consolidated basis for such fiscal period minus Unfinanced Capital Expenditures made by Borrower during such fiscal period and minus cash Interest Expense for such fiscal period, determined in accordance with GAAP minus taxes actually paid in cash by Parent Holdco and its Subsidiaries during such fiscal period minus cash payments of principal made by Parent Holdco and its Subsidiaries during such fiscal period with respect to Indebtedness of Parent Holdco and its Subsidiaries scheduled to be paid during such fiscal period minus Unfinanced Permitted Acquisition Expenses for such fiscal period paid in cash plus decreases in Working Capital of Parent Holdco and its Subsidiaries for such fiscal period minus increases in Working Capital of Parent Holdco and its Subsidiaries for such fiscal period plus any purchase price adjustments (other than working capital adjustments) or indemnity payments received by Parent Holdco or any of its Subsidiaries in cash (excluding any such indemnity payments or purchase price adjustments in respect of an obligation, liability or damage that has resulted, or is reasonably likely to result, in a cash expenditure to a third party with respect to the underlying claim for which such purchase price adjustment or indemnity payment arose (including Capital Expenditures and related retail investments in connection with replacement locations for which landlord consents are not obtained)) under the Purchase Agreement or any acquisition document pertaining to a Permitted Acquisition plus interest income received in cash for such period to the extent deducted from Consolidated Net Income in the calculation of EBITDA plus extraordinary gains for such period which are cash items deducted from Consolidated Net Income in the calculation of EBITDA minus extraordinary losses for such period which are cash items added back to Consolidated Net Income in the calculation of EBITDA minus Pre-Opening Costs added back to Consolidated Net Income in the calculation of EBITDA minus cash Transaction costs to the extent added back to Consolidated Net Income in
 
12 

 
the calculation of EBITDA minus all non-cash adjustments added back to Consolidated Net Income in the calculation of EBITDA minus any amounts included in EBITDA attributable to the target of a Permitted Acquisition and that accrue prior to the closing date of such Permitted Acquisition minus severance expenses actually incurred and paid in cash and added back to Consolidated Net Income in the calculation of EBITDA minus expenses and charges (including premiums, discounts and Hedge Agreement settlement and termination costs) in such period attributable to any debt financings or refinancings, equity offerings, mergers, recapitalizations, acquisitions, investments, option buyouts, dispositions or similar transactions in an amount not to exceed $2,000,000 per fiscal year, in each case, to the extent added back to Consolidated Net Income in the calculation of EBITDA minus any earnout or other similar deferred purchase price payment obligations incurred in connection with a Permitted Acquisition to the extent added back to Consolidated Net Income in the calculation of EBITDA minus non-recurring cash costs,  fees and expenses (including the Restatement Effective Date Bonus Payments) incurred in connection with the Restatement Effective Date Transactions and cash costs, fees and expenses incurred in connection with the negotiation, execution and delivery of this Agreement and the Other Documents to be delivered on the Restatement Effective Date, or incurred within 90 days following the Restatement Effective Date, in each case, to the extent (i) added back to Consolidated Net Income in the calculation of EBITDA and (ii) not funded with the proceeds of the Restatement Effective Date Term Loans or cash proceeds of Permitted Equity Issuances that are not Permitted Freeman Spogli Investments.
 
“ Exchange Act ” shall have the mean the Securities Exchange Act of 1934, as amended.
 
“ Excluded Hedge Liability or Liabilities ” shall mean, with respect to each Loan Party, each of its Swap Obligations if, and to the extent that, all or any portion of this Agreement or any Other Document that relates to such Swap Obligation (or the guaranty of such Swap Obligation, or the grant by such Loan Party of a security interest in the Collateral to secure such Swap Obligation) is or becomes illegal under the CEA, or any rule, regulation or order of the CFTC, by virtue of such Loan Party’s failure to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap.  Notwithstanding anything to the contrary contained in the foregoing or in any other provision of this Agreement or any Other Document, the foregoing is subject to the following provisos: (a) if a Swap Obligation arises under a master agreement governing more than one Swap, this definition shall only include the portion of such Swap Obligation that is attributable to Swaps for which such guaranty or security interest is or becomes illegal as a result of the failure by such Loan Party for any reason to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap; (b) if a guarantee of a Swap Obligation would cause such obligation to be an Excluded Hedge Liability but the grant of a security interest would not cause such obligation to be an Excluded Hedge Liability, such Swap Obligation shall constitute an Excluded Hedge Liability for purposes of the guaranty but not for purposes of the grant of the security interest; and (c) if there is more than one Loan Party executing this Agreement or the Other Documents and a Swap Obligation would be an Excluded Hedge Liability with respect to one or more of such Persons, but not all of them, the definition of Excluded Hedge Liability or Liabilities with respect to each such Person shall only be deemed applicable to (i) the particular Swap Obligations that constitute Excluded Hedge Liabilities with respect to such Person, and (ii) the particular Person with respect to which such Swap Obligations constitute Excluded Hedge Liabilities.
 
13 

 
“ Excluded Taxes ” shall mean, with respect to any Recipient of any payment to be made by or on account of any Obligations, (a) taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender or Issuer, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes (b) in the case of a Lender, any U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in an Advance or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Advance or Commitment (other than pursuant to an assignment request by the Borrower under Section 3.11(a)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 3.10(a), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.10(e), (d) Taxes attributable to the failure of the Agent to properly maintain the Register and (e) any U.S. federal withholding Taxes imposed under FATCA.
 
“ Existing Credit Agreement ” shall have the meaning ascribed to such term in the Recitals.
 
“ Existing Lenders ” shall have the meaning ascribed to such term in the Recitals.
 
“ Existing Other Documents ” shall have the meaning ascribed to such term in Section 15.21.
 
“ Existing PNC Credit Agreement ” shall mean that certain Amended and Restated Revolving Credit, Term Loan and Security Agreement dated as of December 12, 2011 (as amended and in effect prior to the Original Closing Date).
 
“ Existing Term Loan ” shall have the meaning ascribed to such term in Section 2.4(a).
 
“ Existing Term Loan Early Termination Date ” shall have the meaning set forth in Section 13.1 hereof.
 
“ FATCA ” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations thereunder or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
 
“ Federal Funds Rate ” shall mean, for any day, a floating rate equal to the weighted average of the rates on overnight Federal funds transactions among members of the Federal Reserve System, published by the Federal Reserve Bank of New York on the preceding Business Day or, if no such rate is so published, the average rate per annum, as determined by Agent, quoted for overnight Federal Funds transactions last arranged prior to such day.
 
14 

 
“ Fee Letter ” shall mean the fee letter dated as of May 8, 2013 by and between Borrower and the Agent.
 
“ First Amendment ” shall mean the First Amendment to Loan and Security Agreement dated as of September 23, 2013 among Borrower, the other Loan Parties, Agent and the Lenders party thereto.
 
“ Flood Laws ” shall mean all Applicable Laws relating to policies and procedures that address requirements placed on federally regulated lenders under the National Flood Insurance Reform Act of 1994 and other Applicable Laws related thereto.
 
“ Foreign Currency Hedge ” shall mean any foreign exchange transaction, including spot and forward foreign currency purchases and sales, listed or over-the-counter options on foreign currencies, non-deliverable forwards and options, foreign currency swap agreements, currency exchange rate price hedging arrangements, and any other similar transaction providing for the purchase of one currency in exchange for the sale of another currency.
 
“ Foreign Lender ” shall mean any Lender that is organized under the laws of a jurisdiction other than that in which Borrower is resident for tax purposes.  For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
 
“ Foreign Subsidiary ” of any Person, shall mean any Subsidiary of such Person that is organized or incorporated in the United States or any State or territory thereof.
 
“ Freeman Spogli ” means Freeman Spogli & Co., LLC, a Delaware limited liability company and all Affiliates thereof from time to time, other than the Loan Parties.
 
“ Fund ” shall mean any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.
 
“ Funded Debt ” shall mean, with respect to any Person, without duplication, all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or similar evidences of Indebtedness that by its terms matures more than one year from, or is directly or indirectly renewable or extendible at such Person’s option under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year from the date of creation thereof, and specifically including Capitalized Lease Obligations, current maturities of long-term debt, revolving credit and short-term debt extendible beyond one year at the option of the debtor, and also including, in the case of Borrower, the Obligations and, without duplication, Indebtedness consisting of guaranties of Funded Debt of other Persons (other than another Loan Party).
 
“ Funding Account ” shall have the meaning set forth in Section 4.15(h).
 
“ GAAP ” shall mean generally accepted accounting principles in the United States of America in effect from time to time.  Notwithstanding any other provision contained herein, (i)
 
15 

 
all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to in Section 6.5 shall be made, without giving effect to any election under Statement of Financial Accounting Standards 159 (or any other Financing Accounting Standard or FASB Accounting Standards Codification™ having a similar result or effect) to value any Indebtedness or other liabilities of any Loan Party or any Subsidiary of any Loan Party at “fair value,” (ii) no effect shall be given to FAS 141R or any subsequent codification thereof, and (iii) any change to GAAP requiring leases which were previously classified as operating leases to be treated as capitalized leases shall be ignored for the purpose of determining Indebtedness hereunder and such leases shall continue to be treated as operating leases for such purposes consistent with GAAP as in effect on the date hereof.
 
“ GC-Cap ” shall mean Golub Capital LLC, a Delaware limited liability company.
 
“ General Intangibles ” shall mean and include all of Borrower’s general intangibles, whether now owned or hereafter acquired, including all payment intangibles, all choses in action, causes of action, corporate or other business records, inventions, designs, Patents, equipment formulations, manufacturing procedures, quality control procedures, Trademarks, trade secrets, goodwill, Copyrights, design rights, software, computer information, source codes, codes, records and updates, registrations, licenses, franchises, customer lists, tax refunds, tax refund claims, computer programs, all claims under guaranties, security interests or other security held by or granted to Borrower to secure payment of any of the Receivables by a Customer (other than to the extent covered by Receivables) all rights of indemnification and all other intangible property of every kind and nature (other than Receivables).
 
“ Governmental Acts ” shall have the meaning set forth in Section 2.17.
 
“ Governmental Body ” shall mean any nation or government, any state or other political subdivision thereof or any entity, authority, agency, division or department exercising the executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to a government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
 
“ Guaranteed Indebtedness ” shall mean, as to any Person, any obligation of such Person guaranteeing any indebtedness, lease, dividend, or other obligation (“ primary obligations ”) of any other Person (the “ primary obligor ”) in any manner, including any obligation or arrangement of such Person (a) to purchase or repurchase any such primary obligation, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) to indemnify the owner of such primary obligation against loss in respect thereof.  The amount of any Guaranteed Indebtedness at any time shall be deemed to be an amount equal to the lesser at such time of (x) the stated or determinable amount of the primary obligation in
 
16 

 
respect of which such Guaranteed Indebtedness is made and (y) the maximum amount for which such Person may be liable pursuant to the terms of the instrument embodying such Guaranteed Indebtedness; or, if not stated or determinable, the maximum reasonably anticipated liability (assuming full performance) in respect thereof; provided that if such obligation is limited in recourse against a specific asset, the amount of such Guaranteed Indebtedness shall be calculated as the lesser of the obligation so guaranteed or otherwise supported or, if not a fixed and determined amount, the maximum amount so guaranteed or supported and the fair market value of such asset.
 
“ Guarantor ” shall mean Parent Holdco, RCC, Baskins and any other Person who may hereafter guarantee payment or performance of the whole or any part of the Obligations, and “ Guarantors ” means collectively all such Persons.
 
“ Guarantor Security Agreement ” shall mean the Pledge and Security Agreement executed by Parent Holdco, RCC and Baskins, jointly and severally, in favor of Agent, dated as of the Original Closing Date, and any other security agreement executed by any Guarantor in favor of Agent securing the Guaranty of such Guarantor, in form and substance reasonably satisfactory to Agent.
 
“ Guaranty ” shall mean any guaranty of the Obligations (or any portion thereof) executed by a Guarantor in favor of Agent for its benefit and for the ratable benefit of Lenders, in form and substance reasonably satisfactory to Agent.
 
“ Hazardous Discharge ” shall have the meaning set forth in Section 9.3(b) hereof.
 
“ Hazardous Substance ” shall mean, without limitation, any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA or any other applicable Environmental Law and in the regulations adopted pursuant thereto.
 
“ Hazardous Wastes ” shall mean all waste materials subject to regulation under CERCLA, RCRA or other applicable Environmental Laws, now in force or hereafter enacted relating to hazardous waste disposal.
 
“ Hedge Agreement ” shall mean any interest rate, commodity or equity swap, collar, cap, floor or forward rate agreement, or other agreement or arrangement designed to protect against fluctuations in interest rates or commodity or equity values (including, without limitation, any option with respect to any of the foregoing and any combination of the foregoing agreements or arrangements), and any confirmation executed in connection with any such agreement or arrangement.
 
“ Hedge Liabilities ” shall mean the liabilities of any Loan Party or Subsidiary thereof pursuant to any Lender Provided Interest Rate Hedge or Lender-Provided Foreign Currency Hedge.
 
17 

 
“ Indebtedness ” shall mean, with respect to any Person, without duplication (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property, but excluding accounts payable incurred in the Ordinary Course of Business that are unsecured and not overdue by more than 120 days or being Properly Contested, (b) all reimbursement and other obligations with respect to letters of credit, bankers’ acceptances and surety bonds, whether or not matured, but such amounts, not to exceed $1,000,000 in the aggregate, shall be excluded in calculations (including related definitions) of the Financial Covenants in Section 6.3, (c) all obligations evidenced by notes, bonds, debentures or similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations and the present value (discounted at the rate of 10%) of future rental payments under all synthetic leases, (f) obligations (the amount of which, as of any date of determination, shall be the net termination value thereof on such date of determination) under any Interest Rate Hedge, Foreign Currency Hedge, or other interest rate management device, foreign currency exchange agreement, currency swap agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement, (g) [reserved], (h) all Indebtedness referred to above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property or other assets (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, the amount of such Indebtedness to be limited to the lesser of the fair market value of the encumbered property or assets and the amount of the Indebtedness secured by such Lien, (i) “earnouts” and similar payment obligations that have been earned in full as of such date and are not contingent, (j) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Disqualified Equity Interests in such Person or any other Person, valued, in the case of redeemable preferred interests, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends and (k) the Obligations.
 
“ Indemnified Taxes ” shall mean (a) Taxes, other than Excluded Taxes and (b) to the extent not otherwise described in (a), Other Taxes.
 
“ Ineligible Security ” shall mean any security which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.
 
“ Intellectual Property ” shall mean property constituting under any Applicable Law a Patent, Copyright, Trademark, trade secret or license or other right to use any of the foregoing.
 
“ Intercreditor Agreement ” shall mean the Intercreditor Agreement dated as of the Original Closing Date by and between Agent and the Revolver Agent, as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof, including, without limitation, as amended and reaffirmed on the Restatement Effective Date.
 
“ Interest Coverage Ratio ” shall mean as of any date of determination thereof the ratio of (a) EBITDA for the trailing four-fiscal-quarter period ending on such date to (b) Interest Expense
 
18 

 
(net of interest income) for the trailing four-fiscal-quarter period ending on such date.  Notwithstanding the foregoing, for purposes of calculating the Interest Coverage Ratio for the fiscal quarters ending nearest to June 30, 2014, September 30, 2014 and December 31, 2014, Interest Expense (net of interest income) shall be annualized (“ Annualized Interest Expense ”) during such fiscal quarters such that (i) for the calculation of the Interest Coverage Ratio as of the last day of the fiscal quarter ending nearest to June 30, 2014, Annualized Interest Expense for the fiscal quarter then ending will be multiplied by four (4), (ii) for the calculation of the Interest Coverage Ratio as of the last day of the fiscal quarter ending nearest to September 30, 2014, Annualized Interest Expense for the two fiscal quarter period then ending will be multiplied by two (2) and (iii) for the calculation of the Interest Coverage Ratio as of the last day of the fiscal quarter ending nearest to December 31, 2014, Annualized Interest Expense for the three fiscal quarter period then ending will be multiplied by four (4) and then divided by three (3).
 
“ Interest Expense ” shall mean, for any period, as to any Person, as determined in accordance with GAAP and without duplication, the total interest expense of such Person, with respect to such Person and its Subsidiaries, on a consolidated basis, for such period whether paid or accrued during such period (including the interest component of Capitalized Lease Obligations for such period), including, without limitation, interest expense paid to Affiliates of such Person, discounts in connection with the sale of any Receivables and bank fees, commissions, discounts and other fees and charges owed with respect to letters of credit, banker’s acceptances or similar instruments.  For purposes of this definition, Interest Expense shall be determined on a pro forma basis to give effect to any Permitted Acquisitions occurring during any period as if such transaction and any Indebtedness incurred or assumed by Parent Holdco or any Subsidiary in connection with such Permitted Acquisition (and assuming all Indebtedness so incurred or assumed to be outstanding shall be deemed to have borne interest (a) in the case of fixed rate Indebtedness, at the rate applicable thereto or (b) in the case of floating rate Indebtedness, at the rates which were or would have been applicable thereto during the period when such Indebtedness was or was deemed to be outstanding) had, in each case, occurred on the first day of such period.
 
“ Interest Period ” shall mean the period provided for any LIBOR Rate Loan pursuant to Section 2.2(b).
 
“ Interest Rate Hedge ” shall mean an interest rate exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor or similar agreements entered into by the Borrower or its Subsidiaries in order to provide protection to, or minimize the impact upon, the Borrower, any Guarantor and/or their respective Subsidiaries of increasing floating rates of interest applicable to Indebtedness.
 
“ Inventory ” shall mean and include, with respect to any specified Person, all of such Person’s now owned or hereafter acquired goods, merchandise and other personal property, wherever located, to be furnished under any consignment arrangement, contract of service or held for sale or lease, all raw materials, work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in such Person’s business or used in selling or furnishing such goods, merchandise and other personal property, and all documents of title or other documents representing them.
 
19 

 
“ Investment Property ” shall mean and include all of Borrower’s now owned or hereafter acquired securities (whether certificated or uncertificated), securities entitlements, securities accounts, commodities contracts and commodities accounts.
 
“ Law(s) ” shall mean any law(s) (including common law and equitable principles), federal, state and foreign constitutions, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, judgment, authorization or approval, lien or award of or any settlement arrangement with any Governmental Body or arbitrator, directives and orders of any Governmental Body, in each case, whether, foreign or domestic, state, federal or local.
 
“ Lender ” and “ Lenders ” shall have the meaning ascribed to such term in the preamble to this Agreement and shall include each Person which becomes a transferee, successor or assign of any Lender.  For the purpose of provision of this Agreement or any Other Document which provides for the granting of a security interest or other Lien to the Agent for the benefit of Lenders as security for the Obligations, “Lenders” shall include any Affiliate of a Lender to which such Obligation (specifically including any Hedge Liabilities) is owed.
 
“ Lender-Provided Foreign Currency Hedge ” shall mean a Foreign Currency Hedge which is provided by any Lender and with respect to which Agent confirms in writing prior to the execution thereof: (a) is documented in a standard International Swap Dealer Association Agreement; (b) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner; and (c) is entered into for hedging (rather than speculative) purposes.  The liabilities to the provider of any Lender-Provided Foreign Currency Hedge are part of the Hedge Liabilities of the Loan Party or Subsidiary that is party to such Lender-Provided Foreign Currency Hedge shall, for purposes of this Agreement and all Other Documents be “Obligations” of such Person and of each other Loan Party except to the extent constituting Excluded Hedge Liabilities of such Person (subject to the final sentence of the definition of Excluded Hedge Liabilities).
 
“ Lender-Provided Interest Rate Hedge ” shall mean an Interest Rate Hedge which is provided by any Lender and with respect to which Agent confirms in writing prior to the execution thereof: (a) is documented in a standard International Swap Dealer Association Agreement; (b) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner; and (c) is entered into for hedging (rather than speculative) purposes.  The liabilities to the provider of any Lender-Provided Interest Rate Hedge are part of the Hedge Liabilities of the Loan Party or Subsidiary that is party to such Lender-Provided Interest Rate Hedge shall, for purposes of this Agreement and all Other Documents be “Obligations” of such Person and of each other Loan Party except to the extent constituting Excluded Hedge Liabilities of such Person (subject to the final sentence of the definition of Excluded Hedge Liabilities).  The Liens securing such Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agreement and the Other Documents, subject to the express provisions of Section 11.5 hereof.
 
“ LIBOR Rate ” shall mean for each Interest Period a rate of interest determined by Agent equal to (a) the Base LIBOR Rate for such Interest Period, divided by (b) 100% minus the daily Reserve Percentage.  “ Base LIBOR Rate ” means the greater of (a) one and one quarter percent
 
20 

 
(1.25%) per annum, and (b) the rate per annum rate appearing on Bloomberg L.P.’s (the “ Service ”) Page BBAM1/(Official BBA USD Dollar Libor Fixings) (or on any successor or substitute page of such Service, or any successor to or substitute for such Service) two (2) LIBOR Business Days prior to the commencement of the requested Interest Period, for a term and in an amount comparable to the Interest Period and the amount of the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrower in accordance with the Agreement, which determination shall be conclusive in the absence of manifest error.  “ Reserve Percentage ” means, on any day, the maximum percentage prescribed by the Federal Reserve Board (or any successor governmental authority) for determining the reserve requirements (including any basic, supplemental, marginal, or emergency reserves) that are in effect on such date with respect to eurocurrency funding (currently referred to as “eurocurrency liabilities”), but so long as no Lender is required or directed under applicable regulations to maintain such reserves, the Reserve Percentage shall be zero.
 
The LIBOR Rate shall be adjusted with respect to any LIBOR Rate Loan that is outstanding on the effective date of any change in the Reserve Percentage as of such effective date. The Agent shall give prompt notice to the Borrower of the LIBOR Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.
 
“ LIBOR Rate Loan ” shall mean an Loan at any time that bears interest based on the LIBOR Rate.
 
“ License Agreement ” shall mean any agreement between Borrower and a Licensor pursuant to which Borrower is authorized to use any Intellectual Property, other than off the-shelf software, in connection with the manufacturing, marketing, sale or other distribution of any Inventory of Borrower or otherwise in connection with Borrower’s business operations.
 
“ Licensor ” shall mean any Person from whom Borrower obtains the right to use (whether on an exclusive or non-exclusive basis) any Intellectual Property in connection with Borrower’s manufacture, marketing, sale or other distribution of any Inventory or otherwise in connection with Borrower’s business operations.
 
“ Licensor/Agent Agreement ” shall mean an agreement between Agent and a Licensor, in form and content satisfactory to Agent, by which Agent is given the unqualified right, vis-a-vis such Licensor, to enforce Agent’s Liens with respect to and to dispose of Borrower’s Inventory with the benefit of any Intellectual. Property applicable thereto, irrespective of Borrower’s default under any License Agreement with such Licensor.
 
“ Lien ” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), Charge, claim or encumbrance, or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset of any kind or nature whatsoever including any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction.
 
21 

“ Lien Waiver Agreement ” shall mean an agreement which is executed in favor of Agent by a Person who owns or occupies premises at which any Collateral may be located from time to time in form and substance reasonably satisfactory to Agent.
 
“ Loans ” shall mean the Existing Term Loan and the Restatement Effective Date Term Loan and, as the context may require, any portion of any or all of the foregoing.
 
“ Loan Parties ” shall mean Borrower and the Guarantors collectively, and “ Loan Party ” shall mean Borrower or any Guarantor individually.
 
“ Material Adverse Effect ” shall mean a material adverse effect on (i) the condition (financial or otherwise), operations, assets or properties of the Loan Parties (taken as a whole), (ii) Borrower’s consolidated ability to duly and punctually pay or perform the Obligations in accordance with the terms thereof, (ii) the value of the Collateral, or Agent’s Liens on the Collateral or the priority of any such Liens or (d) the practical realization of the benefits of Agent’s and each Lender’s rights and remedies under this Agreement and the Other Documents.
 
“ Modified Assignment Agreement ” shall have the meaning set forth in Section 15.3(d).
 
“ Moody’s ” shall mean Moody’s Investors Service, Inc. and any successor entity thereof.
 
“ Mortgages ” shall mean any mortgage, deed of trust or other such agreement or instrument granting a Lien on any Real Property of Borrower or any Guarantor, together with all extensions, renewals, amendments, supplements, modifications, substitutions and replacements of or with respect to any of the foregoing.
 
“ Multiemployer Plan ” shall mean a “multiemployer plan” as defined in Sections 3(37) and 4001(a)(3) of ERISA which is subject to Title IV of ERISA and to which any Loan Party or member of the Controlled Group is obligated to contribute.
 
“ Non-Qualifying Loan Party ” shall mean any Loan Party that fails for any reason to qualify as an Eligible Contract Participant.
 
“ Obligations ” shall mean and include any and all loans, advances, debts, liabilities, obligations, covenants and duties owing by the Borrower to Lenders or Agent or to any other direct or indirect subsidiary or affiliate of Agent or any Lender of any kind or nature, present or future (including any interest or other amounts accruing thereon after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to the Borrower, whether or not a claim for post-filing or post-petition interest or other amounts is allowed in such proceeding), evidenced by this Agreement and the Other Documents (including, without limitation, Hedge Liabilities), whether or not for the payment of money, whether arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease or guarantee, or in any other manner, whether arising out of overdrafts or deposit or other accounts or electronic funds transfers (whether through automated clearing houses or otherwise) or out of the Agent’s or any Lenders non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository transfer check or other similar arrangements, whether direct or indirect (including those acquired by assignment or participation), absolute or contingent, joint or several, due or to become due, now existing or
 
22 

 
hereafter arising, contractual or tortious, liquidated or unliquidated, regardless of how such indebtedness or liabilities arise or by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument and all amounts payable under Section 15.5 or Section 15.9 and all payment, performance and observance obligations of Loan Parties to Agent or Lenders under this Agreement and the Other Documents.  Notwithstanding anything to the contrary contained in the foregoing (but subject to the final sentence of the definition of Excluded Hedge Liabilities), as to each Loan Party, the Obligations shall not include any Excluded Hedge Liabilities of such Person.
 
“ Ordinary Course of Business ” shall mean, in respect of any transaction involving any Person, the ordinary course of such Person’s business, as conducted by any such Person in accordance with, or reasonably related to, past practice or otherwise related or complementary thereto, and undertaken by such Person in good faith and not for purposes of evading any covenant or restriction in this Agreement or any Other Document.
 
“ Original Closing Date ” shall mean May 31, 2013.
 
“ Original Closing Date Term Loan Commitment ” shall mean the aggregate commitments of all Lenders to make the Existing Term Loan, which aggregate commitment was $100,000,000.00 on the Original Closing Date.
 
“ Original Closing Date Term Loan Commitment Percentage ” shall mean the percentage set forth opposite such Lender’s name under the heading “Original Closing Date Term Loan Commitment Percentage” on Schedule 2.4(a) hereof as same may be adjusted upon any assignment by a Lender pursuant to Section 15.3(c) or 15.3(d) hereof.
 
“ Original Owner ” shall mean Parent Holdco.
 
“ Other Connection Taxes ” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
 
“ Other Documents ” shall mean the Term Notes (if any), the Perfection Certificate, the Credit Card Notices, the Fee Letter, the Supplemental Fee Letter, the Guaranty, any Guarantor Security Agreement, any Lender-Provided Interest Rate Hedge, any Lender-Provided Foreign Currency Hedge, the Mortgages (if any), the Intercreditor Agreement and any and all other agreements, instruments, notes and documents, including guaranties, pledges, security agreements, control agreements, powers of attorney, consents, interest or currency swap agreements or other similar agreements heretofore, now or hereafter executed by Borrower or any Guarantor and/or delivered to Agent or any Lender in respect of the transactions contemplated by this Agreement.
 
“ Other Taxes ” shall mean all present or future stamp, court or documentary, intangible, recording, filing or any other excise or property Taxes, charges or similar levies arising from any payment made hereunder or under any Other Document or from the execution, delivery,
 
23 

 
performance, registration or enforcement of, from the receipt or perfection of a security interest under, or otherwise with respect to, this Agreement or any Other Document except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.11(a)).
 
“ Parent ” of any Person shall mean a corporation or other Person owning, directly or indirectly at least 50% of the shares of stock or other ownership interests having ordinary voting power to elect a majority of the directors of such Person, or other Persons performing similar functions for any such Person.
 
“ Parent Holdco ” shall have the meaning set forth in the preamble to this Agreement.
 
“ Participant ” shall have the meaning set forth in Section 15.3(b)(i) of this Agreement.
 
“ Participant Register ” shall have the meaning set forth in Section 15.3(b)(ii) of this Agreement.
 
“ Patent ” shall mean all of the following (whether now owned or hereafter acquired by Borrower): discoveries and ideas, whether patentable or not, and all issued patents and patent applications, including the patents and patent applications listed on Schedule 5.9 attached hereto and made a part hereof, and (i) all reissues, continuations, continuations-in-part, substitutes, extensions or renewals thereof and improvements thereon, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, (iii) the right to sue for past, present and future infringements and dilutions thereof, and (iv) all of Borrower’s rights corresponding thereto throughout the world.
 
“ Payment Office ” shall mean initially 150 S. Wacker Drive, Suite 800, Chicago, Illinois 60606 and thereafter, such other office of Agent, if any, which it may designate by notice to Borrower and to each Lender to be the Payment Office.
 
“ PBGC ” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.
 
“ Pension Benefit Plan ” shall mean at any time any employee pension benefit plan (including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code and either (i) is maintained by any member of the Controlled Group for employees of any member of the Controlled Group; or (ii) has at any time within the preceding five years been maintained by any entity which was at such time a member of the Controlled Group for employees of any entity which was at such time a member of the Controlled Group.
 
“ Perfection Certificate ” shall mean the Perfection Certificate, dated as of the Original Closing Date, executed by Parent Holdco, Borrower, RCC and Baskins and provided to Agent.
 
“ Permitted Acquisition ” means an acquisition by Borrower or a Guarantor that either (x) is (i) of all or substantially all of the assets, a line of business or division or the Equity Interests
 
24 

 
of any Person engaged in a business which is substantially related to that of Borrower and its Subsidiaries or (ii) a Real Estate Acquisition, provided , that, in the case of each of (i) and (ii), (a) the total consideration (including, without limitation, assumed Indebtedness (on a net of cash basis), cash, debt securities, purchase price adjustments, earnouts or other similar deferred purchase price payment obligations or other property, but excluding any portion of such consideration consisting of Equity Interests of Topco or funded with cash proceeds of Permitted Equity Issuances that are not Permitted Freeman Spogli Investments) for all such acquisitions after the Original Closing Date does not exceed $35,000,000 in the aggregate, (b) in the event that the total consideration (including, without limitation, assumed Indebtedness (on a net of cash basis), cash, debt securities, purchase price adjustments, earnouts or other similar deferred purchase price payment obligations or other property, but excluding any portion of such consideration consisting of Equity Interests of Topco or funded with cash proceeds of Permitted Equity Issuances that are not Permitted Freeman Spogli Investments) for any single acquisition exceeds $20,000,000, the prior written consent of the Agent shall be required, (c) all such acquisitions are approved by the board of directors and stockholders, if required, of the acquiree and are not otherwise hostile, (d) either the Person acquired shall be or become a Subsidiary organized under the laws of a jurisdiction in, or substantially all of the assets, line of business or division acquired shall be located within, the United States or Canada, (e) in the case of an acquisition of Equity Interests, Borrower or one or more Guarantors shall have beneficial ownership of all of the Equity Interests of the Person acquired, (f) both immediately prior, and after giving effect, to any such proposed acquisition no Default or Event of Default shall have occurred and be continuing or would result therefrom, (g) both immediately prior, and after giving effect, to any such proposed acquisition, Borrower and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 6.5 on a pro forma basis after giving effect to such acquisition, recomputed for the twelve (12) month period ending on the last day of the fiscal month most recently ended, (h) the Total Leverage Ratio, calculated on a pro forma basis after giving effect to such acquisition (using Funded Debt calculated as of the date of consummation of such acquisition and after giving effect thereto), does not exceed the lesser of (i) 4.25 to 1.00 and (ii) the Total Leverage Ratio financial covenant level set forth in Section 6.5(b) for the fiscal quarter ending on, or most recently prior to, the date of consummation of such acquisition, less 0.25, (i) except for a Real Estate Acquisition, EBITDA of the Person acquired for the most recent trailing twelve month period prior to the acquisition date for which financial statements are available, after giving pro forma effect to such acquisition (reflecting demonstrable and quantifiable cost savings and synergies to be realized within 12 months after such acquisition, which cost savings and synergies are set forth in a quality of earnings report prepared by an accounting firm reasonably acceptable to Agent, and in form and substance reasonably acceptable to Agent, or as otherwise consented to by Agent), shall be equal to or greater than zero, (j) after giving effect to such acquisition, the Borrower and its Subsidiaries shall have Undrawn Availability of not less than the greater of (i) $15,000,000 or (ii) 20% of the Maximum Revolving Advance Amount (as defined in the PNC Credit Agreement) and (k) such acquisition is a “Permitted Acquisition” under the PNC Credit Agreement; or (y) both the Agent and the Revolving Agent have agreed in writing constitutes a Permitted Acquisition.  Compliance with all of the foregoing provisions (other than with respect to a Permitted Acquisition described in clause (iii) above) shall be confirmed by a certificate of a responsible officer of Borrower.  Borrower shall give Agent and Lenders 15 days’ (or such lesser time period as Agent may agree) prior written notice of each such proposed acquisition, and together with
 
25 

 
such notice and also on the date of consummation of such proposed acquisition, Borrower shall furnish Agent and the Lenders with the other items required by this definition, financial statements (for the three prior years, if available), projections revised to give effect to the proposed Permitted Acquisition, an executed term sheet and/or commitment letter (setting forth in reasonable detail the terms and conditions of such acquisition) and, at the request of the Agent, such other information and documents (including, without limitation, the Other Documents required by Section 6.6), certificates, Lien searches, resolutions and opinions that the Agent may request in its Permitted Discretion, including, without limitation and to the extent available, final or substantially final drafts of the respective material agreements, documents or instruments pursuant to which such acquisition is to be consummated (including, without limitation, any related management, non-compete, employment, option or other material agreements), any schedules to such agreements, documents or instruments and all other material ancillary agreements, instruments and documents to be executed or delivered in connection therewith.  Agent shall promptly undertake a review of such information and shall expeditiously inform the Borrower as to whether the required criteria has been satisfied.  Within a reasonable time following the consummation of such acquisition, Borrower shall deliver to the Agent copies of executed counterparts of each of the material documents with respect to such acquisition.
 
“ Permitted Consignment Sale ” means a sale of Inventory by Borrower to a third party on a consignment basis, provided that: (a) the aggregate value of all such Inventory sold by Borrower on consignment at any time shall not exceed $250,000; and (b) Borrower shall have filed a valid UCC-1 financing statement covering the consigned Inventory in the relevant filing office under the Uniform Commercial Code applicable to the consignee and, if applicable, notified any creditor of the consignee with a security interest in the Inventory of the consignee of Borrower’s rights as consignee with respect to such Inventory.
 
“ Permitted Discretion ” shall mean a determination made in good faith and in the exercise of commercially reasonable (from the perspective of a secured lender) business judgment.
 
“ Permitted Disposition ” shall mean (a) the sale of Inventory and Equipment in the Ordinary Course of Business; (b) Permitted Consignment Sales; (c) Permitted Investments, (d) the disposition or transfer of (i) damaged, obsolete, surplus or worn-out property in the Ordinary Course of Business during any fiscal year having an aggregate fair market value of not more than $250,000 or (ii) the assets (involving Inventory) at closed retail locations, in each case only to the extent the proceeds of any such disposition are remitted to Agent to be applied, or reinvested by such Person, in either case, pursuant to Section 2.21 or remitted to the Revolver Agent or the Agent to be applied pursuant to the terms of the Intercreditor Agreement; (e) the sale, transfer, conveyance, assignment or disposition (i) by any Loan Party or Subsidiary thereof to Borrower or a Borrowing Base Party and any Borrowing Base Party to another Borrowing Base Party, (ii) by any Loan Party to any other Loan Party; provided , that , if only one of such Loan Party’s is a Borrowing Base Party, the Borrowing Base Party shall be the recipient entity, (iii) by any Subsidiary of a Loan Party to any Loan Party or Domestic Subsidiary thereof, (iv) by any Foreign Subsidiary to another Foreign Subsidiary, or (iv) by any Domestic Subsidiary that is not a Loan Party to any other Domestic Subsidiary that is not a Loan Party; (f) sales, transfers, conveyances, assignments or dispositions solely to effectuate a merger or consolidation permitted pursuant to Section 7.1 ; (g) the licensing and sublicensing, on a non-exclusive basis, of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of
 
26 

 
business; (h) to the extent permitted by Section 6.10, the lapse of registered patents, trademarks and other intellectual property of a Loan Party or Subsidiary thereof; (i) the granting of Permitted Encumbrances; (j) subject to the terms of Section 4.11, any involuntary loss or condemnation, damage or destruction of property and any disposition of any such damaged property to any insurer with respect thereto in settlement of any claim by the applicable Loan Party or Subsidiary thereof to the extent required by the applicable insurance policy; (k) dispositions of assets acquired by the Loan Parties and their Subsidiaries pursuant to a Permitted Acquisition consummated within 12 months of the date of the proposed disposition in an aggregate amount not to exceed $500,000 for each such Permitted Acquisition; (l) sales or other dispositions of a de minimis number of shares of the Equity Interests of a Foreign Subsidiary of Borrower in order to qualify members of the governing body of such Foreign Subsidiary if required by Applicable Law; and (m) other sales, transfers, conveyances, assignments or dispositions of assets (excluding Equity Interests) have a fair market value not in excess of $250,000 during any fiscal year.
 
“ Permitted Encumbrances ” shall mean:
 
(a)                                  Liens in favor of Agent for the benefit of Agent and Lenders, including without limitation, Liens securing Hedge Liabilities;
 
(b)                                  Liens for Taxes, assessments or other governmental charges not delinquent or being Properly Contested;
 
(c)                                   Liens disclosed in the financial statements referred to in Section 5.5;
 
(d)                                  deposits or pledges to secure obligations under worker’s compensation, social security or similar laws, or under unemployment insurance;
 
(e)                                   deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the Ordinary Course of Business;
 
(f)                                    Liens arising by virtue of the rendition, entry or issuance against Borrower or any Subsidiary, or any property of Borrower or any Subsidiary, of any judgment, writ, order, or decree so long as such does not constitute an Event of Default under Section 10.6;
 
(g)                                   Liens of (i) Landlords’, carriers’, mechanics’, workers’, materialmen’s, warehousemen’s, repairmen’s or other like Liens arising under Applicable Law in the Ordinary Course of Business with respect to obligations which are not due or which are being Properly Contested; and (ii) the Liens granted to each of MSW Promenade, L.P., TX-SW #1, LP, Ambassador Way Associates, LP and Bluecap, Ltd. pursuant to the leases entered with such Persons by a Loan Party, as such leases exist on the Original Closing Date with such amendments and modifications thereto as are permitted under this Agreement so long as either (A) subject to Section 6.11, such Liens are subordinated to Agent’s Liens pursuant to a Lien Waiver Agreement or (B) the Revolver Agent has received the reporting required under Section 9.2(a) of the PNC Credit Agreement and, at the election of the Revolver Agent, implemented a reserve with respect to such Lien in an amount determined by the Revolver Agent in its Permitted Discretion;
 
27 

 
(h)                                  Liens or interests of lessors under Capital Leases to the extent that such Liens or interests secure Capital Financing Indebtedness; provided that (i) such Lien attaches only to the asset purchased, acquired, constructed, improved or remodeled and the proceeds thereof, and (ii) the aggregate amount of Indebtedness secured by such Liens incurred as a result of such purchases shall not exceed the amount provided for in clause (iii) of Section 7.8;
 
(i)                                      other Liens incidental to the conduct of Borrower’s business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances or credit, and which do not in the aggregate materially detract from Agent’s or Lenders’ rights in and to the Collateral or the value of Borrower’s property or assets or which do not materially impair the use thereof in the operation of Borrower’ s business;
 
(j)                                     Liens disclosed on Schedule 1.2(a) ; provided that such Liens shall secure only those obligations which they secure on the Restatement Effective Date (and extensions, renewals and refinancings of such obligations permitted by Section 7.8) and shall not subsequently apply to any other property or assets of Borrower;
 
(k)                                  Easements, rights of way, zoning, covenants, conditions and other restrictions, minor defects or other irregularities in title, and other similar encumbrances incurred in the Ordinary Course of Business which, either individually or in the aggregate do not in any case materially detract from the value of the Property subject thereto or interfere in any material respect with the ordinary conduct of the businesses of any Loan Party or any Subsidiary of any Loan Party;
 
(l)                                      Liens arising from (i) precautionary UCC financing statements in respect of leases of goods permitted by this Agreement or in respect of trade show or special event consignment arrangements, in each case to the extent that such Liens attach only to such leased property or consigned goods, and (ii) non-consensual filings of any financing statement under the Uniform Commercial Code or any comparable law which the Loan Parties are making commercially reasonable efforts to terminate or remove (promptly after the earlier to occur of (x) receipt of a written request thereto from the Agent and (y) any Loan Party becoming aware of the existence of such non-consensual filing);
 
(m)                              Liens held by creditors of consignees of Inventory of Borrower in connection with Permitted Consignment Sales by Borrower;
 
(n)                                  Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties in connection with the importation of goods in the Ordinary Course of Business so long as such Liens attach only to the imported goods;
 
(o)                                  Good faith pledges on deposits (not otherwise covered in clause (d) above) made in the ordinary course of business to secure new construction of business locations of the Borrower and its Subsidiaries; and
 
(p)                                  to the extent having the priority provided for in the Intercreditor Agreement and securing only the amount permitted thereunder, Liens securing the Revolving Loan Facility.
 
28 

 
“ Permitted Equity Issuances ” means, collectively, (a) Permitted Freeman Spogli Investments and (b) any sale or issuance for cash of any Equity Interests (other than Disqualified Equity Interests) to the Permitted Holders.
 
“ Permitted Freeman Spogli Investment ” shall mean the purchase by Freeman Spogli, the Permitted Holders or any of their Affiliates of additional Equity Interests of Topco (or any such entity’s making of a loan or advance to Topco), the net cash proceeds of which shall be used by Topco to purchase additional Equity Interests (other than Disqualified Equity Interests) of, or make an unsecured loan or advance to (which unsecured loan shall be on terms satisfactory to Agent, in its reasonable discretion, in all respects and subordinated in right of payment to the Obligations pursuant to a written subordination agreement satisfactory to the Agent, in its reasonable discretion, in all respects), Parent Holdco to be similarly invested into Borrower in connection with the exercise of an Equity Cure pursuant to Section 10.23.
 
“ Permitted Holders ” shall mean the persons listed on Schedule 1.2(b)  hereto and their respective Affiliates, successors and assigns and the officers, directors, employees and consultants of any Loan Party.
 
“ Permitted Investment ” shall have the meaning set forth in Section 7.4.
 
“ Permitted Subordinated Debt ” shall mean unsecured Indebtedness incurred from, or provided by, a Person who is not an Affiliate of any Loan Party which is on terms satisfactory to Agent, in its reasonable discretion, in all respects and subordinated in right of payment to the Obligations pursuant to a written subordination agreement satisfactory to the Agent, in its reasonable discretion, in all respects.
 
“ Person ” shall mean any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, association, limited liability company, limited liability partnership, institution, public benefit corporation, joint venture, entity or Governmental Body (whether federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof).
 
“ Plan ” shall mean any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Benefit Plan but not any Multiemployer Plan), maintained for employees of a Loan Party or any such Plan to which a Loan Party is required to contribute on behalf of any of its employees.
 
“ PNC ” means PNC Bank, National Association
 
“ PNC Credit Agreement ” means that certain Second Amended and Restated Revolving Credit and Security Agreement dated as of the Original Closing Date, by and among Borrower, Parent Holdco, PNC Bank, National Association, as agent for the Lenders (as defined therein) thereunder and such Lenders, as amended, amended and restated, supplemented or otherwise modified from time to time to the extent permitted under the terms of this Agreement.
 
“ PNC Revolving Facility ” means the revolving credit facility provided by PNC and the other lenders thereunder pursuant to the terms of the PNC Credit Agreement.
 
29 

 
“ PP&E ” shall mean Property, Plant and Equipment as such term is defined in accordance with GAAP.
 
“ PPSA ” shall mean the Personal Property Security Act as in effect from time to time in any province or territory of Canada applicable to any Collateral.  References to sections of the PPSA shall be construed to also refer to any successor sections.
 
“ Pre-Opening Costs ” means expenses incurred with respect to the acquisition, opening and organizing of new Stores of the Loan Parties to the extent not prohibited by this Agreement, such costs including, but not limited to, the cost of feasibility studies, staff-training and recruiting, and travel costs for employees engaged in such start-up activities; provided, however, that (a) such Pre-Opening Costs are incurred within ninety (90) days before the opening of the applicable new Store, and (b) the aggregate amount of such Pre-Opening Costs does not exceed an average of $150,000 with respect to each single location or $2,500,000 in the aggregate for all locations during any fiscal year.
 
“ Properly Contested ” shall mean, in the case of any Indebtedness or Lien, as applicable, of any Person (including any taxes) that is not paid as and when due or payable by reason of such Person’s bona fide dispute concerning its liability to pay same or concerning the amount thereof, (i) such Indebtedness or Lien, as applicable, is being properly contested in good faith and in the case of Indebtedness to or Liens in favor of a Governmental Body, by appropriate proceedings promptly instituted and diligently conducted; (ii) such Person has established appropriate reserves as shall be required in conformity with GAAP; (iii) the nonpayment of such Indebtedness is not reasonably likely to have a Material Adverse Effect; (iv) no Lien is imposed upon any of such Person’s assets with respect to such Indebtedness unless such Lien is at all times junior and subordinate in priority to the Liens in favor of the Agent (except only with respect to property taxes or other statutory Liens that have priority as a matter of applicable state law) and enforcement of such Lien is stayed during the period prior to the final resolution or disposition of such dispute; (v) if such Indebtedness or Lien, as applicable, results from, or is determined by the entry, rendition or issuance against a Person or any of its assets of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review; and (vi) if such contest is abandoned, settled or determined adversely (in whole or in part) to such Person, such Person forthwith pays such Indebtedness and all penalties, interest and other amounts due in connection therewith.
 
“ Purchase Agreement ” shall mean that certain Membership Interest Purchase Agreement dated as of May 9, 2013 by and among Borrower, Baskins, CGP Baskins, LLC, as the Sellers’ Representative (as defined therein) (the “ Seller Representative ”), and each of the members of Baskins that are Sellers (as defined therein) (“ Sellers ”), as amended by (i) the First Amendment to Purchase Membership Interest Purchase Agreement, dated as of May 13, 2013, by and among Borrower, Seller Representative and Sellers and (ii) that certain Second Amendment to Membership Interest Purchase Agreement, dated as of May 26, 2013, by and among Borrower, Seller Representative and Sellers.
 
“ Purchase Documents ” shall mean, collectively, the Purchase Agreement and all other agreements, documents and instruments entered into in connection therewith (excluding, in any event, the Revolving Loan Documents, this Agreement and the Other Documents).
 
30 

 
“ Purchasing CLO ” shall have the meaning set forth in Section 15.3(d) hereof. “ Purchasing Lender ” shall have the meaning set forth in Section 15.3(c) hereof.
 
“ Qualified ECP Loan Party ” shall mean each Loan Party that (a) has total assets exceeding $10,000,000 on the Eligibility Date, or (b) such other Person as is qualified to give a “letter of credit or keepwell, support, or other agreement” for purposes of Section 1a(18)(A(v)(II) of the CEA.
 
“ RCC ” shall mean RCC Western Stores, Inc., a South Dakota corporation.
 
“ RCC Acquisition ” shall mean the purchase by Borrower of all of the issued and outstanding shares of common stock of RCC pursuant to the RCC Purchase Agreement.
 
“ RCC Purchase Agreement ” shall mean the Stock Purchase Agreement dated as of August 7, 2012 by and among Borrower, RCC, the stockholders of RCC party thereto, and Robert Hoover as the representative of such stockholders.
 
“ RCRA ” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as same may be amended from time to time.
 
“ Real Estate Acquisition ” shall mean the acquisition of all or substantially all of the assets, a line of business or division, or the Equity Interests, of any Person solely or primarily for the purpose of acquiring its real property assets, whether fee interests or leaseholds, and assets and rights incidental or appurtenant thereto, to the extent that no more than ten (10) real estate locations are so acquired in any one such acquisition.
 
“ Real Property ” shall mean all real property now or hereafter owned or leased by Borrower or any Guarantor.
 
“ Receivables ” shall mean and include, as to Borrower, all of Borrower’s accounts, contract rights, instruments (including those evidencing indebtedness owed to Borrower by its Affiliates), documents, chattel paper (including electronic chattel paper), general intangibles relating to accounts, drafts and acceptances, Credit Card Receivables and all other forms of obligations owing to Borrower arising out of or in connection with the sale or lease of Inventory or the rendition of services, all supporting obligations, guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or assigned to Agent hereunder.
 
“ Recipient ” means the Agent and any Lender (including, as applicable, any Participant).
 
“ Register ” shall have the meaning set forth in Section 15.3(e).
 
“ Related Transaction Documents ” shall mean the Purchase Documents and the Revolving Loan Documents.
 
“ Release ” shall have the meaning set forth in Section 5.7(c)(i) hereof.
 
31 

“ Reportable Compliance Event ” shall mean that any Covered Entity becomes a Sanctioned Person, or is indicted, arraigned, investigated or custodially detained, or receives a written inquiry from a Governmental Body, in connection with any Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or self-discovers facts or circumstances implicating any aspect of its operations constituting actual or possible violations of any Anti-Terrorism Law.
 
“ Reportable Event ” shall mean a reportable event described in Section 4043(c) of ERISA or the regulations promulgated thereunder with respect to a Pension Benefit Plan for which the requirement of thirty (30) days’ notice has not been waived under the regulations of the PBGC as in effect on the date of this Agreement.
 
“ Repricing Debt ” shall have the meaning set forth in the definition of “Repricing Event” below.
 
“ Repricing Early Termination Date ” shall have the meaning set forth in Section 13.1 hereof.
 
“ Repricing Event ” shall mean (i) any prepayment or repayment of a Term Loan with the proceeds of, or any conversion of such loans into, any new or replacement tranche of term loans bearing interest at an “effective” interest rate less than the “effective” interest rate applicable to such Term Loan (as such comparative rates are reasonably determined by Agent) (“ Repricing Debt ”), other than such prepayments or repayments in connection with (x) an initial public offering of Equity Interests of Topco, WW Holding Corporation or Parent Holdco or (y) a sale of Topco, WW Holding Corporation, Parent Holdco or Borrower or all or substantially all of their respective assets, in the case of each of the foregoing clauses (x) and (y), constituting a Change of Control and (ii) any amendment that, directly or indirectly, reduces the “effective” interest rate applicable to a Term Loan (in each case in (i) and (ii), with original issue discount and upfront fees, which shall be deemed to constitute like amounts of original issue discount, being equated to interest margins in a manner consistent with generally accepted financial practice based on an assumed four-year life to maturity).
 
“ Required Lenders ” shall mean, subject to Section 2.23, Lenders holding more than fifty percent (50%) of the aggregate outstanding principal balance of the Loans of all Lenders.
 
“ Restatement Effective Date ” shall mean the date on which all conditions precedent to the effectiveness of this Agreement set forth in Section 8.1 shall have been satisfied.
 
“ Restatement Effective Date Adjusted EBITDA ” shall mean $44,163,991.
 
“ Restatement Effective Date Bonus Payments ” shall mean the payment of bonuses to employees and directors who are holders of vested options on or prior to April 22, 2014 in an aggregate amount not to exceed $1,500,000 plus any payroll tax and similar obligations payable in connection therewith.
 
“ Restatement Effective Date Dividend ” shall have the meaning ascribed to such term in the Recitals.
 
32 

 
“ Restatement Effective Date Term Loan ” shall have the meaning ascribed to such term in Section 2.4(a).
 
“ Restatement Effective Date Term Loan Commitment ” shall mean the aggregate commitments of certain Lenders to make the Restatement Effective Date Term Loan, which aggregate commitment shall be $30,750,000.00 on the Restatement Effective Date
 
“ Restatement Effective Date Term Loan Commitment Percentage ” shall mean the percentage set forth opposite such Lender’s name under the heading “Restatement Effective Date Term Loan Commitment Percentage” on Schedule 2.4(a) hereof as same may be adjusted upon any assignment by a Lender pursuant to Section 15.3(c) or 15.3(d) hereof.
 
“ Restatement Effective Date Transaction Documents ” shall mean, collectively, (a) that certain Second Amendment to Second Amended and Restated Revolving Loan and Security Agreement dated as of the Restatement Effective Date by and among the Borrower, the other Loan Parties party thereto, PNC, as agent for the Lenders (as defined therein) and such Lenders party thereto, (b) the Other Documents (as defined in the PNC Credit Agreement) entered into on or about the Restatement Effective Date, (c) this Agreement and (d) the Other Documents entered into on or about the Restatement Effective Date.
 
“ Restatement Effective Date Transactions ” shall mean the funding of the Restatement Effective Date Term Loan, the funding of any amounts under the Revolving Loan Documents on the Restatement Effective Date, the payment of the Restatement Effective Date Dividend, the Restatement Effective Date Bonus Payments and the other transactions consummated in connection with the foregoing.
 
“ Restricted Payment ” shall mean (a) the declaration or payment of any dividend or the incurrence of any liability to make any other payment or distribution of cash or other property or assets (other than in the form of common stock) in respect of a Person’s Equity Interests, (b) any payment on account of the purchase, redemption, defeasance, sinking fund or other retirement of a Person’s Equity Interests or any other payment or distribution made in respect thereof, either directly or indirectly, (c) any payment or prepayment of principal of, premium, if any, or interest, fees or other amounts on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to, any Permitted Subordinated Debt or any earnout or other similar deferred purchase price payment obligation incurred in connection with a Permitted Acquisition; (d) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire Equity Interests of such Person now or hereafter outstanding; (e) any payment of a claim for the rescission of the purchase or sale of, or for material damages arising from the purchase or sale of, any shares of such Person’s Equity Interests or of a claim for reimbursement, indemnification or contribution arising out of or related to any such claim for damages or rescission; (f) any payment, loan, contribution, or other transfer of funds or other property to any equity holder of such Person; and (g) any payment of management fees (or other fees of a similar nature) by such Person to any present or future equity holder of such Person or their Affiliates.
 
33 

 
“ Revolver Agent ” shall mean PNC, or any successor Agent under the PNC Credit Agreement.
 
“ Revolver Event of Default ” shall have the meaning set forth in Section 10.12 .
 
“ Revolver Obligations ” shall mean the “Obligations” as defined in the PNC Credit Agreement.
 
“ Revolving Lenders ” shall mean the lenders from time to time party to the PNC Credit Agreement as revolving lenders.
 
“ Revolving Loan Documents ” means the PNC Credit Agreement and each of the “Other Documents” referred to therein.
 
“ S&P ” shall mean Standard & Poor’s Rating Services and any successor entity thereof.
 
“ Sanctioned Country ” shall mean a country subject to a sanctions program maintained by any Compliance Authority under the Anti-Terrorism Laws.
 
“ Sanctioned Person ” shall mean any individual person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person or entity, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection of transactions), under any Anti-Terrorism Laws.
 
“ SEC ” shall mean the Securities and Exchange Commission or any successor thereto.
 
“ Section 20 Subsidiary ” shall mean the Subsidiary of the bank holding company controlling PNC, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
 
“ Securities Act ” shall mean the Securities Act of 1933, as amended.
 
“ Stores ” shall mean the retail stores owned and operated by Borrower or any of its Subsidiaries.
 
“ Subsidiary ” of any Person shall mean a corporation or other entity of whose Equity Interests having ordinary voting power (other than Equity Interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person.
 
“ Subsidiary Stock ” shall mean all of the issued and outstanding Equity Interests of each first-tier Subsidiary of a Loan Party other than Equity Interests owned directly or indirectly by a Foreign Subsidiary, or voting Equity Interests of a Domestic Holding Company or Foreign Subsidiary to the extent in excess of 65% of the voting Equity Interests thereof.
 
“ Supplemental Fee Letter ” shall mean the fee letter dated as of April 15, 2014 by and between Borrower and the Agent.
 
34 

 
“ Swap ” shall mean any “swap” as defined in Section 1a(47) of the CEA and regulations thereunder, other than (a) a swap entered into, or subject to the rules of, a board of trade designated as a contract market under Section 5 of the CEA, or (b) a commodity option entered into pursuant to CFTC Regulation 32.3(a).
 
“ Swap Obligation ” means any obligation to pay or perform under any agreement, contract or transaction that constitutes a Swap which is also a Lender-Provided Interest Rate Hedge or a Lender-Provided Foreign Currency Hedge.
 
“ Taxes ” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Body, including any interest, additions to tax or penalties applicable thereto.
 
“ Term ” shall have the meaning set forth in Section 13.1 hereof.
 
“ Term Interest Rate ” shall mean (a) in the case of a portion of a Term Loan that is a Base Rate Loan, an interest rate per annum equal to the sum of the Base Rate plus four and three-quarters percent (4.75%) and (b) in the case of a portion of a Term Loan that is a LIBOR Rate Loan, the sum of the LIBOR Rate plus five and three-quarters percent (5.75%); provided , however , the Term Interest Rate shall be subject at all times to the following applicable “floors”:  (i) for the purpose of clause (a) above, the Base Rate, irrespective of its actual per annum rate, shall be deemed to be at least 2.25% per annum; and (ii) for the purpose of clause (b) above, the LIBOR Rate, irrespective of its actual per annum rate, shall be deemed to be at least 1.25% per annum.
 
“ Term Loans ” shall have the meaning set forth in Section 2.4(a) hereof.
 
“ Term Loan Commitments ” shall mean the Original Closing Date Term Loan Commitment and the Restatement Effective Date Term Loan Commitment.
 
“ Term Note ” shall have the meaning set forth in Section 2.4(a) hereof.
 
“ Termination Event ” shall mean (i) a Reportable Event; (ii) the withdrawal of Borrower or any member of the Controlled Group from a Pension Benefit Plan or Multiemployer Plan during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Pension Benefit Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Pension Benefit Plan or Multiemployer Plan; (v) any event or condition (a) which could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Benefit Plan or Multiemployer Plan, or (b) that could be reasonably likely to result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of Borrower or any member of the Controlled Group from a Multiemployer Plan.
 
“ Topco ” shall mean WW Top Holding Corporation, a Delaware corporation.
 
35 

 
“ Total Leverage Ratio ” shall mean as of any date of determination thereof the ratio of (i) the aggregate outstanding principal amount of Funded Debt (other than Permitted Freeman Spogli Investments constituting Indebtedness and intercompany Indebtedness between Loan Parties to (ii) EBITDA for the trailing four-fiscal-quarter period ending on such date.
 
“ Toxic Substance ” shall mean and include any material present on any Real Property which has been shown to have significant adverse effect on human health and which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., or any other applicable Environmental Laws now in force or hereafter enacted relating to toxic substances. “Toxic Substance” includes but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.
 
“ Trademarks ” shall mean all of the following (whether now owned or hereafter adopted or acquired by Borrower): trademarks, trade names, registered trademarks, trademark applications, service marks, registered service marks and service mark applications, brand names, certification marks, collective marks, d/b/a’s, internet domain names, logos, symbols, trade dress, assumed names, fictitious business names and other indicia of origin, including the trade names, registered trademarks, trademark applications, registered service marks and service mark applications listed on Schedule 5.9 attached hereto and made a part hereof, and (i) all reissues, continuations, extensions, modifications and renewals thereof, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, (iii) the right to sue for past, present and future infringements and dilutions thereof, (iv) the goodwill of Borrower’s business symbolized by the foregoing and connected therewith, and (v) all of Borrower’s rights corresponding thereto throughout the world.
 
“ Transactions ” shall mean the acquisition contemplated by the Purchase Agreement and the financing thereof.
 
“ Transferee ” shall have the meaning set forth in Section 15.3(d) hereof.
 
“ Undrawn Availability ” shall have the meaning set forth in the PNC Credit Agreement.
 
“ Unfinanced Capital Expenditures ” shall mean all Capital Expenditures of Parent Holdco and its Subsidiaries in cash other than (a) those made utilizing financing provided by the applicable seller or third party financing sources, (b) expenditures constituting reinvestments from proceeds of any disposition of assets or property permitted by this Agreement, (c) those made utilizing the proceeds of (i) a sale or issuance of Equity Interests, which proceeds are not required to be used to prepay the Loans pursuant to the terms of this Agreement or (ii) a capital contribution to Borrower from Parent Holdco or its Affiliates, which proceeds are not required to be used to prepay the Loans pursuant to the terms of this Agreement, and/or (d) those made utilizing reimbursement proceeds by another Person that is not an Affiliate of a Loan Party, such as a landlord (including, without limitation, pursuant to any applicable rent abatement provisions).  For the avoidance of doubt, Capital Expenditures made utilizing Revolving Advances (as defined in the PNC Credit Agreement as in effect on the Restatement Effective Date) shall be deemed Unfinanced Capital Expenditures.
 
36 

 
“ Unfinanced Permitted Acquisition Expenses ” means all cash expenses of the Loan Parties in connection with Permitted Acquisitions other than (a) those made utilizing financing provided by the applicable seller or third party financing sources and (b) those made utilizing the proceeds of a substantially contemporaneous sale or issuance of Equity Interests not required to be used to prepay the Loans pursuant to the terms of this Agreement.
 
“ Uniform Commercial Code ” shall have the meaning set forth in Section 1.3 hereof.
 
“ USA Patriot Act ” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
 
“ Week ” shall mean the time period commencing with the opening of business on a Wednesday and ending on the end of business the following Tuesday.
 
“ Working Capital ” at a particular date, shall mean the excess, if any, of Current Assets over Current Liabilities at such date.
 
1.3                                Uniform Commercial Code Terms .  All terms used herein and defined in the Uniform Commercial Code as adopted in the State of New York from time to time (the “ Uniform Commercial Code ”) shall have the meaning given therein unless otherwise defined herein. Without limiting the foregoing, unless otherwise defined herein, the terms “accounts,” “chattel paper,” “commercial tort claims,” “instruments,” “general intangibles,” “goods,” “payment intangibles,” “proceeds,” “supporting obligations,” “securities,” “investment property,” “documents,” “deposit accounts,” “software,” “letter of credit rights,” “inventory,” “equipment” and “fixtures,” as and when used in the description of Collateral shall have the meanings given to such terms in Articles 8 or 9 of the Uniform Commercial Code. To the extent the definition of any category or type of collateral is expanded by any amendment, modification or revision to the Uniform Commercial Code, such expanded definition will apply automatically as of the date of such amendment, modification or revision.
 
1.4                                Certain Matters of Construction .  The terms “herein”, “hereof’ and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. All references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement. Any pronoun used shall be deemed to cover all genders. Wherever appropriate in the context, terms used herein in the singular also include the plural and vice versa. All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations, except as otherwise provided. Unless otherwise provided, all references to any instruments or agreements to which Agent is a party, including references to any of the Other Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof. All references herein to the time of day shall mean the time in New York, New York. Unless otherwise provided, all financial calculations shall be performed with Inventory valued on a first-in, first-out basis. Whenever the words “including” or “include” shall be used, such words shall be understood to mean “including, without limitation” or “include, without limitation.”  A Default or Event of Default shall be deemed to exist at all times during the period commencing on the date that such Default or Event of Default occurs to
 
37 

 
the date on which such Default or Event of Default is waived in writing pursuant to this Agreement or, in the case of a Default, is cured within any period of cure expressly provided for in this Agreement; and an Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by the Required Lenders. Any Lien referred to in this Agreement or any of the Other Documents as having been created in favor of Agent, any agreement entered into by Agent pursuant to this Agreement or any of the Other Documents, any payment made by or to or funds received by Agent pursuant to or as contemplated by this Agreement or any of the Other Documents, or any act taken or omitted to be taken by Agent, shall, unless otherwise expressly provided, be created, entered into, made or received, or taken or omitted, for the benefit or account of Agent and Lenders. Wherever the phrase “to the best of Borrower’s knowledge” or words of similar import relating to the knowledge or the awareness of Borrower are used in this Agreement or Other Documents, such phrase shall mean and refer to (i) the actual knowledge of a senior officer of Borrower or (ii) the knowledge that a senior officer would have obtained if he had engaged in good faith and diligent performance of his duties, including the making of such reasonably specific inquiries as may be necessary of the employees or agents of Borrower and a good faith attempt to ascertain the existence or accuracy of the matter to which such phrase relates.  Wherever the phrase “paid in full in cash” is used in this Agreement or the Other Documents, such phrase shall mean and refer to (a) the full payment in cash of the Obligations (other than Obligations relating to Letters of Credit) excluding any then existing contingent indemnification or cost or expense reimbursement obligations that have not at that date been actually asserted and (b) to the extent applicable, cash collateralization of the Obligations relating to Letters of Credit as required by this Agreement.  All references to filing, registering or recording financing statements or other required documents under the Uniform Commercial Code shall be deemed to include filings and registrations under the PPSA.
 
II.                                    LOANS, PAYMENTS.
 
2.1                                [Reserved] .
 
2.2                                Procedure for LIBOR Rate Loan Conversion/Continuation or Borrowing .
 
(a)                                  [Reserved].
 
(b)                                  In the event Borrower desires to borrow the Restatement Effective Date Term Loan as a LIBOR Rate Loan on the Restatement Effective Date, Borrower shall give Agent written notice by no later than Noon (Eastern time) on the day which is three (3) Business Days prior to the Restatement Effective Date, specifying (i) the date of the proposed borrowing (which shall be a Business Day), (ii) the type of borrowing and the amount of such borrowing which amount shall be in an aggregate principal amount that is not less than $500,000 and integral multiples of $100,000 in excess thereof, and (iii) the duration of the first Interest Period therefor.  Interest Periods for LIBOR Rate Loans shall be for one, two, three, six or, if available to all Lenders, nine or twelve months; provided, that, if an Interest Period would end on a day that is not a Business Day, it shall end on the next succeeding Business Day unless such day falls in the next succeeding calendar month in which case the Interest Period shall end on the next preceding Business Day. At the election of Required Lenders or Agent (as directed by the Required Lenders, no LIBOR Rate Loan shall be made available to Borrower during the continuance of an Event of Default. After giving effect to each requested LIBOR Rate Loan, including those which
 
38 

 
are converted from a Base Rate Loan under Section 2.2(d), there shall not be outstanding more than five (5) LIBOR Rate Loans, in the aggregate.
 
(c)                                   Each Interest Period of a LIBOR Rate Loan shall commence on the date such LIBOR Rate Loan is made, continued or converted, as applicable, and shall end on such date as Borrower may elect as set forth in subsection (b)(iii) above, provided that the exact length of each Interest Period shall be determined in accordance with the practice of the interbank market for offshore Dollar deposits and no Interest Period shall end after the last day of the Term.
 
Borrower shall elect the initial Interest Period applicable to a LIBOR Rate Loan by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section 2.2(d), as the case may be. Borrower shall elect the duration of each succeeding Interest Period by giving irrevocable written notice to Agent of such duration not later than Noon (Eastern time) on the day which is three (3) Business Days prior to the last day of the then current Interest Period applicable to such LIBOR Rate Loan. If Agent does not receive timely notice of the Interest Period elected by Borrower, Borrower shall be deemed to have elected to convert to a Base Rate Loan subject to Section 2.2(d) herein below.
 
(d)                                  Provided that no Event of Default shall have occurred and be continuing, Borrower may, on the last Business Day of the then current Interest Period applicable to any outstanding LIBOR Rate Loan, or on any Business Day with respect to Base Rate Loans, convert any such loan into a loan of another type in the same aggregate principal amount provided that any conversion of a LIBOR Rate Loan shall be made only on the last Business Day of the then current Interest Period applicable to such LIBOR Rate Loan. If Borrower desires to convert a loan, Borrower shall give Agent written notice by no later than Noon (Eastern time) (i) on the day which is three (3) Business Days’ prior to the date on which such conversion is to occur with respect to a conversion from a Base Rate Loan to a LIBOR Rate Loan, or (ii) on the day which is one (1) Business Day prior to the date on which such conversion is to occur with respect to a conversion from a LIBOR Rate Loan to a Base Rate Loan, specifying, in each case, the date of such conversion, the loans to be converted and if the conversion is from a Base Rate Loan to any other type of loan, the, duration of the first Interest Period therefor.
 
(e)                                   At its option and upon written notice given prior to Noon (Eastern time) at least three (3) Business Days’ prior to the date of such prepayment, Borrower may prepay the LIBOR Rate Loans in whole at any time or in part from time to time with accrued interest on the principal being prepaid to the date of such repayment. Borrower shall specify the date of prepayment of Loans which are LIBOR Rate Loans and the amount of such prepayment. In the event that any prepayment of a LIBOR Rate Loan is required or permitted on a date other than the last Business Day of the then current Interest Period with respect thereto, Borrower shall indemnify Agent and Lenders therefor in accordance with Section 2.2(f) hereof.
 
(f)                                    Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless from and against any and all losses or expenses that Agent and Lenders may sustain or incur as a consequence of any prepayment, conversion of or any default by Borrower in the payment of the principal of or interest on any LIBOR Rate Loan or failure by Borrower to complete a borrowing of, a prepayment of or conversion of or to a LIBOR Rate Loan after notice
 
39 

 
thereof has been given, including, but not limited to, any interest payable by Agent or Lenders to lenders of funds obtained by it in order to make or maintain its LIBOR Rate Loans hereunder. Such indemnification shall include any loss or expense arising from the reemployment of funds obtained by it (but excluding loss of anticipated profit) or from fees payable to terminate deposits from which such funds were obtained.  For the purpose of calculating amounts payable to a Lender under this subsection, each Lender shall be deemed to have actually funded its relevant LIBOR Rate Loan through the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount of that LIBOR Rate Loan and having a maturity comparable to the relevant Interest Period; provided , however, that each Lender may fund each of its LIBOR Rate Loans in any manner it sees fit, and the foregoing assumption shall be utilized only for the calculation of amounts payable under this subsection.  This covenant shall survive the termination of this Agreement and the payment of the Notes and all other Obligations.  A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Agent or any Lender to Borrower shall be conclusive absent manifest error.
 
(g)                                   Notwithstanding any other provision hereof, if any Applicable Law, or any change therein or in the interpretation or application thereof, shall make it unlawful for any Lender (for purposes of this subsection (g), the term “Lender” shall include any Lender and the office or branch where any Lender or any corporation or bank controlling such Lender makes or maintains any LIBOR Rate Loans) to make or maintain its LIBOR Rate Loans, the obligation of Lenders to make LIBOR Rate Loans hereunder shall forthwith be cancelled and Borrower shall, if any affected LIBOR Rate Loans are then outstanding, promptly upon request from Agent, either pay all such affected LIBOR Rate Loans or convert such affected LIBOR Rate Loans into loans of another type. If any such payment or conversion of any LIBOR Rate Loan is made on a day that is not the last day of the Interest Period applicable to such LIBOR Rate Loan, Borrower shall pay Agent, upon Agent’s request, such amount or amounts as may be necessary to compensate Lenders for any loss or expense sustained or incurred by Lenders in respect of such LIBOR Rate Loan as a result of such payment or conversion, including (but not limited to) any interest or other amounts payable by Lenders to lenders of funds obtained by Lenders in order to make or maintain such LIBOR Rate Loan.  The amount of any such payment shall include any loss or expense arising from the reemployment of funds obtained by it (but excluding loss of anticipated profit) or from fees payable to terminate deposits from which such funds were obtained.  For the purpose of calculating amounts payable to a Lender under this subsection, each Lender shall be deemed to have actually funded its relevant LIBOR Rate Loan through the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount of that LIBOR Rate Loan and having a maturity comparable to the relevant Interest Period; provided , however, that each Lender may fund each of its LIBOR Rate Loans in any manner it sees fit, and the foregoing assumption shall be utilized only for the calculation of amounts payable under this subsection.  This covenant shall survive the termination of this Agreement and the payment of the Notes and all other Obligations.  A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Lenders to Borrower shall be conclusive absent manifest error.
 
2.3                                [Reserved] .
 
2.4                                Term Loans .  (a)  Pursuant to the terms and conditions of the Existing Credit Agreement, the Existing Lenders made, severally and not jointly, a “Term Loan” (under and as
 
40 

 
defined in the Existing Credit Agreement) to Borrower on the Original Closing Date in the aggregate principal amount of $100,000,000.  The Borrower, Agent and each Existing Lender acknowledges and agrees that, as of the date hereof immediately prior to the effectiveness of this Agreement, $99,250,000 of the principal amount of the “Term Loan” (under and as defined in the Existing Credit Agreement) remains outstanding (the “ Existing Term Loan ”).  Each of the Borrower, Agent and each Lender acknowledges and agrees that the outstanding principal amount of the Existing Term Loan shall for all purposes hereunder constitute and be referred to as a portion of the Term Loans hereunder.  Subject to the terms and conditions of this Agreement, certain Lenders agree, severally and not jointly, to make a term loan to Borrower on the Restatement Effective Date in an amount not to exceed such Lender’s Restatement Effective Date Term Loan Commitment Percentage of the Restatement Effective Date Term Loan Commitment (such term loans, individually and collectively, the “ Restatement Effective Date Term Loan ”; the Restatement Effective Date Term Loan and the Existing Term Loan, together, the “ Term Loans ” and each individually, a “ Term Loan ”).  Upon written notice by any Lender to Borrower that a promissory note or other evidence of indebtedness is requested by such Lender to evidence the Term Loans and other Obligations owing or payable to, or to be made by, such Lender, Borrower shall promptly (and in any event within three (3) Business Days of any such request) execute and deliver to such Lender a promissory note substantially in the form attached hereto as Exhibit 2.4 (each such promissory note, a “ Term Note ”).
 
(b)                                  The principal amount of the Existing Term Loan shall be payable as follows, subject to acceleration upon the occurrence of an Event of Default or termination of this Agreement: (a) Borrower shall pay equal installments of $250,000 each on the last day of each calendar quarter commencing on September 30, 2013; and (b) Borrower shall pay the remaining principal balance of the Existing Term Loan on the last day of the Term.  The principal amount of the Restatement Effective Date Term Loan shall be payable as follows, subject to acceleration upon the occurrence of an Event of Default or termination of this Agreement: (a) Borrower shall pay equal installments of $77,000 each on the last day of each calendar quarter commencing on June 30, 2014; and (b) Borrower shall pay the remaining principal balance of the Restatement Effective Date Term Loan on the last day of the Term.
 
(c)                                   The Term Loans may consist of Base Rate Loans or LIBOR Rate Loans, or a combination thereof, as Borrower may request.  If Borrower desires to obtain or extend a LIBOR Rate Loan or to convert a Base Rate Loan to a LIBOR Rate Loan, Borrower shall comply with the notification requirements set forth in Sections 2.2(b) and (d) and the provisions of Sections 2.2(b) through (g) shall apply.
 
2.5                                [Reserved] .
 
2.6                                Repayment of Loans .
 
(a)                                  The Term Loans shall be due and payable as provided in Section 2.4 hereof and in the Term Notes, if any, subject to mandatory prepayments as herein provided.  Borrower may prepay the principal amount of the Term Loans at any time in whole or from time to time in partial payments of not less than $250,000 each, subject to the early termination fee set forth in Section 13.1 and any indemnification required in accordance with Section 2.2(f).  Any such voluntary prepayment of the principal amount of the Term Loans shall be applied to each
 
41 

 
Term Loan on a pro rata basis based on the respective outstanding principal balances thereof and, as to each Term Loan, shall be applied as follows: first, to the next four (4) scheduled payments of principal under such Term Loan and second, ratably to the remaining scheduled payments of principal payable under such Term Loan until such Term Loan is paid in full.
 
(b)                                  [Reserved].
 
(c)                                   All payments of principal, interest and other amounts payable hereunder, or under any of the Other Documents shall be made to Agent at the Payment Office not later than 1:00 P.M. (New York time) on the due date therefor in lawful money of the United States of America in federal funds or other funds immediately available to Agent.  Payments received after 1:00 p.m. (New York time) on any Business Day shall be deemed to have been received on the following Business Day.  Each payment (including each prepayment) by Borrower on account of the principal of and interest on the Term Loans, shall be made from or to, or applied to that portion of the Term Loans pro rata according to the Commitment Percentages of Lenders. Except as expressly provided herein, all payments (including prepayments) to be made by Borrower on account of principal, interest and fees and all other amounts payable hereunder, or under any related agreement, shall be made without any deduction whatsoever, including, but not limited to, any deduction for any setoff or counterclaim.
 
2.7                                [Reserved] .
 
2.8                                Statement of Account .  Agent shall maintain, in accordance with its customary procedures, a loan account in the name of Borrower in which shall be recorded the date and amount of the Term Loans and the date and amount of each payment in respect thereof. The records of Agent with respect to the loan account shall be conclusive evidence absent manifest error of the amount of Term Loans and of payments applicable thereto.
 
2.9                                [Reserved] .
 
2.10                         [Reserved] .
 
2.11                         [Reserved] .
 
2.12                         [Reserved] .
 
2.13                         [Reserved] .
 
2.14                         [Reserved] .
 
2.15                         [Reserved] .
 
2.16                         [Reserved] .
 
2.17                         [Reserved] .
 
2.18                         [Reserved] .
 
42 

2.19                         [Reserved] .
 
2.20                         Manner of Borrowing and Payment .
 
(a)                                  That portion of the Restatement Effective Date Term Loan to be advanced by each Lender on the Restatement Effective Date shall be advanced according to the Restatement Effective Date Term Loan Commitment Percentage of each such Lender.
 
(b)                                  [Reserved].
 
(c)                                   Each Lender shall be entitled to earn interest at the Term Interest Rate on outstanding Loans which it has funded.
 
(d)                                  If any Lender or Participant (a “ benefited Lender ”) shall at any time receive any payment of all or part of its Loans, or interest thereon, or receive any Collateral in respect thereof (whether voluntarily or involuntarily or by set-off) in a greater proportion than any such payment to and Collateral received by any other Lender, if any, in respect of such other Lender’s Loans, or interest thereon, and such greater proportionate payment or receipt of Collateral is not expressly permitted hereunder, such benefited Lender shall purchase for cash from the other Lenders a participation in such portion of each such other Lender’s Loans, or shall provide such other Lender with the benefits of any such Collateral, or the proceeds thereof, as shall be necessary to cause such benefited Lender to share the excess payment or benefits of such Collateral or proceeds ratably with each of the other Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. Each Lender so purchasing a portion of another Lender’s Loans may exercise all rights of payment (including rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion.
 
2.21                         Mandatory Prepayments .
 
(a)                                  Except as otherwise permitted pursuant to clauses (a), (c), (e), (f), (g), (h), (k) and (l) of the definition of Permitted Disposition and subject to Section 15.19, when a Borrower or any of its Subsidiaries sells or otherwise disposes of any Collateral, or receives insurance proceeds paid in respect of any casualty loss relating to any assets or property of such Person or proceeds of a Condemnation Event (other than asset disposition, insurance and/or Condemnation Event proceeds of less than $500,000 in the aggregate in any Fiscal Year), Borrower shall repay the Loans in an amount equal to the cash net proceeds of such sale, casualty loss or Condemnation Event (i.e., gross cash proceeds received less (i) the reasonable costs (including, without limitation, repayment of Indebtedness related thereto and taxes) of such sales or other dispositions, (ii) reserves, required to be established in accordance with GAAP or the definitive agreements relating to such disposition, with respect to such disposition, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and laities under any indemnifications obligations, (iii) any non-contingent liabilities directly related to the asset sold and not assumed by the purchaser thereof and (iv) in the case of insurance proceeds or a Condemnation Event, actual and reasonable costs and expenses incurred in connection with the adjustment or settlement of claims in respect
 
43 

 
thereof), such repayments to be made promptly but in no event more than three (3) Business Days following receipt of such net proceeds, and until the date of payment, such proceeds shall be held in trust for Agent; provided , that no prepayment shall be required in connection with such disposition, casualty loss or Condemnation Event in respect of Revolving Loan Priority Collateral (as defined in the Intercreditor Agreement) unless receipt of the proceeds thereof shall have been declined by the requisite Revolving Lenders in accordance with the terms of the PNC Credit Agreement; provided , further , that no prepayment shall be required in connection with such a Collateral disposition, casualty loss or Condemnation Event if the proceeds thereof are reinvested by the Person receiving such proceeds in an asset reasonably related or necessary to the business of Borrower (or, in the case of insurance proceeds, used to repair, refurbish, restore, replace or rebuild the asset giving rise to such proceeds) within two hundred seventy (270) days following receipt thereof, but only to the extent that the Borrower notifies Agent of such Person’s intent to make such reinvestment at the time such proceeds are received and when such reinvestment occurs no Default or Event of Default shall then be in existence.  Any such prepayment shall be applied in accordance with clause (d) below (either at the time of receipt thereof or upon expiration of the 270-day period described above to the extent the net proceeds are not so reinvested (or, in the case of insurance proceeds, not used to repair, refurbish, restore, replace or rebuild the asset giving rise to such proceeds) within such period as permitted in this clause (a)), and shall be accompanied an indemnification payment as required under Section 2.2(f), in any.  The foregoing shall not be deemed to be implied consent to any such sale otherwise prohibited by the terms and conditions hereof.
 
(b)                                  At Agent’s discretion, Borrower shall, commencing with the fiscal year ending closest to March 31, 2015, prepay the outstanding amount of the Loans in an aggregate amount equal to (i) 50% of Excess Cash Flow for the applicable fiscal year minus (ii) the aggregate amount of all voluntary prepayments of the Term Loans made during such fiscal year, which amount shall be payable on or prior to the fifteenth day following the date the financial statements described in Section 9.7 for such fiscal year are required to be delivered to Agent, and which amount shall be applied in accordance to clause (d) below and shall be accompanied by an indemnification payment as required under Section 2.2(f) to the extent applicable.  In the event that such financial statements are not so delivered, then a calculation based upon estimated amounts shall be made by Agent upon which calculation Borrower shall make the prepayment required by this Section 2.21(b), subject to adjustment when such financial statements are delivered to Agent as required hereby.  The calculation made by Agent shall not be deemed a waiver of any rights Agent or Lenders may have as a result of the failure by Borrower to deliver such financial statements.  The amount of any prepayment due pursuant to this Section 2.21(b) shall be reduced by the aggregate amount of voluntary prepayments of principal on the Term Loans made by Borrower during the applicable fiscal year pursuant to Section 2.6(a) hereof.
 
(c)                                   If any Loan Party or any of its Subsidiaries:
 
(i)                                      issues Equity Interests or otherwise obtains an equity contribution (other than ( A) a contribution resulting from issuances by Parent Holdco to (or equity contributions received from) Freeman Spogli or any other Person that is an equityholder of Parent Holdco as of the Original Closing Date (other than issuances or equity contributions in connection with an Equity Cure), or (B) issuances by Borrower to Parent Holdco or by any
 
44 

 
Subsidiary to another Loan Party) or (C) equity contributions received by a Subsidiary of Parent Holdco from Parent Holdco or another Subsidiary of Parent Holdco);
 
(ii)                                   receives proceeds on account of an Equity Cure; or
 
(iii)                                incurs any Indebtedness for borrowed money (other than Indebtedness permitted to be incurred under Section 7.8), no later than two Business Days following the date of receipt of the proceeds thereof by Holdings or any of its Subsidiaries, the Borrower shall prepay the Loans and other Obligations in an amount equal to all such proceeds, net of, except in the case of the proceeds received on account of an Equity Cure, underwriting discounts and commissions and other reasonable costs paid to non-Affiliates in connection therewith.  Any such prepayment shall be shall be applied in accordance to clause (d) below and shall be accompanied by an indemnification payment as required under Section 2.2(f) to the extent applicable.
 
(d)                                  Subject to the provisions of Section 11.5, any prepayments made by Borrower pursuant to Sections 2.21(a) through (c) shall be applied to each Term Loan on a pro rata basis based on the respective outstanding principal balances thereof and, as to each Term Loan, shall be applied as follows: first , to the outstanding principal balance of such Term Loan; and second , to any other Obligations then outstanding; provided that (i) any partial prepayment of the Term Loans made by or on behalf of Borrower shall be applied to each Term Loan on a pro rata basis based on the respective outstanding principal balances thereof and, as to each Term Loan, shall be applied to reduce the remaining scheduled installments of such Term Loan (including the final installment due on the last day of the Term) pro rata to the remaining installments thereof, and (ii) any prepayment of a Loan shall be applied first to the portion of such Loan comprised of Base Rate Loans and then to the portion of such Loan comprised of LIBOR Rate Loans, in the direct order of Interest Period maturities.
 
2.22                         Use of Proceeds .
 
(a)                                  Borrower applied the proceeds of the Existing Term Loan to (i) repay certain indebtedness of Borrower and Baskins existing on the Closing Date, (ii) finance a portion of the purchase price payable under the Purchase Agreement in connection with the Acquisition and (iii) pay fees and expenses relating to the Transactions and to the credit facilities provided under this Agreement.  Borrower shall apply any remaining proceeds of the Existing Term Loan to finance permitted Capital Expenditures, Permitted Acquisitions and provide for working capital and the general corporate needs of Borrower.  Borrower shall apply the proceeds of the Restatement Effective Date Term Loan to (i) fund a portion of the Restatement Effective Date Dividend, (ii) pay a portion of the costs and expenses of the Restatement Effective Date Transactions, including, without limitation, costs and expenses required to be paid pursuant to Section 3.4(b), and any other costs and expenses (including the payment of the Restatement Effective Date Bonus Payments) related to the transactions contemplated by this Agreement and the Other Documents and (iii) provide for working capital and the general corporate needs of Borrower.
 
(b)                                  Without limiting the generality of Section 2.22(a) above, neither Borrower, the Guarantors nor any other Person which may in the future become party to this
 
45 

 
Agreement or the Other Documents as Borrower or Guarantor, intends to use nor shall they use any portion of the proceeds of the Loans, directly or indirectly, for any purpose in violation of any Anti-Terrorism Laws.
 
2.23                         Defaulting Lender .
 
(a)                                  Notwithstanding anything to the contrary contained herein, in the event any Lender (x) has refused (which refusal constitutes a breach by such Lender of its obligations under this Agreement) to make available its portion of any Loan or (y) notifies either Agent or Borrower that it does not intend to make available its portion of any Loan (if the actual refusal would constitute a breach by such Lender of its obligations under this Agreement) (each, a “ Lender Default ”), all rights and obligations hereunder of such Lender (a “ Defaulting Lender ”) as to which a Lender Default is in effect and of the other parties hereto shall be modified to the extent of the express provisions of this Section 2.23 while such Lender Default remains in effect.
 
(b)                                  Amounts received in respect of principal of any type of Loans shall be applied to reduce the applicable Loans of each Lender (other than any Defaulting Lender) pro rata based on the aggregate of the outstanding Loans of that type of all Lenders at the time of such application; provided, that, Agent shall not be obligated to transfer to a Defaulting Lender any payments received by Agent for the Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees). Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent.  Agent may hold and shall, at the request of Borrower, re-lend to Borrower the amount of such payments received or retained by it for the account of such Defaulting Lender.
 
(c)                                   A Defaulting Lender shall not be entitled to give instructions to Agent or to approve, disapprove, consent to or vote on any matters relating to this Agreement and the Other Documents. All amendments, waivers and other modifications of this Agreement and the Other Documents may be made without regard to a Defaulting Lender and, for purposes of the definition of “Required Lenders,” a Defaulting Lender shall be deemed not to be a Lender and not to have either Loans outstanding or a Commitment Percentage.
 
(d)                                  Other than as expressly set forth in this Section 2.23, the rights and obligations of a Defaulting Lender (including the obligation to indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in this Section 2.23 shall be deemed to release any Defaulting Lender from its obligations under this Agreement and the Other Documents, shall alter such obligations, shall operate as a waiver of any default by such Defaulting Lender hereunder, or shall prejudice any rights which Borrower, Agent or any Lender may have against any Defaulting Lender as a result of any default by such Defaulting Lender hereunder.
 
(e)                                   In the event a Defaulting Lender retroactively cures to the satisfaction of Agent the breach which caused a Lender to become a Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender and shall be treated as a Lender under this Agreement.
 
46 

 
2.24                         Joint and Several Liability, Waivers, etc .  Each Person from time to time party hereto as “Borrower” hereby agrees as follows.
 
(a)                                  Each such Person is accepting joint and several liability hereunder and under the Other Documents in consideration of the financial accommodations to be provided by Agent and the Lenders under this Agreement, for the mutual benefit, directly and indirectly, of each such Person and in consideration of the undertakings of the other Persons from time to time party hereto as “Borrower” to accept joint and several liability for the Obligations.
 
(b)                                  Each such Person, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Persons from time to time party hereto as “Borrower”, with respect to the payment and performance of all of the Obligations (including any Obligations arising under this Section 2.24), it being the intention of such Persons and the parties hereto that all the Obligations shall be the joint and several obligations of each Person from time to time party hereto as “Borrower” without preferences or distinction among them.
 
(c)                                   If and to the extent that any such Person shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event such Person will make such payment with respect to, or perform, such Obligation.
 
(d)                                  The Obligations of each such Person under the provisions of this Section 2.24 constitute the absolute and unconditional, full recourse Obligations of each such Person enforceable against each such Person to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of this Agreement or any other circumstances whatsoever.
 
(e)                                   Except as otherwise expressly provided in this Agreement, each such Person hereby waives notice of acceptance of its joint and several liability, notice of any Loans issued under or pursuant to this Agreement, notice of the occurrence of any Default, Event of Default, or of any demand for any payment under this Agreement, notice of any action at any time taken or omitted by Agent or Lenders under or in respect of any of the Obligations, any requirement of diligence or to mitigate damages and, generally, to the extent permitted by applicable law, all demands, notices and other formalities of every kind in connection with this Agreement (except as otherwise provided in this Agreement). Each such Person hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by Agent or Lenders at any time or times in respect of any default by any such Person in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by Agent or Lenders in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations or the addition, substitution or release, in whole or in part, of any such Person. Without limiting the generality of the foregoing, each such Person assents to any other action or delay in acting or failure to act on the part of Agent or any Lender with respect to the failure by any such Person to comply with any of its respective Obligations, including, without limitation,
 
47 

 
any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this Section 2.24 afford grounds for terminating, discharging or relieving any such Person, in whole or in part, from any of its Obligations under this Section 2.24, it being the intention of each such Person that, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of each such Person under this Section 2.24 shall not be discharged except by performance and then only to the extent of such performance. The Obligations of each such Person under this Section 2.24 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any such Person or Agent or any Lender.
 
(f)                                    Each such Person represents and warrants to Agent and Lenders that such Person is currently informed of the financial condition of the other Persons from time to time party hereto as “Borrower” and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each such Person further represents and warrants to Agent and Lenders that such Person has read and understands the terms and conditions of this Agreement and the Other Documents. Each such Person hereby covenants that such Person will continue to keep informed of the other such Person’s financial condition, the financial condition of other guarantors, if any, and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Obligations.
 
(g)                                   Each such Person waives, to the maximum extent permitted by law, all rights and defenses arising out of an election of remedies by Agent or any Lender, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed Agent’s or such Lender’s rights of subrogation and reimbursement against any such Person by the operation of Section 580(d) of the California Code of Civil Procedure, any comparable statute, or otherwise.
 
(h)                                  Each such Person waives, to the maximum extent permitted by law, all rights and defenses that such Person may have because the Obligations are or become secured by Real Property. This means, among other things: (i) Agent and Lenders may collect from such Person without first foreclosing on any Real Property or personal property Collateral pledged by any other Person and (ii) if Agent or any Lender forecloses on any Real Property pledged by any such Person or any Guarantor: (A) the amount of the Obligations may be reduced only by the price for which such Collateral is sold at the foreclosure sale, even if such Collateral is worth more than the sale price; and (B) Agent and Lenders may collect from such Person even if Agent or Lenders, by foreclosing on any such Real Property, has destroyed any right such Person may have to collect from the other Persons from time to time party hereto as “Borrower.” This is an unconditional and irrevocable waiver of any rights and defenses such Person may have because the Obligations are secured by Real Property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure or any comparable statutes. As provided in Section 15.1 hereof, this Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. The foregoing provisions are included solely out of an abundance of caution and shall not be construed to mean that any of the above referenced provisions of California law are in any way applicable to this Agreement or the Obligations.
 
48 

 
(i)                                      The provisions of this Section 2.24 are made for the benefit of Agent, Lenders and their respective successors and permitted assigns, and may be enforced by it or them from time to time against any or all Persons from time to time signatory hereto as “Borrower” as often as occasion therefor may arise and without requirement on the part of Agent, any Lender, any of their respective successors or permitted assigns first to marshal any of its or their claims or to exercise any of its or their rights against any such Persons or to exhaust any remedies available to it or them against any such Persons or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 2.24 shall remain in effect until all of the Obligations shall have been paid in full in accordance with the terms of this Agreement. If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by Agent or any Lender upon the insolvency, bankruptcy or reorganization of any such Person, or otherwise, the provisions of this Section 2.24 will forthwith be reinstated in effect, as though such payment had not been made.
 
(j)                                     Until the Obligations have been paid in full in cash and all of the commitments of the Lenders hereunder have been terminated, each such Person hereby agrees that it will not enforce any of its rights of contribution or subrogation against any other such Person with respect to any liability incurred by it hereunder or under any of the Other Documents, any payments made by it to Agent or any Lender with respect to any of the Obligations or any collateral security therefor until such time as all of the Obligations have been paid in full in cash. Any claim which any such Person may have against any other such Person with respect to any payments to Agent or any Lender hereunder or under any Other Documents are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar proceeding under the laws of any jurisdiction relating to any such Person, its debts or its assets, whether voluntary or involuntary, all such Obligations shall be paid in full in cash before any payment or distribution of any character, whether in cash, securities or other property, shall be made to any other such Person therefore.
 
(k)                                  Each such Person hereby agrees that, after the occurrence and during the continuance of any Event of Default, the payment of any amounts due with respect to the indebtedness or other obligations owing by any such Person to any other such Person is hereby subordinated to the prior payment in full in cash of the Obligations in accordance with the terms of this Agreement. Each such Person hereby agrees that after the occurrence and during the continuance of any Event of Default, such Person will not demand, sue for or otherwise attempt to collect any indebtedness of any other such Person owing to such Person until the Obligations shall have been paid in full in cash. If, notwithstanding the foregoing sentence, such Person shall collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected, enforced and received by such Person as trustee for Agent, and such Person shall deliver any such amounts to Agent for application to the Obligations in accordance with the terms of this Agreement.
 
49 

 
III.                               INTEREST AND FEES.
 
3.1                                Interest .  Interest on Loans shall be payable quarterly in arrears on the last day of each quarter with respect to Base Rate Loans and, with respect to LIBOR Rate Loans, at the end of each Interest Period or, for LIBOR Rate Loans with an Interest Period in excess of three months, on the last day of each three month interval. Interest charges shall be computed on the actual principal amount of Loans outstanding during the applicable period at a rate per annum equal to the applicable Term Interest Rate.  Automatically and for so long as any Event of Default shall have occurred and be continuing under Section 10.7 or 10.8 (or at the election of Agent or Required Lenders for so long as an Event of Default shall have occurred and be continuing under Section 10.1 or 10.5 (solely with respect to Section 6.5)), (i) all Obligations except the outstanding principal amount of the Term Loans shall bear interest at a rate per annum equal to the rate of interest otherwise applicable thereto plus two (2) percentage points and (ii) the outstanding principal amount of the Term Loans shall bear interest at a rate per annum equal to the Term Interest Rate plus two (2) percentage points (as applicable, the “ Default Rate ”).  With respect to any election of the Default Rate by Agent or Required Lenders as set forth above, the Default Rate may, at the option of Agent of the Required Lenders, accrue retroactively from the initial date of the applicable Event of Default).
 
3.2                                [Reserved] .
 
3.3                                [Reserved] .
 
3.4                                Fee Letters .  Borrower shall pay (a) the amounts required to be paid in the Fee Letter in the manner and at the times required by the Fee Letter and (b) the amounts required to be paid in the Supplemental Fee Letter in the manner and at the times required by the Supplemental Fee Letter.
 
3.5                                Computation of Interest and Fees .  Interest on the LIBOR Rate Loans and fees hereunder shall be computed on the basis of a year of 360 days and for the actual number of days elapsed. Interest on the Base Rate Loans shall be computed on the basis of a three hundred sixty-five (365) day year (three hundred sixty-six (366) days in the case of a leap year) and the actual number of days elapsed. If any payment to be made hereunder becomes due and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and interest thereon shall be payable at the applicable Term Interest Rate for Base Rate Loans during such extension.  Each determination by Agent of an interest rate hereunder shall be final, binding and conclusive, absent manifest error.
 
3.6                                Maximum Charges .  In no event whatsoever shall interest and other charges charged hereunder exceed the highest rate permissible under law. In the event interest and other charges as computed hereunder would otherwise exceed the highest rate permitted under law, such excess amount shall be first applied to any unpaid principal balance owed by Borrower, and if the then remaining excess amount is greater than the previously unpaid principal balance, Lenders shall promptly refund such excess amount to Borrower and the provisions hereof shall be deemed amended to provide for such permissible rate.
 
50 

3.7                                Increased Costs .  In the event that any adoption of any new Applicable Law or Change in Law or compliance by any Lender (for purposes of this Section 3.7, the term “Lender” shall include Agent or any Lender and any corporation or bank controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined) makes or maintains any LIBOR Rate Loans with any request or directive (whether or not having the force of law) from any central bank or other financial, monetary or other authority, shall:
 
(a)                                  subject Agent or any Lender to any Tax of any kind whatsoever with respect to this Agreement or any Other Document or any LIBOR Rate Loan, or change the basis of taxation of payments to Agent or such Lender in respect thereof (except for (i) Indemnified Taxes, (ii) Taxes described in clauses (b) through (e) of the definition of Excluded Taxes and (iii) Connection Income Taxes) ;
 
(b)                                  impose, modify or deem applicable any reserve, special deposit, assessment, special deposit, compulsory loan, insurance charge or similar requirement against assets held by, or deposits in or for the account of, advances or loans by, or other credit extended by, any office of Agent or any Lender, including pursuant to Regulation D of the Board of Governors of the Federal Reserve System ; or
 
(c)                                   impose on Agent, any Lender or the London interbank offered rate market any other condition, loss or expense (other than Taxes) affecting this Agreement or any Other Document or any Loan made by any Lender ;
 
and the result of any of the foregoing is to increase the cost to Agent or any Lender of making, renewing or maintaining its Loans hereunder by an amount that Agent or such Lender reasonably deems to be material or to reduce the amount of any payment (whether of principal, interest or otherwise) in respect of any of the Loans by an amount that Agent or such Lender reasonably deems to be material, then, in any case Borrower shall promptly pay Agent or such Lender, upon its demand, such additional amount as will compensate Agent or such Lender for such additional cost or such reduction, as the case may be, provided that the foregoing shall not apply to increased costs which are reflected in the LIBOR Rate, as the case may be. Agent or such Lender shall certify the amount of such additional cost or reduced amount to Borrower, and such certification shall be conclusive absent manifest error.
 
3.8                                Basis For Determining Interest Rate Inadequate or Unfair .  In the event that Agent or any Lender shall have determined that:
 
(a)                                  reasonable means do not exist for ascertaining the LIBOR Rate applicable pursuant to Section 2.2 hereof for any Interest Period; or
 
(b)                                  Dollar deposits in the relevant amount and for the relevant maturity are not available in the London interbank Eurodollar market, with respect to an outstanding LIBOR Rate Loan, a proposed LIBOR Rate Loan, or a proposed conversion of a Base Rate Loan into a LIBOR Rate Loan, then Agent shall give Borrower prompt written or telephonic notice of such determination. If such notice is given, (i) any such requested LIBOR Rate Loan shall be made as a Base Rate Loan, unless Borrower shall notify Agent no later than Noon (Eastern time) two (2) Business Days prior to the date of such proposed borrowing, that its request for such borrowing
 
51 

 
shall be cancelled or made as an unaffected type of LIBOR Rate Loan, (ii) any Base Rate Loan or LIBOR Rate Loan which was to have been converted to an affected type of LIBOR Rate Loan shall be continued as or converted into a Base Rate Loan, or, if Borrower shall notify Agent, no later than Noon (Eastern time) two (2) Business Days prior to the proposed conversion, shall be maintained as an unaffected type of LIBOR Rate Loan, and (iii) any outstanding affected LIBOR Rate Loans shall be converted into a Base Rate Loan, or, if Borrower shall notify Agent, no later than Noon (Eastern time) two (2) Business Days prior to the last Business Day of the then current Interest Period applicable to such affected LIBOR Rate Loan, shall be converted into an unaffected type of LIBOR Rate Loan, on the last Business Day of the then current Interest Period for such affected LIBOR Rate Loans. Until such notice has been withdrawn, Lenders shall have no obligation to make an affected type of LIBOR Rate Loan or maintain outstanding affected LIBOR Rate Loans and Borrower shall not have the right to convert a Base Rate Loan or an unaffected type of LIBOR Rate Loan into an affected type of LIBOR Rate Loan.
 
3.9                                Capital Adequacy .
 
(a)                                  In the event that Agent or any Lender shall have determined in good faith that any adoption of any new Applicable Law or guideline regarding capital adequacy, or Change in Law, or any change in the interpretation or administration thereof by any Governmental Body, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Agent or any Lender (for purposes of this Section 3.9, the term “Lender” shall include Agent or any Lender and any corporation or bank controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined) makes or maintains any LIBOR Rate Loans with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on Agent or any Lender’s capital as a consequence of its obligations hereunder to a level below that which Agent or such Lender could have achieved but for such adoption, change or compliance (taking into consideration Agent’s and each Lender’s policies with respect to capital adequacy) by an amount deemed by Agent or any Lender to be material, then, from time to time, Borrower shall pay on demand to Agent or such Lender such additional amount or amounts as will compensate Agent or such Lender for such reduction. In determining such amount or amounts, Agent or such Lender may use any reasonable averaging or attribution methods. The protection of this Section 3.9 shall be available to Agent and each Lender regardless of any possible contention of invalidity or inapplicability with respect to the Applicable Law, guideline or condition referred to in this Section 3.9(a).
 
(b)                                  A certificate of Agent or such Lender setting forth such amount or amounts as shall be necessary to compensate Agent or such Lender with respect to Section 3.9(a) hereof when delivered to Borrower shall be conclusive absent manifest error.
 
3.10                         Taxes .
 
(a)                                  Any and all payments by or on account of any Obligations hereunder or under any Other Document shall be made free and clear of and without reduction or withholding for any Taxes; provided that if Applicable Law requires any payor of an amount hereunder to deduct any Taxes from such payments, then (i) in the case of Indemnified Taxes, the sum
 
52 

 
payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Recipient receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions in accordance with Applicable Law, and (iii) Borrower shall timely pay the full amount deducted to the relevant Governmental Body in accordance with Applicable Law.
 
(b)                                  Without limiting the provisions of Section 3.10(a) above, Borrower shall timely pay any Other Taxes to the relevant Governmental Body in accordance with Applicable Law.
 
(c)                                   Borrower shall indemnify each Recipient within ten (10) days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by such Recipient, and (without duplication) any penalties, interest and reasonable out of pocket expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Body.  A certificate as to the amount of such payment or liability delivered to Borrower by a Recipient (with a copy to Agent), or by Agent on its own behalf or on behalf of a Lender or Issuer, shall be conclusive absent manifest error.
 
(d)                                  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by Borrower to a Governmental Body, Borrower shall deliver to Agent the original or a certified copy of a receipt issued by such Governmental Body evidencing such payment (if any), a copy of the return reporting such payment, or such other evidence of such payment reasonably satisfactory to Agent.
 
(e)                                   Any Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which Borrower is resident for tax purposes, or under any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any Other Document shall deliver to Borrower (with a copy to Agent), at the time or times prescribed by Applicable Law or reasonably requested by Borrower or Agent, such properly completed and executed documentation prescribed by Applicable Law as will permit such payments to be made without withholding or at a reduced rate of withholding.  Notwithstanding the submission of such documentation claiming a reduced rate of or exemption from U.S. withholding tax, Agent, as applicable, shall be entitled to withhold United States federal income taxes at the full 30% withholding rate if in its reasonable judgment it is required to do so under the due diligence requirements imposed upon a withholding agent under § 1.1441-7(b) of the United States Income Tax Regulations or other Applicable Law.  Further, Agent is indemnified under § 1.1461-1(e) of the United States Income Tax Regulations against any claims and demands of any Lender, Issuer or assignee or participant of a Lender or Issuer for the amount of any tax it deducts and withholds in accordance with regulations under § 1441 of the Code.  In addition, any Lender, if requested by Borrower or Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or Agent as will enable Borrower or Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Without limiting the generality of the foregoing, in the event that Borrower is resident for tax purposes in the United States of America, each any
 
53 

 
Foreign Lender (or other Lender) shall deliver to Borrower and Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of Borrower or Agent, but only if such Foreign Lender (or other Lender) is legally entitled to do so), whichever of the following is applicable:
 
(i)                                      in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, two duly completed valid and executed originals of IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
 
(ii)                                   two (2) duly completed valid and executed originals of IRS Form W-8ECI,
 
(iii)                                in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate (a “U.S. Tax Compliance Certificate”) to the effect that such Foreign Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (y) two duly completed valid originals of IRS Form W-8BEN,
 
(iv)                               to the extent a Foreign Lender is not the beneficial owner, duly completed, valid and executed originals of IRS Form W-8IMY, accompanied by duly completed, valid and executed originals of IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner,
 
(v)                                  any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Agent to determine the withholding or deduction required to be made, or
 
(vi)                               to the extent that any Lender is not a Foreign Lender, such Lender shall submit to Agent two (2) duly completed valid and executed originals of an IRS Form W-9 or any other form prescribed by Applicable Law demonstrating that such Lender is not a Foreign Lender.
 
54 

 
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Agent in writing of its legal inability to do so.
 
(f)                                    If a payment made to a Recipient under this Agreement or any Other Document would be subject to U.S. Federal withholding Tax imposed by FATCA if such Person fails to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Recipient shall deliver to the Agent (in the case of a Lender or Participant) and Borrower at such times as are prescribed by Applicable Law, and at such other times as reasonably requested by Agent or Borrower, as applicable, (A) a certification signed by the chief financial officer, principal accounting officer, treasurer or controller of such Person, and (B) such other documentation reasonably requested by Agent or Borrower sufficient for Agent and Borrower to comply with their obligations under FATCA and to determine that such Recipient has complied with their own obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (f), “FATCA” shall include any amendments made to FATCA after the date of this Agreement .
 
If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by Borrower or with respect to which Borrower has paid additional amounts pursuant to this Section, it shall pay to Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by Borrower under this Section with respect to the Indemnified Taxes or Other Taxes giving rise to such refund); net of all out-of-pocket expenses of such party and without interest (other than any interest paid by the relevant Governmental Body with respect to such refund); provided that Borrower, upon the request of such party, agrees to repay the amount paid over to Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Body) to such party to the extent such party is required to repay such refund to such Governmental Body.  This Section shall not be construed to require any party to make available its tax returns (or any other information relating to its taxes that it deems confidential) to Borrower or any other Person.
 
3.11                         Mitigation; Replacement of Lenders .
 
(a)                                  If any Lender requests compensation under Section 3.7, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Body for the account of any Lender pursuant to Section 3.10, then, unless Borrower has elected to exercise its rights under Section 3.11(b) below, such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Advances or Commitments hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.7 or 3.10, as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
 
55 

 
(b)                                  If any Lender (an “ Affected Lender ”) (i) makes demand upon Borrower for (or if Borrower is otherwise required to pay) amounts pursuant to Section 3.7, 3.9 or 3.10 hereof and the Affected Lender has not taken the actions described in Section 3.11(a) above, (ii) is unable to make or maintain Eurodollar Rate Loans as a result of a condition described in Section 2.2(g) hereof, (iii) is a Defaulting Lender, or (iv) denies any consent requested by the Agent pursuant to Section 15.2(b) hereof, Borrower may, within ninety (90) days of receipt of such demand, notice (or the occurrence of such other event causing Borrower to be required to pay such compensation or causing Section 2.2(g) hereof to be applicable), or such Lender becoming a Defaulting Lender or denial of a request by Agent pursuant to Section 15.2(b) hereof, as the case may be, by notice in writing to the Agent and such Affected Lender (A) request the Affected Lender to cooperate with Borrower in obtaining a replacement Lender satisfactory to Agent and Borrower (the “ Replacement Lender ”); (B) request the non-Affected Lenders to acquire and assume all of the Affected Lender’s Loans, as provided herein, but none of such Lenders shall be under any obligation to do so; or (C) propose a Replacement Lender subject to approval by Agent in its good faith business judgment.  If any satisfactory Replacement Lender shall be obtained, and/or if any one or more of the non-Affected Lenders shall agree to acquire and assume all of the Affected Lender’s Loans, then such Affected Lender shall assign, in accordance with Section 15.3 hereof, all of its Loans and other rights and obligations under this Agreement and the Other Documents to such Replacement Lender or non-Affected Lenders, as the case may be, in exchange for payment of the principal amount so assigned and all interest and fees (except as otherwise provided in Section 2.23) accrued on the amount so assigned, plus all other Obligations then due and payable to the Affected Lender.
 
IV.                                COLLATERAL:  GENERAL TERMS
 
4.1                                Security Interest in the Collateral .  Each of Borrower, Parent Holdco, the Lenders and the Agent hereby reaffirm each of the provisions set forth in Section 4.1 of the Existing Credit Agreement pursuant to Sections 15.20 and 15.21 hereof.  Out of an abundance of caution, to secure the prompt payment and performance to Agent and each Lender of the Obligations, Borrower hereby assigns, pledges and grants, and shall cause each Borrowing Base Party (to the extent such Borrowing Base Party has not previously so assigned, pledged and granted) to assign, pledge and grant, to Agent for its benefit and for the ratable benefit of each Lender a continuing security interest in and to and Lien on all of its Collateral, whether now owned or existing or hereafter acquired or arising and wheresoever located. Notwithstanding any of the other provisions set forth in this Section 4.1, this Agreement shall not constitute a grant of a security interest in any property (and such property shall not constitute Collateral) to the extent that such grant of a security interest is (x) prohibited by any requirements of any law, rule or regulation of any governmental authority, requires a consent not obtained of any governmental authority pursuant to such requirement or (y) prohibited by, or constitutes a breach or default under or results in the termination of or requires any consent not obtained under, any contract, license, agreement, instrument or other document evidencing or giving rise to such property; provided, that the exclusions set forth in clauses (x) and (y) above shall not apply to accounts, payment intangibles or to any other category of Collateral to the extent such requirements of law, rule or regulation or the term in such contract, license, agreement, instrument or other document or shareholder or similar agreement providing for such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law; provided , further , that the Collateral shall not include (a) Equity Interests in first-tier Domestic Holding Companies or
 
56 

 
Foreign Subsidiaries of a Loan Party in excess of the shares representing 100% of the nonvoting Equity Interests and 65% of the total combined voting power of all classes of Equity Interests entitled to vote of any such Domestic Holding Company or Foreign Subsidiary or (b) Equity Interests of any Subsidiary owned, directly or indirectly, by a Domestic Holding Company or Foreign Subsidiary of a Loan Party.  Borrower shall, and shall cause each Borrowing Base Party to, promptly provide Agent with written notice of all commercial tort claims for claims in excess of $500,000, such notice to contain the case title together with the applicable court and a brief description of the claim(s). Upon delivery of each such notice, Borrower (or the applicable Borrowing Base Party) shall be deemed to hereby grant to Agent a security interest and lien in and to such commercial tort claims and all proceeds thereof.
 
4.2                                Perfection of Security Interest .  Borrower shall, and shall cause each Borrowing Base Party to, take all action that Agent may reasonably request, so as at all times to maintain the validity, perfection, enforceability and priority of Agent’s security interest in and Lien on the Collateral or to enable Agent to protect, exercise or enforce its rights hereunder and in the Collateral, including, but not limited to, (i) promptly discharging all Liens other than Permitted Encumbrances, (ii) delivering to Agent, endorsed or accompanied by such instruments of assignment as Agent may reasonably specify, and stamping or marking, in such manner as Agent may specify, any and all chattel paper, instruments, letters of credit and advices thereof and documents in excess of $100,000 evidencing or forming a part of the Collateral, (iv) entering into warehousing, lockbox and other custodial arrangements reasonably satisfactory to Agent, and (v) executing and delivering financing statements, control agreements, instruments of pledge, mortgages, notices and assignments, in each case subject to customary provisos and exceptions and in form and substance reasonably satisfactory to Agent, relating to the creation, validity, perfection, maintenance or continuation of Agent’s security interest and Lien under the Uniform Commercial Code, the PPSA or other Applicable Law. By its signature hereto, Borrower hereby authorizes, and shall cause each Borrowing Base Party to authorize, Agent to file (to the extent not already filed) against Borrower and such Borrowing Base Parties, one or more financing, continuation or amendment statements pursuant to the Uniform Commercial Code, the PPSA or other Applicable Law in form and substance satisfactory to Agent (which statements may have a description of collateral which is broader than that set forth herein, including “all assets,” “all property” or similar phrases).  All costs and expenses as provided for in Section 15.9 hereof that Agent may incur in doing any of the foregoing, and any local taxes relating thereto, shall constitute Obligations, and, at Agent’s option, shall be paid to Agent for its benefit and for the ratable benefit of Lenders promptly upon demand.
 
4.3                                [Reserved] .
 
4.4                                Preservation of Collateral .  Following the occurrence and during the continuance of an Event of Default and the demand by Agent for payment of all Obligations due and owing, in addition to the rights and remedies set forth in Section 11.1 hereof, Agent: (a) may at any time take such steps as Agent deems necessary to protect Agent’s interest in and to preserve the Collateral, including the hiring of such security guards or the placing of other security protection measures as Agent may deem necessary; (b) may employ and maintain at any of Borrowing Base Party’s premises a custodian who shall have full authority to do all acts necessary to protect Agent’s interests in the Collateral; (c) may lease warehouse facilities to which Agent may move all or part of the Collateral; (d) may use any Borrowing Base Party’s owned or leased lifts,
 
57 

 
hoists, trucks and other facilities or equipment for handling or removing the Collateral; and (e) shall have, and is hereby granted, a right of ingress and egress to the places where the Collateral is located, and may proceed over and through any Borrowing Base Party’s owned or leased property (subject to the terms of the applicable lease and the rights of the parties thereunder), in each case, in accordance with, and subject to the other terms of, this Article IV.  Borrower shall, and shall cause each Borrowing Base Party to, cooperate fully with all of Agent’s efforts to preserve the Collateral and will take such actions to preserve the Collateral as Agent may direct. All of Agent’s expenses of preserving the Collateral, including any expenses relating to the bonding of a custodian, shall constitute Obligations and shall be payable pursuant to Section 15.9.
 
4.5                                Ownership of Collateral; Liens .
 
(a)                                  With respect to the Collateral, at the time the Collateral becomes subject to Agent’s security interest: (i) Borrower or the applicable Borrowing Base Party shall be the sole owner of and fully authorized and able to sell, transfer, pledge and/or grant a first priority security interest (subject to Permitted Encumbrances and, as to priority, Section 15.9) in each and every item of the Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall be free and clear of all Liens and encumbrances whatsoever; (ii) each document and agreement executed by any Borrowing Base Party or delivered to Agent or any Lender in connection with this Agreement shall be true and correct in all material respects; (iii) all signatures and endorsements of any Borrowing Base Party that appear on such documents and agreements shall be genuine and such Borrowing Base Party shall have full capacity to execute same; and (iv) each Borrowing Base Party’s Equipment and Inventory shall be located as set forth on Schedule 4.5 (as updated from time to time upon written notice from Borrower to Agent) and shall not be removed from such location(s) (except for Inventory and Equipment in transit, temporarily at event locations and Equipment off-site for repairs) without the prior written consent of Agent except with respect to the sale of Inventory and Equipment in the Ordinary Course of Business and other property to the extent permitted in Section 7.1 hereof.  Borrower or the applicable Borrowing Base Party has good legal title to, or valid leasehold interests in, all of the Collateral purported to be owned by it.
 
(b)                                  (i) As of the Restatement Effective Date, there is no location at which any Borrowing Base Party has any Inventory (except for Inventory in transit or temporarily at event locations) other than those locations listed on Schedule 4.5 ; (ii)  Schedule 4.5 hereto contains a correct and complete list, as of the Restatement Effective Date, of the legal names and addresses of each warehouse at which Inventory of any Borrowing Base Party is stored; (iii)  Schedule 4.5 hereto sets forth a correct and complete list as of the Restatement Effective Date of (A) each place of business of each Borrowing Base Party and (B) the chief executive office of each Borrowing Base Party; and (iv)  Schedule 4.5 hereto sets forth a correct and complete list as of the Restatement Effective Date of the location, by state and street address, of all Real Property owned or leased by a Borrowing Base Party, together with the names and addresses of any landlords.
 
4.6                                Defense of Agent’s and Lenders’ Interests .  Until (a) payment in full in cash of all of the Obligations and (b) termination of this Agreement, Agent’s interests in the Collateral shall continue in full force and effect.  During such period Borrower shall not, nor shall it permit any
 
58 

 
Borrowing Base Party to, without Agent’s prior written consent, pledge, assign, transfer, sell (except to the extent permitted in Section 7.1), create or suffer to exist a Lien upon or encumber or allow or suffer to be encumbered in any way except for Permitted Encumbrances, any part of the Collateral.  Borrower shall, and shall cause each Borrowing Base Party to, defend Agent’s interests in the Collateral against any and all Persons whatsoever.  At any time following the occurrence of an Event of Default and demand by Agent for payment of all Obligations, Agent shall have the right to take possession of the indicia of the Collateral and the Collateral in whatever physical form contained, including: labels, stationery, documents, instruments and advertising materials.  If Agent exercises this right to take possession of the Collateral, Borrower shall and shall cause each Borrowing Base Party to, upon demand, assemble it in a commercially reasonable manner and make it available to Agent at a place reasonably convenient to Agent.  In addition, with respect to all Collateral, Agent and Lenders shall be entitled to all of the rights and remedies set forth herein and further provided by the Uniform Commercial Code, the PPSA or other Applicable Law.  After the occurrence and during the continuation of an Event of Default, Borrower shall, and shall cause each Borrowing Base Party to, and Agent may, at its option, instruct all suppliers, carriers, forwarders, warehousers or others receiving or holding cash, checks, Inventory, documents or instruments in which Agent holds a security interest to deliver same to Agent and/or subject to Agent’s order and if they shall come into any Borrowing Base Party’s possession, they, and each of them, shall be held by such Borrowing Base Party in trust as Agent’s trustee, and Borrower will, and will cause each Borrowing Base Party to, immediately deliver them to Agent in their original form together with any necessary endorsement.
 
4.7                                Books and Records .  Borrower shall, and shall cause each Borrowing Base Party to, (a) keep books of record and account in which entries that are true and correct in all material respects will be made; and (b) set up on its books accruals with respect to all taxes, assessments, charges, levies and claims. All determinations pursuant to this subsection shall, to the extent applicable, be made in accordance with, or as required by, GAAP consistently applied in the opinion of such independent public accountant as shall then be regularly engaged by Topco.
 
4.8                                Financial Disclosure .  Borrower hereby irrevocably authorizes and directs all accountants and auditors employed by Borrower at any time during the Term to exhibit and deliver to Agent copies of any of Borrower’s financial statements, trial balances or other accounting records of any sort in the accountant’s or auditor’s possession, and to disclose to Agent any information such accountants may have concerning Borrower’s financial status and business operations. Borrower hereby authorizes all Governmental Bodies to furnish to Agent copies of reports or examinations relating to Borrower, whether made by Borrower or otherwise; however, Agent will attempt to obtain such information or materials directly from Borrower prior to obtaining such information or materials from such accountants or Governmental Bodies.
 
4.9                                Compliance with Laws and Organization Documents .  Borrower shall, and shall cause each of its Subsidiaries to, comply in all material respects with (a) all Applicable Laws with respect to the Collateral or any part thereof or to the operation of Loan Parties’ business the non-compliance with which could reasonably be expected to have a Material Adverse Effect and (b) the terms of its certificate or articles of incorporation and bylaws (or equivalent or comparable formation or constitutive documents).  Borrower or any of its Subsidiaries may, however, contest or dispute any Applicable Laws in any reasonable manner, provided that any related Lien is inchoate or stayed and sufficient reserves are established to the reasonable
 
59 

 
satisfaction of Agent to protect Agent’s Lien on or security interest in the Collateral.  Borrower shall, and shall cause each of its Subsidiaries to, obtain and maintain all licenses, permits (including Environmental Permits), certifications, franchises, consents and governmental authorizations and approvals necessary to own its property and to conduct its business as conducted on the Restatement Effective Date, except to the extent failure to obtain and maintain, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
 
4.10                         Inspection of Premises .  At reasonable times and upon reasonable prior notice Agent shall have full access to and the right to audit, check, inspect and make abstracts and copies from each Loan Party’s books, records, audits, correspondence and all other papers relating to the Collateral and the operation of each Loan Party’s business.  Agent and its agents may enter upon any of any Loan Party’s premises at any time during business hours and at any other reasonable time and upon reasonable prior notice, and from time to time, for the purpose of inspecting the Collateral and any and all records pertaining thereto and the operation of such Loan Party’s business.  So long as no Event of Default exists, Agent shall not exercise its rights under this Section 4.10 more frequently than two (2) times in any calendar year.
 
4.11                         Insurance .  The assets and properties of each Borrowing Base Party at all times shall be maintained in accordance with the requirements of all insurance carriers which provide insurance with respect to the assets and properties of each Borrowing Base Party so that such insurance shall remain in full force and effect. The Borrowing Base Parties shall bear the full risk of any loss of any nature whatsoever with respect to the Collateral. At the Borrowing Base Parties’ own cost and expense in amounts and with carriers either (x) reasonably acceptable to Agent or (y) with an AM Best Rating of at least A1/P1 or otherwise reasonably acceptable to Agent, the Borrowing Base Parties shall (a) keep all its insurable properties and properties in which any Borrowing Base Party has an interest insured against the hazards of fire, flood, sprinkler leakage, those hazards covered by extended coverage insurance and such other hazards, and for such amounts, as is customary in the case of companies engaged in businesses similar to Borrowing Base Parties’ including business interruption insurance; (b) maintain a bond or insurance in such amounts as is customary in the case of companies engaged in businesses similar to the Borrowing Base Parties’ insuring against larceny, embezzlement or other criminal misappropriation of insured’s officers and employees who may either singly or jointly with others at any time have access to the assets or funds of any Borrowing Base Party either directly or through authority to draw upon such funds or to direct generally the disposition of such assets; (c) maintain public and product liability insurance against claims for personal injury, death or property damage suffered by others; (d) maintain all such worker’s compensation or similar insurance as may be required under the laws of any state or jurisdiction in which the applicable Borrowing Base Party is engaged in business; (e) furnish Agent with (i) copies of all policies and evidence of the maintenance of such policies by the renewal thereof at least thirty (30) days before any expiration date, and (ii) appropriate loss payable endorsements in form and substance satisfactory to Agent, naming Agent as a co-insured and loss payee as its interests may appear with respect to all insurance coverage referred to in clauses (a) and (c) above, and providing (A) that all proceeds thereunder shall be payable to Agent (or the Revolving Agent, as applicable, pursuant to Section 15.19), (B) no such insurance shall be affected by any act or neglect of the insured or owner of the property described in such policy, and (C) that such policy and loss payable clauses may not be cancelled, amended or terminated unless at least thirty (30) days’
 
60 

 
prior written notice is given to Agent. In the event of any loss thereunder, the carriers named therein hereby are directed by Agent and Borrower to make payment for such loss to Agent (or the Revolving Agent, as applicable, pursuant to Section 15.19) and not to any Borrowing Base Party and Agent jointly (and, to the extent required by any Lease of Real Property, the landlord thereunder). If any insurance losses are paid by check, draft or other instrument payable to any Borrowing Base Party and Agent jointly, Agent may endorse such Borrowing Base Party’s name thereon and do such other things as Agent may deem advisable to reduce the same to cash. Agent is hereby authorized to adjust and compromise claims under insurance coverage referred to in clauses (a) and (b) above.  Subject to the terms of Section 2.21 hereof, all loss recoveries received by Agent upon any such insurance shall be applied to reduce the principal balance of the Loans. Any surplus shall be paid by Agent to Borrower or applied as may be otherwise required by law.  Each Borrowing Base Party shall take all actions required under the Flood Laws and/or requested by Agent to assist in ensuring that each Lender is in compliance with the Flood Laws applicable to the Collateral, including, but not limited to, providing Agent with the address and/or GPS coordinates of each structure owned or lease by a Borrowing Base Party or a Guarantor on any Real Property that will be subject to a Mortgage, and, to the extent required, obtaining flood insurance for such property, structures and contents prior to such property, structures and contents becoming Collateral, and thereafter maintaining such flood insurance in full force and effect for so long as required by the Flood Laws.
 
4.12                         Failure to Pay Insurance .  If Borrower or any of its Subsidiaries fails to obtain insurance as hereinabove provided, or to keep the same in force, Agent, if Agent so elects, may obtain such insurance and pay the premium therefor on behalf of Borrower or such Subsidiary, and such expenses so paid shall constitute Obligations and shall be paid pursuant to the terms of Section 15.9.
 
4.13                         Payment of Taxes .  Each Loan Party will pay, and will cause each of its Subsidiaries to pay, before the same shall become delinquent, all material Taxes, assessments and other Charges lawfully levied or assessed upon such Loan Party or Subsidiary or any of the Collateral including real and personal property Taxes, assessments and charges and, without duplication, all franchise, income, employment, social security benefits, withholding, and sales Taxes other than Taxes, assessments or Charges to the extent that the applicable Loan Party or Subsidiary has Properly Contested those taxes, assessments or Charges.
 
4.14                         Payment of Leasehold Obligations .  Borrower shall, and shall cause each Borrowing Base Party to, at all times pay, when and as due, its rental obligations under all leases under which it is a tenant unless such are being contested, and shall otherwise comply with all other terms of such leases and keep them in full force and effect (where the failure to pay or contest is likely to have a Material Adverse Effect) and, at Agent’s reasonable request, will provide evidence of having done so.
 
4.15                         Receivables .
 
(a)                                  [Reserved] .
 
(b)                                  [Reserved] .
 
61 

(c)                                   Locations of Loan Parties .  As of the Restatement Effective Date, the current location of the chief executive office and principal place of business of each Loan Party and each of its Subsidiaries is set forth in Schedule 4.15(c) , and, other than as set forth on Schedule 4.15(c) , none of such locations have changed within the twelve (12) months preceding the Restatement Effective Date.  Until written notice is given to Agent by any Loan Party of any other office at which such Loan Party keeps its records pertaining to Receivables, all such records shall be kept at the executive office for such Loan Party set forth in Schedule 4.15(c).
 
(d)                                  [Reserved] .
 
(e)                                   Notification of Assignment of Receivables .
 
(i)                                      With respect to Credit Card Receivables, so long as an Event of Default shall have occurred and be continuing, Agent shall have the right to send notice of the collateral assignment of, and Agent’s security interest in and Lien on, such Receivables to any and all Customers or any third party holding or otherwise concerned with such Receivables, whether pursuant to the Credit Card Notices or otherwise. After such notices are sent, all amounts payable on such Receivables shall be remitted to a deposit account maintained with PNC or a collection account established at a financial institution that has entered into a deposit account control agreement in form and substance reasonably satisfactory to Agent in its Permitted Discretion and, at the instruction of the Required Lenders, applied to the Obligations as set forth herein. Agent’s actual expenses in connection with the foregoing shall constitute Obligations and shall be paid pursuant to the terms of Section 15.9.
 
(ii)                                   With respect to all Receivables other than Credit Card Receivables, at any time following the occurrence and during the continuance of an Event of Default, Agent shall have the right to send notice of the assignment of, and Agent’s security interest in and Lien on, such Receivables to any and all Customers or any third party holding or otherwise concerned with any of the Collateral. After such notices are sent, Agent shall have the sole right to collect such Receivables, take possession of the Collateral, or both. Agent’s actual collection expenses, including, but not limited to, stationery and postage, telephone and telegraph, secretarial and clerical expenses and the salaries of any collection personnel used for collection shall constitute Obligations and shall be paid pursuant to the terms of Section 15.9.
 
(f)                                    Power of Agent to Act on Behalf of Borrower and its Subsidiaries .  So long as an Event of Default shall have occurred and be continuing and subject to Section 15.19, Agent shall have the right to receive, endorse, assign and/or deliver in the name of Agent, Borrower or any of Borrower’s Subsidiaries, any and all checks, drafts and other instruments for the payment of money relating to the Receivables, and Borrower, on behalf of itself and each such Subsidiary, hereby waives notice of presentment, protest and non-payment of any instrument so endorsed. Borrower, on behalf of itself and each of its Subsidiaries, hereby constitutes Agent or Agent’s designee as such Loan Party’s attorney with power, so long as an Event of Default shall have occurred, to (in each case, subject to Section 15.19) (i) endorse Borrower’s or such Subsidiary’s name upon any notes, acceptances, checks, drafts, money orders or other evidences of payment or Collateral; (ii) sign Borrower’s or such Subsidiary’s name on any invoice or bill of lading relating to any of the Receivables, drafts against Customers, and assignments of Receivables; (iii) sign Borrower’s or such Subsidiary’s name on and to send
 
62 

 
verifications of Receivables to any Customer without disclosing Agent’s identity; (iv) sign Borrower’s or such Subsidiary’s name on all documents or instruments deemed necessary or appropriate by Agent to preserve, protect, or perfect Agent’s interest in the Collateral and to file same; (v) demand payment of the Receivables; (vi) enforce payment of the Receivables by legal proceedings or otherwise; (vii) exercise all of Borrower’s or such Subsidiary’s rights and remedies with respect to the collection of the Receivables and any other Collateral; (viii) settle, adjust, compromise, extend or renew the Receivables; (ix) settle, adjust or compromise any legal proceedings brought to collect Receivables; (x) prepare, file and sign Borrower’s or such Subsidiary’s name on a proof of claim in bankruptcy or similar document against any Customer; (xi) prepare, file and sign Borrower’s or such Subsidiary’s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables; and (xii) do all other acts and things necessary to carry out this Agreement. All acts of said attorney or designee are hereby ratified and approved, and said attorney or designee shall not be liable for any acts of omission or commission nor for any error of judgment or mistake of fact or of law, unless done willfully or with gross (not mere) negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment); this power being coupled with an interest is irrevocable while any of the Obligations remain unpaid. Agent shall have the right at any time following the occurrence and during the continuation of an Event of Default or Default, to change the address for delivery of mail addressed to any Loan Party to such address as Agent may designate and to receive, open and dispose of all mail addressed to such Loan Party.
 
(g)                                   No Liability .  Neither Agent nor any Lender shall, under any circumstances or in any event whatsoever, have any liability for any error or omission or delay of any kind occurring in the settlement, collection or payment of any of the Receivables or any instrument received in payment thereof, or for any damage resulting therefrom other than due to its gross negligence or willful misconduct. Following the occurrence and during the continuation of an Event of Default, Agent may, without notice or consent from any Loan Party, sue upon or otherwise collect, extend the time of payment of, compromise or settle for cash, credit or upon any terms any of the Receivables or any other securities, instruments or insurance applicable thereto and/or release any obligor thereof. Agent is authorized and empowered to accept following the occurrence and during the continuation of an Event of Default the return of the goods represented by any of the Receivables, without notice to or consent by any Loan Party, all without discharging or in any way affecting such Loan Party’s liability hereunder.
 
(h)                                  Establishment of a Dominion Account .
 
(i)                                      [Reserved].
 
(ii)                                   On or before the Original Closing Date, Borrower shall have established a deposit account at PNC for the purpose of receiving proceeds of the Loans (the “ Funding Account ”).  All deposit accounts and investment accounts of the Loan Parties and their Subsidiaries are set forth on Schedule 4.15(h)(2)  (as such schedule may be updated by the Loan Parties as set forth in the quarterly Compliance Certificate required to be delivered to Agent pursuant to Section 9.8).  Borrower shall ensure that, at all times on and after the date that is one hundred twenty (120) days (or such later date as Agent may agree to) after the Original Closing Date, Agent has received control agreements, in form and substance satisfactory to Agent in its Permitted Discretion, with respect to all such accounts (including, for the avoidance of doubt, all
 
63 

 
accounts set forth in the updates to Schedule 4.15(h)(2)  in the quarterly Compliance Certificate required to be delivered to Agent pursuant to Section 9.8), other than (A) those containing, at all times, less than $25,000 with respect to any one account or $100,000 in the aggregate for all such accounts, (B) those utilized solely for making payroll or employee benefit related payments and (C) so long as the funds maintained therein do not exceed $125,000 at any time, deposit account #220386039 maintained by the Loan Parties at JPMorgan Chase Bank.
 
(iii)                                At such time as an Event of Default shall have occurred and be continuing, and, in each case, subject to Section 15.19, (A) each Borrowing Base Party, jointly with Agent, shall issue Credit Card Notices to each Credit Card Issuer and each Credit Card Processor utilized by such Borrowing Base Party, as and when requested by Agent; (B) no Borrowing Base Party may change (except, upon prior written notice to Agent, to direct such funds to an account maintained with PNC which is subject to a deposit account control agreement in favor of Agent as required by clause (ii) above) any direction or designation as to payments on Credit Card Receivables set forth in such Credit Card Notices without the prior written consent of Agent, (C) without limiting the foregoing or any other provision of this Agreement, in the event a Credit Card Notice is not in effect with respect to any credit or debit card processing arrangement to which any Borrowing Base Party is a party, Borrower shall instruct the Credit Card Issuer and Credit Card Processor with respect thereto to remit all proceeds of the Credit Card Receivables arising therefrom to the account designated for receipt of such proceeds in the Credit Card Notices and shall not rescind or alter such instruction without the prior written consent of Agent (except, upon prior written notice to Agent, to direct such funds to another account maintained with PNC which is subject to a deposit account control agreement in favor of Agent as required by clause (ii) above).
 
4.16                         Inventory .  To the extent Inventory held for sale or lease has been produced by any Loan Party or any of its Subsidiaries, it has been and will be produced by Borrower in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations and orders thereunder.
 
4.17                         Maintenance of Equipment .  The Equipment shall be maintained in good operating condition and repair (reasonable wear and tear excepted).  Borrower shall not, nor shall Borrower permit or cause any of its Subsidiaries to, use or operate the Equipment in violation in any material respect of any law, statute, ordinance, code, rule or regulation. Borrower and each of its Subsidiaries, shall have the right to sell Equipment to the extent set forth in Section 7.1 hereof.
 
4.18                         Exculpation of Liability .  Nothing herein contained shall be construed to constitute Agent or any Lender as any Loan Party’s or any of its Subsidiaries’ agent for any purpose whatsoever, nor shall Agent or any Lender be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral wherever the same may be located and regardless of the cause thereof unless caused by such Person’s gross negligence or willful misconduct.  Neither Agent nor any Lender, whether by anything herein or in any assignment or otherwise, assume any of Borrower’s obligations under any contract or agreement assigned to Agent or such Lender, and neither Agent nor any Lender shall be responsible in any way for the performance by Borrower or any of its Subsidiaries of any of the terms and conditions thereof.
 
64 

 
4.19                         Environmental Matters .
 
(a)                                  Borrower shall, and shall cause each of its Subsidiaries to, conduct its operations and businesses in compliance in all material respects with all Environmental Laws and Borrower shall not, nor shall Borrower permit or cause any of its Subsidiaries to, place or permit to be placed, or cause or permit a Release of, any material Hazardous Substances on any Real Property which would adversely impact the value or marketability of any of the Real Property or any of the Collateral, other than such violations or impacts which could not reasonably be expected to have a Material Adverse Effect, in each case, except as permitted by Applicable Law or appropriate Governmental Bodies.
 
(b)                                  Borrower shall, and shall cause its Subsidiaries to, dispose of any and all Hazardous Waste generated at the Real Property only at facilities and with carriers that maintain valid permits under RCRA and any other applicable Environmental Laws.
 
(c)                                   If Borrower or any of its Subsidiaries shall fail to respond promptly to any Hazardous Discharge or Environmental Complaint or Borrower or any of its Subsidiaries shall fail to comply in any material respect with any of the requirements of any Environmental Laws, Agent on behalf of Lenders may, but without the obligation to do so, for the sole purpose of protecting Agent’s interest in the Collateral and not to participate in the management of the Real Property or any facilities thereon:  (A) give such notices or (B) enter onto the Real Property (or authorize third parties to enter onto the Real Property) and take such actions as Agent (or such third parties as directed by Agent) deem reasonably necessary or advisable, to investigate, clean up, remove, mitigate or otherwise deal with any such Hazardous Discharge or Environmental Complaint. All costs and expenses of the type described in Section 15.9 incurred by Agent and Lenders (or such third parties) in the exercise of any such rights, including any sums paid in connection with any judicial or administrative investigation or proceedings, fines and penalties, together with interest thereon from the date expended at the Default Rate for Base Rate Loans constituting Loans shall be Obligations and shall be paid pursuant to the terms of Section 15.9.
 
(d)                                  For purposes of Section 4.19 and 5.7, all references to Real Property shall be deemed to include all of any of Borrower’s or its Subsidiaries’ right, title and interest in and to its owned and leased premises.
 
4.20                         Financing Statements .  Except as respects the financing statements filed by Agent and the financing statements which may, in accordance with Applicable Law, be filed in connection with Permitted Encumbrances, no consensual financing statement covering any of the Collateral or any proceeds thereof is on file in any public office.
 
4.21                         Provisions with Respect to Investment Property .
 
(a)                                  Other than with respect to the Liens and Indebtedness evidenced by the Revolving Loan Documents, Borrower represents, warrants and covenants to the Agent and the Lenders that, on the Restatement Effective Date, and immediately after giving effect to the consummation of the Restatement Effective Date Transactions: (i) there are no restrictions on the pledge or transfer of any of the Investment Property, other than restrictions referenced on the face or back of any certificates evidencing such Investment Property, transfer restrictions under
 
65 

 
any Applicable Law and any Liens described in clauses (a) and (b) of the definition of Permitted Encumbrance; (ii) Borrower is the legal owner of the Investment Property, if any, pledged by it hereunder, which is registered in the name of Borrower, the Custodian (as hereinafter defined) or a nominee; (iii) the Investment Property is free and clear of any security interests, pledges, liens, encumbrances, charges, agreements, claims or other arrangements or restrictions of any kind, except as referenced in clause (i) above; (iv) Borrower has the right to transfer the Investment Property free of any encumbrances and Borrower will defend its title to the Investment Property against the claims of all persons, and any registration with, or consent or approval of, or other action by, any Governmental Body which was or is necessary for the validity of the pledge of and grant of the security interest in the Investment Property has been obtained; (v) the pledge of and grant of the security interest in the Investment Property and delivery of the original certificates evidencing same is effective to vest in the Agent a valid and perfected first priority security interest, superior to the rights of any other person, in and to the Investment Property as set forth herein and (vi) none of the operating agreements, limited partnership agreements or other agreements governing any Investment Property provide that the Equity Interests governed thereby are securities governed by Article 8 of the Uniform Commercial Code as in effect in any relevant jurisdiction.
 
(b)                                  Borrower covenants that it shall: (i) not incur, create, assume or permit to exist any pledge, security interest, lien, charge or other encumbrance of any nature whatsoever on any of the Investment Property or assign, pledge or otherwise encumber any right to receive income from the Investment Property, other than in favor of the Agent and Liens and encumbrances described in clause (a) above; (ii) if the Investment Property includes securities or any other financial or other asset maintained in a securities account, then Borrower agrees to use commercially reasonable efforts to cause the securities intermediary on whose books and records the ownership interest of Borrower in such Investment Property appears (the “Custodian”) to execute and deliver, within 60 days of receipt of Investment Property received after the Original Closing Date, a notification and control agreement or other agreement (the “Control Agreement”) satisfactory to the Agent in order to perfect and protect the Agent’s security interest in such Investment Property; (iii) not make or consent to any amendment or other modification or waiver with respect to any operating agreement or limited partnership agreement constituting or giving rise to any Investment Property, unless expressly permitted under this Agreement or where such amendment, modification or waiver is not materially adverse to the Lenders; and (iv) not permit any of the operating agreements, limited partnership agreements or other agreements governing any Investment Property in respect of limited liability company or partnership interests to provide that such Equity Interests governed thereby are securities governed by Article 8 of the Uniform Commercial Code as in effect in any relevant jurisdiction.
 
(c)                                   At any bona fide public sale, and to the extent permitted by Law, at any private sale, Agent shall be free to purchase all or any part of the Collateral consisting of Investment Property, free of any right or equity of redemption in the Borrower, which right or equity is hereby waived and released. Any such sale may be on cash or credit. Agent shall be authorized at any such sale (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to persons who will represent and agree that they are purchasing the Investment Property Collateral for their own account in compliance with Regulation D of the Securities Act of 1933 (the “Act”) or any other applicable exemption available under such Act. Agent will not be obligated to make any sale if it determines not to do so, regardless of the fact that notice of the
 
66 

 
sale may have been given. Agent may adjourn any sale and sell at the time and place to which the sale is adjourned. If the Collateral consisting of Investment Property is customarily sold on a recognized market or threatens to decline speedily in value, Agent may sell such Collateral consisting of Investment Property at any time without giving prior notice to the Borrower. Whenever notice is otherwise required by law to be sent by Agent to any grantor of any sale or other disposition of the Collateral consisting of Investment Property, ten (10) days written notice sent to the Borrower at its address specified in Section 15.6 will be reasonable.
 
(d)                                  Borrower recognizes that Agent may be unable to effect or cause to be effected a public sale of the Collateral consisting of Investment Property by reason of certain prohibitions contained in the Act, so that Agent may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obligated to agree, among other things, to acquire the Collateral consisting of Investment Property for their own account, for investment and without a view to the distribution or resale thereof. The Borrower understands that private sales so made may be at prices and on other terms less favorable to the seller than if the Collateral consisting of Investment Property was sold at public sales, and agrees that Agent has no obligation to delay or agree to delay the sale of any of the Collateral consisting of Investment Property for the period of time necessary to permit the issuer of the securities which are part of the Collateral consisting of Investment (even if the issuer would agree), to register such securities for sale under the Act.
 
(e)                                   If any demand is made at any time upon Agent for the repayment or recovery of any amount received by it in payment or on account of any of the Obligations and if Agent repays all or any part of such amount by reason of any judgment, decree or order of any court or administrative body or by reason of any settlement or compromise of any such demand, the Borrower will be and remain liable for the amounts so repaid or recovered to the same extent as if such amount had never been originally received by Agent. The provisions of this section will be and remain effective notwithstanding the release of any of the Collateral consisting of Investment Property by Agent in reliance upon such payment (in which case the Borrower’s liability will be limited to an amount equal to the fair market value of the Collateral consisting of Investment Property determined as of the date such Collateral consisting of Investment Property was released) and any such release will be without prejudice to Agent’s rights hereunder and will be deemed to have been conditioned upon such payment having become final and irrevocable. This section shall survive the termination of this Agreement.
 
(f)                                    Prior to the occurrence of an Event of Default, the Borrower will have the right to exercise all voting rights with respect to the Collateral consisting of Investment Property. At any time after the occurrence and during the continuance of an Event of Default, Agent may transfer any or all of the Collateral consisting of Investment Property into its name or that of its nominee and may exercise all voting rights with respect to the Collateral consisting of Investment Property, but no such transfer shall constitute a taking of such Collateral consisting of Investment Property in satisfaction of any or all of the Obligations unless Agent expressly so indicates by written notice to the Borrower.
 
(g)                                   Borrower will have the right to receive all cash dividends, interest and premiums declared and paid on the Collateral consisting of Investment Property prior to the occurrence of any Event of Default. In the event any additional shares are issued to the Borrower
 
67 

 
as a stock dividend or in lieu of interest on any of the Collateral consisting of Investment Property, as a result of any split of any of the Collateral consisting of Investment Property, by reclassification or otherwise, any certificates evidencing any such additional shares will be promptly delivered to Agent and such shares will be subject to this Agreement and a part of the Collateral consisting of Investment Property to the same extent as the original Collateral constituting Investment Property. At any time after the occurrence and during the continuance of an Event of Default, Agent shall be entitled to receive, and upon Agent’s request the Borrower shall deliver, for application to the Obligations, all cash or stock dividends, interest and premiums declared or paid on the Collateral consisting of Investment Property.
 
V.                                     REPRESENTATIONS AND WARRANTIES.
 
Each Loan Party hereby represents and warrants to Agent and the Lenders that on the Restatement Effective Date, and immediately after giving effect to the consummation of the Restatement Effective Date Transactions:
 
5.1                                Authority .  Such Loan Party has full power, authority and legal right to enter into this Agreement and the Other Documents executed and delivered on the Restatement Effective Date, in each case, to the extent such Loan Party is a party thereto.  Such Loan Party has full power, authority and legal right to perform all its respective obligations hereunder and under the Other Documents, in each case, to the extent such Loan Party is a party thereto. This Agreement and the Other Documents have been duly executed and delivered by such Loan Party, and this Agreement and the Other Documents constitute the legal, valid and binding obligation of such Loan Party enforceable in accordance with their terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally, in each case, to the extent such Loan Party is a party thereto. The execution, delivery and performance of this Agreement and of the Other Documents on the Restatement Effective Date, in each case, to the extent such Loan Party is a party thereto, (a) are within such Loan Party’s corporate or limited liability company powers, as applicable, have been duly authorized by all necessary corporate or limited liability company action, as applicable, do not violate the terms of such Loan Party’s by-laws, operating agreement articles or certificate of incorporation or formation or other documents relating to such Loan Party’s formation, (b) will not violate any material law or regulation, or any judgment, order or decree of any Governmental Body in any material respect, (c) will not require any Consent of any Governmental Body or any other Person the lack of which would have a Material Adverse Effect, except those Consents set forth on Schedule 5.1 hereto, all of which will have been duly obtained, made or compiled prior to the Restatement Effective Date and which are in full force and effect and (d) will not result in any breach of, or constitute a default under, which breach or default could reasonably be expected to have a Material Adverse Effect, or result in the creation of any Lien (except Permitted Encumbrances) upon any asset of such Loan Party pursuant to, the provisions of any agreement or instrument to which such Loan Party is a party or by which it or its property is bound.
 
5.2                                Formation and Qualification; Compliance with Law .
 
(a)                                  Such Loan Party and each of its Subsidiaries is duly incorporated, validly existing and in good standing under the laws of the states listed on Schedule 5.2(a)  and, as of the
 
68 

 
Restatement Effective Date, is qualified to do business and is in good standing in the states listed on Schedule 5.2(a)  which constitute all states in which qualification and good standing are necessary for such Loan Party to conduct its business and own its property and where the failure to so qualify could reasonably be expected to have a Material Adverse Effect. Such Loan Party has delivered to Agent true and complete copies of its articles or certificate of incorporation and by-laws (or similar constituent documents) and will promptly notify Agent of any material amendment or changes thereto.
 
(b)                                  The only Subsidiaries of such Loan Party as of the Restatement Effective Date are listed on Schedule 5.2(b) .
 
(c)                                   Such Loan Party and each of its Subsidiaries is in compliance with all Applicable Laws, except where the failure to comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.
 
5.3                                Survival of Representations and Warranties .  All representations and warranties of each Loan Party contained in this Agreement and the Other Documents shall survive the execution, delivery and acceptance thereof by the parties thereto and the closing of the transactions described therein or related thereto.
 
5.4                                Tax Returns .  Each Loan Party’s federal tax identification number is set forth on Schedule 5.4 . Each Loan Party has filed all material federal, state and local tax returns and other reports it is required by law to file and has paid (or has timely requested an extension of the deadline to pay) all material Taxes, assessments, fees and other governmental charges that are due and payable.  Subject to Schedule 5.4 , the provision for Taxes on the books of each Loan Party is adequate for all years not closed by applicable statutes, and for its current fiscal year, and no Loan Party has any knowledge of any deficiency or additional assessment in connection therewith not provided for on its books, and, except as set forth on Schedule 5.4 , there is no action, suit, proceeding, investigation, audit or claim now pending or threatened by any authority regarding any taxes relating to any of the Loan Parties or any of their respective Subsidiaries, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or result in material liability to any of the Loan Parties or any of their respective Subsidiaries.  Except as described on Schedule 5.4 , no Loan Party and no Subsidiary of a Loan Party has executed or filed with the Internal Revenue Service or any other governmental agency any agreement or other document extending, or having the effect of extending, the period for assessment or collection of any Charges.  None of the Loan Parties, any of their respective Subsidiaries or any of their respective predecessors are liable for any Charges: (a) under any agreement (including any tax sharing agreements) or (b) to each Loan Party’s knowledge, as a transferee.  No Loan Party has agreed or been requested to make any adjustment under Code Section 481(a), by reason of a change in accounting method or otherwise, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
 
5.5                                No Material Adverse Effect .  Since March 30, 2013 there has been no change in the condition, financial or otherwise, of Parent Holdco or its Subsidiaries, as shown on the consolidated balance sheet as of such date, that could reasonably be expected to have a Material Adverse Effect.
 
69 

5.6                                Entity Name .  No Loan Party has been known by any other corporate name in the past five years nor does any Loan Party sell Inventory under any other name except as set forth on Schedule 5.6 , nor has any Loan Party been the surviving corporation of a merger or consolidation or except as set forth on Schedule 5.6 acquired all or substantially all of the assets of any Person during the preceding five (5) years.
 
5.7                                O.S.H.A. and Environmental Compliance .
 
(a)                                  Each Loan Party has, at all times, duly complied in all material respects with, and its facilities, business, assets, property, leaseholds, Real Property and Equipment are in compliance in all material respects with, the provisions of the Federal Occupational Safety and Health Act, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) (42 U.S.C. § 9601 et seq. (1980)), RCRA and all other Environmental Laws; and there are no outstanding citations, notices or orders of non-compliance issued to Borrower or relating to its business, assets, property, leaseholds or Equipment under any such laws, rules or regulations.
 
(b)                                  Each Loan Party has been issued all required material federal, state and local licenses, certificates or permits relating to all applicable Environmental Laws.
 
(c)                                   To Borrower’s knowledge, (i) there are no visible signs of releases, spills, discharges, leaks or disposal (collectively referred to as “ Releases ”) of Hazardous Substances at, upon, under or within any Real Property; (ii) there are no underground storage tanks or polychlorinated biphenyls on the Real Property or any premises leased by any Loan Party; (iii) the Real Property has never been used as a treatment, storage or disposal facility of Hazardous Waste; and (iv) no Hazardous Substances are present on the Real Property, excepting such quantities as are handled in accordance in all material respects with all applicable manufacturer’s instructions and governmental regulations.
 
(d)                                  All Real Property owned by any Loan Party is insured pursuant to policies and other bonds which are valid and in full force and effect and which provide adequate coverage from reputable and financially sound insurers in amounts sufficient to insure the assets and risks of each such Loan Party in accordance with prudent business practice in the industry of such Loan Party.  Each Loan Party has taken all actions required under the Flood Laws and/or requested by Agent to assist in ensuring that each Lender is in compliance with the Flood Laws applicable to the Collateral, including, but not limited to, providing Agent with the address and/or GPS coordinates of each structure owned or leased by Borrower or a Guarantor and located upon any Real Property that will be subject to a Mortgage, and, to the extent required by any Flood Law, obtaining flood insurance for such property, structures and contents prior to such property, structures and contents becoming Collateral.
 
5.8                                Solvency; No Litigation, Violation, Indebtedness or Default .
 
(a)                                  After giving effect to the Restatement Effective Date Transactions, Borrower and the other Loan Parties, taken as a whole, will be solvent, able to pay their respective debts as they mature, will have capital sufficient to carry on their respective businesses and all businesses in which they are about to engage, and (i) as of the Restatement
 
70 

 
Effective Date, the fair present saleable value of the assets of Borrower and the other Loan Parties taken as a whole, calculated on a going concern basis, is in excess of the amount of the liabilities of the Loan Parties and (ii) after giving effect to the Restatement Effective Date Transactions, the fair saleable value of the assets of Borrower and the other Loan Parties taken as a whole, (calculated on a going concern basis) will be in excess of the amount of the liabilities of the Loan Parties.
 
(b)                                  No action, claim, lawsuit, demand, investigation or proceeding is now pending or, to the knowledge of any Loan Party, threatened against any Loan Party or any of its Subsidiaries, before any Governmental Body or before any arbitrator or panel of arbitrators, which challenges the right or power of any Loan Party or any of its Subsidiaries to enter into or perform any of its obligations under the Revolving Loan Documents to which it is a party, or the validity or enforceability of this Agreement, any Other Document or any Revolving Loan Document or any action taken thereunder.  Except as disclosed in Schedule 5.8(b) , no Loan Party has any pending or, the knowledge of any Loan Party, threatened litigation, arbitration, actions or proceedings which could reasonably be expected to have a Material Adverse Effect or result in injunctive relief or findings of criminal misconduct of any Loan Party or any of its Subsidiaries.
 
(c)                                   No Loan Party is in violation of any applicable statute, law, rule, regulation or ordinance in any respect which could reasonably be expected to have a Material Adverse Effect, nor is any Loan Party in violation of any order of any court, Governmental Body or arbitration board or tribunal.  No Loan Party or any Subsidiary of any Loan Party is the subject of an audit or, to each Loan Party’s knowledge, any review or investigation by any Governmental Body concerning the violation or possible violation of any Applicable Law.
 
(d)                                  Except as could not reasonably be expected to result in a material liability to any Loan Party:  neither any Loan Party nor any Subsidiary of a Loan Party maintains or contributes to any Pension Benefit Plan other than (x) those listed on Schedule 5.8(d) hereto and (y) thereafter, as permitted under this Agreement.  (i) no Pension Benefit Plan has incurred any “accumulated funding deficiency,” as defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether or not waived, and each Loan Party and each member of the Controlled Group has met all applicable minimum funding requirements under Section 302 of ERISA in respect of each Pension Benefit Plan; (ii) each Plan which is intended to be a qualified plan under Section 401(a) of the Code as currently in effect has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the Code and the trust related thereto is exempt from federal income tax under Section 501(a) of the Code; (iii) neither any Loan Party nor any member of the Controlled Group has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due which are unpaid; (iv) no Pension Benefit Plan has been terminated by the plan administrator thereof nor by the PBGC, and there is no occurrence which would cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Benefit Plan; (v) the current value of the assets of each Pension Benefit Plan exceeds the present value of the accrued benefits and other liabilities of such Pension Benefit Plan and neither any Loan Party nor any member of the Controlled Group knows of any facts or circumstances which would materially change the value of such assets and accrued benefits and other liabilities; (vi) neither any Loan Party nor any member of the Controlled Group has breached any of the material responsibilities, obligations or duties imposed on it by ERISA with respect to any Pension Benefit Plan; (vii) neither any Loan
 
71 

 
Party nor any member of a Controlled Group has incurred any material liability for any excise tax arising under Section 4972 or 4980B of the Code, and no fact exists which could give rise to any such liability; (viii) neither any Loan Party nor any member of the Controlled Group nor any fiduciary of, nor any trustee to, any Pension Benefit Plan, has engaged in a “prohibited transaction” described in Section 406 of the ERISA or Section 4975 of the Code nor taken any action which would constitute or result in a Termination Event with respect to any such Pension Benefit Plan which is subject to ERISA; (ix) each Loan Party and each member of the Controlled Group has made all material contributions due and payable with respect to each Pension Benefit Plan; (x) there exists no Reportable Event; (xi) neither any Loan Party nor any member of the Controlled Group has any fiduciary responsibility for investments with respect to any plan existing for the benefit of persons other than employees or former employees of such Loan Party and any member of the Controlled Group; (xii) neither any Loan Party nor any member of the Controlled Group maintains or contributes to any Plan which provides health, accident or life insurance benefits to former employees, their spouses or dependents, other than in accordance with Section 4980B of the Code; (xiii) neither any Loan Party nor any member of the Controlled Group has withdrawn, completely or partially, from any Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan Amendments Act of 1980 and there exists no fact which would reasonably be expected to result in any such withdrawal and liability; and (xiv) no Pension Benefit Plan fiduciary (as defined in Section 3(21) of ERISA) has any material liability for breach of fiduciary duty or for any failure in connection with the administration or investment of the assets of a Pension Benefit Plan.
 
5.9                                Patents, Trademarks, Copyrights and Licenses .  All issued patents, patent applications, trademark registrations, trademark applications, service mark registrations, service mark applications, registered copyrights and copyright applications owned by the Loan Parties as of the Restatement Effective Date are set forth on Schedule 5.9 , to the knowledge of the Loan Parties, are valid and have been duly registered or filed with all appropriate Governmental Bodies, except as set forth in Schedule 5.9 ; to the knowledge of the Loan Parties, there is no objection to or pending challenge to the validity of any material Patent, Trademark or Copyright owned by a Loan Party and no Loan Party is aware of any grounds for any such challenge, except as set forth in Schedule 5.9 hereto.  Except as set forth in Schedule 5.9 hereto, each material Patent, Trademark and Copyright owned or held by each Loan Party consists of original material or property developed by or on behalf of such Loan Party or was lawfully acquired or licensed by such Loan Party from a third party.  With respect to all material software owned by any Loan Party (other than off-the-shelf products), such Loan Party is in possession of all source and object codes related to each piece of software or is the beneficiary of a source code escrow agreement, each such source code escrow agreement being listed on Schedule 5.9 hereto.  Except as set forth on Schedule 5.9 or as could not reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect, all Intellectual Property material to the business of each Loan Party and each of its Subsidiaries (i) is subsisting in full force and effect, has not been terminated, cancelled, expired, or abandoned, and is valid and enforceable; (ii) has been prosecuted in accordance with all Applicable Laws; (iii) has been protected with adequate safeguards and security to maintain any trade secrets, and confidential or proprietary information; (iv) is not the subject of any third party challenge, whether judicial, administrative or otherwise, as to ownership, registerability, validity or enforceability; (v) has not been the subject of any written notice alleging that it is invalid or unenforceable or challenging ownership or registerability; and (vi) includes all the intellectual property rights reasonably required to
 
72 

 
conduct such Person’s business.  Except as set forth on Schedule 5.9 , no stockholder, officer, director or any Affiliate of any Loan Party or any of its Subsidiaries owns or possesses any rights in any Intellectual Property used by any of the Loan Parties or any of their Subsidiaries and material to the operations of their businesses.  Except as set forth on Schedule 5.9 or except for such allegations which, if proven to be true, individually or in the aggregate as could not reasonably be expected to result in a Material Adverse Effect, no Loan Party and no Subsidiary of a Loan Party has (i) received any written notice alleging (x) infringement or notice of any other complaint that its operations infringe or misappropriate rights under any intellectual property of any third party, or (y) unfair trade practices or passing off of counterfeit goods; (ii) knowledge of any such infringement, misappropriation, unfair trade practices or passing off of counterfeit goods, or (iii) wrongfully employed any trade secrets or any confidential information or documentation proprietary to any former employer, or any other Person..
 
5.10                         Licenses and Permits .  Except as set forth in Schedule 5.10 , each Loan Party (a) is in compliance with and (b) has procured and is now in possession of, all material licenses or permits required by any applicable federal, state or local law, rule or regulation for the operation of its business in each jurisdiction wherein it is now conducting or proposes to conduct business and where the failure to procure such licenses or permits is reasonably likely to have a Material Adverse Effect.
 
5.11                         Default of Indebtedness .  No Loan Party is in default in the payment of the principal of or interest on any Indebtedness in excess of $500,000 or under any instrument or agreement under or subject to which any such Indebtedness has been issued and no event has occurred under the provisions of any such instrument or agreement which with or without the lapse of time or the giving of notice, or both, constitutes or would constitute an event of default thereunder.
 
5.12                         No Default .  No Loan Party is in default in the payment or performance of any of its contractual obligations which individually or together with all such defaults, could reasonably be expected to have a Material Adverse Effect.
 
5.13                         No Burdensome Restrictions .  No Loan Party is a party to any contract or agreement the performance of which is reasonably likely to have a Material Adverse Effect.  No Loan Party has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien which is not a Permitted Encumbrance.
 
5.14                         Labor Matters .  Other than as set forth on Schedule 5.14 hereto, no Loan Party is involved in any material labor dispute; there are no strikes or walkouts or union organization of any Loan Party’s employees threatened or in existence and no labor contract is scheduled to expire during the Term.
 
5.15                         Margin Regulations .  No Loan Party is engaged, nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. No part of the proceeds of any Loan will be used for “purchasing” or “carrying” “margin stock” as defined in Regulation U of such Board of Governors.
 
73 

 
5.16                         [Reserved] .
 
5.17                         Disclosure .  No representation or warranty made by Borrower in this Agreement, in any Other Agreement or in any financial statement, report, certificate or any other document furnished in connection herewith or therewith contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not materially misleading; provided , that all financial performance projections delivered to the Agent, including the financial performance projections delivered on or prior to the Restatement Effective Date, represent the Borrower’s estimates of future financial performance and are based on assumptions believed by the Borrower, in good faith, to be reasonable in light of current market conditions, it being acknowledged and agreed by the Agent and Lenders that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by such projections may differ from the projected results.
 
5.18                         Swaps .  No Loan Party is a party to any swap agreement whereby such Loan Party has agreed to swap interest rates or currencies.
 
5.19                         Conflicting Agreements .  No provision of any mortgage, indenture, contract, agreement, judgment, decree or order binding on any Loan Party or the Collateral requires any Consent which has not already been obtained to, or would in any way prevent the execution, delivery or performance of, the terms of this Agreement or the Other Documents, except where the failure to obtain such Consent could not reasonably be expected to have a Material Adverse Effect.
 
5.20                         Application of Certain Laws and Regulations .  Neither any Loan Party nor any Affiliate of any Loan Party is subject to any law, statute, rule or regulation which regulates the incurrence of any Indebtedness, including laws, statutes, rules or regulations relative to common or interstate carriers or to the sale of electricity, gas, steam, water, telephone, telegraph or other public utility services.
 
5.21                         Business and Property of Borrower .  The Loan Parties do not propose to engage in any business other than the retail sale of clothing, shoes and accessories, reasonable extensions thereof and any business reasonably related, ancillary or complementary thereto.
 
5.22                         Section 20 Subsidiaries .  Borrower does not intend to use and shall not use any portion of the proceeds of the Loans, directly or indirectly, to purchase during the underwriting period, or for 30 days thereafter, Ineligible Securities being underwritten by a Section 20 Subsidiary.
 
5.23                         No Brokers or Agents .  No Loan Party or Subsidiary thereof uses any brokers or other agents acting in any capacity for such Loan Party or Subsidiary in connection with the Obligations.
 
5.24                         [Reserved] .
 
74 

 
5.25                         Federal Securities Laws .  Neither Parent Holdco nor any of its Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii) has any securities registered under the Exchange Act or (iii) has filed a registration statement that has not yet become effective under the Securities Act.
 
5.26                         Collateral .  Each of the Loan Parties hereby reaffirms each of the provisions set forth in Section 5.26 of the Existing Credit Agreement.  This Agreement and the Other Documents are effective to create (and, with respect to the Other Documents executed and delivered on the Original Closing Date, have created) in favor of the Agent for the ratable benefit of the Lenders a legal, valid and enforceable security interest in the Collateral (as defined herein and therein), and (a) to the extent UCC financing statements in appropriate form were filed in the appropriate filing offices prior to the date hereof, the Other Documents executed and delivered on the Original Closing Date constitute a fully perfected Lien (to the extent that such Lien may be perfected by the filing of a UCC financing statement) on, and security interest in, all right, title and interest of the grantors thereunder in such Collateral, in each case prior and superior in right to any other Person, other than with respect to the Permitted Encumbrances and (b) when UCC financing statements in appropriate form are filed in the appropriate filing offices, this Agreement and the Other Documents executed and delivered on the Restatement Effective Date shall constitute a fully perfected Lien (to the extent that such Lien may be perfected by the filing of a UCC financing statement) on, and security interest in, all right, title and interest of the grantors thereunder in such Collateral, in each case prior and superior in right to any other Person, other than with respect to the Permitted Encumbrances.
 
5.27                         [Reserved] .
 
5.28                         Ventures, Subsidiaries and Affiliates; Outstanding Stock .  Except as set forth in Schedule 5.28 , no Loan Party has any Subsidiaries, is engaged in any joint venture or partnership with any other Person, or is an Affiliate of any other Person.  All of the issued and outstanding Equity Interests of each Loan Party and each of its Subsidiaries is owned by each of the stockholders, partners or members, as applicable and in the amounts set forth on Schedule 5.28.  Except as set forth on Schedule 5.28, there are no outstanding rights to purchase, options, warrants or similar rights or agreements pursuant to which any Loan Party or any of its Subsidiaries may be required to issue, sell, repurchase or redeem any of its Equity Interests or other equity securities or any Equity Interests or other equity securities of such Person’s Subsidiaries.
 
5.29                         Government Regulation .  No Loan Party and no Subsidiary of a Loan Party is an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” as such terms are defined in the Investment Company Act of 1940 as amended.  No Loan Party and no Subsidiary of a Loan Party is subject to regulation under the Federal Power Act or any other federal, state, local or foreign statute that restricts or limits its ability to incur Indebtedness or to perform its obligations hereunder. The making of the Loans by Lenders to Borrower, the application of the proceeds thereof and the repayment thereof and the consummation of the Restatement Effective Date Transactions will not violate any provision of any such statute or any rule, regulation or order issued by the Securities and Exchange Commission.
 
75 

 
5.30                         Other Environmental Matters .
 
(a)                                  Except as set forth in Schedule 5.30 , (i) the Loan Parties and their Subsidiaries are and have been in compliance with all Environmental Laws, except for such noncompliance which would not reasonably be expected to have a Material Adverse Effect; (ii) the Loan Parties and their Subsidiaries have obtained, and are in compliance with, all Environmental Permits required by Environmental Laws for the operations of their respective businesses as presently conducted or as proposed to be conducted, except where the failure to so obtain or comply with such Environmental Permits would not reasonably be expected to have a Material Adverse Effect, and all such Environmental Permits are valid, uncontested and in good standing; (iii) no Loan Party and no Subsidiary of a Loan Party is involved in operations or knows of any facts, circumstances or conditions, including any Releases of Hazardous Materials, that are likely to result in a Material Adverse Effect, and no Loan Party and no Subsidiary of a Loan Party has permitted any current or former tenant or occupant of the Real Property to engage in any such operations; (iv) no notice has been received by any Loan Party or any of its Subsidiaries identifying it as a “potentially responsible party” or requesting information under CERCLA or analogous laws, and to the knowledge of the Loan Parties, there are no facts, circumstances or conditions that could reasonably be expected to result in any Loan Party or any Subsidiary of a Loan Party being identified as a “potentially responsible party” under CERCLA or analogous laws; and (v) the Loan Parties have provided to Agent copies of all existing environmental reports, reviews and audits and all written information pertaining to actual or potential Environmental Liabilities, in each case relating to any Loan Party and its Subsidiaries.
 
5.31                         Insurance .  Schedule 5.31 lists all insurance policies of any nature maintained for current occurrences by each Loan Party and each of its Subsidiaries, as well as a summary of the terms of each such policy.  No Loan Party and no Subsidiary of a Loan Party is in default of any obligation under any such policy.  To the extent any insurance policy has a cash surrender, rebate or similar value, there is no restriction, Lien or other encumbrance affecting the receipt or claim of such value by any Loan Party or any of its Subsidiaries, and no obligation or agreement to pay, directly or indirectly, such value to any other party exists other in favor of the Lenders.
 
5.32                         [Reserved ].
 
5.33                         Transactions Documents .  No Loan Party is in default in the performance or compliance with any provisions of any Revolving Loan Document.  This Agreement and the Other Documents are in full force and effect as of the date hereof and, to the extent executed prior to the date hereof, have not been terminated, rescinded or withdrawn since such prior execution date.
 
VI.                                AFFIRMATIVE COVENANTS.
 
Each Loan Party shall, and shall cause each of its Subsidiaries to, until the date on or following the date upon which all of the Obligations have been paid in full in cash.
 
6.1                                [Reserved] .
 
6.2                                Conduct of Business and Maintenance of Existence and Assets .  (a) Conduct and operate its business according to good business practices and maintain all of its material
 
76 

 
properties in good working order and condition (reasonable wear and tear and damage from a casualty event excepted and except as may be disposed of in accordance with the terms of this Agreement and, with respect to leased Real Property, except with respect to maintenance obligations which are the responsibility of the landlord and not such Loan Party), and take all actions reasonably necessary to protect the validity of any material Intellectual Property right owned by such Loan Party and included in the Collateral (except as may be abandoned or disposed of in accordance with the terms of this Agreement); (b) keep in full force and effect its existence and comply in all material respects with the laws and regulations governing the conduct of its business where the failure to do so could reasonably be expected to have a Material Adverse Effect; and (c) make all such reports and pay all such franchise and other taxes and license fees and do all such other acts and things as may be lawfully required to maintain its rights, licenses, leases, powers and franchises under the laws of the United States or any political subdivision thereof where the failure to do so could reasonably be expected to have a Material Adverse Effect.
 
6.3                                [Reserved] .
 
6.4                                Government Receivables .  Take all steps reasonably requested by Agent to protect Agent’s interest in the Collateral under the Federal Assignment of Claims Act, the Uniform Commercial Code, PPSA and all other Applicable Laws and deliver to Agent (or the Revolver Agent, as applicable) appropriately endorsed, any instrument or chattel paper connected with any Receivable arising out of contracts between such Loan Party and the United States, any state or any department, agency or instrumentality of any of them.
 
6.5                                Financial Covenants .
 
(a)                                  Minimum Interest Coverage Ratio .  Not permit the Interest Coverage Ratio as of the last day of any fiscal quarter of Borrower to be less than the correlative amount set forth below:
 
77 

 

Fiscal Quarter Ending Nearest To:	 	Minimum Interest Coverage Ratio	
 	 	 	
March 31, 2014	 	3.50:1.00	
 	 	 	
June 30, 2014 and as of the last day of each fiscal quarter of Borrower through and including the fiscal quarter ending nearest to September 30, 2014	 	3.00:1.00	
 	 	 	
December 31, 2014 and as of the last day of each fiscal quarter of Borrower through and including the fiscal quarter ending nearest to March 31, 2015	 	3.25:1.00	
 	 	 	
June 30, 2015 and as of the last day of each fiscal quarter of Borrower thereafter	 	3.50:1.00	
 
(b)                                  Total Leverage Ratio .  Not permit the Total Leverage Ratio as of the last day of any fiscal quarter of Borrower to exceed the correlative amount set forth below:

Fiscal Quarter Ending Nearest To:	 	Maximum Total Leverage Ratio	
 	 	 	
March 31, 2014	 	4.25: 1.00	
 	 	 	
June 30, 2014 and as of the last day of each fiscal quarter of Borrower through and including the fiscal quarter ending nearest to March 31, 2015	 	5.25:1.00	
 	 	 	
June 30, 2015 and as of the last day of each fiscal quarter of Borrower through and including the fiscal quarter ending nearest to March 31, 2016	 	4.75:1.00	
 	 	 	
June 30, 2016 and as of the last day of each fiscal quarter of Borrower through and including the fiscal quarter ending nearest to March 31, 2017	 	4.25:1.00	
 	 	 	
June 30, 2017 and as of the last day of each fiscal quarter of Borrower through and including the fiscal quarter ending nearest to March 31, 2018	 	3.75:1.00	
 	 	 	
June 30, 2018 and as of the last day of each fiscal quarter of Borrower thereafter	 	3.25:1.00	
 
78 

 
6.6                                Execution of Supplemental Instruments .  Execute and deliver to Agent (or Revolver Agent, as applicable) from time to time, upon demand, such supplemental agreements, statements, assignments and transfers, or instructions or documents relating to the Collateral, and such other instruments as Agent may reasonably request, in order that the full intent of this Agreement may be carried into effect.
 
6.7                                Payment of Indebtedness .  Pay, discharge or otherwise satisfy at or before maturity (subject, where applicable, to specified grace periods and, in the case of the trade payables, to normal payment practices) all its Indebtedness, except when the failure to do so could not reasonably be expected to have a Material Adverse Effect or when the amount or validity thereof is currently being contested in good faith by appropriate proceedings and the applicable Loan Party shall have provided for adequate reserves, subject at all times to any applicable subordination arrangement in favor of Lenders.
 
6.8                                Standards of Financial Statements .  Cause all financial statements referred to in Sections 9.7, 9.8, 9.9 and 9.12 as to which GAAP is applicable to be complete and correct in all material respects (subject, in the case of interim financial statements, to normal year-end audit adjustments and the absence of footnote disclosures) and to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein.
 
6.9                                Board Observation Rights .  As long as the aggregate amount of the then outstanding Term Loans held by GC-Cap and/or its Affiliates is at least forty percent (40%) of the aggregate amount of the sum of (a) the Term Loan funded by GC-Cap and/or its Affiliates on the Original Closing Date plus (b) the Term Loan funded by GC-Cap and/or its Affiliates on the Restatement Effective Date, each of Parent Holdco and Borrower shall allow one non-voting representative designated by Agent to attend and participate in all meetings and other activities of the board of directors or equivalent governing body of such Person, excluding all committees and sub-committees thereof (each, a “ Board Observer ”); provided, that such Board Observer shall have executed a customary confidentiality agreement.  Parent Holdco or Borrower, as applicable, shall (i) give Agent notice of all such meetings, at the same time as furnished to the members of such governing body, (ii) provide to the Board Observer all notices and board packages furnished to the members of such governing body, whether at or in anticipation of a meeting, an action by written consent or otherwise, at the same time furnished to the members of such governing body, (iii) notify the Board Observer and permit such Board Observer to participate by telephone in, emergency meetings of such governing body, and (iv) provide the Board Observer copies of the minutes of all such meetings at the time such minutes are furnished to the members of such governing body.  Notwithstanding the foregoing, Parent Holdco or Borrower shall be entitled to (x) exclude the Board Observer from any portion of any meeting or telephone call (i) consisting of an executive session, (ii) when the governing body discusses any matters relating to this Agreement, the Other Documents, the Revolving Loan Documents, or Parent Holdco’s or Borrower’s relationship with the Agent or the Lenders, or (iii) if and to the extent Parent Holdco or Borrower reasonably believes that the Board Observer’s presence at or participation in such meeting or telephone conference (or any portion thereof) may create a conflict of interest for the Board Observer or affect the attorney/client or a similar privilege of any of the Loan Parties and their legal advisors, and (y) withhold from the Board Observer information delivered to the governing body prior to any such meeting to the extent such information relates to any of the foregoing.
 
79 

6.10                         Intellectual Property .
 
(a)                                  Upon the reasonable request of Agent, in order to facilitate filings with the United States Patent and Trademark Office and the United States Copyright Office, each Loan Party shall execute and deliver to Agent one or more security agreements substantially in the form of Exhibit 6.10(a)  to evidence Agent’s Lien on such Loan Party’s Patents, Trademarks, and/or Copyrights registered by or filed with such Office.
 
(b)                                  Each Loan Party shall have the duty, to the extent reasonably necessary or economically desirable in the operation of such Loan Party’s business, as determined by such Loan Party, (i) to promptly sue for infringement, misappropriation, or dilution and to endeavor to recover any and all damages for such infringement, misappropriation, or dilution of any material Intellectual Property owned by such Loan Party, (ii) to prosecute diligently any material trademark application or material service mark application that is part of the Trademarks owned by such Loan Party pending as of the date hereof or hereafter until the termination of this Agreement, (iii) to prosecute diligently any material patent application that is part of the Patents owned by such Loan Party pending as of the date hereof or hereafter until the termination of this Agreement, and (iv) to take all reasonably necessary action to preserve and maintain all of such Loan Party’s material Trademarks, Patents, Copyrights, License Agreements, and its rights therein, including , with respect to any Trademarks, Patents or Copyrights owned by such Loan Party that are the subject of a registration issued by or an application filed with any Governmental Body, the filing of applications for renewal, affidavits of use, affidavits of noncontestability and opposition and interference and cancellation proceedings.  Each Loan Party shall promptly file an application with the United States Copyright Office for any material Copyright of such Loan Party that has not been registered with the United States Copyright Office if such Loan Party determines that the registration of such Copyright is necessary in connection with the operation of such Loan Party’s business.  Any expenses incurred in connection with the foregoing shall be borne by the Loan Parties.  The Loan Parties further agree not to abandon any Trademark, Patent, Copyright owned by such Loan Party, or License Agreement that is necessary in the operation of any Loan Party’s business without the prior written consent of Agent, not to be unreasonably withheld, conditioned or delayed; provided, that the Loan Parties may take such abandonment actions, so long as the Trademark, Patent, Copyright or License Agreement proposed to be abandoned is no longer material to the operation of the business as determined by the Loan Parties.
 
(c)                                   The Loan Parties acknowledge and agree that the Agent and the Lenders shall have no duties with respect to the Trademarks, Patents, Copyrights, or License Agreements. Without limiting the generality of this Section 6.10(c), the Loan Parties acknowledge and agree that neither the Agent nor any Lender shall be under any obligation to take any steps necessary to preserve rights in the Trademarks, Patents, Copyrights, or License Agreements against any other Person, but Agent may do so at its option from and after the occurrence and during the continuance of an Event of Default, and all expenses incurred in connection therewith (including reasonable fees and expenses of attorneys and other professionals) shall be for the sole account of the Loan Parties and shall be chargeable to the Loan Parties.
 
(d)                                  With respect to the Intellectual Property rights owned by the Loan Parties which are material to the conduct of the Loan Parties’ respective businesses and the subject of a
 
80 

 
registration issued by or application filed with a Governmental Body, each Loan Party agrees to take all necessary steps, including making all necessary payments and filings in connection with registration, maintenance, and renewal of Copyrights, Trademarks, and Patents in the United States Copyright Office, the United States Patent and Trademark Office, any other appropriate Governmental Bodies in foreign jurisdictions or in any court, to maintain each such Intellectual Property right; provided, however, no Loan Party shall, either itself or through any agent, employee, licensee, or designee, file an application for the registration of any Copyright with the United States Copyright Office or any similar office or agency, except in compliance with the provisions of Sections 6.10(e).  Each Loan Party hereby agrees to take, or cause to be taken, corresponding steps with respect to each new or acquired Intellectual Property right to which it is now or later becomes entitled that are material to the conduct of their businesses. Any expenses incurred in connection with such activities shall be borne solely by the Loan Parties.
 
(e)                                   Without limiting any other provision hereof, within twenty (20) Business Days following the date of registration of or recordation of transfer of ownership, as applicable, to a Loan Party of any registered Copyrights, such Loan Party shall cause to be prepared, executed, and delivered to Agent (i) a Copyright security agreement or supplemental schedules to an existing registered Copyright security agreement reflecting the security interest of Agent in such registered Copyrights, which supplemental schedules shall be in form and content suitable for recordation with the United States Copyright Office (or any similar office of any other jurisdiction in which registered Copyrights are used) so as to give constructive notice, when so recorded, of the transfer by such Loan Party to Agent of a security interest in such registered Copyrights and (ii) any other documentation as Agent reasonably deems necessary in order to perfect, and confirm and continue the perfection of, Agent’s Liens on such registered Copyrights following such recordation.
 
The Loan Parties shall ensure that each of the representations and warranties contained in Section 5.9 remain true and correct at all times.
 
6.11                         Lien Waiver Agreements .  Use commercially reasonable efforts to deliver to Agent executed Lien Waiver Agreements in favor of Agent for each location leased by a Loan Party with respect to which Revolver Agent has received or shall be receiving a Lien Waiver Agreement.
 
6.12                         Exercise of Rights under Related Transaction Documents .   Each Loan Party shall, and shall cause each of its Subsidiaries to, enforce all of its material rights, including, without limitation, all material indemnification rights, and pursue all material remedies available to it with diligence and in good faith in connection with the enforcement of any such rights under the Related Transaction Documents.
 
6.13                         Keepwell .   If it is a Qualified ECP Loan Party, then jointly and severally, together with each other Qualified ECP Loan Party, hereby absolutely unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by any Non-Qualifying Loan Party to honor all of such Non-Qualifying Loan Party’s obligations under this Agreement or any Other Document in respect of Swap Obligations (provided, however, that each Qualified ECP Loan Party shall only be liable under this Section 6.13 for the maximum amount of such liability that can be hereby incurred without
 
81 

 
rendering its obligations under this Section 6.13, or otherwise under this Agreement or any Other Document, voidable under applicable law, including applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount).  The obligations of each Qualified ECP Loan Party under this Section 6.13 shall remain in full force and effect until payment in full of the Obligations and termination of this Agreement and the Other Documents.  Each Qualified ECP Loan Party intends that this Section 6.13 constitute, and this Section 6.13 shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell, support, or other agreement” for the benefit of each other Loan Party.
 
VII.                           NEGATIVE COVENANTS.
 
No Loan Party shall, nor shall any Loan Party permit any of its Subsidiaries to, until the date on or following the date upon which all of the Obligations have been paid in full in cash:
 
7.1                                Merger, Consolidation, Acquisition and Sale of Assets .
 
(a)                                  Enter into any merger, consolidation or other reorganization with or into any other Person (other than (i) pursuant to a Permitted Acquisition where a Loan Party is the surviving entity, or where the surviving entity becomes a Loan Party; provided, however that, in all cases, Borrower shall be the surviving entity of any Permitted Acquisition that it is a party to and (ii) transactions between (A) any Loan Party or Subsidiary and Borrower so long as Borrower is the surviving entity, (B) any Loan Party and any other Loan Party; provided, that, if Borrower is a party thereto, Borrower is the surviving entity, (C) any Subsidiary of a Loan Party and any Loan Party or Domestic Subsidiary thereof; provided, that, if a Loan Party is a party thereto, such Loan Party is the surviving entity, (D) any Foreign Subsidiary and another Foreign Subsidiary, or (E) any Domestic Subsidiary that is not a Loan Party and any other Domestic Subsidiary that is not a Loan Party)) or acquire all or a substantial portion of the assets or Equity Interests of any Person (other than as permitted by Sections 7.4, 7.6 and 7.9 and clause (e) of the definition of the definition of Permitted Dispositions).
 
(b)                                  Sell, lease, transfer or otherwise dispose of any of its properties or assets, except (subject to Section 7.10) Permitted Dispositions.
 
(c)                                   Convert into any other organizational form.
 
7.2                                Creation of Liens .  Create or suffer to exist any Lien upon or against any of its property or assets now owned or hereafter acquired, except Permitted Encumbrances.
 
7.3                                Guarantees .  Become liable for any Guaranteed Indebtedness (other than to Lenders) except (a) the endorsement of checks in the Ordinary Course of Business, (b) as otherwise permitted by Section 7.8, and (c) guarantees of obligations and liabilities of other Loan Parties not otherwise prohibited by this Agreement.
 
7.4                                Investments .  Purchase or acquire, or make any commitment to purchase or acquire, obligations, assets or Equity Interests of, or other interest in, any Person, except the following (“Permitted Investments”) (a) obligations issued or guaranteed by the United States of America or any agency thereof, (b) commercial paper with maturities of not more than 180 days and a published rating of not less than A-1 or P-1 (or the equivalent rating), (c) certificates of
 
82 

 
time deposit and bankers’ acceptances having maturities of not more than 180 days and repurchase agreements backed by United States government securities of a commercial bank if (i) such bank has a combined capital and surplus of at least $500,000,000, or (ii) its debt obligations, or those of a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating) by a nationally recognized investment rating agency, (d) U.S. money market funds that invest substantially all of their assets in obligations issued or guaranteed by the United States of America or an agency thereof, (e) as permitted by Section 7.1(a), 7.8 and 7.12 and (f) Permitted Acquisitions.
 
7.5                                Loans .  Make or commit to make advances, loans or extensions of credit or capital contributions to any Person, including any Parent, Subsidiary or Affiliate, or make, accrue or permit to exist loans or advances of money to, any Person, including any Parent, Subsidiary or Affiliate, through the direct or indirect lending of money, holding of securities or otherwise, in each case, except (a) advances, loans or extensions of credit by any Loan Party to another Loan Party, (b) with respect to the extension of commercial trade credit in connection with the sale of Inventory in the Ordinary Course of Business and (c) to directors, officers, employees and consultants in an amount not to exceed $500,000 in the aggregate at any time outstanding.
 
7.6                                Capital Expenditures .  Contract for, purchase or make any expenditure or commitments for Capital Expenditures (other than Capital Expenditures described in subparagraph (c) of the definition of Unfinanced Capital Expenditures) which would cause the aggregate Capital Expenditures made in cash (other than Capital Expenditures described in subparagraph (c) of the definition of Unfinanced Capital Expenditures) by the Loan Parties and their Subsidiaries in any fiscal year of Borrower to exceed $12,000,000 in fiscal year 2014; $15,500,000 in fiscal year 2015; $15,500,000 in fiscal year 2016; $17,000,000 in fiscal year 2017; $17,500,000 in fiscal year 2018; and $18,000,000 in fiscal year 2019 and thereafter; provided that 50% of the amount specified herein for any fiscal year of Borrower, if not so expended in such fiscal year may be carried over and expended in the next succeeding fiscal year (with Capital Expenditures made by the Loan Parties and their Subsidiaries in such succeeding fiscal year applied last to such unexpended amount).
 
7.7                                Restricted Payments .  Make any Restricted Payments except for (a) such to be used to pay director fees and expenses and overhead of Parent Holdco or Topco directly attributable to its direct or indirect ownership of Borrower and its Subsidiaries, (b) dividends and distributions by Subsidiaries of a Loan Party paid to such Loan Party (other than Parent Holdco); provided, that dividends and distributions by a non-wholly owned Subsidiary of a Loan Party shall only be made with the prior written consent of Agent if any Person other than a Loan Party would be entitled to receive any portion of such dividend or distribution, (c) tax distributions to allow Parent Holdco or Topco to pay franchise and other Taxes owed by either of them, but excluding any Taxes payable with respect to any Person that is not a Loan Party or Subsidiary thereof (other than Topco, solely as a member of the consolidated tax group including Borrower and its Subsidiaries) as well as the consolidated, combined, unitary or other group taxes owed by Topco and its Subsidiaries, (d) the purchase, redemption or other retirement of any common or preferred Equity Interests, or of any options to purchase or acquire any such shares of common or preferred Equity Interests of such Loan Party or Topco other than ( provided that (i) no Default or Event of Default has occurred and is continuing or would arise as a result of such Restricted Payment, (ii) after giving effect to such Restricted Payment, the Loan Parties and their
 
83 

 
Subsidiaries are in compliance on a pro forma basis with the financial covenants set forth in Section 6.5 , recomputed for the most recent fiscal quarter for which financial statements have been delivered to Agent and Lenders pursuant to the terms of this Agreement, (iii) the aggregate Restricted Payments permitted under this clause (d) shall not exceed $ 2,500,000 during the term of this Agreement plus the amount of any net cash proceeds received from additional issuances of Equity Interests to other employees, officers or directors, and (iv) both before and after giving effect to such Restricted Payment, no Covenant Compliance Period (as defined in the PNC Credit Agreement) shall then be in effect) from employees, officers, directors and consultants, (e) (i) [reserved] and (ii) any other earnout or other similar deferred purchase price payment obligations incurred pursuant to a Permitted Acquisition ( provided that (w) the earnout or other similar deferred purchase price payment obligations with respect to which such Restricted Payment described in clause (e)(ii) above is made are unsecured, (x) no Default or Event of Default has occurred and is continuing or would arise as a result of such Restricted Payment, (y) after giving effect to such Restricted Payment, the Loan Parties and their Subsidiaries are in compliance on a pro forma basis with the financial covenants set forth in Section 6.5 , recomputed for the most recent fiscal quarter for which financial statements have been delivered to Agent and Lenders pursuant to the terms of this Agreement, and (z) the aggregate Restricted Payments permitted under this subclause (ii) shall not exceed $ 2,000,000 during any fiscal year), (f) any other Restricted Payment otherwise expressly permitted by the terms of this Agreement and the PNC Credit Agreement and (g) the Restatement Effective Date Dividend.
 
7.8                                Indebtedness .  Create, incur, assume or suffer to exist any Indebtedness (exclusive of trade debt) except in respect of (i) the Obligations; (ii) Indebtedness owed by one Loan Party to another Loan Party; (iii) Capital Financing Indebtedness; provided , that, the total amount of all Indebtedness incurred pursuant to this clause (iii) at any time outstanding shall not exceed $5,000,000; (iv) Indebtedness incurred in connection with Permitted Investments, (v) unsecured Indebtedness in an aggregate outstanding principal amount at any time not to exceed $500,000, (vi) Indebtedness existing on the Restatement Effective Date and identified on Schedule 7.8 , (vii) Permitted Subordinated Debt in an aggregate principal amount not to exceed $5,000,000 (which amount, for the avoidance of doubt, shall not include any Permitted Freeman Spogli Investment constituting Indebtedness and any Indebtedness between Loan Parties), and, to the extent not exceeding, in principal amount, the Maximum Principal Amount of Revolving Loan Debt (as defined in the Intercreditor Agreement), Indebtedness under the Revolving Loan Documents, (viii) Indebtedness arising from the endorsement of instruments for deposit, the honoring by a bank or other institution of a check, draft or similar instrument drawn against insufficient funds, so long as the same is covered within 5 Business Days, or consisting of obligations in respect of cash management services or overdraft protection, (ix) Indebtedness owing to any insurance company in connection with the financing of any insurance premiums permitted by such insurance company in the ordinary course of business, (x) Indebtedness arising as an account party in respect of trade letters of credit issued in the ordinary course of business, (xi) unsecured Indebtedness arising under Hedge Agreements entered into for bona fide hedging purposes and not for speculation, (xii) refinancings of any of the foregoing Indebtedness which do not increase the principal amount of such Indebtedness and are on terms (including pricing) not less favorable to the applicable Loan Party than the existing Indebtedness being refinanced, (xiii) any earnout or other similar deferred purchase price payment obligations incurred in connection with a Permitted Acquisition to the extent permitted by Section 7.7 and (xiv) Permitted Freeman Spogli Investments to the extent constituting Indebtedness.
 
84 

 
7.9                                Nature of Business .  Substantially change the nature of the business in which it is presently engaged or businesses otherwise reasonably related or complementary thereto, nor except as specifically permitted hereby purchase or invest, directly or indirectly, in any assets or property other than (a) in the Ordinary Course of Business for assets or property which are useful in, necessary for and are to be used in its business as presently conducted and (b) as permitted by Sections 7.1(a) and 7.6.
 
7.10                         Transactions with Affiliates .  Except as disclosed on Schedule 7.10 and with respect to transactions that are otherwise expressly permitted herein, directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property to, or otherwise enter into any transaction or deal with, any Affiliate thereof or any present or former shareholder thereof, except:
 
(a)                                  transactions which are in the Ordinary Course of Business, on an arm’s-length basis on fair and reasonable terms and conditions no less favorable than terms and conditions which would have been obtainable in a comparable arm’s length transaction from a Person other than an Affiliate or a present or former shareholder of such Loan Party or such Loan Party and, if such transaction involves payments from the Loan Parties or any of their Subsidiaries to such Affiliate in excess of $500,000 per fiscal year, such transaction shall have been disclosed to Agent in writing.  All such transactions existing as of the Restatement Effective Date are described on Schedule 7.10 ;
 
(b)                                  reasonable and customary director, board observer, officer, employee and member of management compensation (including bonuses), documented expense reimbursement and other benefits (including retirement, health, severance, stock option and other benefit plans) and employment, severance, change of control and indemnification arrangements, in the case of the officers or directors;
 
(c)                                   customary indemnity and expense reimbursement paid to or on behalf of Freeman Spogli in connection with Freeman Spogli’s performance of financial, advisory, monitoring, oversight and similar services; provided, that Borrower shall provide to Agent, upon Agent’s request in its Permitted Discretion, a reasonably detailed explanation of the indemnities and expenses so reimbursed and the purpose therefor;
 
(d)                                  the Transactions and related transactions contemplated by the Purchase Agreement (as in effect on the Original Closing Date) and the payment of the fee payable to Freeman Spogli or one of its Affiliates in connection therewith;
 
(e)                                   sales of Equity Interests of Parent Holdco to Freeman Spogli and Permitted Holders permitted by this Agreement and the granting of registration and other customary rights in connection therewith;
 
(f)                                    the payment of fees to Freeman Spogli (or its affiliated entities) for any financial or mergers and acquisitions advisory, financing, underwriting or placement services (whether structured as a fee or an underwriting discount) in connection with Permitted Acquisitions or permitted equity Investments; provided that the fees for any such Permitted Acquisition shall not exceed the greater of (i) 2% of the transaction value and (ii) 5% of the amount of any new equity invested by Freeman Spogli or its Affiliates in connection with such Permitted Acquisition or equity Investment; and
 
85 

 
(g)                                   the payment of the Restatement Effective Date Bonus Payments and the Restatement Effective Date Dividend.
 
7.11                         Management Fees .  Except as disclosed on Schedule 7.11 , pay any management, consulting, administrative or similar fees to any Affiliate of any Loan Party, any officer, director or employee of any Loan Party, any Affiliate of any Loan Party or Freeman Spogli (or its affiliated entities) during the term of this Agreement, other than as provided in Section 7.10.
 
7.12                         Subsidiaries .
 
(a)                                  Subject to Section 4.1, form or acquire any Subsidiary unless:
 
(i)                                      such Subsidiary executes and delivers, or causes to be delivered (as applicable) to Agent promptly: (A) either, at the election of Agent, a joinder to this Agreement in the form of Exhibit 7.12 or a joinder to the Guaranty and the Guarantor Security Agreement, (B) if such Subsidiary has any Subsidiaries, (1) certificates evidencing all of the Equity Interests of any Person owned by such Subsidiary, (2) undated stock powers executed in blank with signature guaranteed, and (3) such opinion of counsel as Agent may reasonably request, (C) if requested by Agent, with respect to owned Real Property of such Subsidiary with a fair market value in excess of $250,000 (1) a fully executed Mortgage in form and substance reasonably satisfactory to Agent together with an A.L.T.A. lender’s title insurance policy issued by a title insurer reasonably satisfactory to Agent, in form and substance and in an amount reasonably satisfactory to Agent insuring that the Mortgage is a valid and enforceable first priority (subject to the terms of the Intercreditor Agreement) Lien on such Real Property, free and clear of all defects, encumbrances and Liens other than Permitted Encumbrances, (2) then current A.L.T.A. surveys, certified to Agent by a licensed surveyor sufficient to allow the issuer of the lender’s title insurance policy to issue such policy without a survey exception and (3) an environmental site assessment prepared by a qualified firm reasonably acceptable to Agent, in form and substance satisfactory to Agent, and (D) such other agreements, instruments, approvals, legal opinions or other documents reasonably requested by Agent in order to create, perfect, establish the first priority (subject to Permitted Encumbrances and the terms of the Intercreditor Agreement) of or otherwise protect any Lien purported to be covered by any such security agreement, pledge agreement or Mortgage or otherwise to effect the intent that such Subsidiary shall become bound by all of the terms, covenants and agreements contained in this Agreement and the Other Documents and that all property and assets of such Subsidiary constituting “Collateral” shall become Collateral for the Obligations; and
 
(ii)                                   each owner of the Equity Interests of any such Subsidiary, at the reasonable request of Agent, executes and delivers promptly a pledge agreement in form and substance reasonably satisfactory to Agent, together with (A) certificates evidencing all of the Equity Interests of such Subsidiary, (B) undated stock powers or other appropriate instruments of assignment executed in blank with signature guaranteed, and (C) such other agreements, instruments, approvals, legal opinions or other documents reasonably requested by Agent.
 
86 

 
(b)                                  Enter into any partnership, joint venture or similar arrangement.
 
7.13                         Fiscal Year and Accounting Changes; Change of Jurisdiction, Corporate Name or Locations.  Change its fiscal year or make any significant change (i) in accounting treatment and reporting practices except as required by GAAP or (ii) in tax reporting treatment except as required by law.  Except in the case of the non-surviving entity in a merger or other transaction permitted under Section 7.1 , change its chief executive office, principal place of business or the location of its primary records concerning the Collateral, in any case without at least ten (10) days’ prior written notice to Agent and after Agent’s written acknowledgment that any reasonable action requested by Agent in connection therewith, including to continue the perfection of any Liens in favor of Agent, on behalf of itself and the other Lenders, in any Collateral, has been completed or taken, and provided that any such new location of a Loan Party or any of its domestic Subsidiaries shall be in the continental United States or Canada. Without limiting the foregoing, (a) in no event shall any Borrower be or become a Person that is not a “United States person” as defined in Section 7701(a)(30) of the Code and (b) no Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to, change its jurisdiction of organization, name, identity or organizational structure in any manner which might make any financing or continuation statement filed in connection herewith seriously misleading within the meaning of Section 9-506 of the Uniform Commercial Code or any other then applicable provision of the Uniform Commercial Code or PPSA except upon prior written notice to Agent and after Agent’s written acknowledgment that any reasonable action requested by Agent in connection therewith, including to continue the perfection of any Liens in favor of Agent, on behalf of itself and the other Lenders, in any Collateral, has been completed or taken.
 
7.14                         Pledge of Credit .  Now or hereafter pledge Agent’s or any Lender’s credit on any purchases or for any purpose whatsoever or use any portion of any Loan in or for any business other than as permitted by Section 7.9.
 
7.15                         Amendment of Certificate of Incorporation, By-Laws and Other Documents .  Amend, modify or waive (a) any material term or provision of its Certificate of Incorporation or By-Laws (or other similar constituent documents) other than in connection with Permitted Equity Issuances if such amendment, modification or waiver could reasonably be expected to have a Material Adverse Effect or would otherwise be materially adverse to the interest of the Agent or any Lender (as reasonably determined by the Agent), (b) any documents or instruments evidencing or giving rise to Permitted Subordinated Debt except to the extent permitted under the terms of the subordination agreement with respect thereto and, in any event, if such modification or waiver is material to the interests of the Lenders, without promptly delivering a copy thereof to the Agent, (c) any Revolving Loan Document except in connection with the Restatement Effective Date Transactions and as permitted under the terms of the Intercreditor Agreement and, in any event, if such modification or waiver is material to the interests of the Lenders, without promptly delivering a copy thereof to the Agent or (d) any provision of any lease between any Loan Party and any of MSW Promenade, L.P., TX-SW #1, LP, Ambassador Way Associates, LP or Bluecap, Ltd. with respect to any Lien granted to any such lessor in a manner adverse to the interests of the Lenders.  Permit any of its Subsidiaries to, amend, modify or alter, or permit to be amended, modified or altered, or enter into any new agreement or document with respect to, any Purchase Document, including without limitation any schedule, exhibit, amendment, supplement, modification, assignment, side letter or any other document
 
87 

 
delivered pursuant thereto or in connection therewith by any Loan Party, Subsidiary or any other Affiliate, in each case, to the extent the same (i) could reasonably be expected to have a Material Adverse Effect, (ii) would cause or result in a Default or Event of Default hereunder or (iii) is adverse to the interests of Agent or any Lender in their capacities as such.
 
7.16                         Compliance with ERISA .  If any material liability could reasonably be expected to be imposed on any Loan Party:  (i) (x) maintain, or permit any Subsidiary of a Loan Party to maintain, or (y) become obligated to contribute, or permit any Subsidiary of a Loan Party to become obligated to contribute, to any Pension Benefit Plan, other than those Pension Benefit Plans disclosed on Schedule 5.8(d)  or any other Pension Benefit Plan for which Agent has provided its prior written consent, (ii) engage, or permit any member of the Controlled Group to engage, in any non-exempt “prohibited transaction,” as that term is defined in section 406 of ERISA and Section 4975 of the Code, (iii) incur, or permit any member of the Controlled Group to incur, any “accumulated funding deficiency,” as that term is defined in Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any member of the Controlled Group to terminate, any Pension Benefit Plan where such event could result in any liability of any Loan Party or the imposition of a lien on the property of any Loan Party pursuant to Section 4068 of ERISA, (v) assume, or permit any Subsidiary of a Loan Party to assume, any obligation to contribute to any Multiemployer Plan not disclosed on Schedule 5.8(d) , (vi) incur, or permit any member of the Controlled Group to incur, any withdrawal liability to any Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of any Termination Event, (viii) fail to comply, or permit a member of the Controlled Group to fail to comply, with the requirements of ERISA or the Code or other Applicable Laws in respect of any Pension Benefit Plan, (ix) fail to meet, or permit any member of the Controlled Group to fail to meet, all minimum funding requirements under ERISA or the Code, or postpone or delay or allow any member of the Controlled Group to postpone or delay any funding requirement with respect of any Pension Benefit Plan.
 
7.17                         Prepayment of Indebtedness .  Cancel any claim or debt owing to it, except in the Ordinary Course of Business consistent with past practice.  At any time, directly or indirectly make any payment of any type with respect to, repurchase, redeem, retire or otherwise acquire, any Indebtedness that is subordinated to the Obligations in right of payment except as permitted under the subordination agreement related thereto or as otherwise expressly permitted hereby.
 
7.18                         [Reserved] .
 
7.19                         Membership/Partnership Interests .  Elect to permit any of its Subsidiaries to (x) treat its limited liability company membership interests or partnership interests, as the case may be, as securities as contemplated by the definition of “security” in Section 8-102(15) and by Section 8-103 of Article 8 of Uniform Commercial Code or (y) certificate its limited liability company membership interests or partnership interests, as the case may be.
 
7.20                         [Reserved] .
 
7.21                         Bank Accounts .  Close any bank account at a depository institution other than PNC without providing at least 10 days’ prior notice to Agent.
 
88 

 
7.22                         Limitation on Issuance of Equity Interests .  Issue or sell, or permit any of its Subsidiaries to issue or sell, any shares of its Equity Interests, any securities convertible into or exchangeable for its Equity Interests or any warrants; provided that the following issuances and sales shall be permitted:
 
(a)                                  Parent Holdco may issue shares of its Equity Interests that are not Disqualified Equity Interests to any director, officer, consultant or employee of Parent Holdco or its Subsidiaries pursuant to a written plan or agreement approved by the Board of Directors of Parent Holdco;
 
(b)                                  the Loan Parties (other than Parent Holdco) may issue Equity Interests to other Loan Parties so long as the requirements set forth in Section 7.12(a)(ii) are complied with;
 
(c)                                   Permitted Equity Issuances; and
 
(d)                                  new Subsidiaries of Loan Parties may issue Equity Interests to Loan Parties so long as the requirements set forth in Section 7.12 are complied with.
 
7.23                         Limitations on Negative Pledges .  Enter into, incur or permit to exist, or permit any Subsidiary to enter into, incur or permit to exist, directly or indirectly, any agreement, instrument, deed, lease or other arrangement that prohibits, restricts or imposes any condition upon the ability of any Loan Party or any Subsidiary of any Loan Party to create, incur or permit to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, or that requires the grant of any security for an obligation if security is granted for another obligation, except the following:
 
(a)                                  this Agreement and the Other Documents;
 
(b)                                  the Revolving Loan Documents;
 
(c)                                   any agreement entered into in connection with Permitted Subordinated Debt;
 
(d)                                  negative pledges and restrictions on Liens in favor of any holder of Capital Financing Indebtedness permitted under clause (iii) of Section 7.8 but solely to the extent such negative pledge or restriction extends solely to the property financed by such Indebtedness, accessions thereto and the proceeds and the products thereof;
 
(e)                                   any customary restrictions and conditions contained in agreements relating to the sale or other disposition of assets or of a Subsidiary pending such sale or other disposition, provided, that such restrictions and conditions apply only to the assets or Subsidiary to be sold or disposed of and such sale or disposition is permitted hereunder;
 
(f)                                    customary provisions restricting assignments, subletting or other transfers contained in leases, licenses, joint venture agreements and other agreements entered into in the Ordinary Course of Business; and
 
89 

(g)                                   restrictions that exist in any agreement in effect at the time a Subsidiary becomes a Subsidiary of a Loan Party, so long as such agreement was not entered into in contemplation of such person becoming a Subsidiary.
 
7.24                         Capital Structure and Business .  Except as permitted in Section 7.1, make any change in its capital structure as described on Schedule 5.28, including the issuance of any shares of Equity Interests, warrants or other securities convertible into Equity Interests or any revision of the terms of its outstanding Equity Interests to the extent any such change could be adverse to the interests of Lenders in any material respect; provided, in no event shall any Loan Party, nor shall any Loan Party permit any of its Subsidiaries to, become, create, form or acquire a Domestic Holding Company of the type described in clause (ii) of the definition of “Domestic Holding Company” set forth in this Agreement.  Parent Holdco shall not engage in any business activities other than (i) ownership of the Equity Interests of Borrower, (ii) activities incidental to the maintenance of its corporate existence and (iii) performance of its obligations under the Related Transaction Documents to which it is a party.
 
7.25                         [Reserved] .
 
7.26                         Sale-Leasebacks .  Engage in any sale leaseback, synthetic lease or similar transaction involving any of its assets.
 
7.27                         No Impairment of Intercompany Transfers .  Directly or indirectly enter into or become bound by any agreement, instrument, indenture or other obligation (other than this Agreement and the other Loan Documents) which could directly or indirectly restrict, prohibit or require the consent of any Person with respect to the payment of dividends or distributions or the making or repayment of intercompany loans by a Subsidiary of a Loan Party to such Loan Party, except for such restrictions, prohibitions or requirements existing under applicable mandatory legal requirements or this Agreement and the Other Documents or the Revolving Loan Documents.
 
7.28                         No Speculative Transactions .  Engage in any transaction involving commodity options, futures contracts or similar transactions, except Hedge Agreements expressly permitted hereunder.
 
7.29                         Additional Store Leases .  Enter into any leases or subleases for additional store locations at any time that an Event of Default exists as a result of Borrower’s failure to comply with the then applicable Total Leverage Ratio covenant threshold set forth in Section 6.5, as determined based on the last Compliance Certificate delivered to Agent, unless Agent otherwise consents in writing.
 
90 

 
VIII.                      CONDITIONS PRECEDENT.
 
8.1                                Conditions to Restatement Effective Date Term Loan .  The obligation of Lenders to make the Restatement Effective Date Term Loan on the Restatement Effective Date is subject to the satisfaction (in a manner reasonably satisfactory to Lenders), or waiver thereby by all Lenders, immediately prior to or concurrently with the making of such Loans, of the following conditions precedent:
 
(a)                                  Loan Documents .  Agent shall have received this Agreement and each of the Other Documents listed on Schedule 8.1(a) , in each case, duly executed and delivered by an authorized officer of each Loan Party party thereto;
 
(b)                                  [ Reserved ];
 
(c)                                   Amendment to Revolving Facility .  The amendment to the PNC Revolving Facility shall have closed (or shall close on the Restatement Effective Date concurrently herewith) on terms reasonably acceptable to Agent;
 
(d)                                  Legal Opinion .  Agent shall have received the executed legal opinion of Bingham McCutchen LLP in form and substance satisfactory to Agent, which shall cover such matters incident to the transactions contemplated by this Agreement, the Term Notes, if any, the rest of the Other Documents and all related agreements as Agent may reasonably require and the Loan Parties hereby authorize and direct such counsel to deliver such opinion to Agent and Lenders;
 
(e)                                   Representations and Warranties .  The representations and warranties set forth herein and in the Other Documents executed as of even date herewith shall be true and correct in all material respects;
 
(f)                                    Leverage Covenant and Financial Statements .  The Loan Parties shall certify to Agent and Lenders that, the ratio of (i) the aggregate outstanding principal amount of Funded Debt on the Restatement Effective Date (after giving effect to the Restatement Effective Date Transactions) to (ii) Restatement Effective Date Adjusted EBITDA shall not be greater than 4.25:1.00;
 
(g)                                   Solvency .  After giving effect to the Restatement Effective Date Transactions, Borrower and the other Loan Parties, taken as a whole, shall be solvent, able to pay their respective debts as they mature, shall have capital sufficient to carry on their respective businesses and all businesses in which they are about to engage, and (i) as of the Restatement Effective Date, the fair present saleable value of the assets of Borrower and the other Loan Parties taken as a whole, calculated on a going concern basis, shall be in excess of the amount of the liabilities of the Loan Parties and (ii) after giving effect to the Restatement Effective Date Transactions, the fair saleable value of the assets of Borrower and the other Loan Parties taken as a whole, (calculated on a going concern basis) shall be in excess of the amount of the liabilities of the Loan Parties;
 
(h)                                  [Reserved] ;
 
91 

 
(i)                                      Fees .  Agent shall have received all fees payable to Agent and Lenders on or prior to the Restatement Effective Date hereunder, including pursuant to Article III hereof, whether by deduction from the Restatement Effective Date Term Loan or otherwise;
 
(j)                                     Material Adverse Effect .  Since March 30, 2013, there shall not have occurred any change, development or event that has had or would reasonably be expected to have a Material Adverse Effect with respect to Borrower or any of its Subsidiaries;
 
(k)                                  [Reserved] ;
 
(l)                                      Closing Certificate .  Agent shall have received a closing certificate signed by an authorized officer of Parent Holdco dated as of the date hereof, certifying that (i) each of the conditions set forth in clauses (e), (f), (g), (j) and (n) of this Section 8.1 have been satisfied in all material respects and (ii) attached thereto are (x) true, correct and complete copies of the Revolving Loan Documents, in each case, executed and delivered on the Restatement Effective Date and (y) a calculation demonstrating compliance with clause (f) above;
 
(m)                              Reaffirmation of and Amendment to Intercreditor Agreement .  Agent shall have received an executed reaffirmation of and amendment to the Intercreditor Agreement, duly executed by PNC, as agent for the Lenders under the PNC Revolving Facility, Agent and the Loan Parties, on terms satisfactory to Agent; and
 
(n)                                  Undrawn Availability .  After giving effect to the Restatement Effective Date Term Loan hereunder and any loans advanced under the PNC Revolving Facility, in each case, on the Restatement Effective Date, Borrower shall have Undrawn Availability of at least $15,000,000 on the Restatement Effective Date.
 
Notwithstanding anything in this Agreement or any Other Document to the contrary, the availability of the Restatement Effective Date Term Loan on the Restatement Effective Date shall not be impaired by the terms of this Agreement and the Other Documents if the conditions set forth in Section 8.1 shall have been otherwise satisfied or waived.
 
IX.                              INFORMATION AS TO THE LOAN PARTIES.
 
Each Loan Party shall, until satisfaction in full of the Obligations and the termination of this Agreement:
 
9.1                                Disclosure of Material Matters .  Promptly upon learning thereof, report to Agent all matters materially affecting the value, enforceability or collectability of any material portion of the Collateral, including such Loan Party’s reclamation or repossession of, or the return to such Loan Party of, a material amount of goods or claims or disputes asserted by any Customer or other obligor.
 
9.2                                Schedules .  Deliver to Agent:
 
(a)                                  no less frequently than once during each 12-month period, an Inventory count conducted by a third party reasonably acceptable to Agent (and, if a Default or an Event of Default shall have occurred and be continuing, the Loan Parties shall, upon the request of Agent, conduct, and deliver the results of, such physical verifications as Agent may reasonably require);
 
92 

 
(b)                                  at such intervals as Agent may reasonably require, (i) confirmatory assignment schedules and (ii) such further schedules, documents and/or information regarding the Collateral as Agent may require including trial balances and test verifications;
 
(c)                                   concurrently with the delivery of such items to Revolving Agent, the reports required to be delivered to Revolving Agent pursuant to Section 9.2(a) of the PNC Credit Agreement.
 
The items to be provided under this Section are to be in form reasonably satisfactory to Agent and executed by Borrower and delivered to Agent from time to time solely for Agent’s convenience in maintaining records of the Collateral, and Borrower’s failure to deliver any of such items to Agent shall not affect, terminate, modify or otherwise limit Agent’s Lien with respect to the Collateral.  Borrower, at its own expense, shall deliver to Agent such appraisals of the assets of the Loan Parties and their respective Subsidiaries as Agent may reasonably request at any time after the occurrence and during the continuance of an Event of Default, such appraisals to be conducted by an appraiser, and in form and substance, reasonably satisfactory to Agent.
 
9.3                                Environmental Matters .
 
(a)                                  Furnish Agent, concurrently with the delivery of the financial statements referred to in Sections 9.7 and 9.8, with an environmental certificate in substantially the form of Exhibit 9.3, signed by the President or Chief Financial Officer of Parent Holdco stating, to the best of his knowledge, that the Loan Parties are in compliance in all material respects with all federal, state and local Environmental Laws. To the extent any Loan Party is not in compliance with the foregoing laws in all material respects, the certificate shall set forth with specificity all areas of such non-compliance and the proposed action such Loan Party will implement in order to achieve compliance in all material respects.
 
(b)                                  In the event Borrower obtains, gives or receives notice of any Release or threat of Release of any Hazardous Substances at the Real Property (any such event being hereinafter referred to as a “ Hazardous Discharge ”) or receives any notice of violation, request for information or notification that it is potentially responsible for investigation or cleanup of environmental conditions at the Real Property, demand letter or complaint, order, citation, or other written notice with regard to any Hazardous Discharge or violation of Environmental Laws affecting the Real Property or Borrower’s interest therein (any of the foregoing is referred to herein as an “ Environmental Complaint ”) from any Person, including any state agency responsible in whole or in part for environmental matters in the state in which the Real Property is located or the United States Environmental Protection Agency (any such person or entity hereinafter the “ Environmental Authority ”), then Borrower shall, within five (5) Business Days thereafter, give written notice of same to Agent detailing facts and circumstances of which Borrower is aware giving rise to the Hazardous Discharge or Environmental Complaint. Such information is to be provided to allow Agent to protect its security interest in and Lien on the Real Property and the Collateral and is not intended to create nor shall it create any obligation upon Agent or any Lender with respect thereto.
 
93 

 
(c)                                   Borrower shall promptly forward to Agent copies of any request for information, notification of potential liability, demand letter relating to potential responsibility with respect to the investigation or cleanup of Hazardous Substances at any other site owned, operated or used by Borrower to dispose of Hazardous Substances. Borrower shall promptly forward to Agent copies of all documents and reports concerning a Hazardous Discharge at the Real Property that Borrower is required to file under any Environmental Laws. Such information is to be provided solely to allow Agent to protect Agent’s security interest in and Lien on the Real Property and the Collateral.
 
9.4                                Litigation; Violations .
 
(a)                                  Promptly notify Agent in writing of any written claim, litigation, suit or administrative proceeding against any Loan Party, whether or not the claim is covered by insurance, which in any such case (i) seeks damages in excess of $5,000,000 not otherwise covered by insurance, (ii) seeks injunctive relief, which would reasonably be expected to result in liability in excess of $5,000,000 not otherwise covered by insurance, (iii) is asserted or instituted against any Loan Party in connection with any Plan, (iv) alleges criminal misconduct by any Loan Party or Subsidiary of a Loan Party or which would reasonably be expected to result in liability in excess of $5,000,000 not otherwise covered by insurance or (v) alleges the violation of any Law regarding, or seeks remedies in connection with, any Environmental Liabilities which, in each of cases (iii) and (v) would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
 
(b)                                  Promptly notify Agent in writing of any violation of any law, statute, regulation or ordinance of any Governmental Body, or of any agency thereof, applicable to such Loan Party which could reasonably be expected to have a Material Adverse Effect.
 
9.5                                Material Occurrences .  Upon Borrower’s knowledge thereof, promptly notify Agent in writing of (a) any Event of Default or Default, specifying the nature of such Default or Event of Default, including the anticipated effect thereof; (b) any default or event of default under any of the Revolving Loan Documents; (c) any event, development or circumstance whereby any financial statements or other reports furnished to Agent fail in any material respect to present fairly, in accordance with GAAP consistently applied (subject, in the case of interim financial statements, to normal year-end adjustments and the absence of footnote disclosures), the financial condition or operating results of the Loan Parties as of the date of such statements; (d) any accumulated retirement plan funding deficiency which, if such deficiency continued for two plan years and was not corrected as provided in Section 4971 of the Code, could subject any Loan Party to a material tax imposed by Section 4971 of the Code; (e) each and every default by any Loan Party which could reasonably be expected to result in the acceleration of the maturity of any Indebtedness in excess of $500,000, including the names and addresses of the holders of such Indebtedness, and the amount of such Indebtedness; and (f) any other development in the business or affairs of any Loan Party which could reasonably be expected to have a Material Adverse Effect; in each case describing the nature thereof and the action such Loan Party proposes to take with respect thereto.
 
94 

 
9.6                                Government Receivables .  Notify Agent promptly if any of its Receivables in excess of $250,000 in the aggregate arise out of contracts between a Borrowing Base Party and the United States, any state, or any department, agency or instrumentality of any of them.
 
9.7                                Annual Financial Statements .  Furnish Agent and Lenders within one hundred twenty (120) days after the end of each fiscal year of Topco, financial statements of Topco and its Subsidiaries on a consolidated basis including, but not limited to, a balance sheet and statement of income and retained earnings and cash flows, setting forth in comparative form in each case to the figures for the previous fiscal year, which financial statements shall be prepared in accordance with GAAP consistently applied, certified without qualification (except for a qualification that results solely from the Obligations being classified as short term Indebtedness during the one year period prior to the maturity date of such indebtedness) by Deloitte & Touche or another independent certified public accounting firm of recognized national standing selected by Topco (the “ Accountants ”).  Such financial statements shall be accompanied by (i) a report from the Accountants to the effect that, in connection with their audit examination, nothing has come to their attention to cause them to believe that a Default or Event of Default has occurred (or specifying those Defaults and Events of Default that they became aware of), it being understood that such audit examination extended only to accounting matters and that no special investigation was made with respect to the existence of Defaults or Events of Default, (ii) the annual letters to such accountants in connection with their audit examination detailing contingent liabilities and material litigation matters and (iii) the certification of the President, Chief Financial Officer, Controller or equivalent officer of Borrower that (A) except as described in such certificate, the results reported in such financial statements do not include any income of Topco or Subsidiaries of Topco that are not Subsidiaries of Borrower and, if any such income is included, providing a calculation of EBITDA for Borrower and its Subsidiaries on a consolidated basis and (B) all such financial statements present fairly in accordance with GAAP the financial position, results of operations and statements of cash flows of Topco and its Subsidiaries on a consolidated basis, as at the end of such year and for the period then ended, and that there was no Default or Event of Default in existence as of such time or, if a Default or Event of Default shall have occurred and be continuing, describing the nature thereof and all efforts undertaken to remedy such Default or Event of Default.  The report of the Accountants shall be accompanied by a copy of any management letter of the Accountants issued in connection with such financial statements addressed to Topco.  In addition, the reports shall be accompanied by a Compliance Certificate.
 
9.8                                Quarterly Financial Statements .  Furnish Agent within forty-five (45) days after the end of each fiscal quarter (or with respect to any fiscal quarter that is the last fiscal quarter of any fiscal year, within sixty (60) days after the end of such fiscal quarter if the financial statements required to be delivered pursuant to Section 9.7 for such fiscal year have not been delivered before the end of such sixty (60) day period), an unaudited consolidated balance sheet of Topco and its Subsidiaries and unaudited statements of income and stockholders’ equity and cash flow of Topco and its Subsidiaries reflecting results of operations from the beginning of the fiscal year to the end of such quarter and for such quarter, complete and correct in all material respects, subject to normal year-end adjustments that individually and in the aggregate are not material to Borrower’s and/or its Subsidiaries’ business. The reports shall be accompanied by a Compliance Certificate.
 
95 

 
9.9                                Monthly Financial Statements .  Furnish Agent within thirty (30) days after the end of each fiscal month, an unaudited balance sheet of Topco and its Subsidiaries on a consolidated basis, unaudited statements of income and stockholders’ equity and cash flow of Topco and its Subsidiaries on a consolidated basis reflecting results of operations from the beginning of the fiscal year to the end of such month and for such month, prepared on a basis consistent with prior practices and complete and correct in all material respects, subject to normal year end adjustments that individually and in the aggregate are not material to the business of Borrower and its Subsidiaries and a report of the Borrowing Base (as defined in the PNC Credit Agreement) for such month.
 
9.10                         Additional Information .  Furnish Agent with (i) such additional financial and other information respecting any business or financial condition of a Loan Party or any of its Subsidiaries as Agent or any Lender shall, from time to time, reasonably request, including information as Agent shall reasonably request in order to enable Agent to determine whether the terms, covenants, provisions and conditions of this Agreement and the Notes have been complied with by the Loan Parties including, without the necessity of any request by Agent, (a) copies of all environmental audits and reviews, (b) at least ten (10) days prior thereto, notice of any Loan Party’s opening of any new office or place of business or any Loan Party’s closing of any existing office or place of business, (c) promptly upon any Loan Party’s knowledge thereof, notice of any material labor dispute to which any Loan. Party may become a party, any strikes or walkouts relating to any of its plants or other facilities, and the expiration of any organized labor contract to which any Loan Party is a party or by which any Loan Party is bound and (ii) upon request of Agent or any Lender, forms and information required by the U.S. Small Business Administration, including, without limitation, SBA Forms 480 and 652, properly completed and duly executed where applicable.
 
9.11                         Projected Operating Budget .  Furnish Agent, no later than thirty (30) days after the beginning of each of Topco’s fiscal years commencing with the fiscal year beginning on April 1, 2014, a month-by-month projected operating budget and cash flow of Topco on a consolidated basis for such fiscal year (including an income statement for each month and a balance sheet as at the end of the last month in each fiscal quarter), prepared based on reasonable assumptions as of the date thereof, which will include a statement of all of the material assumptions on which such plan is based, will a monthly budget for the following year and will integrate sales, gross profits, operating expenses, operating profit, cash flow projections and liquidity projections all prepared on the same basis and in similar detail as that on which operating results are reported (and in the case of cash flow projections, representing management’s good faith estimates of future financial performance based on historical performance), and including plans for Capital Expenditures and facilities.
 
9.12                         Variances from Operating Budget and Prior Financial Statement Comparisons .  Furnish Agent, concurrently with the delivery of the annual, quarterly and monthly financial statements referred to in Sections 9.7, 9.8 and 9.9, respectively, an analysis of all material variances from budgets submitted by the Loan Parties pursuant to Section 9.11 and from Topco’s consolidated financial statements for the prior fiscal year (or for the corresponding monthly or quarterly period of such prior fiscal year, as applicable).
 
96 

 
9.13                         Notice of Suits, Adverse Events .  Furnish Agent with prompt written notice of (i) any lapse or other termination of any Consent issued to any Loan Party by any Governmental Body or any other Person that is material to the operation of such Loan Party’s business, (ii) any refusal by any Governmental Body or any other Person to renew or extend any such Consent; and (iii) copies of any periodic or special reports filed by any Loan Party with any Governmental Body or Person, if such reports indicate any material change in the business, operations, affairs or condition of any Loan Party, or if copies thereof are reasonably requested by Agent, and (iv) copies of any material notices and other communications from any Governmental Body or Person which specifically relate to any Loan Party.
 
9.14                         ERISA Notices and Requests .  If any material liability could reasonably be expected to be imposed on any Loan Party, furnish Agent with prompt written notice in the event that (a) any Loan Party or any member of the Controlled Group knows or has reason to know that a Termination Event has occurred, together with a written statement describing such Termination Event and the action, if any, which such Loan Party or any member of the Controlled Group has taken, is taking, or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, Department of Labor or PBGC with respect thereto, (b) any Loan Party or any member of the Controlled Group knows or has reason to know that, with respect to a Pension Benefit Plan, a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred together with a written statement describing such transaction and the action which such Loan Party or any member of the Controlled Group has taken, is taking or proposes to take with respect thereto, (c) a funding waiver request has been filed with respect to any Pension Benefit Plan together with all communications received by such Loan Party or any member of the Controlled Group with respect to such request, (d) any increase in the benefits of any existing Pension Benefit Plan or the establishment of any new Pension Benefit Plan or the commencement of contributions to any Pension Benefit Plan to which such Loan Party or any member of the Controlled Group was not previously contributing shall occur, (e) any Loan Party shall receive from the PBGC a notice of intention to terminate a Pension Benefit Plan or to have a trustee appointed to administer a Pension Benefit Plan, together with copies of each such notice, (f) any Loan Party shall receive any favorable or unfavorable determination letter from the Internal Revenue Service regarding the qualification of a Plan under Section 401(a) of the Code, together with copies of each such letter; (g) any Loan Party or any member of the Controlled Group shall receive a notice regarding the imposition on it of withdrawal liability, together with copies of each such notice; (h) any Loan Party or any member of the Controlled Group shall fail to make a required installment or any other required payment under Section 412 of the Code on or before the due date for such installment or payment; (i) any Loan Party or any member of the Controlled Group knows that (x) a Multiemployer Plan has been terminated, (y) the administrator or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (z) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan.
 
9.15                         Federal Securities Laws .  Promptly notify Agent in writing if such Loan Party or any of its Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii) registers any securities under the Exchange Act or (iii) files a registration statement under the Securities Act.
 
97 

 
9.16                         IP Notices .  As soon as practicable, and in any event within five (5) Business Days after a claim is made or action is commenced (or with respect to a threatened claim or action, after an authorized officer of a Loan Party has knowledge thereof), notice of any claim or action by any Person pending, or to the knowledge of any Loan Party, threatened, against any Loan Party or any of its Subsidiaries with respect to any of the Intellectual Property that (i) seeks damages in excess of $1,000,000 not otherwise covered by insurance, or (ii) seeks injunctive relief.  With the delivery of a Compliance Certificate, notify Agent of each application for the registration of any Patent, Trademark, or Copyright with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency made by any Loan Party, either itself or through any agent, employee, licensee, or designee. Promptly upon any such filing, the Loan Parties shall comply with Section 6.10(a) hereof.
 
9.17                         [Reserved] .
 
9.18                         Notices Relating to Related Transactions .  Within three (3) Business Days after receipt thereof by any Loan Party or any of its Subsidiaries, copies of all amendments, consent letters, waivers or modifications to, and any material notices or reports provided by any Person to any Loan Party or any of its Subsidiaries pursuant to the terms of or in connection with, any Purchase Document, any agreement, document or instrument governing a Permitted Acquisition or any formation or organizational document of any Loan Party or any of its Subsidiaries, or by any Loan Party or Subsidiary of a Loan Party to any such Person.
 
9.19                         Additional Documents .  Execute and deliver to Agent, upon request, such documents and agreements as Agent may, from time to time, reasonably request to carry out the purposes, terms or conditions of this Agreement.
 
X.                                     EVENTS OF DEFAULT.
 
The occurrence of any one or more of the following events shall constitute an “ Event of Default ”:
 
10.1                         Nonpayment .  Failure by Borrower to pay (a) when due, any amount of principal of any Loan whether at maturity or by reason of acceleration pursuant to the terms of this Agreement, or by required prepayment, (b) within three (3) days after the same shall become due, any interest on the Obligations when due or any fees with respect thereto, in each case, whether at maturity or by reason of acceleration pursuant to the terms of this Agreement, or by required prepayment or (c) within five (5) days following the due date therefor (or, if there is no due date therefor, within five (5) days following Agent’s demand), any other liabilities or other payment, fee or charge provided for herein or in any Other Document;
 
10.2                         Breach of Representation .  Any representation or warranty made by or on behalf of any Loan Party or by any officer of the foregoing under or in connection with this Agreement, any Other Document or any related agreement or in any certificate, document or financial or other statement furnished at any time in connection herewith or therewith shall prove to have been misleading in any material respect on the date when made;
 
98 

 
10.3                         Financial Information .  Failure by any Loan Party to (a) furnish financial information (i) when due, or (ii) when requested, within fifteen (15) days after such request, or (b) permit the inspection of its books or records in accordance with this Agreement;
 
10.4                         Judicial Actions .  Issuance of a notice of Lien, levy, assessment, injunction or attachment against any Loan Party’s Inventory or Receivables with an aggregate fair market value in excess of $100,000, or against a material portion of any Loan Party’s other property which is not stayed or lifted within thirty (30) days;
 
10.5                         Noncompliance .  Except as otherwise provided for in this Article X, (a) failure of any Loan Party to perform, keep or observe any term, provision, condition, covenant applicable to such Loan Party herein contained or in the Fee Letter or (b) failure of any Loan Party to perform, keep or observe any term, provision, condition or covenant contained in any Other Document or in Sections 4.6, 4.7, 4.9, 4.17, 4.19, 6.5, 6.7, 6.8, 7.4, 9.3, 9.4, 9.5 or 9.7 hereof which is not cured within thirty (30) days after notice from Agent of the occurrence of such failure;
 
10.6                         Judgments .  Any judgment or judgments are rendered against a Loan Party or any of its Subsidiaries, or any Loan Party or any Subsidiary thereof agrees to settle any litigation for an aggregate amount in excess of $1,000,000 and, in the case of any such judgment, (a) enforcement proceedings shall have been commenced by a creditor upon such judgment, or (b) any such judgment results in the creation of a Lien upon any of the Collateral (other than a Permitted Encumbrance), and (c) there shall be any period of thirty (30) consecutive days during which a stay of enforcement of such judgment or such Lien, by reason of a pending appeal or otherwise, shall not be in effect;
 
10.7                         Bankruptcy .  Any Loan Party shall (a) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (b) make a general assignment for the benefit of creditors, (c) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (d) be adjudicated a bankrupt or insolvent, (e) file a petition seeking to take advantage of any other law providing for the relief of debtors, (f) acquiesce to, or fail to have dismissed, within sixty (60) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (g) take any action for the purpose of effecting any of the foregoing;
 
10.8                         Inability to Pay .  Any Loan Party shall admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business;
 
10.9                         Cash Management .  Any bank at which any deposit account of any Loan Party is maintained shall fail to comply with any of the terms of any control agreement to which such bank is a party (and which such deposit account is required to be subject), or any securities intermediary, commodity intermediary or other financial institution at any time in custody, control or possession of any investment property of any Loan Party shall fail to comply with any of the terms of any investment property control agreement to which such Person is a party and such failure continues for more than 30 days after Borrower receives notice thereof;
 
99 

 
10.10                  Restraint of Business Activities .  Any Loan Party or any of its Subsidiaries is enjoined, restrained or in any way prevented by the order of any court or any Governmental Body from conducting all or any material part of the business of the Loan Parties (taken as a whole) for more than fifteen (15) consecutive days if such enjoinment or restraint could reasonably be expected to result in a Material Adverse Effect;
 
10.11                  Lien Priority .  Any Lien created hereunder or provided for hereby or under any related agreement for any reason ceases to be or is not a valid and perfected Lien having a first priority (subject to Section 15.19) interest subject to Permitted Encumbrances;
 
10.12                  Cross Default .  (a) A default in one or more agreements to which any Loan Party is a party with one or more Persons (other than another Loan Party) relative to Funded Debt of such Loan Party involving an aggregate principal amount (including undrawn committed or available amounts) of $1,000,000 or more (i) occurs at the final maturity of the obligations thereunder, or (ii) occurs prior to the final maturity thereof and results in a right by such Person(s), irrespective of whether exercised, to accelerate the maturity of such Loan Party’s obligations thereunder; provided, however, that the cure or waiver of such default (and the corresponding rescission of such acceleration if commenced) shall constitute a cure or waiver of such Event of Default hereunder; or (b) an “Event of Default,” however defined, occurs under the PNC Credit Agreement (a “Revolver Event of Default”); provided, that so long as (x) the Obligations under this Agreement have not been accelerated and no remedies have been exercised in accordance with Section 11.1 as a result of an Event of Default arising solely under this subsection 10.12(b) and (y) the Agent is satisfied in its sole discretion that the obligations under the PNC Credit Agreement have not been accelerated and no remedies have been exercised by the Revolving Lenders as a result of the Revolver Event of Default, then upon the waiver of such Revolver Event of Default that gave rise to such Event of Default solely as a result of the application of this subsection 10.12(b), such Event of Default shall be considered waived hereunder;
 
10.13                  Breach of Guaranty .  Termination or breach of any Guaranty or Guaranty Security Agreement executed and delivered to Agent in connection with the Obligations of Borrower, or if any Guarantor attempts to terminate, challenges the validity of, or its liability under, any such Guaranty or Guaranty Security Agreement;
 
10.14                  Change of Control .  Any Change of Control shall occur;
 
10.15                  Invalidity .  Any material provision of this Agreement or any Other Document shall, for any reason, cease to be valid, binding and enforceable in accordance with its terms (or any Loan Party or Subsidiary of a Loan Party shall challenge the enforceability of any Other Document or shall assert in writing, or engage in any action or inaction based on any such assertion, that any provision of any of the Other Documents has ceased to be or otherwise is not valid, binding and enforceable in accordance with its terms), or any security interest created under any Other Document shall cease to be a valid and perfected first priority security interest or Lien (except as otherwise permitted herein or therein, or, as to priority, Section 15.19) in any of the Collateral purported to be covered thereby;
 
100 

 
10.16                  Licenses .  (a) Any Governmental Body shall (i) revoke, terminate, suspend or adversely modify any license or permit of any Loan Party, the continuation of which is material to the continuation of any Loan Party’s business, or (ii) commence proceedings to suspend, revoke, terminate or adversely modify any such license or permit and such proceedings shall not be dismissed or discharged within sixty (60) days, or (iii) schedule or conduct a hearing on the renewal of any license or permit necessary for the continuation of such Loan Party’s business and the staff of such Governmental Body issues a report recommending the termination, revocation, suspension or material, adverse modification of such license or permit; or (b) any agreement which is necessary or material to the operation of such Loan Party’s business shall be revoked or terminated and not replaced by a substitute reasonably acceptable to Agent within thirty (30) days after the date of such revocation or termination, and in the case of (a) or (b), such would reasonably be expected to have a Material Adverse Effect;
 
10.17                  Seizures .  Any portion of the Collateral shall be seized or taken by a Governmental Body, or any Loan Party or the title and rights of any Loan Party which is the owner of any material portion of the Collateral shall have become the subject matter of claim, litigation, suit or other proceeding which is reasonably likely to result in a Material Adverse Effect;
 
10.18                  Operations .  Any cessation of a substantial part of the business of the Loan Parties if such cessation could reasonably be expected to result in a Material Adverse Effect as determined by Agent in its Permitted Discretion;
 
10.19                  Pension Plans .  An event or condition specified in Sections 7.16 or 9.15 hereof shall occur or exist with respect to any Pension Benefit Plan and, as a result of such event or condition, together with all other such events or conditions, any Loan Party or any member of the Controlled Group shall incur, or in the reasonable opinion of Agent be reasonably likely to incur, a liability to a Plan or the PBGC (or both) which is reasonably likely to have a Material Adverse Effect; or
 
10.20                  Invalidity of Intercreditor Agreement, Subordination Provisions, etc .  The Intercreditor Agreement or any subordination agreement with respect to any Permitted Subordinated Debt shall cease to be in full force and effect, or any Person (other than the Agent of any Lender) party to any such intercreditor or subordination agreement shall breach the provisions thereof or shall contest in any manner the validity, binding nature or enforceability of any such provision or a proceeding shall be commenced by any such Person or any Governmental Body having jurisdiction over such Person, seeking to establish the invalidity or unenforceability thereof.
 
10.21                  Material Assets .  There shall occur any material damage to, or loss, theft or destruction of, any material assets of any Loan Party or any Subsidiary of a Loan Party or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty, or any order or injunction of any court or any administrative or regulatory agency which in any such case causes, for more than ten (10) consecutive days, the cessation or substantial curtailment of revenue producing activities of the Loan Parties, taken as a whole, if such event or circumstance is not covered by business interruption insurance and could reasonably be expected to have a Material Adverse Effect.
 
101 

10.22                  Reportable Compliance Event .  The occurrence of any Reportable Compliance Event, or any Loan Party’s failure to immediately report a Reportable Compliance Event in accordance with Section 15.18 hereof.
 
10.23                  Equity Cure .
 
In the event that the Loan Parties fail to comply with any financial covenant contained in Section 6.5(a) or (b) (a “ Financial Covenant Default ”) or Section 7.6 (after giving effect to any applicable carryover amount) (a “ Capex Covenant Default ”), Borrower shall have the right to cure such Event of Default on the following terms and conditions (the “ Equity Cure ”):
 
(a)                                  In the event Borrower desires to cure a Financial Covenant Default or Capex Covenant Default, Borrower shall deliver to the Agent irrevocable written notice of its intent to cure (a “ Cure Notice ”) at any time during the period commencing on the date that the financial statements and corresponding Compliance Certificate as of and for the period ending on the last day of the fiscal quarter as of which such Financial Covenant Default or Capex Covenant Default, as applicable, occurred (the “ Testing Date ”) are delivered to Agent and Lenders and ending on the tenth (10th) Business Day after Agent’s and Lenders’ receipt of such financial statements and Compliance Certificate.  The Cure Notice shall set forth the calculation of the applicable Financial Covenant Cure Amount (as hereinafter defined) or Capex Covenant Cure Amount (as hereinafter defined).
 
(b)                                  In the event Borrower delivers a Cure Notice, a Permitted Freeman Spogli Investment shall be made in an amount not less than the Financial Covenant Cure Amount or Capex Covenant Cure Amount, as applicable, at any time during the period commencing on the date of Agent’s receipt of such Cure Notice and ending on the tenth (10th)  Business Day following the date on which the relevant financial statements and Compliance Certificate were required to be delivered to Agent and the Lenders (such tenth (10th) Business Day, the “ Required Contribution Date ”).  The proceeds of such Permitted Freeman Spogli Investment equal to the Financial Covenant Cure Amount or Capex Covenant Cure Amount, as applicable, shall be immediately contributed by Holdings to the capital of Borrower and, in the case of the Financial Covenant Cure Amount, used by Borrower to make a mandatory prepayment of the Loans and other Obligations in the amount of such proceeds (applied to the Loans and other Obligations in accordance with the mandatory prepayment waterfall set forth in Section 2.21(d)); provided, however, that if the Financial Covenant Cure Amount is increased as described below to account for an event of default pursuant to Section 6.5 of the PNC Credit Agreement, only so much of the Financial Covenant Cure Amount as shall be necessary to cure the applicable Financial Covenant Defaults hereunder shall be applied to the Loans as described above.  The “ Financial Covenant Cure Amount ” shall be the amount which if added to the amount of EBITDA as of the applicable Testing Date, would result in the Loan Parties being in pro forma compliance with the applicable financial covenant which is the subject of such Financial Covenant Default(s) as of such Testing Date (provided, however, that if more than one such Financial Covenant Default exists as of a Testing Date, or if an event of default pursuant to Section 6.5 of the PNC Credit Agreement then exists, the Financial Covenant Cure Amount for purposes hereof shall equal the largest amount necessary to cure all such applicable financial covenant defaults).  The “ Capex Covenant Cure Amount ” shall be the amount which if deducted from the amount of Capital Expenditures as of the applicable Testing Date, would result in the Loan Parties being in pro forma compliance with Section 7.6.
 
102 

 
(c)                                   In no event shall the Financial Covenant Cure Amount exceed the amount required to cause Borrower to be in compliance with all applicable financial covenants or capital expenditure covenant, as applicable.  No Equity Cure may be exercised if after giving effect thereto the aggregate amount of all Financial Covenant Cure Amounts and Capex Covenant Cure Amounts actually funded hereunder to effectuate one or more Equity Cures would exceed $12,500,000.
 
(d)                                  The Equity Cure may not be exercised (i) more than twice in any four (4) consecutive fiscal quarter period or (ii) more than four (4) times during the Term.
 
(e)                                   (i) Upon timely receipt by Borrower in cash of the appropriate Financial Covenant Cure Amount, if and to the extent after giving effect to the following clause (f) all applicable Financial Covenant Defaults would no longer exist on a pro forma basis, the applicable Financial Covenant Defaults shall be deemed cured and (ii) upon timely receipt by Borrower in cash of the appropriate Capex Covenant Cure Amount, if and to the extent after giving effect to the following clause (f) the applicable Capex Covenant Default would no longer exist on a pro forma basis, such Capex Covenant Default shall be deemed cured.
 
(f)                                    The Equity Cure and the effects thereof on EBITDA and the Total Leverage Ratio will be disregarded for all other purposes under the Loan Documents, including, without limitation, for purposes of calculating Total Leverage Ratio as a threshold for permitted exceptions to various affirmative and negative covenants; provided that for purposes of determining compliance with Sections 6.5(a) and 6.5(b), (i) the Financial Covenant Cure Amount shall be deemed added to EBITDA for the fiscal quarter ending as of the applicable Testing Date and any subsequent measurement period that includes such fiscal quarter and (ii) the reduction in the outstanding principal balance of Loans due to the application of the proceeds of an Equity Cure pursuant to Section 2.21(c) shall not be taken into account for purposes of determining compliance with Sections 6.5(a) and 6.5(b) for the measurement period ending on the applicable Testing Date and the next  three (3) measurement periods.
 
So long as the applicable Financial Covenant Cure Amount does not exceed the amount permitted under Section 10.23(c) and the Borrower is otherwise entitled to exercise an Equity Cure pursuant to the foregoing terms and provisions of this Section 10.23, from the effective date of delivery of a Cure Notice until the earlier to occur of the Required Contribution Date and the date on which Agent is notified that the required contribution will not be made, neither Agent nor any Lender shall impose default interest, accelerate the Obligations or exercise any enforcement remedy against any Loan Party or any of its Subsidiaries or any of their respective properties solely on the basis of the applicable Financial Covenant Default or Capex Covenant Default, as applicable, in respect of which the Cure Notice was delivered; provided until timely receipt of the Financial Covenant Cure Amount of Capex Covenant Cure Amount, as applicable, an Event of Default shall be deemed to exist for all other purposes of this Agreement, including, without limitation, Article VII and Article VIII hereof and any term or provision of any Other Document which prohibits any action to be taken by a Loan Party or any of its Subsidiaries during the existence of an Event of Default; provided, further, that notwithstanding the
 
103 

 
foregoing, upon a deemed cure pursuant to Section 10.23(e), the requirements of the applicable financial covenants or capital expenditures covenant shall be deemed to have been satisfied as of the applicable Testing Date with the same effect as though there had been no Financial Covenant Default at such date or thereafter.
 
XI.                                LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.
 
11.1                         Rights and Remedies .
 
(a)                                  Upon the occurrence of: (i) an Event of Default pursuant to Section 10.7 all Obligations shall be immediately due and payable and this Agreement and the obligation of Lenders to make Loans shall be deemed terminated other than, with respect to clause (f) thereof, as may be required by an appropriate order of the bankruptcy court having jurisdiction over such Loan Party; and (ii) any of the other Events of Default and at any time thereafter (such default not having previously been cured pursuant to Section 10.23 or otherwise or waived), at the option of Required Lenders, all Obligations shall be immediately due and payable and Lenders shall have the right to terminate this Agreement and to terminate the obligation of Lenders to make Loans. Upon the occurrence of any Event of Default, Agent shall have the right to exercise any and all rights and remedies provided for herein, under the Other Documents, under the Uniform Commercial Code, the PPSA and at law or equity generally, including the right to foreclose the security interests granted herein and to realize upon any Collateral by any available judicial procedure and/or to take possession of and sell any or all of the Collateral with or without judicial process. Agent may, subject to the terms of leases and the rights of the parties thereunder, enter any of any Loan Party’s premises or other premises without legal process and without incurring liability to any Loan Party therefor, and Agent may thereupon, or at any time thereafter, in its discretion without notice or demand, take the Collateral and remove the same to such place as Agent may deem advisable and Agent may require the Loan Parties to make the Collateral available to Agent at a convenient place. With or without having the Collateral at the time or place of sale, Agent may sell the Collateral, or any part thereof, at public or private sale, at any time or place, in one or more sales, at such price or prices, and upon such terms, either for cash, credit or future delivery, as Agent may elect. Except as to that part of the Collateral which is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Agent shall give the Loan Parties reasonable notification of such sale or sales, it being agreed that in all events written notice mailed to the Loan Parties at least ten (10) days prior to such sale or sales is reasonable notification. At any public sale Agent or any Lender may bid for and become the purchaser, and Agent, any Lender or any other purchaser at any such sale thereafter shall hold the Collateral sold absolutely free from any claim or right of whatsoever kind, including any equity of redemption and all such claims, rights and equities are hereby expressly waived and released by the Loan Parties. In connection with the exercise of the foregoing remedies, including the sale of Inventory, Agent is granted (but only to the extent it is necessary to exercise the foregoing remedies) a royalty free, nonexclusive license and Agent is granted permission to use all of each Loan Party’s (a) Trademarks, trade styles, trade names, patents, patent applications, copyrights, service marks, licenses, franchises and other Intellectual Property rights (to the extent permitted by the applicable license, franchise or other governing instrument) which are reasonably used or useful in connection with Inventory for the sole purpose of marketing, advertising for sale and selling or otherwise disposing of such Inventory and (b) Equipment for the purpose of completing the manufacture of unfinished goods. The cash
 
104 

 
proceeds realized from the sale of any Collateral shall be applied to the Obligations in the order set forth in Section 11.5 hereof.  Noncash proceeds will only be applied to the Obligations as they are converted into cash. If any deficiency shall arise, the Loan Parties shall remain liable to Agent and Lenders therefor.
 
(b)                                  To the extent that Applicable Law imposes duties on the Agent to exercise remedies in a commercially reasonable manner, each Loan Party acknowledges and agrees that it is not commercially unreasonable for the Agent (i) to fail to incur expenses reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Customers or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against Customers and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as the Loan Parties, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by the Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Agent in the collection or disposition of any of the Collateral. The Loan Parties acknowledge that the purpose of this Section 11.1(b) is to provide non-exhaustive indications of what actions or omissions by the Agent would not be commercially unreasonable in the Agent’s exercise of remedies against the Collateral and that other actions or omissions by the Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 11.1(b). Without limitation upon the foregoing, nothing contained in this Section 11.1(b) shall be construed to grant any rights to any Loan Party or to impose any duties on Agent that would not have been granted or imposed by this Agreement or by Applicable Law in the absence of this Section 11.1(b).
 
(c)                                   Agent’s and Lender’s rights and obligations under this Section 11.1 shall be subject to the provisions of the Intercreditor Agreement in all respects.
 
11.2                         Agent’s Discretion .  Agent shall have the right in its sole discretion to determine which rights, Liens, security interests or remedies Agent may at any time pursue, relinquish, subordinate, or modify or to take any other action with respect thereto and such determination will not in any way modify or affect any of Agent’s or Lenders’ rights hereunder.
 
105 

 
11.3                         Setoff .  Subject to Section 14.12, in addition to any other rights which Agent or any Lender may have under Applicable Law, upon the occurrence of an Event of Default hereunder, Agent and such Lender shall have a right, immediately and without notice of any kind, to apply any Loan Party’s property held by Agent and such Lender to reduce the Obligations.
 
11.4                         Rights and Remedies not Exclusive .  The enumeration of the foregoing rights and remedies is not intended to be exhaustive and the exercise of any rights or remedy shall not preclude the exercise of any other right or remedies provided for herein or otherwise provided by law, all of which shall be cumulative and not alternative.
 
11.5                         Allocation of Payments After Event of Default .  Notwithstanding any other provisions of this Agreement to the contrary, after the occurrence and during the continuance of an Event of Default, all amounts collected or received by the Agent on account of the Obligations or any other amounts outstanding under any of the Other Documents or in respect of the Collateral may, be paid in such order as Agent may from time to time elect, including, at Agent’s discretion, as follows:
 
FIRST, to the payment of all fees, costs, indemnities, liabilities, obligations and expenses incurred by or owing to Agent with respect to this Agreement, the Other Documents or the Collateral;
 
SECOND, to payment of any accrued and unpaid interest on protective advances;
 
THIRD, to the payment of any protective advances;
 
FOURTH, to the payment of all fees, costs, indemnities, liabilities, obligations and expenses incurred by or owing to any Lender with respect to this Agreement, the Other Documents or the Collateral;
 
FIFTH, to the payment of accrued and unpaid interest on all other Obligations;
 
SIXTH, to the payment of the principal amount of all other Obligations then due and owing;
 
SEVENTH, to all other outstanding Obligations not repaid pursuant to clauses “FIRST” through “SIXTH” above; and
 
EIGHTH, to the payment of the surplus, if any, to Borrower.
 
In carrying out the foregoing, (i) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; (ii) each of the Lenders shall receive (so long as it is not a Defaulting Lender) an amount equal to its pro rata share (based on the proportion that the then outstanding Loans held by such Lender bears to the aggregate then outstanding Loans) of amounts available to be applied pursuant to clauses “THIRD,” “FOURTH,” “FIFTH,” “SIXTH” and “SEVENTH” above; and (iii) notwithstanding anything to the contrary in this Section 11.5, no Swap Obligation of any Non-Qualified Party shall be paid with amounts received from such Non-Qualified Party under its Guaranty
 
106 

 
(including sums received as a result of the exercise of remedies with respect to such Guaranty) or from the proceeds of such Non-Qualified Party’s Collateral if such Swap Obligation would constitute an Excluded Hedge Liability (but subject to the final sentence of the definition of Excluded Hedge Liabilities); provided , that, to the extent possible, appropriate adjustments shall be made with respect to payments and/or the proceeds of Collateral from other Loan Parties that are Eligible Contract Participants with respect to such Swap Obligations to preserve the allocation to Obligations otherwise set forth above in this Section 11.
 
XII.                           WAIVERS AND JUDICIAL PROCEEDINGS.
 
12.1                         Waiver of Notice .  Each Loan Party hereby waives notice from Agent or any Lender of non-payment of any of the Receivables, demand, presentment, protest and notice thereof with respect to any and all instruments, notice of acceptance hereof, notice of loans or advances made, credit extended, Collateral received or delivered, or any other action taken in reliance hereon, and all other demands and notices of any description, except such as are expressly provided for herein.
 
12.2                         Delay .  No delay or omission on Agent’s or any Lender’s part in exercising any right, remedy or option shall operate as a waiver of such or any other right, remedy or option or of any Default or Event of Default.
 
12.3                         Jury Waiver .  EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
 
XIII.                      EFFECTIVE DATE AND TERMINATION.
 
13.1                         Term .  This Agreement, which shall inure to the benefit of and shall be binding upon the respective successors and permitted assigns of the Loan Parties party hereto, Agent and each Lender, shall become effective on the date hereof and shall continue in full force and effect until May 31, 2019 (the “ Term ”) unless sooner terminated as herein provided. Borrower may terminate this Agreement at any time upon prior written notice upon payment in full of the Obligations.  In the event (a) the Obligations in respect of the Existing Term Loan are prepaid in full prior to the last day of the Term in connection with any refinancing, (b) voluntary
 
107 

 
prepayments in excess of $10,000,000 in the aggregate in any fiscal year are made with respect to all or any portion of the Existing Term Loan or (c) a mandatory prepayment in respect of the Existing Term Loan in connection with a Change of Control or a sale or all or substantially all of the assets of the Borrower is made, in the case of each of the foregoing clauses (a), (b) and (c), prior to the second anniversary of the Closing Date (the date of such prepayment hereinafter referred to as the “ Existing Term Loan Early Termination Date ”), Borrower shall pay to Agent for the benefit of Lenders an early termination fee in the following applicable amount:
 
(x)                                  2% of the amount of such prepayment if the Existing Term Loan Early Termination Date occurs after the Original Closing Date to and including the date immediately preceding the first anniversary of the Original Closing Date; and
 
(y)                                  1% of the amount of such prepayment if the Existing Term Loan Early Termination Date occurs on or after the first anniversary of the Original Closing Date to and including the date immediately preceding the second anniversary of the Original Closing Date.
 
In addition to any early termination fees payable pursuant to the provisions above, in the event (a) all or any portion of the Term Loans are prepaid prior to the third anniversary of the Original Closing Date with Repricing Debt, or (b) there is any amendment to the terms of any Term Loan prior to the third anniversary of the Original Closing Date constituting a Repricing Event (the date of such prepayment or amendment or other modification, as applicable, hereinafter referred to as the “ Repricing Early Termination Date ”), Borrower shall pay to Agent for the benefit of Lenders an early termination fee in the following applicable amount:
 
(x)                                  1% of the amount of such prepayment applied in respect of the Existing Term Loan, or the aggregate amount of the Existing Term Loan so amended in connection with such Repricing Event, as applicable, if the Repricing Early Termination Date occurs on or after the Restatement Effective Date to and including the date immediately preceding the third anniversary of the Original Closing Date;
 
(y)                                  2% of the amount of such prepayment applied in respect of the Restatement Effective Date Term Loan, or the aggregate amount of the Restatement Effective Date Term Loan so amended in connection with such Repricing Event, as applicable, if the Repricing Early Termination Date occurs on or after the Restatement Effective Date to and including the date immediately preceding the second anniversary of the Original Closing Date; and
 
(z)                                   1% of the amount of such prepayment applied in respect of the Restatement Effective Date Term Loan, or the aggregate amount of the Restatement Effective Date Term Loan so amended in connection with such Repricing Event, as applicable, if the Repricing Early Termination Date occurs on or after second anniversary of the Original Closing Date to and including the date immediately preceding the third anniversary of the Original Closing Date.
 
13.2                         Termination .  The termination of the Agreement shall not affect any Loan Party’s, Agent’s or any Lender’s rights, or any of the Obligations having their inception prior to the effective date of such termination, and the provisions hereof shall continue to be fully operative
 
108 

 
until all transactions entered into, rights or interests created or Obligations have been fully and indefeasibly paid, disposed of, concluded or liquidated. The security interests, Liens and rights granted to Agent and Lenders hereunder and the financing statements filed hereunder shall continue in full force and effect, notwithstanding the termination of this Agreement, until all of the Obligations of Borrower have been paid in full in cash after the termination of this Agreement or Borrower has furnished Agent and Lenders with an indemnification satisfactory to Agent and Lenders with respect thereto. Accordingly, each Loan Party waives any rights which it may have under the Uniform Commercial Code or PPSA to demand the filing of termination statements with respect to the Collateral, and Agent shall not be required to send such termination statements to the Loan Parties, or to file them with any filing office, unless and until this Agreement shall have been terminated in accordance with its terms and all Obligations have been paid in full in cash. All representations, warranties, covenants, waivers and agreements contained herein shall survive termination hereof until all Obligations are paid in full in cash.
 
XIV.                       REGARDING AGENT.
 
14.1                         Appointment .  Each Lender hereby designates GC-Cap to act as Agent for such Lender under this Agreement and the Other Documents. Each Lender hereby irrevocably authorizes Agent to take such action on its behalf under the provisions of this Agreement and the Other Documents and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto and Agent shall hold all Collateral, payments of principal and interest, fees (except the fees set forth in Section 3.3 and the Fee Letter), charges and collections (without giving effect to any collection days) received pursuant to this Agreement, for the ratable benefit of Lenders. Agent may perform any of its duties hereunder by or through its agents or employees. As to any matters not expressly provided for by this Agreement (including collection of the Term Note) Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding; provided, however, that Agent shall not be required to take any action which exposes Agent to liability or which is contrary to this Agreement or the Other Documents or Applicable Law unless Agent is furnished with an indemnification reasonably satisfactory to Agent with respect thereto.
 
14.2                         Nature of Duties .  Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and the Other Documents. Neither Agent nor any of its officers, directors, employees or agents shall be (i) liable for any action taken or omitted by them as such hereunder or in connection herewith, unless caused by their gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), or (ii) responsible in any manner for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement, or in any of the Other Documents or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any of the Other Documents or for the value, validity, effectiveness, genuineness, due execution, enforceability or sufficiency of this Agreement, or any of the Other Documents or for any failure of any Loan Party to perform its obligations hereunder. Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of
 
109 

 
any of the agreements contained in, or conditions of, this Agreement or any of the Other Documents, or to inspect the properties, books or records of any Loan Party. The duties of Agent as respects the Loans to Borrower shall be mechanical and administrative in nature; Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent any obligations in respect of this Agreement except as expressly set forth herein.
 
14.3                         Lack of Reliance on Agent and Resignation .  Independently and without reliance upon Agent or any other Lender, each Lender has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of Borrower and each Guarantor in connection with the making and the continuance of the Loans hereunder and the taking or not taking of any action in connection herewith, and (ii) its own appraisal of the creditworthiness of Borrower and each Guarantor. Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before making of the Loans or at any time or times thereafter except as shall be provided by Borrower pursuant to the terms hereof. Agent shall not be responsible to any Lender for any recitals, statements, information, representations or warranties herein or in any agreement, document, certificate or a statement delivered in connection with or for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency of this Agreement or any Other Document, or of the financial condition of Borrower or any Guarantor, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement, the Term Note, the Other Documents or the financial condition of any Loan Party, or the existence of any Event of Default or any Default.
 
Agent may resign on thirty (30) days’ written notice to each of Lenders and Borrower and upon such resignation, the Required Lenders will promptly designate a successor Agent reasonably satisfactory to Borrower.
 
Any such successor Agent shall succeed to the rights, powers and duties of Agent, and the term “Agent” shall mean such successor agent effective upon its appointment, and the former Agent’s rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent. After any Agent’s resignation as Agent, the provisions of this Article XIV shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.
 
14.4                         Certain Rights of Agent .  If Agent shall request instructions from Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any Other Document, Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from the Required Lenders; and Agent shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, Lenders shall not have any right of action whatsoever against Agent as a result of its acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders.
 
14.5                         Reliance .  Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier
 
110 

 
message, cablegram, order or other document or telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to this Agreement and the Other Documents and its duties hereunder, upon advice of counsel selected by it. Agent may employ agents and attorneys-in-fact and shall not be liable for the default or misconduct of any such agents or attorneys-in-fact selected by Agent with reasonable care.
 
14.6                         Notice of Default .  Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder or under the Other Documents, unless Agent has received notice from a Lender or a Loan Party referring to this Agreement or the Other Documents, describing such Default or Event of Default and stating that such notice is a “notice of default.” In the event that Agent receives such a notice, Agent shall give notice thereof to Lenders. Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of Lenders.
 
14.7                         Indemnification .  To the extent Agent is not reimbursed and indemnified by the any Loan Parties, each Lender will reimburse and indemnify Agent in proportion to its respective portion of the Loans (or, if no Loans are outstanding, according to its Commitment Percentage), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Agent in performing its duties hereunder, or in any way relating to or arising out of this Agreement or any Other Document; provided that, Lenders shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent’s gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment).  Without limiting the foregoing, each Lender agrees to reimburse Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including reasonable counsel fees) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and each Other Document, to the extent that Agent is not reimbursed for such expenses by the Loan Parties.
 
14.8                         Agent in its Individual Capacity .  With respect to the obligation of Agent to lend under this Agreement, the Loans made by it shall have the same rights and powers hereunder as any other Lender and as if it were not performing the duties as Agent specified herein; and the term “Lender” or any similar term shall, unless the context clearly otherwise indicates, include Agent in its individual capacity as a Lender. Agent may engage in business with Borrower as if it were not performing the duties specified herein, and may accept fees and other consideration from Borrower for services in connection with this Agreement or otherwise without having to account for the same to Lenders.
 
14.9                         Delivery of Documents .  To the extent Agent receives financial statements required under Sections 9.7, 9.8, 9.9, 9.11 and 9.12 from the Loan Parties pursuant to the terms of this Agreement which the Loan Parties are not obligated to deliver to each Lender, Agent will promptly furnish such documents and information to Lenders.
 
111 

 
14.10                  Borrower’s Undertaking to Agent .  Without prejudice to its obligations to Lenders under the other provisions of this Agreement, Borrower hereby undertakes with Agent to pay to Agent from time to time on demand all amounts from time to time due and payable by it for the account of Agent or Lenders or any of them pursuant to this Agreement to the extent not already paid. Any payment made pursuant to any such demand shall pro tanto satisfy the relevant Borrower’s obligations to make payments for the account of Lenders or the relevant one or more of them pursuant to this Agreement.
 
14.11                  No Reliance on Agent’s Customer Identification Program .  Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA Patriot Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “ CIP Regulations ”), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with Borrower, its Affiliates or its agents, this Agreement, the Other Documents or the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2) any record-keeping, (3) comparisons with government lists, (4) customer notices or (5) other procedures required under the CIP Regulations or such other laws.
 
14.12                  Other Agreements .  Each of the Lenders agrees that it shall not, without the express consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the request of Agent, set off against the Obligations, any amounts owing by such Lender to any Loan Party or any deposit accounts of any Loan Party now or hereafter maintained with such Lender. Anything in this Agreement to the contrary notwithstanding, each of the Lenders further agrees that it shall not, unless specifically requested to do so by Agent, take any action to protect or enforce its rights arising out of this Agreement or the Other Documents, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the Other Documents shall be taken in concert and at the direction or with the consent of Agent or Required Lenders.
 
14.13                  Collateral Matters .
 
(a)                                  The Lenders hereby irrevocably authorize Agent, at its option and in its discretion, to release any Lien granted to or held by Agent upon any Collateral upon the payment in full in cash of all Obligations; or constituting property being sold or disposed of in compliance with the terms of this Agreement and the Other Documents; or constituting property to be financed with Indebtedness permitted under Section 7.8(iii) hereof; or constituting property in which any Loan Party (as applicable) owned no interest at the time the Lien was granted or at any time thereafter; or if approved, authorized or ratified in writing by the Required Lenders. Upon request by Agent at any time, the Lenders will confirm in writing Agent’s authority to release particular types or items of Collateral pursuant to this Section 14.13(a).
 
112 

(b)                                  Without in any manner limiting Agent’s authority to act without any specific or further authorization or consent by the Lenders (as set forth in Section 14.13(a)), each Lender agrees to confirm in writing, upon request by Agent, the authority to release Collateral conferred upon Agent under Section 14.13(a). Either without such confirmation (if Agent has not requested such confirmation) or upon receipt by Agent of such confirmation (if Agent has requested such confirmation), and upon prior written request by Borrower, Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to Agent to the extent permitted by Section 14.13; provided, however, that (i) Agent shall not be required to execute any such document on terms which, in Agent’s opinion, would expose Agent to liability or create any obligations or entail any consequence other than the release of such Liens without recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any Lien upon (or obligations of any Loan Party in respect of) all interests in the Collateral retained by such Loan Party (as applicable).
 
(c)                                   Agent shall have no obligation whatsoever to any Lender to assure that the Collateral exists or is owned by any Loan Party or is cared for, protected or insured or has been encumbered or that the Lien granted to Agent pursuant to this Agreement or any Other Document has been properly or sufficiently or lawfully created, perfected, protected or enforced or is entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent in this Section 14.13 or in any Other Document, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, Agent may act in any manner it may deem appropriate, in its sole discretion, given Agent’s own interest in the Collateral as one of the Lenders and that Agent shall have no duty or liability whatsoever to any other Lender, except as otherwise provided herein.
 
(d)                                  Each Loan Party and each Lender each hereby irrevocably authorizes Agent, based upon the written instruction of the Required Lenders, to bid and purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral at any sale thereof conducted (i) by Agent under the provisions of the Code, including pursuant to Sections 9-610 or 9-620 of the Code (ii)  under the provisions of the Federal Bankruptcy Reform Act of 1978, including Section 363, 365 and/or 1129 thereof, or (iii) conducted by Agent (whether by judicial action or otherwise, including a foreclosure sale) in accordance with Applicable Law (clauses (i), (ii) an (iii), a “Collateral Sale”); and in connection with any Collateral Sale, Agent may accept non-cash consideration, including debt and equity securities issued by such acquisition vehicle under the direction or control of Agent and Agent may offset all or any portion of the Obligations against the purchase price of such Collateral.
 
XV.                            MISCELLANEOUS.
 
15.1                         Governing Law .  This Agreement shall be governed by and construed in accordance with the laws of the State of New York applied to contracts to be performed wholly within the State of New York. Any judicial proceeding brought by or against any Loan Party with respect to any of the Obligations, this Agreement, the Other Documents or any related agreement may be brought in any court of competent jurisdiction in the State of New York, United States of America, and, by execution and delivery of this Agreement, each Loan Party
 
113 

 
accepts for itself and in connection with its properties, generally and unconditionally, the nonexclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. Each Loan Party hereby waives personal service of any and all process upon it and consents that all such service of process may be made by registered mail (return receipt requested) directed to such Loan Party at its address set forth in Section 15.6 and service so made shall be deemed completed five (5) days after the same shall have been so deposited in the mails of the United States of America. Nothing herein shall affect the right to serve process in any manner permitted by law or shall limit the right of Agent or any Lender to bring proceedings against any Loan Party in the courts of any other jurisdiction. Each Loan Party waives any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. Each Loan Party waives the right to remove any judicial proceeding brought against such Loan Party in any state court to any federal court. Any judicial proceeding by any Loan Party against Agent or any Lender involving, directly or indirectly, any matter or claim in any way arising out of, related to or connected with this Agreement or any related agreement, shall be brought only in a federal or state court located in the Borough of Manhattan, County of New York, State of New York.
 
15.2                         Entire Understanding .
 
(a)                                  This Agreement and the documents executed concurrently herewith contain the entire understanding between the Loan Parties, Agent and each Lender and supersedes all prior agreements and understandings, if any, relating to the subject matter hereof. Any promises, representations, warranties or guarantees not herein contained and hereinafter made shall have no force and effect unless in writing, signed by the Loan Parties, Agent’s and each Lender’s respective officers. Neither this Agreement nor any portion or provisions hereof may be changed, modified, amended, waived, supplemented, discharged, cancelled or terminated orally or by any course of dealing, or in any manner other than by an agreement in writing, signed by the party to be charged. Each Loan Party acknowledges that it has been advised by counsel in connection with the execution of this Agreement and Other Documents and is not relying upon oral representations or statements inconsistent with the terms and provisions of this Agreement.
 
(b)                                  The Required Lenders, Agent with the consent in writing of the Required Lenders, and the Loan Parties may, subject to the provisions of this Section 15.2(b), from time to time enter into written supplemental agreements to this Agreement or the Other Documents executed by the Loan Parties, for the purpose of adding or deleting any provisions or otherwise changing, varying or waiving in any manner the rights of Lenders, Agent or the Loan Parties thereunder or the conditions, provisions or terms thereof or waiving any Event of Default thereunder, but only to the extent specified in such written agreements; provided, however, that no such supplemental agreement shall, without the consent of all Lenders:
 
(i)                                      increase the Commitment Percentage or the maximum dollar commitment of any Lender;
 
114 

 
(ii)                                   extend the maturity of the Term Notes, or the due date for any amount payable hereunder, or decrease the rate of interest or reduce any fee payable by Borrower to Lenders pursuant to this Agreement;
 
(iii)                                alter the definition of the term Required Lenders or alter, amend or modify this Section 15.2(b);
 
(iv)                               release all or substantially all of the Collateral (other than in accordance with the terms of this Agreement and in connection with a permitted transfer or sale thereof) or as required by the terms of the Intercreditor Agreement;
 
(v)                                  materially change the rights and duties of Agent (provided Agent’s consent is obtained); or
 
(vi)                               release any Guarantor from its obligations under its Guaranty other than in connection with a permitted transfer or sale thereof Any such supplemental agreement shall apply equally to each Lender and shall be binding upon the Loan Parties, Lenders and Agent and all future holders of the Obligations. In the case of any waiver, the Loan Parties, Agent and Lenders shall be restored to their former positions and rights, and any Event of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific Event of Default shall extend to any subsequent Event of Default (whether or not the subsequent Event of Default is the same as the Event of Default which was waived), or impair any right consequent thereon.
 
In the event that Agent requests the consent of a Lender pursuant to this Section 15.2 and such consent is denied, then Agent or Borrower may, at its option, require such Lender to assign its interest in the Loans to GC-Cap and/or its Affiliates (with Agent’s consent) or to another Lender or to any other Person designated by the Agent (the “ Designated Lender ”), for a price equal to the then outstanding principal amount thereof plus accrued and unpaid interest and fees due such Lender, which interest and fees shall be paid when collected from Borrower. In the event Agent or Borrower elects to require any Lender to assign its interest to GC-Cap or its Affiliates or to the Designated Lender, Agent will so notify such Lender in writing within forty five (45) days following such Lender’s denial, and such Lender will assign its interest to GC-Cap (or its Affiliates) or the Designated Lender no later than five (5) days following receipt of such notice pursuant to an Assignment Agreement executed by such Lender, GC-Cap (or its Affiliate) or the Designated Lender, as appropriate, and Agent.
 
The Agent is hereby authorized by the Loan Parties and the Lenders, from time to time in the Agent’s sole discretion, (A) after the occurrence and during the continuation of a Default or an Event of Default, or (B) at any time that any of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied, to make Loans to Borrower on behalf of the Lenders which Agent, in its reasonable business judgment, deems necessary or desirable (a) to preserve or protect the Collateral, or any portion thereof, (b) to enhance the likelihood of, or maximize the amount of, repayment of the Loans and other Obligations, or (c) to pay any other amount chargeable to Borrower pursuant to the terms of this Agreement; provided, that at any time after giving effect to any such Loans the outstanding Loans do not exceed $2,000,000.
 
115 

 
15.3                         Successors and Assigns; Participations; New Lenders .
 
(a)                                  This Agreement shall be binding upon and inure to the benefit of the Loan Parties, Agent, each Lender, all future holders of the Obligations and their respective successors and permitted assigns, except that no Loan Party hereto may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of Agent and each Lender.
 
(b)
 
(i)                                      Borrower acknowledges that in the regular course of commercial banking business one or more Lenders may at any time and from time to time sell participating interests in the Loans to other financial institutions (each such transferee or purchaser of a participating interest, a “ Participant ”), provided that so long as no Event of Default exists, the sale of any such participating interests shall require the consent of Borrower, which shall not be unreasonably withheld. Each Participant may exercise all rights of payment (including rights of set-off) with respect to the portion of such Loans held by it or other Obligations payable hereunder as fully as if such Participant were the direct holder thereof provided that such Participant shall agree, for the benefit of the Borrower, to comply with Section 3.10(e) and 3.11 as though it were a Lender, and provided, further that Borrower shall not be required to pay to any Participant more than the amount which it would have been required to pay to Lender which granted an interest in its Loans or other Obligations payable hereunder to such Participant had such Lender retained such interest in the Loans hereunder or other Obligations payable hereunder and in no event shall Borrower be required to pay any such amount arising from the same circumstances and with respect to the same Loans or other Obligations payable hereunder to both such Lender and such Participant. Borrower hereby grants to any Participant a continuing security interest in any deposits, moneys or other property actually or constructively held by such Participant as security for the Participant’s interest in the Loans.
 
(ii)                                   Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other Obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Loans or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.  For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.
 
(c)                                   Any Lender may sell, assign or transfer all or any part of its rights and obligations under or relating to any Term Loan, as applicable, under this Agreement and the Other Documents to (i) any existing Lender (other than a Defaulting Lender), (ii) any Affiliate or
 
116 

 
Approved Fund of any existing Lender (other than a Defaulting Lender) or (iii) any other Person acceptable to Agent and, if no Event of Default then exists, Borrower, which acceptance shall not be unreasonably withheld or delayed (each a “ Purchasing Lender ”), in minimum amounts of not less than $1,000,000, pursuant to an Assignment Agreement, executed by a Purchasing Lender, the transferor Lender, and Agent and delivered to Agent for recording. Upon such execution, delivery, acceptance and recording, from and after the transfer effective date determined pursuant to such Assignment Agreement, (i) Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Assignment Agreement, have the rights and obligations of a Lender thereunder with a Commitment Percentage as set forth therein; provided, that in the case of a Purchasing Lender that is a Revolving Lender or has Affiliates or Approved Funds that are Revolving Lenders (collectively, the “Crossover Lenders”), (i) there shall be no more than two (2) Crossover Lenders at any time, (ii) each Crossover Lender shall have voting rights as a Lender solely with respect to maturity extensions, pricing decreases and waivers of interest, principal and fee payments (other than mandatory prepayments), in each case, in respect of its portion of the Term Loans and (iii) in no event shall any Crossover Lender be treated in a manner that is adverse and disproportionate to how other similarly situated Lenders that are not Crossover Lenders are treated, and (ii) the transferor Lender thereunder shall, to the extent provided in such Assignment Agreement, be released from its obligations under this Agreement, the Assignment Agreement creating a novation for that purpose. Such Assignment Agreement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender and the resulting adjustment of the Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents. Borrower shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing.
 
(d)                                  Any Lender, with the consent of Agent which shall not be unreasonably withheld or delayed, may directly or indirectly sell, assign or transfer all or any portion of its rights and obligations under or relating any Term Loan under this Agreement and the Other Documents to an entity, whether a corporation, partnership, trust, limited liability company or other entity that (i) is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and (ii) is administered, serviced or managed by the assigning Lender or an Affiliate of such Lender (a “ Purchasing CLO ” and together with each Participant and Purchasing Lender, each a “ Transferee ” and collectively the “ Transferees ”), pursuant to an Assignment Agreement modified as appropriate to reflect the interest being assigned (“ Modified Assignment Agreement”), executed by any intermediate purchaser, the Purchasing CLO, the transferor Lender, and Agent as appropriate and delivered to Agent for recording. Upon such execution and delivery, from and after the transfer effective date determined pursuant to such Modified Assignment Agreement, (i) Purchasing CLO thereunder shall be a party hereto and, to the extent provided in such Modified Assignment Agreement, have the rights and obligations of a Lender thereunder and (ii) the transferor Lender thereunder shall, to the extent provided in such Modified Assignment Agreement, be released from its obligations under this Agreement, the Modified Assignment Agreement creating a novation for that purpose.  Such Modified Assignment Agreement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing CLO. Borrower hereby consents to the addition of such Purchasing CLO. Borrower shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing.
 
117 

 
(e)                                   Agent, acting for this purpose as a nonfiduciary agent of the Borrower, shall maintain at its address in the United States a copy of each Assignment Agreement and Modified Assignment Agreement delivered to it and a register (the “ Register ”) for the recordation of the names and addresses of each Lender and the outstanding principal, accrued and unpaid interest and other fees due hereunder. The entries in the Register shall be conclusive, in the absence of manifest error, and Borrower, Agent and Lenders may treat each Person whose name is recorded in. the Register as the owner of the Advance recorded therein for the purposes of this Agreement. The Register shall be available for inspection by Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. Agent shall receive a fee in the amount of $3,500 payable by the applicable Purchasing Lender and/or Purchasing CLO upon the effective date of each transfer or assignment (other than to an intermediate purchaser) to such Purchasing Lender and/or Purchasing CLO.
 
(f)                                    Each Loan Party authorizes each Lender to disclose to any Transferee and any prospective Transferee any and all financial information in such Lender’s possession concerning the Loan Parties and their Subsidiaries which has been delivered to such Lender by or on behalf of any Loan Party pursuant to this Agreement or in connection with such Lender’s credit evaluation of Borrower, provided that such Transferee or prospective Transferee agrees to keep such financial information confidential.
 
(g)                                   Each Loan Party hereby acknowledges that Agent and the Lenders and/or each of their Affiliates may securitize all or any part of the Loans through the pledge of all or any part of this Agreement and the Other Documents as collateral security for loans thereto or through the issuance of direct or indirect interests in all or any part of the Loans, which loans to Borrower or their direct or indirect interests may be rated by Moody’s, S&P or one or more other nationally recognized rating agencies (the “ Rating Agencies ”).
 
15.4                         Application of Payments .  Agent shall have the continuing and exclusive right to apply or reverse and re-apply any payment and any and all proceeds of Collateral to any portion of the Obligations. To the extent any Loan Party makes a payment or Agent or any Lender receives any payment or proceeds of the Collateral for any Loan Party’s benefit, which are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver, custodian or any other party under any bankruptcy law, common law or equitable cause, then, to such extent, the Obligations or part thereof intended to be satisfied shall be revived and continue as if such payment or proceeds had not been received by Agent or such Lender.
 
15.5                         Indemnity .  Each Loan Party shall indemnify Agent, each Lender and each of their respective officers, directors, Affiliates, attorneys, employees and agents (each an “ Indemnitee ”) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including reasonable fees and disbursements of counsel) (collectively, “ Losses ”) which may be imposed on, incurred by, or asserted against any Indemnitee in any claim, litigation, proceeding or investigation instituted or conducted by any Governmental Body or instrumentality or any
 
118 

 
other Person with respect to any aspect of, or any transaction contemplated by, or referred to in, or any matter related to, this Agreement or the Other Documents, whether or not Agent or any Lender is a party thereto, except to the extent that any of the foregoing arises out of the gross negligence, bad faith or willful misconduct of the Indemnitee (as determined by a court of competent jurisdiction in a final and non-appealable judgment).  Without limiting the generality of the foregoing, each Loan Party shall indemnify each Indemnitee from and against all Losses, suffered or incurred by any Indemnitee under or on account of any Environmental Laws, including the assertion of any Lien thereunder, with respect to any Hazardous Discharge, the presence of any Hazardous Substances affecting the Real Property, whether or not the same originates or emerges from the Real Property or any contiguous real estate, except to the extent such loss, liability, damage and expense is attributable to any Hazardous Discharge resulting from actions on the part of Agent or any Lender.  Each Loan Party’s indemnity obligations shall arise upon the discovery of the presence of any material Hazardous Substances in violation of Applicable Laws at the Real Property, whether or not any federal, state, or local environmental agency has taken or threatened any action in connection with the presence of any Hazardous Substances.
 
15.6                         Notice .  Any notice or request hereunder may be given to the Loan Parties or to Agent or any Lender at their respective addresses set forth below or at such other address as may hereafter be specified in a notice designated as a notice of change of address under this Section. Any notice, request, demand, direction or other communication (for purposes of this Section 15.6 only, a “ Notice ”) to be given to or made upon any party hereto under any provision of this Loan Agreement shall be given or made by telephone or in writing (which includes by means of electronic transmission (i.e., “e-mail”) or facsimile transmission in accordance with this Section 15.6. Any such Notice must be delivered to the applicable parties hereto at the addresses and numbers set forth under their respective names in this Section 15.6 or in accordance with any subsequent unrevoked Notice from any such party that is given in accordance with this Section 15.6. Any Notice shall be effective:
 
(a)                                  In the case of hand-delivery, when delivered;
 
(b)                                  If given by mail, five (5) days after such Notice is deposited with the United States Postal Service, by registered mail, return receipt requested;
 
(c)                                   In the case of a telephonic Notice, when a party is contacted by telephone, if delivery of such telephonic Notice is confirmed no later than the next Business Day by hand delivery, a facsimile or electronic transmission, or an overnight courier delivery of a confirmatory Notice (received at or before noon on such next Business Day);
 
(d)                                  In the case of a facsimile transmission, when sent to the applicable party’s facsimile machine’s telephone number, if the party sending such Notice receives confirmation of the delivery thereof from its own facsimile machine;
 
(e)                                   In the case of electronic transmission, when actually received; and
 
(f)                                    If given by any other means (including by overnight courier), when actually received.
 
119 

 
Any Lender giving a Notice to any Loan Party shall concurrently send a copy thereof to the Agent, and the Agent shall promptly notify the other Lenders of its receipt of such Notice.

 

 	(A)	If to Agent or GC-Cap at:	
 	 	 	
 	 	Golub Capital LLC	
 	 	c/o Golub Capital Incorporated	
 	 	666 Fifth Avenue, 18 th  Floor	
 	 	New York, NY 10103	
 	 	Attention:	Nicholas Chan	
 	 	Facsimile:	(212) 750-3756	
 	 	Email:	nchan@golubcapital.com	
 	 	 	 	
 	 	with a copy (which shall not constitute notice) to:	
 	 	 	
 	 	Katten Muchin Rosenman LLP	
 	 	525 West Monroe Street, Suite 1900	
 	 	Chicago, Illinois 60661	
 	 	Attn: Derek Ladgenski, Esq.	
 	 	Facsimile No.: (312) 902-1061	
 	 	E-Mail: derek.ladgenski@kattenlaw.com	
 	 	 	
 	(B)	If to a Lender other than GC-Cap, as specified on the signature pages hereof	
 	 	 	
 	(C)	If to any Loan Party:	
 	 	 	
 	 	Boot Barn, Inc.	
 	 	15776 Laguna Canyon Road	
 	 	Irvine, California 92618	
 	 	Attention:	Paul Iacono	
 	 	Telephone:	(949) 453-4400	
 	 	Facsimile:	(949) 453-4401	
 	 	 	 	
 	 	with a copy to:	
 	 	 	
 	 	Freeman Spogli & Co.	
 	 	11100 Santa Monica Boulevard	
 	 	Suite 1900	
 	 	Los Angeles, California 90025	
 	 	Attention:	Brad Brutocao	
 	 	Telephone:	(310) 444-1865	
 	 	Facsimile:	(310) 546-9726	
 
120 

 

 	 	with an additional copy to (which shall not constitute Notice):	
 	 	 	
 	 	Bingham McCutchen LLP	
 	 	355 S. Grand Avenue	
 	 	Suite 4400	
 	 	Los Angeles, California 90071	
 	 	Attention:	Roger H. Lustberg, Esq.	
 	 	Telephone:	(213) 229-8407	
 	 	Facsimile:	(213) 830-8601	
 
15.7                         Survival .  The obligations of the Loan Parties under Sections 2.2(f), 3.7, 4.19(h) and 15.5 and the obligations of Lenders under Section 14.7, shall survive termination of this Agreement and the Other Documents and payment in full of the Obligations.
 
15.8                         Severability .  If any part of this Agreement is contrary to, prohibited by, or deemed invalid under Applicable Laws, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible.
 
15.9                         Expenses .  Borrower shall reimburse Agent for all reasonable, out- of- pocket and documented fees, costs and expenses incurred in connection with any matters contemplated by or arising out of this Agreement, the Other Documents and the Collateral, including those pertaining to diligence, syndication of the Loans, the negotiation and preparation of the Other Documents, the perfection of Liens and the closing of the Loans (including the reasonable, out-of-pocket and documented fees, costs and expenses of its (A) counsel, agents and representatives and (B) independent consultants, accountants, auditors, advisors, Ratings Agencies and appraisers, in each case retained after consultation with Borrower (unless a Default or an Event of Default has occurred and is continuing), in connection with the Loan Documents and the Related Transaction Documents and advice in connection therewith).  In furtherance of the foregoing and without limiting the foregoing, Borrower shall reimburse (i) Agent for all reasonable, out-of-pocket and documented fees, costs and expenses, including the reasonable, out-of-pocket and documented  fees, costs and expenses of counsel and other advisors and professionals (including counsel, advisors, agents, representatives, consultants (environmental, management and otherwise), accountants, auditors, Rating Agencies and appraisers, in each case after consultation with Borrower to the extent required above) with respect to each of the items enumerated in each of the clauses set forth below and (ii) Lenders for all reasonable, out-of-pocket and documented fees, costs and expenses of counsel solely with respect to, and subject to the limitations set forth in, the items enumerated in clauses (c), (d) and (e) set forth below:
 
(a)                                  the forwarding to Borrower or any other Person on behalf of Borrower by Agent of the proceeds of the Loans including standard wire transfer fees;
 
(b)                                  administration of the Loans, Other Documents and Collateral, including any amendment, modification or waiver of, or consent with respect to, any of the Other Documents or Related Transaction Documents or advice in connection with the administration of the Loans or its rights hereunder or thereunder;
 
121 

(c)                                   any litigation, contest, dispute, suit, proceeding or action (whether instituted by Agent, any Lender, Borrower or any other Person) in any way relating to the Collateral, any of the Loan Documents or any other agreement to be executed or delivered in connection therewith or herewith, whether as party, witness, or otherwise, including any litigation, contest, dispute, suit, case, proceeding or action, and any appeal or review thereof, in connection with a case commenced by or against Borrower or any other Person that may be obligated to Agent by virtue of the Other Documents; including any such litigation, contest, dispute, suit, proceeding or action arising in connection with any work-out or restructuring of the Loans during the pendency of one or more Events of Default; provided that in the case of reimbursement of counsel for Lenders other than Agent, such reimbursement shall be limited to one counsel for all such Lenders;
 
(d)                                  any attempt to collect the Obligations or collect upon the Collateral or to enforce any remedies of Agent or any Lender against any or all of the Loan Parties or any other Person that may be obligated to Agent or any Lender by virtue of any of the Other Documents; including any such attempt to enforce any such remedies in the course of any work-out or restructuring of the Loans during the pendency of one or more Events of Default; provided that in the case of reimbursement of counsel for Lenders other than Agent, such reimbursement shall be limited to one counsel for all such Lenders;
 
(e)                                   any work-out or restructuring of the Loans during the pendency of one or more Events of Default, whether in the context of a bankruptcy proceeding or otherwise; provided that in the case of reimbursement of counsel for Lenders other than Agent, such reimbursement shall be limited to one counsel for all such Lenders;
 
(f)                                    efforts to (i) monitor or rate the Loans or any of the other Obligations, (ii) evaluate, observe or assess any of the Loan Parties or their respective affairs, and (iii) verify, protect, evaluate, audit, inspect, review, assess, appraise, collect, sell, liquidate or otherwise dispose of (or do any other thing provided for in Section 4.10 ) any of the Collateral; and
 
(g)                                   the Board Observer in connection with the Board Observer’s attendance at meetings of the board of directors or equivalent governing body of any Loan Party or any of their Subsidiaries pursuant to Section 6.9 .
 
15.10                  Injunctive Relief .  Each Loan Party recognizes that, in the event any Loan Party fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, or threatens to fail to perform, observe or discharge such obligations or liabilities, any remedy at law may prove to be inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving that actual damages are not an adequate remedy.
 
15.11                  Consequential Damages .  Neither Agent nor any Lender, nor any agent or attorney for any of them, shall be liable to any Loan Party (or any Affiliate of any such Person) for indirect, punitive, exemplary or consequential damages arising from any breach of contract, tort or other wrong relating to the establishment, administration or collection of the Obligations or as a result of any transaction contemplated under this Agreement or any Other Document.
 
122 

 
15.12                  Captions .  The captions at various places in this Agreement are intended for convenience only and do not constitute and shall not be interpreted as part of this Agreement.
 
15.13                  Counterparts; Facsimile Signatures .  This Agreement may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any signature delivered by a party by facsimile or other similar form of electronic transmission shall be deemed to be an original signature hereto.
 
15.14                  Construction .  The parties acknowledge that each party and its counsel have reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits thereto. In the event of a direct conflict between the provisions of this Agreement and the provisions contained in any Other Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Agreement shall control and govern.
 
15.15                  Confidentiality; Sharing Information .  Agent, each Lender and each Transferee shall hold all non-public information obtained by Agent, such Lender or such Transferee pursuant to the requirements of this Agreement in accordance with Agent’s, such Lender’s and such Transferee’s customary procedures for handling confidential information of this nature; provided, however, Agent, each Lender and each Transferee may disclose such confidential information (a) to its examiners, Affiliates, outside auditors, counsel and other professional advisors, so long as they agree to hold such information confidential, (b) to Agent, any Lender or to any prospective Transferees (so long as such prospective Transferees agree to hold such information confidential in accordance with this Section 15.15), and (c) as required or requested by any Governmental Body or representative thereof or pursuant to legal process; provided, further that (i) unless specifically prohibited by Applicable Law, Agent, each Lender and each Transferee shall use its reasonable best efforts prior to disclosure thereof, to notify Borrower of the applicable request for disclosure of such non-public information (A) by a Governmental Body or representative thereof (other than any such request in connection with an examination of the financial condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant to legal process and (ii) in no event shall Agent, any Lender or any Transferee be obligated to return any materials furnished by any Loan Party other than those documents and instruments in possession of Agent or any Lender in order to terminate its Lien on the Collateral once the Obligations have been paid in full and this Agreement has been terminated. Each Loan Party acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to any Loan Party or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender and each Loan Party hereby authorizes each Lender to share any information delivered to such Lender by any Loan Party or its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of such Lender, it being understood that any such Subsidiary or Affiliate of any Lender receiving such information shall be bound by the provisions of this Section 15.15 as if it were a Lender hereunder. Such authorization shall survive the repayment of the other Obligations and the termination of this Agreement.
 
123 

 
15.16                  Publicity .  Subject to the prior review and approval of Borrower, not to be unreasonably withheld, conditioned or delayed, each Loan Party, on behalf of itself and each of its Subsidiaries, authorizes the publication by Agent or any Lender of any press releases, tombstones, advertising or other promotional materials (whether by means of electronic transmission, posting to a website or other internet application, print media or otherwise) relating to the financing transactions contemplated by this Agreement and the Other Documents using a Loan Party’s or its Subsidiary’s name, product photographs, logo, trademark or related information.
 
15.17                  Certifications From Banks and Participants; US Patriot Act .
 
(a)                                  Each Lender or assignee or participant of a Lender that is not incorporated under the Laws of the United States of America or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA Patriot Act and the applicable regulations because it is both (i) an affiliate of a depository institution or foreign bank that maintains a physical presence in the United States or foreign country, and (ii) subject to supervision by a banking authority regulating such affiliated depository institution or foreign bank) shall deliver to the Agent the certification, or, if applicable, recertification, certifying that such Lender is not a “shell” and certifying to other matters as required by Section 313 of the USA Patriot Act and the applicable regulations: (1) within ten (10) days after the Restatement Effective Date, and (2) as such other times as are required under the USA Patriot Act.
 
(b)                                  The USA Patriot Act requires all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an “account” with such financial institution.  Consequently, Lender may from time to time request, and each Loan Party shall provide to Lender, such Loan Party’s name, address, tax identification number and/or such other identifying information as shall be necessary for Lender to comply with the USA PATRIOT Act and any other Anti-Terrorism Law.
 
15.18                  Anti-Money Laundering/International Trade Law Compliance .  Each Loan Party represents and warrants to Agent, as of the date of this Agreement, the date of any renewal, extension or modification of this Agreement, and at all times until this Agreement has been terminated and all Obligations have been indefeasibly paid in full, that: (a) no Covered Entity (i) is a Sanctioned Person; (ii) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person; or (iii) does business in or with, or derives any of its operating income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law enforced by any Compliance Authority; (b) the Advances will not be used to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law enforced by any Compliance Authority; (c) the funds used to repay the Obligations are not derived from any unlawful activity; and (d) each Covered Entity is in compliance with, and no Covered Entity engages in any dealings or transactions prohibited by, any Anti-Terrorism Laws.  Each Loan Party covenants and agrees that it shall immediately notify Agent in writing upon obtaining knowledge of the occurrence of a Reportable Compliance Event.
 
124 

 
15.19                  Intercreditor Agreement .  Notwithstanding anything herein to the contrary, the priority of the Liens granted to Agent in the Collateral pursuant to this Agreement and the Other Documents (including, without limitation, Liens previously granted to Agent pursuant to the Existing Credit Agreement and the Existing Other Documents (as defined below), all of which are confirmed and reaffirmed by this Agreement) and the exercise, after the occurrence and during the continuance of an Event of Default, of any right or remedy by Agent or any Lender with respect to certain of the Collateral hereunder or under any Other Document are subject to the provisions of the Intercreditor Agreement.  In the event of any direct and irreconcilable conflict between the terms of the Intercreditor Agreement and this Agreement with respect to (a) the priority of Liens granted to Agent in the Collateral pursuant to this Agreement and the Other Documents (including, without limitation, Liens previously granted to Agent pursuant to the Existing Credit Agreement and the Existing Other Documents (as defined below)) or (b) the rights of Agent or any Lender under this Agreement with respect to certain Collateral after the occurrence and during the continuance of an Event of Default, the terms of the Intercreditor Agreement shall govern and control.  Any reference in this Agreement or any Other Document to “first priority lien” or words of similar effect in describing the Liens created hereunder or under any Other Document (including, without limitation, Liens previously granted to Agent pursuant to the Existing Credit Agreement and the Existing Other Documents (as defined below)) shall be understood to refer to such priority as set forth in the Intercreditor Agreement.  Nothing in this Section 15.19 shall be construed to provide that any Loan Party is a third party beneficiary of the provisions of the Intercreditor Agreement other than as expressly set forth therein and each Loan Party (x) agrees that, except as expressly otherwise provided in the Intercreditor Agreement, nothing in the Intercreditor Agreement is intended or shall impair the obligation of any Loan Party to pay the obligations under this Agreement or any Other Document as and when the same become due and payable in accordance with their respective terms, or to affect the relative rights of the creditors of any Loan Party, other than Agent and the Lenders as between themselves and (y) except to the extent that any exercise of remedies by Agent against Revolving Loan Priority Collateral (as defined in the Intercreditor Agreement) is not permitted under the Intercreditor Agreement and such exercise would cause the Loan Parties to be in breach of the terms of the PNC Credit Agreement requiring the Loan Parties to deliver possession or control of Revolving Loan Priority Collateral to Revolver Agent, if Agent shall enforce its rights or remedies in violation of the terms of the Intercreditor Agreement, agrees that it shall not use such violation as a defense to any enforcement of remedies otherwise made in accordance with the terms of this Agreement and the Other Documents by Agent or any Lender or assert such violation as a counterclaim or basis for set-off or recoupment against Agent or any Lender and agrees to abide by the terms of this Agreement and to keep, observe and perform the several matters and things herein intended to be kept, observed and performed by it.  In furtherance of the foregoing, notwithstanding anything to the contrary set forth herein, prior to the Payment in Full of the Revolver Obligations (each term as defined in the Intercreditor Agreement) to the extent that any Loan Party is required to (i) give physical possession over any Revolving Loan Priority Collateral to Agent under this Agreement or the Other Documents, such requirement to give possession shall be satisfied if such Collateral is delivered to and held by the Revolving Agent pursuant to the Intercreditor Agreement and (ii) take any other action with respect to the Collateral or any proceeds thereof, including delivery of such Collateral or proceeds thereof to Agent, such action shall be deemed satisfied to the extent undertaken with respect to the Revolving Agent.
 
125 

 
15.20                  Continued Effectiveness; No Novation .  Notwithstanding anything herein to the contrary, this Agreement is not intended to and shall not serve to effect a novation of the Obligations under the Existing Credit Agreement.  Instead, it is the express intention of the parties hereto to reaffirm the indebtedness and other Obligations (as defined in the Existing Credit Agreement) created under the Existing Credit Agreement which may be evidenced by the notes provided for therein and secured by the Collateral.  Each of the Loan Parties party hereto acknowledges and confirms that it has no defense, set off, claim or counterclaim arising prior to the Restatement Effective Date against the Agent and the Lenders with regard to the indebtedness, liabilities and obligations created under the Existing Credit Agreement and that the term “Obligations” as used in the Existing Credit Agreement and the Other Documents (or any other term used therein to describe or refer to the indebtedness, liabilities and obligations of the Borrower to the Agent and the Lenders) includes, without limitation, the indebtedness, liabilities and obligations of the Borrower and the other Loan Parties under this Agreement, as the same further may be amended, modified, supplemented and/or restated from time to time.  The Other Documents and all agreements, instruments and documents executed or delivered in connection with any of the foregoing shall each be deemed to be amended to the extent necessary to give effect to the provisions of this Section and Section 15.21 below.  All references in the Existing Credit Agreement and the Other Documents to the “Obligations” of the Loan Parties owing from time to time and at any time to Agent and the Lenders shall be deemed to refer to, without limitation, the “Obligations” of the Loan Parties under, pursuant to and as defined in this Agreement.  All references in the Other Documents to the “Credit Agreement” shall be deemed to refer to this Agreement.  All references in the Other Documents to the “Other Documents” shall be deemed to refer to the “Other Documents” as defined herein.  All references in the Other Documents entered into prior to the Restatement Effective Date to the “Borrower” shall be deemed to refer to the “Borrower” under, pursuant to and as defined in this Agreement.  Cross-references in the Other Documents to particular section numbers in the Existing Credit Agreement shall be deemed to be cross-references to the corresponding sections, as applicable, of this Agreement.
 
15.21                  Reaffirmation of Existing Other Documents .  Each Loan Party signatory hereto, in the respective capacities, if any, of such Loan Party under the Existing Credit Agreement and each of the other “Other Documents” (as such term is defined in the Existing Credit Agreement, and herein referred to as the “ Existing Other Documents ”) to which such Loan Party is a party (including the respective capacities of accommodation party, assignor, grantor, guarantor, indemnitor, mortgagor, obligor and pledgor, as applicable, and each other similar capacity, if any, in which such Loan Party granted Liens on all or any part of its properties and assets, or otherwise acted as an accommodation party, guarantor, indemnitor or surety with respect to all or any part of the Obligations (as defined in the Existing Credit Agreement)), hereby (i) agrees that, except as otherwise expressly set forth herein, the terms and provisions hereof shall not affect in any way any payment, performance, observance or other obligations or liabilities of such Loan Party hereunder or under the Existing Credit Agreement or any of the other Existing Other Documents, to the extent such obligations and liabilities are outstanding as of the Restatement Effective Date and as of such date have not been modified by the terms hereof, all of which obligations and liabilities are hereby ratified, confirmed and reaffirmed in all respects, and (ii) to
 
126 

 
the extent such Loan Party has granted Liens on any of its properties or assets pursuant to the Existing Credit Agreement or any of the Existing Other Documents to secure the payment, performance and/or observance of all or any part of the Obligations (as defined in the Existing Credit Agreement), acknowledges, ratifies, confirms and reaffirms such grant of Liens, and acknowledges and agrees that all of such Liens are intended and shall be deemed and construed to secure to the fullest extent set forth therein all now existing and hereafter arising Obligations under and as defined in this Agreement, as hereafter amended, restated, amended and restated, supplemented and otherwise modified and in effect from time to time.
 
[Rest of page intentionally left blank; signature page follows]
 
127 

Each of the parties has signed this Agreement as of the day and year first above written.

 	BOOT BARN, INC., a Delaware corporation	

 	By:	/s/ Paul J. Iacono	
 	Name:	Paul J. Iacono	
 	Title:	Chief Financial Officer	

 	BOOT BARN HOLDING CORPORATION,	
 	a Delaware corporation	

 	By:	/s/ Christian B. Johnson	
 	Name:	Christian B. Johnson	
 	Title:	Secretary	

 	Solely for purposes of Sections 15.20 and 15.21:	

 	RCC WESTERN STORES, INC., a South Dakota corporation	

 	By:	/s/ Paul J. Iacono	
 	Name:	Paul J. Iacono	
 	Title:	Chief Financial Officer	

 	BASKINS ACQUISITION HOLDINGS, LLC, a Delaware limited liability company	

 	By:	/s/ Paul J. Iacono	
 	Name:	Paul J. Iacono	
 	Title:	Chief Financial Officer	
 
Signature Page to Amended and Restated Term Loan and Security Agreement

 

 	GOLUB CAPITAL LLC , as Agent	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	
 
Signature Page to Amended and Restated Term Loan and Security Agreement

 

 	Golub Capital Finance Funding LLC , as a Lender	
 	By: GC Advisors LLC, its Manager	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	

 	Golub Capital BDC Holdings LLC , as a Lender	
 	By: GC Advisors LLC, its Manager	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	

 	Golub Capital BDC 2010-1 LLC , as a Lender	
 	By: GC Advisors LLC, its Collateral Manager	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	

 	Golub Capital BDC Funding LLC , as a Lender	
 	By: GC Advisors LLC, as agent	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	

 	Golub Capital PEARLS Direct Lending Program, L.P. , as a Lender	
 	By: GC Advisors LLC, its Manager	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	
 
Signature Page to Amended and Restated Term Loan and Security Agreement

 

 	PEARLS VIII, LLC , as a Lender	
 	By: GC Advisors LLC, its Manager	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	

 	PEARLS IX, LLC , as a Lender	
 	By: GC Advisors LLC, its Manager	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	

 	PEARLS X, L.P. , as a Lender	
 	By: GC Advisors LLC, its Manager	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	

 	Golub Capital LLC , as a Lender	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	
 
Signature Page to Amended and Restated Term Loan and Security Agreement

 

 	Golub Capital Partners CLO 10, Ltd. , as a Lender	
 	By: GC Advisors LLC, its agent	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	

 	Golub Capital Partners CLO 15, Ltd. , as a Lender	
 	By: GC Advisors LLC, its agent	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	

 	Golub Capital Partners CLO 16, Ltd. , as a Lender	
 	By: GC Advisors LLC, its agent	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	

 	Golub Capital Partners CLO 17, Ltd. , as a Lender	
 	By: GC Advisors LLC, its agent	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	
 
Signature Page to Amended and Restated Term Loan and Security Agreement

 

 	Golub Capital Partners CLO 18(M), Ltd. , as a Lender	
 	By: GC Advisors LLC, its agent	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	

 	GOLUB INTERNATIONAL LOAN LTD. I , as a Lender	
 	By: GOLUB CAPITAL INTERNATIONAL MANAGEMENT LLC, as Collateral Manager	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	

 	GOLUB INTERNATIONAL LOAN LTD. I , as a Lender	
 	By: GOLUB CAPITAL INTERNATIONAL MANAGEMENT LLC, as Collateral Manager	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	

 	GC Advisors LLC as Agent for BCBSM, Inc. , as a Lender	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	
 
Signature Page to Amended and Restated Term Loan and Security Agreement

 

 	GC Advisors LLC as Agent for HMO Minnesota , as a Lender	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	
 	 	
 	GC Advisors LLC as Agent for RGA Operating Company , as a Lender	

 	By:	/s/ Marc C. Robinson	
 	Name: Marc C. Robinson	
 	Title: Managing Director	
 
Signature Page to Amended and Restated Term Loan and Security Agreement

 
EXHIBIT 1.2(a)
 
FORM OF COMPLIANCE CERTIFICATE
 
TO :                         GOLUB CAPITAL LLC , as Agent
 
The undersigned [President] [Chief Financial Officer] [Controller] of Boot Barn Holding Corporation, a Delaware corporation (“ Parent Holdco ”), solely in such capacity and not in any individual capacity, certifies that, under the terms and conditions of the Amended and Restated Term Loan and Security Agreement dated as of April 15, 2014, among Boot Barn, Inc., a Delaware corporation (“ Borrower ”), Parent Holdco, Agent and the lenders from time to time party thereto (as amended, modified and supplemented from time to time, the “ Agreement ”), (i) the Loan Parties are in complete compliance for the period ending [                               ] with all of the below-listed covenants set forth in the Agreement, except as may be noted below, (ii) other than as set forth on Schedule B hereto, no other Default or Event of Default exists, and (iii) the most recent financial statements provided to Agent include all adjustments necessary for a fair presentation in all material respects of the consolidated financial position and results of operations of Parent Holdco and its Subsidiaries for the period presented. Attached hereto as Schedule A are covenant calculations with respect to Sections 6.5(a) and 6.5(b) of the Agreement.  Attached hereto as Schedule C is each application for the registration of any Patent, Trademark, or Copyright with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency made by any Loan Party, either itself or through any agent, employee, licensee, or designee, since the delivery of the last Compliance Certificate.  Attached hereto as Schedule D is each deposit account or investment account opened or maintained by any Loan Party since the delivery of the last Compliance Certificate, which deposit accounts and/or investment accounts shall be deemed added to Schedule 4.15(h)(2) to the Agreement for all purposes under the Agreement and the Other Documents.  Capitalized terms used in this Certificate which are not defined herein shall have the meanings set forth in the Agreement.  Nothing herein limits or modifies any of the terms or provisions of the Agreement.
 
Compliance status is indicated by circling Yes/No under “Complies” column.

Financial Covenant	 	Required(1)	 	Actual	 	Complies	
 	 	 	 	 	 	 	
Section 6.5(a) – Minimum Interest Coverage Ratio	 	:1.0	 	:1.0	 	Yes     No	
Section 6.5(b) – Total Leverage Ratio	 	(2):1.0	 	:1.0	 	Yes     No(3)	
Section 7.6 - Capital Expenditures	 	$	(4)	$	 	 	

(1)          Insert applicable covenant level, in accordance with Section 6.5(a) of the Agreement.
(2)          Insert applicable covenant level, in accordance with Section 6.5(b) of the Agreement.
(3)          Only to be completed if this Certificate is being delivered in connection with quarterly financial statements.
(4)          Insert $10,000,000 plus the carryover amount from the prior year, as applicable, in accordance with Section 7.6 of the Agreement

 

Negative Covenants	 	Complies	
 	 	 	
Section 7.4 - Investments	 	Yes     No	
Section 7.5 - Loans	 	Yes     No	
Section 7.7 - Restricted Payments	 	Yes     No	
Section 7.8 - Indebtedness	 	Yes     No	

Affirmative Covenant	 	Complies	
 	 	 	
Section 4.14 - Leasehold Obligations	 	Yes     No	
 
Comments Regarding Exceptions:

Sincerely,
 
BOOT BARN HOLDING CORPORATION

By:	 	 	
Name:	 	 	
Title: [President] [Chief Financial Officer] [Controller]	

 
Schedule A to Compliance Certificate
Covenant Calculations
 
(Include calculations of Capital Expenditures, EBITDA, Interest Expense, and Funded Debt (including each sub-component of each such calculation), as well as each ratio).

 
Schedule B to Compliance Certificate
Defaults and Events of Default

 
Schedule C to Compliance Certificate
Intellectual Property Applications

 
EXHIBIT 2.4
 
FORM OF TERM NOTE

$[                          ]	, 2014	
 
This Term Note (this “ Note ”) is executed and delivered under and pursuant to the terms of that certain Amended and Restated Term Loan and Security Agreement dated as of April 15, 2014 (as amended, restated, supplemented or modified from time to time, the “ Credit Agreement ”) by and among BOOT BARN, INC., a Delaware corporation, with a place of business at 15776 Laguna Canyon Road, Irvine, California 92618 (“ Borrower ”), BOOT BARN HOLDING CORPORATION, a Delaware corporation, as a Guarantor, GOLUB CAPITAL LLC (“ Golub ”) as agent (in such capacity, the “Agent”) for the various financial institutions from time to time party thereto as lenders (collectively, “ Lenders ”) and such Lenders. Capitalized terms not otherwise defined herein shall have the meanings provided in the Credit Agreement.
 
FOR VALUE RECEIVED, Borrower hereby promises to pay to [                                            ], at the office of Agent located at 150 S. Wacker Drive, Suite 800, Chicago, Illinois 60606 or at such other place as Agent may from time to time designate to Borrower in writing:
 
(i)                                      the outstanding principal sum of [                                         ] Dollars ($[                              ]), payable in accordance with the provisions of the Credit Agreement, subject to acceleration upon the occurrence of an Event of Default under the Credit Agreement or earlier termination of the Credit Agreement pursuant to the terms thereof; and
 
(ii)                                   interest on the principal amount of this Note from time to time outstanding until such principal amount is paid in full at the Term Interest Rate in accordance with the provisions of the Credit Agreement. In no event, however, shall interest exceed the maximum interest rate permitted by law. Upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the direction of the Required Lenders, following written notice from Agent to Borrower and provided that such Event of Default is not cured or waived in accordance with the terms of the Credit Agreement, interest shall be payable at the Default Rate.
 
This Note is one of the Term Notes referred to in the Credit Agreement, is secured, inter alia , by the liens granted pursuant to the Credit Agreement and the Other Documents, is entitled to the benefits of the Credit Agreement and the Other Documents and is subject to all of the agreements, terms and conditions therein contained.
 
This Note is subject to mandatory prepayment on the terms and conditions set forth in the Credit Agreement and may be voluntarily prepaid, in whole or in part, on the terms and conditions set forth in the Credit Agreement.
 
This Note shall be construed and enforced in accordance with the laws of the State of New York.

 
Borrower expressly waives any presentment, demand, protest, notice of protest, or notice of any kind except as expressly provided in the Credit Agreement.
 
 [remainder of page intentionally blank]

 
IN WITNESS WHEREOF, this Note has been executed and delivered as of the date first written above.

 	BOOT BARN, INC. ,	
 	a Delaware corporation	

 	By:	 	
 	Name:	 	
 	Title:	 	

 
EXHIBIT 6.10(a)
 
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT (5)
 
THIS [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT, dated as of                        , 20    , is made by each of the entities listed on the signature pages hereof (each a “ Grantor ” and, collectively, the “ Grantors ”), in favor of Golub Capital LLC, as agent (in such capacity, together with its successors and assigns, “ Agent ”) for the Lenders (as defined in the Credit Agreement referred to below).
 
W I T N E S S E T H
 
WHEREAS , pursuant to that certain Amended and Restated Term Loan and Security Agreement, dated as of April 15, 2014 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Boot Barn, Inc., Delaware corporation (“ Borrower ”), Boot Barn Holding Corporation, a Delaware corporation (“ Parent Holdco ”), the financial institutions which are now or which hereafter become party thereto (the “ Lenders ”) and Agent, the Lenders have severally agreed to make financial accommodations to the Borrower subject to the conditions set forth therein;
 
WHEREAS , each Grantor (other than the Borrower) has agreed, pursuant to a Guaranty and Suretyship Agreement, dated May 31, 2013 in favor of the Agent (as amended, restated, supplemented or otherwise modified from time to time, the “ Guaranty ”), to guarantee the Obligations (as defined in the Credit Agreement) of the Borrower; and
 
WHEREAS , pursuant to the Credit Agreement, the Guaranty and that certain Pledge and Security Agreement, dated as of May 31, 2013 (as may be amended, restated, supplemented, or otherwise modified from time to time, the “Pledge and Security Agreement”), by and between the Grantors and the Agent, the Grantors are required to execute and deliver this [Copyright] [Patent] [Trademark] Security Agreement;
 
NOW, THEREFORE , in consideration of the premises and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each Grantor hereby agrees with the Agent as follows:
 
1.                                       Defined Terms .  Capitalized terms used herein without definition are used as defined in the Credit Agreement.
 
2.                                       Grant of Security Interest in [Copyright] [Trademark] [Patent] Collateral .  Each Grantor, as collateral security for the prompt payment and performance when due

(5)          Separate agreements should be executed relating to each Grantor’s respective Copyrights, Patents, and Trademarks.

 
(whether at stated maturity, by acceleration or otherwise) of the Guaranteed Obligations of such Grantor, hereby assigns, pledges and grants to the Agent for the benefit of the Lenders, and grants to the Agent for its benefit and for the ratable benefit of each Lender a continuing security interest in and a Lien on all of its right, title and interest in, to and under the following Collateral of such Grantor (the “ [Copyright] [Patent] [Trademark] Collateral ”):
 
a.                                       [all of its Copyrights, including, without limitation, those referred to on Schedule 1 hereto;
 
b.                                       all renewals, reversions and extensions of the foregoing; and
 
c.                                        all income, royalties and proceeds at any time due or payable or asserted under and with respect to any of the foregoing, including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, dilution, violation or other impairment thereof.]
 
or
 
a.                                       [all of its Patents, including, without limitation, those referred to on Schedule 1 hereto;
 
b.                                       all reissues, reexaminations, continuations, continuations-in-part, divisionals, renewals and extensions of the foregoing; and
 
c.                                        all income, royalties and proceeds at any time due or payable or asserted under and with respect to any of the foregoing, including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, dilution, violation or other impairment thereof.]
 
or
 
d.                                       [all of its Trademarks, including, without limitation, those referred to on Schedule 1 hereto;
 
e.                                        all renewals and extensions of the foregoing;
 
f.                                         all goodwill of the business connected with the use of, and symbolized by, each such Trademark; and
 
g.                                        all income, royalties and proceeds at any time due or payable or asserted under and with respect to any of the foregoing, including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, dilution, violation or other impairment thereof.]
 
3.                                       Credit Agreement and Pledge and Security Agreement .  The security interest granted pursuant to this [Copyright] [Patent] [Trademark] Security Agreement is

 
granted in conjunction with the security interest granted to the Agent pursuant to the Credit Agreement and the Pledge and Security Agreement, and each Grantor hereby acknowledges and agrees that the rights and remedies of the Agent with respect to the security interest in the [Copyright] [Patent] [Trademark] Collateral made and granted hereby are more fully set forth in the Credit Agreement and the Pledge and Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein; provided, however that in no event shall the [Copyright] [Patent] [Trademark] Collateral include any property or asset of Grantor which is excluded from Collateral pursuant to Section 4.1 of the Credit Agreement or the definition of “Collateral” in Section 1 of the Pledge and Security Agreement.
 
4.                                       Grantor Remains Liable .  Each Grantor hereby agrees that, anything herein to the contrary notwithstanding, such Grantor shall assume full and complete responsibility for the prosecution, defense, enforcement or any other necessary or desirable actions in connection with their [Copyrights] [Patents] [Trademarks] and License Agreement subject to a security interest hereunder.
 
5.                                       Counterparts .  This [Copyright] [Patent] [Trademark] Security Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Signature pages may be detached from multiple separate counterparts and attached to a single counterpart.
 
6.                                       Governing Law .  This [Copyright] [Patent] [Trademark] Security Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.
 
[signature pages follow]

 
                                                IN WITNESS WHEREOF , each Grantor has caused this [Copyright] [Patent] [Trademark] Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

 	 	Very truly yours,	
 	 	 	
 	 	[ GRANTOR ],	
 	 	as Grantor	
 	 	 	
 	 	By:	 	
 	 	Name:	 	
 	 	Title:	 	

ACCEPTED AND AGREED	 	 	
as of the date first above written:	 	 	
 	 	 	
GOLUB CAPITAL LLC ,	 	 	
as Agent	 	 	

By:	 	 	 	
Name:	 	 	 	
Title:	 	 	 	
 
SIGNATURE PAGE TO [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT

 
Schedule I
to
[Copyright] [Patent] [Trademark] Security Agreement
 
[Copyright] [Patent] [Trademark] Registrations
 
REGISTERED [COPYRIGHTS] [PATENTS] [TRADEMARKS]
 
[Include Registration Number and Date]
 
[COPYRIGHT] [PATENT] [TRADEMARK] APPLICATIONS
 
[Include Application Number and Date]
 
[COPYRIGHT] [PATENT] [TRADEMARK] LICENSE AGREEMENT
 
[Include complete legal description of agreement (name of agreement, parties and date)]

 
EXHIBIT 7.12
 
JOINDER AGREEMENT
 
This Joinder Agreement (this “ Joinder ”) is executed and delivered as of this [    ] day of [            ], 20[    ] by [                                                        ], a [                                        ] (“ New Borrower ”), BOOT BARN, INC., a Delaware corporation (“ Boot Barn ”) and BOOT BARN HOLDING CORPORATION, a Delaware corporation (“ Parent Holdco ”), in favor of GOLUB CAPITAL LLC (“Golub”), as administrative and collateral agent (in such capacity, the “ Agent ”) for itself and the Lenders under and as defined in the Credit Agreement referred to below.
 
Reference is hereby made to that certain Amended and Restated Term Loan and Security Agreement dated as of April 15, 2014 (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the “ Credit Agreement ”) among Boot Barn, its Subsidiaries from time to time party thereto as Borrower, Parent Holdco, the financial institutions from time to time party thereto (the “ Lenders ”) and the Agent.
 
New Borrower hereby agrees to join the Credit Agreement as a Borrower, and hereby agrees that it shall be deemed a party to the Credit Agreement as if New Borrower were originally signatory thereto. New Borrower hereby agrees to be bound by, and a maker and obligor of, all representations, warranties, indemnities, undertakings, covenants, limitations, waivers, exclusions, acknowledgements and agreements under the Credit Agreement relating to, pertaining to, or binding upon, Borrower or made or agreed to by Borrower to or for the benefit of the Agent and/or the Lenders.
 
Without limiting the foregoing, New Borrower, as security for the payment and performance in full of the Obligations does hereby grant, assign, and pledge to the Agent, for the benefit of the Lenders, a security interest in and Lien on all personal property of the New Borrower including all property of the type described in the Credit Agreement as “Collateral.” The information on the attached Schedules [  ] hereto is hereby added to Schedules [  ] to the Credit Agreement.  This Joinder is a supplement to, and not a novation of, the Credit Agreement, which remains in full force and effect, and the provisions of which are incorporated herein by reference.
 
New Borrower hereby irrevocably appoints Boot Barn as its borrowing agent and attorney-in-fact for all purposes under the Credit Agreement and the Other Documents which appointment shall remain in full force and effect unless and until the Agent shall have received prior written notice signed by New Borrower that such appointment has been revoked and that another Borrower has been appointed as agent for all Borrowers.  New Borrower hereby irrevocably appoints and authorizes Boot Barn to, notwithstanding anything in the Credit Agreement to the contrary, (i) provide the Agent with all notices with respect to Loans obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and (ii) take such action as Boot Barn deems appropriate on its behalf to obtain Loans and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of the Credit Agreement and the Other Documents.  It is understood that the handling of the Borrower’s Account and Collateral of Borrowers in a combined fashion is done solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of Borrowers in the most

 
efficient and economical manner and at their request, and that neither the Agent nor any Lender shall incur liability to any Borrower as a result thereof.  New Borrower expects to derive benefit, directly or indirectly from the handling of the Borrower’s Account and the Collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful performance of the integrated group.  To induce the Agent and the Lenders to do so, and in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify the Agent and each Lender and hold the Agent and each Lender harmless against any and all liability, expense, loss or claim of damage or injury, made against the Agent or any Lender by any Borrower or by any third party whosoever arising from or incurred by reason of (a) the handling of the Borrower’s Account and Collateral of Borrowers as herein provided, (b) the Agent and Lenders reliance on any instructions of Boot Barn or (c) any other action taken by the Agent or any Lender hereunder or under the Other Documents except that Borrowers will have no liability to the Agent or the relevant Lender with respect to any liability that has been determined by a court of competent jurisdiction (pursuant to a final judgment which is no longer appealable) to have resulted solely from the gross negligence, bad faith or willful misconduct of the Agent or such Lender, as the case may be.
 
[signature page follows]

 
IN WITNESS WHEREOF , New Borrower, Parent Holdco, and Boot Barn have executed and delivered this Joinder as part of the Credit Agreement as of the date and year first set forth above.

 	[                                                          ] ,	
 	a	 	

 	By	 	
 	Name	 	
 	Title	 	

 	BOOT BARN, INC. ,	
 	a Delaware corporation, as Borrower	

 	By	 	
 	Name	 	
 	Title	 	

 	BOOT BARN HOLDING CORPORATION ,	
 	a Delaware corporation, as Parent Holdco	

 	By	 	
 	Name	 	
 	Title	 	

ACCEPTED AND AGREED
 
GOLUB CAPITAL LLC ,
as Agent

By	 	 	
Name	 	 	
Title	 	 	

 
EXHIBIT 8.1
 
INTERCREDITOR AGREEMENT
 
THIS INTERCREDITOR AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof, this “Agreement”) is entered into as of May 31, 2013, by and among PNC BANK, NATIONAL ASSOCIATION , as Revolving Agent (as defined below), and GOLUB CAPITAL LLC , as Term Loan Agent (as defined below).  Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in Section 1 hereof.
 
RECITALS
 
A.                                     Boot Barn, Inc., a Delaware corporation (“Borrower”), Boot Barn Holding Corporation, a Delaware corporation (“Holdco”), the other “Loan Parties” party thereto from time to time, Term Loan Agent and Term Loan Lenders (as defined below) have entered into a Term Loan and Security Agreement of even date herewith (as the same may be amended, restated, supplemented or otherwise modified from time to time as permitted hereunder, the “Term Loan Credit Agreement”) pursuant to which, among other things, Term Loan Lenders have agreed, subject to the terms and conditions set forth in the Term Loan Credit Agreement, to make certain loans and financial accommodations to Borrower.  All of the Obligors’ (as defined below) obligations to the Term Loan Agent and Term Loan Lenders under the Term Loan Credit Agreement and the other Term Loan Financing Documents (as defined below) are secured by the Term Loan Collateral (as defined below).
 
B.                                     Borrower, Holdco, the other “Loan Parties” party thereto from time to time, Revolving Agent and Revolving Loan Lenders (as defined below) have entered into a Second Amended and Restated Revolving Credit and Security Agreement of even date herewith (as the same may be amended, restated, supplemented or otherwise modified from time to time as permitted hereunder, the “Revolving Loan Credit Agreement”) pursuant to which, among other things, Revolving Loan Lenders have agreed, subject to the terms and conditions set forth in the Revolving Loan Credit Agreement, to make certain revolving loans and financial accommodations available to Borrower.  All of the Obligors’ obligations to the Revolving Agent and Revolving Loan Lenders under the Revolving Loan Credit Agreement and the other Revolving Loan Financing Documents (as defined below) are secured by the Revolving Loan Collateral (as defined below).
 
C .                                     As an inducement to and as one of the conditions precedent to the agreement of Term Loan Agent and Term Loan Lenders to consummate the transactions contemplated by the Term Loan Credit Agreement, and to the agreement of Revolving Agent and Revolving Loan Lenders to consummate the transactions contemplated by the Revolving Loan Credit Agreement, each of such Persons has required the execution and delivery of this Agreement by the other parties hereto in order to set forth the relative rights and priorities of the Term Loan Creditors and the Revolving Loan Creditors in respect of the Collateral.
 
NOW, THEREFORE , in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows:

 
1.                                       Definitions .
 
1.1.                             UCC Definitions .  The following terms which are defined in Article 9 of the Uniform Commercial Code in effect from time to time in the State of New York are used herein as so defined: Account, Chattel Paper, Commercial Tort Claims, Deposit Account, Documents, General Intangible, Instrument, Inventory, Letter of Credit Rights, Proceeds, Securities Account and Supporting Obligations.
 
1.2.                             General Terms .   As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and the plural forms of the terms defined:
 
“Access Period” has the meaning set forth in Section 5(a) .
 
“Access Termination Date” has the meaning set forth in Section 5(a) .
 
“Agent” shall mean either or both of Revolving Agent and Term Loan Agent, as context requires.
 
“Bankruptcy Code” shall mean the provisions of Title 11 of the United States Code, 11 U.S.C. §§101 et seq .
 
“Borrower” has the meaning set forth in the preamble hereof and includes its successors and assigns, including without limitation, any receiver, trustee or debtor-in-possession on behalf of the Borrower or on behalf of any successor or assign.
 
“Business Day” shall mean any day that is not a Saturday, a Sunday or a day on which commercial banks in Chicago, Illinois or East Brunswick, New Jersey are authorized by law to close.
 
“Cash Management Liabilities” shall have the meaning set forth in the Revolving Loan Credit Agreement.
 
“Collateral” shall mean the Term Loan Collateral and the Revolving Loan Collateral, collectively.
 
“DIP Financing” shall mean financing provided to any Obligor or Obligors as debtor(s)-in-possession (or a trustee appointed on behalf of such Obligor or Obligors) pursuant to Section 364 of the Bankruptcy Code.
 
“Distribution” shall mean, with respect to any indebtedness or obligation, (a) any payment or distribution by any Person of cash, securities or other property, by set-off or otherwise, on account of such indebtedness or obligation or (b) any redemption, purchase or other acquisition of such indebtedness or obligation by any Person.
 
“Documents” shall mean the Term Loan Financing Documents and the Revolving Loan Financing Documents, collectively.
 
2 

 
“Enforcement Action” shall mean, upon the occurrence and during the continuation of an Event of Default, the exercise of remedies by a Secured Creditor consisting of: (i) any action by any Secured Creditor to foreclose on the Lien of such Person in any Collateral, (ii) any action by any Secured Creditor to take possession of, or sell or otherwise realize upon, or to exercise any other rights or remedies with respect to, any Collateral, including, without limitation, a sale or other disposition of any Collateral by an Obligor with the consent of, or at the direction of, a Secured Creditor, including, but not limited to, taking, or directing the disposition of, cash in deposit, securities and other similar accounts, or otherwise exercising control over such accounts, in each case, pursuant to account control agreements, (iii) the taking of any other actions by a Secured Creditor to collect or enforce all or any part of the Obligations payable to such Secured Creditor or any claims in respect thereof against any of any Obligor’s property or assets, including the taking of control or possession of, or the exercise of any right of setoff with respect to, any property or assets of any Obligor or the sale or other disposition of any interest in such property or assets (other than, in each case, as an unsecured creditor of any Obligor), and/or (iv) the commencement by any Secured Creditor of any legal proceedings or actions against or with respect to any of any Obligor’s property or assets or any Collateral to facilitate the actions described in clauses (i), (ii) and (iii) above, including any Insolvency Proceeding and action to have the automatic stay lifted in any Insolvency Proceeding of an Obligor (other than as an unsecured creditor of any Obligor); provided , that none of the following shall be deemed to be an Enforcement Action: (A) the filing of any notice of or voting any claim in any Insolvency Proceeding involving an Obligor as an unsecured creditor thereof or otherwise not initiated or joined in violation of this Agreement, (B) the making of any argument, or the filing of any objection, pleading or motion, by any Secured Creditor to preserve or protect its Lien on the Collateral that is not otherwise in contravention of this Agreement, (C) the establishment of reserves against the Formula Amount (as defined in the Revolving Loan Credit Agreement), excluding assets from the Formula Amount provided for under the Revolving Loan Credit Agreement, or the establishment of other terms or conditions for revolving loans and letters of credit under the Revolving Loan Credit Agreement in accordance with the terms thereof, (D) making a demand for payment or accelerating any indebtedness in accordance with the terms of the applicable Documents, (E) the imposition of a default rate of interest or, subject to the limitations set forth in Section 6.2, increase in “grid” pricing or a late fee, (F) the taking of any action in connection with the verification of Accounts or the attempt to receive, or the receipt of, collections of Accounts by Revolving Agent as contemplated by Section 4.15 of the Revolving Loan Credit Agreement, and (G) the suspension or termination of the commitments to lend under the Revolving Loan Financing Documents, including upon the occurrence of a default or the existence of an overadvance.
 
“Event of Default” shall mean each “Event of Default” or similar term, as such term is defined in any Term Loan Financing Document or any Revolving Loan Financing Document.
 
“Hedge Liabilities” shall have the meaning set forth in the Revolving Loan Credit Agreement.
 
“Insolvency Proceeding” shall mean, as to any Obligor, any of the following:  (i) any case or proceeding with respect to such Person under the Bankruptcy Code or any other
 
3 

 
bankruptcy, insolvency, reorganization or other law affecting creditors’ rights or any other or similar proceedings seeking any stay, reorganization, arrangement, composition or readjustment of the obligations and indebtedness of such Obligor; (ii) any proceeding seeking the appointment of any trustee, receiver, liquidator, custodian or other insolvency official with similar powers with respect to such Obligor or any of its assets; (iii) any proceeding for liquidation, dissolution or other winding up of the business of such Obligor; or (iv) any assignment for the benefit of creditors or any marshaling of assets of such Obligor.
 
“Junior Agent” shall mean (a) with respect to any Revolving Loan Priority Collateral, the Term Loan Agent and (b) with respect to any Term Loan Priority Collateral, the Revolving Agent.
 
“Junior Collateral” shall mean with respect to any Junior Creditor, any Collateral on which it has a Junior Lien.
 
“Junior Creditors” shall mean (a) with respect to the Revolving Loan Priority Collateral, all Term Loan Creditors and (b) with respect to the Term Loan Priority Collateral, all Revolving Loan Creditors.
 
“Junior Documents” shall mean, collectively, with respect to any Junior Obligations, the Documents relating to, or otherwise evidencing, such Junior Obligations.
 
“Junior Liens” shall mean (a) with respect to the Revolving Loan Priority Collateral, all Liens held by any Term Loan Creditor securing the Term Loan Obligations and (b) with respect to the Term Loan Priority Collateral, all Liens held by any Revolving Loan Creditor securing the Revolving Loan Obligations.
 
“Junior Obligations” shall mean (a) with respect to any Revolving Loan Priority Collateral, all Term Loan Obligations and (b) with respect to any Term Loan Priority Collateral, all Revolving Loan Obligations.
 
“Junior Security Documents” shall mean with respect to any Junior Creditor, the Documents that secure the Junior Obligations.
 
“Lien” shall mean any mortgage, deed of trust, pledge, lien (statutory or otherwise), security interest, charge or other encumbrance or security or preferential arrangement of any nature, including any conditional sale or title retention arrangement, any capitalized lease and any assignment, deposit arrangement or financing lease intended as, or having the effect of, security.
 
“Maximum Principal Amount of Revolving Loan Debt” shall mean, as of any date of determination, the sum of (1) the aggregate outstanding principal amount of advances and undrawn face amount of letters of credit made or issued pursuant to the Revolving Loan Financing Documents not exceeding (a) the lesser of (i) 120% of the Formula Amount (as defined in the Revolving Loan Credit Agreement) and (ii) $72,000,000 minus (b) any permanent reductions of the Maximum Revolving Advance Amount (as defined in the Revolving Loan Credit Agreement) (other than any such reduction due to the occurrence of any Insolvency
 
4 

 
Proceeding or due to a refinancing or replacement of the Revolving Loan Credit Agreement), plus (c) protective advances provided for under the Revolving Loan Credit Agreement of up to $2,000,000 in principal amount, plus (d) following the commencement and continuation of any Insolvency Proceeding, 10% of the Maximum Revolving Advance Amount in effect immediately prior to the commencement of such Insolvency Proceeding to the extent such additional amount is used by Revolving Creditors to provide a DIP Financing to the Obligors which is not prohibited by this Agreement plus (2) $2,000,000 in the aggregate with respect to Cash Management Liabilities and Hedge Liabilities.
 
“Maximum Principal Amount of Term Loan Debt” shall mean, as of any date of determination, the aggregate outstanding principal amount of loans (other than payments made in kind) made pursuant to the Term Loan Financing Documents equal to $120,000,000, reduced by the amount of any principal repayments to the extent that such repayments may not be reborrowed.
 
“Obligations” shall mean the Term Loan Obligations and the Revolving Loan Obligations, collectively.
 
“Obligor” shall mean the Borrower, Holdco and each other Person that becomes liable on or in respect of any of the Obligations, and each other Person that has granted a Lien on any Collateral for any Obligations, together with each such Person’s successors and assigns, including a receiver, trustee or debtor-in-possession on behalf of such Person.
 
“Paid in Full” shall mean, with respect to any Obligations, that:  (a) all of such Obligations (other than contingent indemnification obligations as to which no claim has been made) have been, subject only to Section 8.4 below, paid, performed or discharged in full in cash or cash equivalents acceptable to the Secured Creditor to whom such Obligations are owed, (b) no Person has any further right to obtain any loans, letters of credit, bankers’ acceptances, or other extensions of credit under the Documents relating to such Obligations and (c) with respect to the applicable Revolving Loan Obligations, Revolving Agent has received the Required Cash Collateral.
 
“Permitted Collateral Sale” shall mean (i) any sale or other disposition of Collateral permitted under both the Term Loan Credit Agreement and the Revolving Loan Credit Agreement, each as in effect on the date hereof, and (ii) any other sales or dispositions of Collateral permitted by the Term Loan Required Lenders and the Revolving Loan Required Lenders, other than any such sale or disposition occurring or effected under any circumstance or condition described in the definition of the term “Release Event.”
 
“Permitted Reorganization Securities” shall mean any debt or equity securities which are distributed to the Junior Creditors in an Insolvency Proceeding which are subordinated to the Junior Obligations as to Liens and have payment terms no less favorable to the Senior Creditors than the terms of the Junior Obligations related thereto.
 
“Person” shall mean an individual, corporation, partnership, limited liability company, limited liability partnership, association, joint-stock company, trust, unincorporated organization, joint venture, governmental authority or other regulatory body.
 
5 

 
“Pledged Collateral” has the meaning set forth in Section 3.4(a) .
 
“Purchase Notice” has the meaning set forth in Section 6.1 .
 
“Release Documents” has the meaning set forth in Section 6.5 .
 
“Release Event” shall mean (i) the occurrence and continuance of an Event of Default and the taking of any Enforcement Action by the Senior Agent or any Senior Creditor against any Senior Collateral, which such Enforcement Action is conducted in a commercially reasonable manner, or (ii) after the occurrence and during the continuance of an Insolvency Proceeding by or against any Obligor, the entry of an order of the court having jurisdiction over such Insolvency Proceeding authorizing the sale of all or any portion of any Senior Collateral, including, without limitation, any such order entered by a bankruptcy court pursuant to Section 363 or Section 1129 of the Bankruptcy Code authorizing the sale of all or any portion of any Senior Collateral, in each case, which sale has been consented to by the Senior Agent with respect thereto.
 
“Required Cash Collateral” shall mean, as of any date of determination, either (a) cash collateral in the sum of (i) 105% of the maximum undrawn face amount of all letters of credit then outstanding under the Revolving Loan Credit Agreement plus (ii) the lesser of (A) $2,000,000 and (B) the amount determined by Revolving Agent as the exposure of the applicable Revolving Loan Creditors with respect to Cash Management Liabilities and Hedge Liabilities then outstanding under the Revolving Loan Financing Documents or (b) if consented to by Revolving Agent, a stand-by letter of credit in form, and issued by a bank, satisfactory to Revolving Loan Agent in the face amount of the sum set forth in the foregoing clause (a).
 
“Revolving Agent” shall mean PNC Bank, National Association, as Agent under the Revolving Loan Credit Agreement and its successors and assigns in such capacity (including one or more other similar agents or similar contractual representatives for one or more lenders that at any time succeeds to or refinances, replaces or substitutes for any or all of the Revolving Loan Obligations at any time and from time to time).
 
“Revolving Loan Collateral” shall mean all assets and properties of any Obligor or its estate of any kind whatsoever, real or personal, tangible or intangible and wherever located (including any stock, partnership interest, membership interests or other equity securities), whether now owned or hereafter acquired, upon which a Lien is now or hereafter granted or purported to be granted by such Person in favor of any or all of the Revolving Loan Creditors, as security for all or any part of the Revolving Loan Obligations, and the Proceeds (including insurance proceeds) thereof.
 
“Revolving Loan Credit Agreement” has the meaning set forth in the recitals hereto.
 
“Revolving Loan Creditors” shall mean the Revolving Agent, the Revolving Loan Lenders and any other Person holding any portion of the Revolving Loan Obligations, collectively.
 
6 

 
“Revolving Loan Default Notice” shall mean with respect to any Event of Default under the Revolving Loan Financing Documents, a written notice from the Revolving Agent to the Term Loan Agent describing such Event of Default in reasonable detail and stating that the Revolving Agent, or any other applicable Revolving Loan Creditors, intend to take Enforcement Actions with respect thereto.
 
“Revolving Loan Financing Documents” shall mean the Revolving Loan Credit Agreement, all “Other Documents” (as such term is defined in the Revolving Loan Credit Agreement) and all other agreements, documents and instruments at any time executed and/or delivered by any Obligor or any other Person with, to or in favor of the Revolving Loan Creditors in connection therewith or related thereto, including such documents evidencing successive refundings or refinancings of the Revolving Loan Obligations in whole or in part, in each case, as amended, restated, supplemented or otherwise modified from time to time as permitted hereunder.
 
“Revolving Loan Lender” shall mean all lenders from time to time party to the Revolving Loan Credit Agreement in their capacities as such.
 
“Revolving Loan Obligations” shall mean all “Obligations” as defined in the Revolving Loan Credit Agreement, and all other obligations, liabilities and indebtedness of every kind, nature and description owing by the Borrower or any other Obligor to the Revolving Loan Creditors evidenced by or arising under one or more of the Revolving Loan Financing Documents, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including principal, interest, charges, fees, costs, indemnities and reasonable expenses, however evidenced, and whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Revolving Loan Credit Agreement, whether arising before, during or after the commencement of any Insolvency Proceeding with respect to any Obligor (and including the payment of interest, fees, costs, expenses, charges and other amounts which would accrue and become due but for the commencement of such Insolvency Proceeding, but only to the extent such interest is allowed in whole or in part in any such Insolvency Proceeding).
 
“Revolving Loan Priority Collateral” shall mean all Revolving Loan Collateral consisting of Accounts, Inventory, related Documents, Instruments, books and records, Deposit Accounts and Securities Accounts (except to the extent established to hold proceeds of Term Loan Priority Collateral), contracts giving rise to Accounts, Supporting Obligations for Accounts, payment intangibles related to any of the foregoing, claims arising from or with respect to any of the foregoing, and all products and Proceeds (in any form, including insurance proceeds) of any of the foregoing (but excluding any of the foregoing to the extent arising from the sale, lease, license, assignment or other disposition of, or constituting the identifiable Proceeds of, Term Loan Priority Collateral).
 
“Revolving Loan Required Lenders” shall mean “Required Lenders” as such term is defined in the Revolving Loan Credit Agreement except with respect matters requiring the approval of all affected or all Revolving Loan Lenders in accordance with the Revolving Loan Credit Agreement, in which case, Revolving Loan Required Lenders shall mean such affected or all Revolving Loan Lenders.
 
7 

 
“Revolving Loan Termination Date” shall mean the date on which all Revolving Loan Obligations have been Paid in Full.
 
“Revolving Loan Standstill Period” shall mean each period commencing on the date of the occurrence of an Event of Default under any Revolving Loan Financing Document and ending upon the date which is 120 days after the date the Term Loan Agent has received a Revolving Loan Default Notice with respect to such Event of Default.  For the avoidance of doubt, the term “Revolving Loan Standstill Period” shall have no application with respect to, and shall in no way delay, actions taken solely with respect to the Revolving Loan Priority Collateral or which would otherwise constitute Enforcement Actions or other actions taken by Revolving Loan Creditors as unsecured creditors of the Obligors.
 
“Secured Creditors” shall mean the Term Loan Creditors and the Revolving Loan Creditors, collectively.
 
“Senior Agent” shall mean (a) with respect to any Revolving Loan Priority Collateral, the Revolving Agent and (b) with respect to any Term Loan Priority Collateral, the Term Loan Agent.
 
“Senior Collateral” shall mean with respect to any Senior Creditor, any Collateral on which it has a Senior Lien.
 
“Senior Creditors” shall mean (a) with respect to the Revolving Loan Priority Collateral, all Revolving Loan Creditors and (b) with respect to the Term Loan Priority Collateral, all Term Loan Creditors.
 
“Senior Documents” shall mean (a) with respect to Revolving Loan Priority Collateral, all Revolving Loan Financing Documents and (b) with respect to the Term Loan Priority Collateral, the Term Loan Financing Documents.
 
“Senior Liens” shall mean (a) with respect to the Revolving Loan Priority Collateral, all Liens granted to any Revolving Loan Creditor securing the Revolving Loan Obligations and (b) with respect to the Term Loan Priority Collateral, all Liens granted to any Term Loan Creditor securing the Term Loan Obligations.
 
“Senior Loan Termination Date” shall mean with respect to any Senior Obligations, the date on which such Obligations have been Paid In Full.
 
“Senior Obligations” shall mean (a) with respect to any Revolving Loan Priority Collateral, all Revolving Loan Obligations and (b) with respect to any Term Loan Priority Collateral, all Term Loan Obligations.
 
“Senior Security Documents” shall mean with respect to any Senior Creditor, the Documents that secure the Senior Obligations.
 
8 

“Standstill Period” shall mean (a) as to any Enforcement Action to be taken by Revolving Agent with respect to Term Loan Priority Collateral, the Revolving Loan Standstill Period and (b) as to any Enforcement Action to be taken by Term Loan Agent with respect to Revolving Loan Priority Collateral, the Term Loan Standstill Period.
 
“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the equity interests having ordinary voting power for the election of directors or other governing body are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.
 
“Term Loan Agent” shall mean Golub Capital LLC, a Delaware limited liability company, in its capacity as Administrative Agent for the Term Loan Lenders under the Term Loan Financing Documents, and its successors and assigns in such capacity (including one or more other similar agents or similar contractual representatives for one or more lenders that at any time succeeds to or refinances, replaces or provides substitute funding for any or all of the Term Loan Obligations at any time and from time to time).
 
“Term Loan Collateral” shall mean all assets and properties of any Obligor or its estate of any kind whatsoever, real or personal, tangible or intangible and wherever located (including any stock, partnership interest, membership interests or other equity securities), whether now owned or hereafter acquired, upon which a Lien is now or hereafter granted or purported to be granted by such Person in favor of any or all of the Term Loan Creditors, as security for all or any part of the Term Loan Obligations, and the Proceeds (including insurance proceeds) thereof.
 
“Term Loan Credit Agreement” has the meaning set forth in the recitals hereof.
 
“Term Loan Creditors” means the Term Loan Agent and the Term Loan Lenders, collectively.
 
“Term Loan Default Notice” means with respect to any Event of Default under the Term Loan Financing Documents, a written notice from the Term Loan Agent to the Revolving Agent describing such Event of Default in reasonable detail and stating that the Term Loan Agent, or any other applicable Term Loan Creditors, intend to take Enforcement Actions with respect thereto.
 
“Term Loan Financing Documents” means the Term Loan Credit Agreement, all “Other Documents” (as such term is defined in the Term Loan Credit Agreement) and all other agreements, documents and instruments at any time executed and/or delivered by any Obligor or any other Person with, to or in favor of the Term Loan Agent or any other Term Loan Creditor in connection therewith or related thereto, including documents evidencing a replacement, substitution, renewal or refinancing of the Term Loan Obligations, in each case, as amended, restated, supplemented or otherwise modified from time to time as permitted hereunder.
 
“Term Loan Lenders” means all lenders from time to time party to the Term Loan Credit Agreement in their capacities as such.
 
9 

 
“Term Loan Obligations” means all obligations, liabilities and indebtedness of every kind, nature and description owing by the Borrower, or any other Obligor to the Term Loan Creditors evidenced by or arising under the Term Loan Financing Documents, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including principal, interest, charges, fees, costs, indemnities and expenses, however evidenced, and whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Term Loan Credit Agreement whether arising before, during or after the commencement of any Insolvency Proceeding with respect to any Obligor (and including the payment of any principal, interest, fees, cost, expenses, charges and other amounts which would accrue and become due but for the commencement of such Insolvency Proceeding but only to the extent that such amounts are allowed in whole or in part in any such Insolvency Proceeding).
 
“Term Loan Priority Collateral” means all Term Loan Collateral other than the Revolving Loan Priority Collateral.
 
“Term Loan Required Lenders” shall mean “Required Lenders” as such term is defined in the Term Loan Credit Agreement except with respect matters requiring the approval of all affected or all Term Loan Lenders in accordance with the Term Loan Credit Agreement, in which case, Term Loan Required Lenders shall mean such affected or all Term Loan Lenders.
 
“Term Loan Standstill Period” means each period commencing on the date of the occurrence of an Event of Default under any Term Loan Financing Document and ending upon the date which is 120 days after the date the Revolving Agent has received a Term Loan Default Notice with respect to such Event of Default.  For the avoidance of doubt, the term “Term Loan Standstill Period” shall have no application with respect to actions taken solely with respect to the Term Loan Priority Collateral or which would otherwise constitute Enforcement Actions or other actions taken by Term Loan Creditors as unsecured creditors of the Obligors.
 
“Term Loan Termination Date” means the date on which all Term Loan Obligations have been Paid in Full.
 
“Trigger Event” has the meaning set forth in Section 6.1 .
 
“UCC” means the UCC as in effect from time to time in the State of New York.
 
1.3.         Certain Matters of Construction .  The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement and section references are to this Agreement unless otherwise specified.  For purposes of this Agreement, the following additional rules of construction shall apply:  (i) wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter; (ii) the term “including” shall not be limiting or exclusive, unless specifically indicated to the contrary; (iii) all references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations; and (iv) unless otherwise specified, all references to any instruments or agreements, including
 
10 

 
references to any of this Agreement and the Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof, in each case, to the extent permitted under the terms hereof.
 
2.             Security Interests; Priorities .
 
2.1.         Priorities .   The Term Loan Creditors hereby acknowledge that the Revolving Agent has been granted Liens upon the Collateral to secure the Revolving Loan Obligations.  The Revolving Loan Creditors hereby acknowledge that the Term Loan Agent has been granted Liens upon the Collateral to secure the Term Loan Obligations.  Any Senior Lien in respect of any Collateral is and shall be senior and prior to the Junior Lien in respect of such Collateral.  The priorities of the Liens provided in this Section 2.1 shall not be altered or otherwise affected by any amendment, modification, supplement, extension, renewal, restatement, replacement or refinancing of any of the Obligations, nor by any action or inaction which any of the Secured Creditors or any Obligor may take or fail to take in respect of the Collateral.  The priorities given to the Senior Liens pursuant to this Section 2.1 and the terms of this Agreement shall continue to govern the relative rights and priorities of the Liens of the Secured Creditors in and to the Collateral even if all or any part of such Senior Liens are subordinated, avoided, disallowed, unperfected, set aside or otherwise invalidated, whether pursuant to an Insolvency Proceeding, any other judicial proceeding or otherwise, and this Agreement shall be reinstated if at any time any payment of any of the Obligations is rescinded or must be returned by any holder thereof or any representative of such holder in connection with any such Insolvency Proceeding, any other judicial proceeding or otherwise.
 
2.2.         No Alteration of Priority .   The priorities set forth in this Agreement are applicable irrespective of the order or time of attachment, or the order, time or manner of grant, or the order, time or manner of perfection, or the order or time of filing or recordation of any document or instrument, or other method of perfecting a Lien, if any, in favor of each Secured Creditor in any of the Collateral, or the failure of any Lien granted in any of the Collateral to be perfected, and notwithstanding any conflicting terms or conditions which may be contained in any of the Documents.  Except as to any “Permitted Encumbrance” (as defined in the Senior Documents as in effect on the date hereof) or in connection with any plan in an Insolvency Proceeding which does not conflict with this Agreement and has been duly approved in accordance with the laws governing such Insolvency Proceeding, Senior Agent agrees not to enter into any agreement with another creditor of the Borrower or any Obligor to subordinate the Senior Lien of the Senior Creditors in any Senior Collateral under the Senior Security Documents to the Lien of such other creditor in the Senior Collateral, or to subordinate the right of the Senior Creditors to the payment of the Senior Obligations to the payment of the indebtedness or claim of any other creditor of the Borrower or any Obligor, in each case without the prior written consent of Junior Required Lenders.
 
2.3.         Perfection .   Except as provided in Section 3.4 , each Secured Creditor shall be solely responsible for perfecting and maintaining the perfection of its Lien in and to each item constituting the Collateral in which such Secured Creditor has been granted a Lien.  The provisions of this Agreement are intended solely to govern the respective Lien priorities as among the Secured Creditors and shall not impose on any Secured Creditor any obligations in
 
11 

 
respect of the disposition of proceeds of any Collateral that would conflict with prior perfected claims therein in favor of any other Person other than the Secured Creditors or any order or decree of any court or governmental authority or any applicable law.  Each Secured Creditor agrees that it will not institute, solicit or join in any contest of the validity, perfection, priority or enforceability of the Liens of the other Secured Creditors in the Collateral.
 
2.4.         Proceeds of Collateral .   All net proceeds of any Senior Collateral (including insurance proceeds) received by the Junior Agent or any other Junior Creditor in connection with or pursuant to an Enforcement Action, or otherwise in a manner not permitted by the terms of this Agreement, shall be forthwith paid over, in the funds and currency received, to the Senior Agent for application to the Senior Obligations.  All net proceeds of any Senior Collateral received by the Senior Agent after the Senior Loan Termination Date shall be forthwith paid over, in the funds and currency received (with any necessary endorsements), to the Junior Creditors for application to the Junior Obligations.
 
2.5.         Release of Collateral Upon Permitted Collateral Sale .  The Junior Agent shall at any time in connection with any Permitted Collateral Sale:  (i) upon the request of the Senior Agent with respect to the Senior Collateral subject to such Permitted Collateral Sale, release or otherwise terminate its Liens on such Senior Collateral; (ii) deliver such terminations of financing statements, partial lien releases, mortgage satisfactions and discharges, endorsements, guarantee releases, assignments or other instruments of transfer, termination or release (collectively, “Release Documents”) and take such further actions as the Senior Agent shall reasonably require in order to release and/or terminate such Junior Agent’s Liens on the Senior Collateral subject to such Permitted Collateral Sale; provided , that , if the closing of the sale or disposition of the Senior Collateral is not consummated, the Senior Agent shall promptly return all Release Documents to the Junior Agent; and (iii) be deemed to have consented (along with the other Junior Creditors) under the Junior Documents to such Permitted Collateral Sale free and clear of the Junior Agent’s Liens thereon; provided , that , the Junior Creditors shall, subject to the provisions of Section 4 of this Agreement, retain their rights with respect to the proceeds of such Senior Collateral.
 
2.6.         Release of Collateral Upon Release Event .   The Junior Agent shall at any time in connection with a Release Event with respect to any Senior Collateral:  (i) upon the request of the Senior Agent with respect to the Senior Collateral subject to such Release Event (which request will generally describe the Senior Collateral to be sold, and, if known to the Senior Agent, specify the proposed terms of the sale and the type and amount of consideration expected to be received in connection therewith, unless such information has already been forwarded to the Junior Agent by the applicable Obligor), release or otherwise terminate its Liens on such Senior Collateral, to the extent such Senior Collateral is to be sold or otherwise disposed of either by (A) the Senior Agent or its agents or representatives, or (B) any Obligor with the consent or at the direction of the Senior Creditors; (ii) be deemed to have consented (along with the other Junior Creditors) under the Junior Documents to such Release Event free and clear of the Junior Agent’s Liens (and waived the provisions of the Junior Documents to the extent necessary to permit such transaction); provided , that , the Junior Creditors shall, subject to the provisions of Section 4 of this Agreement, retain their rights with respect to the proceeds of such Senior Collateral and (iii) the Junior Agent shall deliver such Release Documents and take such
 
12 

 
further actions as the Senior Agent may reasonably require in connection therewith; provided , that , no such release and/or authorization documents shall be required to be delivered (1) to any Obligor or (2) more than two (2) Business Days prior to the date of the closing of such Release Event; provided, further, if the closing of the sale or disposition of the Senior Collateral subject to such Release Event is not consummated, the Senior Agent shall promptly return all Release Documents to the Junior Agent.
 
2.7.         Power of Attorney .   With respect to any Senior Collateral, Junior Agent hereby irrevocably constitutes and appoints the Senior Agent and any officer of the Senior Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Junior Agent and in the name of the Junior Agent or in the Senior Agent’s own name, from time to time in the Senior Agent’s discretion, for the purpose of carrying out the terms of Sections 2.6 and 2.10 hereof, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of such Sections, including any Release Documents and, in addition, to take any and all other appropriate and commercially reasonable action for the purpose of carrying out the terms of such Sections.  The Junior Agent, as applicable, on behalf of itself and each of the other Junior Creditors, hereby ratifies all that said attorneys shall lawfully do or cause to be done pursuant to the power of attorney granted in this Section 2.7 .  No Person to whom this power of attorney is presented, as authority for the Senior Agent to take any action or actions contemplated hereby, shall be required to inquire into or seek confirmation from the Junior Agent as to the authority of the Senior Agent to take any action described herein, or as to the existence of or fulfillment of any condition to this power of attorney, which is intended to grant to the Senior Agent unconditionally the authority to take and perform the actions contemplated herein.  The Junior Agent, on behalf of itself and each of the other Junior Creditors, irrevocably waives any right to commence any suit or action, in law or equity, against any Person which in good faith acts in reliance upon or acknowledges the authority granted under this power of attorney.
 
2.8.         Waiver .   Subject to the other terms and conditions of this Agreement, each of the Junior Creditors waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations under the Senior Documents and notice of or proof of reliance by the Senior Creditors upon this Agreement and protest, demand for payment or notice except to the extent otherwise specified herein.  Each of the Junior Creditors acknowledges and agrees the Senior Creditors have relied upon the Lien priority and other provisions hereof in entering into the Senior Documents and in making funds available the Borrower thereunder.  The Senior Agent acknowledges and agrees the Junior Creditors have relied upon the lien priority and other provisions hereof in entering into the Junior Documents and in making funds available to the Borrower thereunder.
 
2.9.         Notice of Interest In Collateral .   This Agreement is intended, in part, to constitute an authenticated notification of a claim by each Agent to the other Agent of an interest in all or a portion of the Collateral in accordance with the provisions of Sections 9-611 and 9-621 of the UCC.
 
2.10.       Insurance Matters .   Until the Senior Obligations have been Paid in Full, the Senior Agent shall have the sole and exclusive right, as against the Junior Creditors, to adjust
 
13 

 
settlement of insurance claims in a commercially reasonable manner in the event of any covered loss, theft or destruction of any Senior Collateral.  All proceeds of such insurance shall be applied as set forth in Section 4 .  The Junior Creditors shall cooperate (if necessary) in a reasonable manner in effecting the payment of insurance proceeds to the holders of Senior Obligations (or any representative thereof), including without limitation, providing any necessary endorsements.  In the event the Senior Documents as in effect on the date hereof permits any Obligor to utilize the proceeds of insurance to replace Senior Collateral, the Junior Creditors shall be deemed to have consented to such use of proceeds.
 
2.11.       Similar Liens and Agreements .   The parties hereto agree, subject to the other provisions of this Agreement:
 
(a)           upon request by the Term Loan Agent or the Revolving Agent, to cooperate in good faith (and to direct their counsel to cooperate in good faith) from time to time in order to determine the specific items included in the Collateral and the steps taken to perfect their respective Liens thereon and the identity of the respective parties obligated under the Term Loan Financing Documents and the Revolving Loan Financing Documents;
 
(b)           that the provisions of the documents and agreements creating or evidencing the granting of Liens in Collateral securing the Term Loan Obligations and the Revolving Loan Obligations shall be in all material respects the same form other than with respect to the priority of the Obligations thereunder; and
 
(c)           notwithstanding this Section 2.11 , the parties hereto agree that any failure by any party to comply with this Section 2.11 shall not impair or alter the priorities or rights of the parties hereto with respect to the other terms and conditions of this Agreement.
 
2.12.       No New Liens .   The parties hereto agree that no additional Liens shall be granted or permitted on any asset of the Borrower or any other Obligor to secure any Obligation unless each Agent shall have been afforded the opportunity to, immediately after giving effect to such grant or concurrently therewith, also receive a Lien on such asset to secure its Obligations (with the priorities set forth in this Agreement and, in any event, subject to all of the terms and provisions of this Agreement).  To the extent that the foregoing provisions are not complied with for any reason, without limiting any other rights and remedies available to any Person, the parties hereto hereby agree that (a) the Secured Creditor holding such Lien on such asset shall be deemed to be holding such Lien for the benefit of the other Secured Creditors as a non-fiduciary agent for such other Secured Creditors in order to ensure the creation and perfection of such Lien on such assets as Collateral for the Obligations of such other Secured Creditors and (b) amounts received by or distributed to any of them pursuant to or as a result of Liens granted in contravention of this Section 2.12 shall be subject to Section 4 .
 
3.             Enforcement of Security .
 
3.1.         Management of Collateral .  Subject to the other terms and conditions of this Agreement, the Senior Creditors shall have the exclusive right, in accordance with applicable
 
14 

 
law, to manage, perform and enforce the terms of the Senior Documents with respect to the Senior Collateral, to exercise and enforce all privileges and rights thereunder according to their discretion and the exercise of their sole business judgment, including the exclusive right to take or retake control or possession of the Senior Collateral and to hold, prepare for sale, process, sell, lease, dispose of, or liquidate the Senior Collateral and to incur expenses in connection with such sale or disposition and to exercise all the rights and remedies of a secured lender under the UCC of any applicable jurisdiction.  In conducting any public or private sale under the UCC, the Senior Agent shall give the Junior Agent such notice of such sale as may be required by the applicable UCC; provided , however , ten (10) days prior written notice shall be deemed to be commercially reasonable notice.  Junior Agent hereby agrees it shall not, directly or indirectly, take any Enforcement Actions with respect to any Senior Collateral during any Standstill Period and Term Loan Agent hereby agrees any Enforcement Action taken by Term Loan Agent or any other Term Loan Creditor with respect to Term Loan Priority Collateral during the Access Period shall be subject to, and shall not materially interfere with, Revolving Agent’s rights under Section 5 .  Subject at all times to the provisions of Section 2 and Section 6.4 , upon the expiration of the applicable Standstill Period, the Junior Agent may take any Enforcement Action with respect to Senior Collateral; provided , the Junior Agent may not take Enforcement Actions even after the expiration of the Standstill Period so long as either (a) the Senior Agent is pursuing diligently and in good faith an Enforcement Action with respect to any material portion of the Senior Collateral, or diligently attempting in good faith to vacate any stay prohibiting such an Enforcement Action or (b) an Insolvency Proceeding is continuing.  Subject at all times to the provisions of Section 2 and to the preceding sentence, if the Junior Agent commences any Enforcement Action with respect to any Senior Collateral after the Standstill Period and upon not less than ten (10) days prior written notice to Senior Agent of such intended Enforcement Action (which notice may be given during the Standstill Period) against Senior Collateral with respect to all or any material portion of the Senior Collateral, then the Senior Agent shall not take any Enforcement Action of a similar nature with respect to such Senior Collateral so long as (i) the Junior Agent is diligently pursuing in good faith such Enforcement Action and (ii) the cash proceeds from such Enforcement Action are applied in accordance with Section 4 hereof.
 
3.2.         Notices of Default .   Each Agent shall give to the other Agent (or the agent therefor) concurrently with the giving thereof to any Obligor (i) a copy of any written notice by such Agent of an Event of Default under any of its Documents or a written notice of acceleration of the Obligations and demand for payment thereof by any Obligor, and (ii) a copy of any written notice sent by such Agent to any Obligor stating such Agent’s intention to take any Enforcement Actions with respect to all or any portion of the Collateral; provided , that , except for notices expressly required to be provided by an Agent to another Agent under any other section of this Agreement or applicable law (a) no Agent shall have any obligation to provide any such notice which, in the good faith judgment of such Agent, would result in the breach of any confidentiality provisions binding on such Agent or would be prejudicial or otherwise adverse to the interests of the Secured Creditors it is acting for, (b) no Agent shall have any liability whatsoever for the failure to provide any such notice, and (c) failure to provide such notice shall not affect the validity or effectiveness of any such notice as against any Obligor.  Each Agent will provide such information as it may have to the other as the other Agent may from time to time reasonably request concerning the status of the exercise of any Enforcement Action; provided , that (a) no Agent shall have any obligation to provide any information which, in the good faith
 
15 

 
judgment of such Agent, would result in the breach of any confidentiality provisions binding on such Agent or would be prejudicial or otherwise adverse to the interests of the Secured Creditors it is acting for, (b) no Agent shall have any liability whatsoever for the failure to provide any such information and (c) failure to provide such information shall not affect the validity or effectiveness of any action taken by Agent against any Obligor or Collateral.
 
3.3.         Permitted Actions .   Nothing in this Agreement shall be construed to limit or impair in any way:  (i) the right of any Secured Creditor to bid for or purchase Collateral at any private or judicial foreclosure upon such Collateral initiated by any Secured Creditor, (ii) the right of any Secured Creditor to join (but not control) any foreclosure or other judicial lien enforcement proceeding with respect to the Senior Collateral initiated by another Secured Creditor for the sole purpose of protecting such Secured Creditor’s Lien on the Senior Collateral, so long as it does not delay or interfere with the exercise by such other Secured Creditor of its rights under this Agreement, the Documents and under applicable law, (iii) any right of the Junior Creditors to receive any remaining proceeds of Senior Collateral after the Senior Obligations have been Paid in Full, (iv) any right the Junior Creditors may have as unsecured creditors against any of the Borrower and other Obligors in accordance with the Junior Documents and applicable law (for purposes hereof, the rights of an unsecured creditor do not include a creditor that holds a judgment lien), or (v) any right the Senior Creditors may have as unsecured creditors against any of the Borrower and other Obligors in accordance with the Senior Documents or applicable law.
 
3.4.         Collateral In Possession; Deposit and Securities Accounts .
 
(a)           Each Secured Creditor agrees to hold any Collateral that can be perfected by the possession or control (within the meaning of the UCC) of such Collateral or of any deposit, securities or other similar account in which such Collateral is held, and if such Collateral or any such account is in fact in the possession or under the control of a Secured Creditor, or of agents or bailees of such Secured Creditor (such Collateral being referred to herein as the “Pledged Collateral”) as bailee and agent for and on behalf of the other Secured Creditors solely for the purpose of perfecting the security interest granted to the other Secured Creditors in such Pledged Collateral  (including, but not limited to, any securities or any deposit accounts or securities accounts, if any) pursuant to the Revolving Loan Financing Documents or Term Loan Financing Documents, as applicable, subject to the terms and conditions of this Agreement.  Prior to the Revolving Loan Termination Date, any Collateral (other than Term Loan Priority Collateral) in the possession or under the control of any Term Loan Creditor shall be forthwith delivered to the Revolving Agent, except as otherwise may be required by applicable law or court order. Prior to the Term Loan Termination Date, any Collateral (other than Revolving Loan Priority Collateral) in the possession or under the control of any Revolving Loan Creditor shall be forthwith delivered to the Term Loan Agent, except as otherwise may be required by applicable law or court order.
 
(b)           Until the Revolving Loan Termination Date has occurred, the Revolving Loan Creditors shall be entitled to deal with the Pledged Collateral consisting of Revolving Loan Priority Collateral in accordance with the terms of the Revolving Loan
 
16 

 
Financing Documents as if the Liens of the Term Loan Agent did not exist. The rights of the Term Loan Agent under this Section 3.4 shall at all times be subject to the terms of this Agreement and to the Revolving Loan Creditors’ rights under the Revolving Loan Financing Documents.  Until the Term Loan Termination Date has occurred, the Term Loan Creditors shall be entitled to deal with the Pledged Collateral consisting of Term Loan Priority Collateral in accordance with the terms of the Term Loan Financing Documents as if the Liens of the Revolving Agent did not exist. The rights of the Revolving Agent under this Section 3.4 shall at all times be subject to the terms of this Agreement and to the Term Loan Creditors’ rights under the Term Loan Financing Documents.
 
(c)           Each Secured Creditor shall have no obligation whatsoever to the other Secured Creditors to assure that the Pledged Collateral is genuine or owned by any of the Obligors or to preserve rights or benefits (including perfection of any Lien) of any Person except as expressly set forth in this Section 3.4 . The duties or responsibilities of each Secured Creditor under this Section 3.4 shall be limited solely to holding the Pledged Collateral as bailee and agent for and on behalf of the other Secured Creditors for purposes of perfecting the Lien held by such other Secured Creditors.
 
(d)           Each Secured Creditor shall not have by reason of the Revolving Loan Financing Documents, the Term Loan Financing Documents or this Agreement or any other document a fiduciary relationship in respect of the other Secured Creditors and shall not have any liability to the other Secured Creditors in connection with its holding the Pledged Collateral, other than for its gross negligence or willful misconduct as determined by a final, non-appealable order of a court of competent jurisdiction.
 
(e)           Revolving Agent agrees that (i) in connection with any Pledged Collateral consisting of Deposit Accounts, Securities Accounts or similar Collateral for which perfection is obtained by control (within the meaning of the UCC) which is under Revolving Agent’s control, upon Revolving Agent’s receipt of a Term Loan Default Notice, Revolving Agent shall, at the request of Term Loan Agent, instruct the depository bank, securities intermediary or other financial institution where such account is maintained to remit funds or other Pledged Collateral in such accounts consisting of identifiable Term Loan Priority Collateral (or Proceeds thereof) to Term Loan Agent to be applied in accordance with Section 4 .
 
(f)            Term Loan Agent agrees that in connection with any Pledged Collateral consisting of Deposit Accounts, Securities Accounts or similar Collateral for which perfection is obtained by control (within the meaning of the UCC) which is under Term Loan Agent’s control, upon Term Loan Agent’s receipt of a Revolving Loan Default Notice, Term Loan Agent shall, at the request of Revolving Agent, instruct the depository bank, securities intermediary or other financial institution where such account is maintained to remit funds or other Pledged Collateral in such accounts consisting of identifiable Revolving Loan Priority Collateral (or Proceeds thereof) to Revolving Agent to be applied in accordance with Section 4 .
 
17 

 
(g)           Upon the Revolving Loan Termination Date, to the extent permitted under applicable law, upon the request of the Term Loan Agent, the Revolving Agent shall, without recourse or warranty, transfer the possession and control of the Pledged Collateral, if any, then in its possession or control to Term Loan Agent, except in the event and to the extent (i) the Revolving Loan Creditors have retained or otherwise acquired such Collateral in full or partial satisfaction of any of the Revolving Loan Obligations and otherwise not in contravention of this Agreement, (ii) such Collateral is sold or otherwise disposed of free of Term Loan Agent’s Liens thereon by Revolving Loan Creditors or by an Obligor as provided herein or (iii) they are required to do otherwise by any order of any court or other governmental authority or applicable law.  The foregoing provision shall not impose on Revolving Loan Creditors any obligations which would conflict with prior perfected claims therein in favor of any other Person or any order or decree of any court or other governmental authority or any applicable law.  In connection with any transfer described herein to Term Loan Agent, Revolving Agent agrees to take reasonable actions in its power (with all reasonable costs and expenses in connection therewith to be for the account of the Term Loan Creditors and to be paid by Borrower) as shall be reasonably requested by the Term Loan Agent to permit the Term Loan Agent to obtain, for its benefit and the benefit of the Term Loan Creditors, a first priority perfected security interest in such Pledged Collateral.
 
(h)           Upon the Term Loan Termination Date, to the extent permitted under applicable law, upon the request of Revolving Agent, the Term Loan Agent shall, without recourse or warranty, transfer the possession and control of the Pledged Collateral, if any, then in its possession or control to Revolving Agent, except in the event and to the extent (i) the Term Loan Creditors have retained or otherwise acquired such Collateral in full or partial satisfaction of any of the Term Loan Obligations and otherwise not in contravention of this Agreement, (ii) such Collateral is sold or otherwise disposed of free of Revolving Agent’s Liens by Term Loan Creditors or by an Obligor as provided herein or (iii) they are required to do otherwise by any order of any court or other governmental authority or applicable law.  The foregoing provision shall not impose on Term Loan Creditors any obligations which would conflict with prior perfected claims therein in favor of any other Person or any order or decree of any court or other governmental authority or any applicable law.  In connection with any transfer described herein to Revolving Agent, Term Loan Agent agrees to take reasonable actions in its power (with all reasonable costs and expenses in connection therewith to be for the account of the Revolving Loan Creditors, to be due and payable by Borrower and constitute Revolving Loan Obligations) as shall be reasonably requested by the Revolving Agent to permit the Revolving Agent to obtain a first priority security interest in such Pledged Collateral.
 
3.5.         Waiver of Marshaling and Similar Rights .   Each Secured Creditor, to the fullest extent permitted by applicable law, waives as to each other Secured Creditor any requirement regarding, and agrees not to demand, request, plead or otherwise claim the benefit of, any marshaling, appraisement, valuation or other similar right that may otherwise be available under applicable law.
 
18 

3.6.         Effect of Default Waiver .  In the event that any Term Loan Default shall have occurred solely as a result of a Revolving Default, and if such Revolving Default shall have been cured by any Borrower or any Obligor or waived by the Revolving Agent or the Revolving Lender (as applicable), then (i) such Term Loan Default shall be deemed to be automatically cured by the Borrowers or such Obligor or waived by the Term Loan Agent and the Term Loan Lenders, as the case may be, and (ii) any period under Section 2.7 commenced solely on the basis of such Revolving Default and then in existence shall terminate (unless at such time the Term Loan Agent and the Term Loan Lenders shall be entitled to commence such a period on the basis of any other Term Loan Default) for all purposes hereunder and the Term Loan Agent and the Term Loan Lenders shall cease any remedial actions commenced and then continuing in connection with such Term Loan Default.  In the event that any Revolving Default shall have occurred solely as a result of a Term Loan Default, and if such Term Loan Default shall have been cured by any Borrower or any Obligor or waived by the Term Loan Agent or the Term Loan Lenders (as applicable), then (i) such Revolving Default shall be deemed to be automatically cured by the Borrowers or such Obligor or waived by the Revolving Agent and the Revolving Lenders, as the case may be, and (ii) any period under Section 2.7 commenced solely on the basis of such Term Loan Default and then in existence shall terminate (unless at such time the Revolving Lender shall be entitled to commence such a period on the basis of any other Revolving Default) for all purposes hereunder and the Revolving Lender shall cease any remedial actions commenced and then continuing in connection with such Revolving Default.
 
4.             Application of Proceeds of Senior Collateral .  The Senior Agent and Junior Agent hereby agree that, as between the Senior Creditors, on the one hand, and the Junior Creditors, on the other hand, all Senior Collateral, and all Proceeds thereof, received by any of them in connection with any Enforcement Action, Release Event, Permitted Collateral Sale, Insolvency Proceeding or any other collection, sale or disposition of any Senior Collateral made by or at the direction of any Secured Creditor shall be applied as follows (and the Senior Agent agrees to remit promptly to the Junior Agent any Senior Collateral and Proceeds necessary to effect such application):
 
(i)            first , to the payment of costs and expenses (including reasonable attorneys fees and expenses and court costs) of the Senior Agent in connection with such Enforcement Action, Release Event, Permitted Collateral Sale or Insolvency Proceeding,
 
(ii)           second , to the permanent repayment of the Senior Obligations in accordance with (and to the extent at such time required by) the Senior Documents until the Senior Loan Termination Date; provided that , (A) with respect to the Revolving Loan Obligations, (w) amounts shall be applied thereto in the order of priority set forth in Section 11.5 of the Revolving Loan Credit Agreement as in effect on the date hereof or as may from time to time thereafter be modified in a manner that is not adverse to the Term Loan Creditors, (x) amounts applied to the principal balance of revolving advances shall be accompanied by a permanent reduction to the Maximum Revolving Advance Amount and related commitments of the Revolving Loan Lenders under the Revolving Loan Credit Agreement, (y) cash collateral shall not exceed the
 
19 

 
Required Cash Collateral Amount and (z) any (1) principal balance of the Revolving Loan Obligations in excess of the applicable components of the Maximum Principal Amount of Revolving Loan Debt and (2) any other Revolving Loan Obligations remaining outstanding after giving effect to the entirety of this proviso, shall not be deemed to constitute Senior Obligations for purposes of this clause (ii) and instead shall be paid pursuant to clause (iv) below and (B) any principal balance of the Term Loan Obligations in excess of the Maximum Principal Amount of Term Loan Debt shall not be deemed to constitute Senior Obligations for purposes of this clause (ii) and instead shall be paid pursuant to clause (iv) below,
 
(iii)          third , to the payment of the Junior Obligations in accordance with (and to the extent at such time required by) the Junior Documents, and
 
(iv)          fourth , the balance, if any, to the Obligors or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.
 
5.             Access Rights .
 
(a)           As between the Revolving Agent and the Term Loan Agent, the Revolving Agent may enter upon any real property of an Obligor, whether leased or owned, and without obligation to pay rent or compensation to the Term Loan Creditors, may use (at Revolving Agent’s sole expense) any of the Term Loan Priority Collateral to collect Accounts and remove, sell or otherwise dispose of any of the Revolving Loan Priority Collateral until the date (as such date may be extended pursuant to the last sentence of this Section 5(a) , the “Access Termination Date”) that is 120 days after the earlier to occur of (i) the date of receipt by the Revolving Agent of a Term Loan Default Notice and (ii) the date Revolving Agent is first entitled to exercise remedies with respect to the Revolving Loan Priority Collateral (such 120-day period, as same may be extended pursuant to the last sentence of this Section 5(a) , the “Access Period”); provided that (v) in connection with such use of Term Loan Priority Collateral, the Term Loan Creditors shall have no responsibility for payment of any, and the Revolving Agent shall pay all, utilities, taxes, insurance and other operating costs of such usage of (1) any leased or owned real property of an Obligor subject to a mortgage in favor of the Term Loan Agent and (2) any other real property, to the extent the landlord thereof may require such payments during Revolving Agent’s access and use of such real property and failure by Revolving Agent to make such payments would be prejudicial to the Term Loan Agent’s interest in the Term Loan Collateral or it’s rights to also access such real property, (w) to the extent the Term Loan Creditors shall not have been indemnified by the Obligors, Revolving Agent shall indemnify (it being understood that any amounts expended are for the account of the Borrower and shall constitute Revolving Loan Obligations) the Term Loan Creditors against third party claims resulting from such usage, including, but not limited to, claims that such Term Loan Priority Collateral was used or otherwise dealt with by Revolving Agent in violation of applicable law, (x) the Revolving Agent shall, to the extent not provided by the Obligors, provide the Term Loan Agent with evidence of
 
20 

 
the continued effectiveness of the Obligors’ casualty and liability insurance as to the Term Loan Priority Collateral used by Reveling Agent which consists of leased or owned real property of an Obligor subject to a mortgage in favor of the Term Loan Agent, which such insurance shall satisfy the applicable requirements therefor set forth in the Term Loan Credit Agreement, (y) Revolving Agent shall reimburse (it being understood that any amounts expended are for the account of the Borrower and shall constitute Revolving Loan Obligations) Term Loan Agent, on demand, for the cost and expense to repair any physical damage to the Term Loan Priority Collateral (ordinary wear and tear excepted) to the extent directly caused by the Revolving Agent or its agents or designees and to the extent insurance proceeds are not otherwise available to reimburse Term Loan Agent for such damage and (z) no Term Loan Priority Collateral may be removed from the premises at which such Term Loan Priority Collateral was theretofore located without the prior written consent of the Term Loan Agent.  In the event that Revolving Agent is unable to exercise its rights as a secured creditor as a result of any stay in any Insolvency Proceeding or of any temporary restraining order or preliminary injunction with respect to any Obligor, any Revolving Loan Collateral or Revolving Agent, such Access Period shall be extended by the number of days that the Revolving Agent’s or its designees’ access to the Revolving Loan Collateral has been prevented.
 
(b)           In the event that Revolving Agent shall, in the exercise of its rights under the Revolving Loan Financing Documents, as the case may be, or otherwise, receive and retain possession or control of any books and records of any Obligor which contain information identifying or pertaining to the Term Loan Priority Collateral, Revolving Agent shall, upon request from the Term Loan Agent (at the Term Loan Agent’s expense) and as promptly as practicable thereafter, either make available to the Term Loan Agent such books and records for inspection and duplication or provide copies thereof.  In the event that Term Loan Agent shall, in the exercise of its rights under the Term Loan Financing Documents, as the case may be, or otherwise, receive and retain possession or control of any books and records of any Obligor which contain information identifying or pertaining to the Revolving Loan Priority Collateral, Term Loan Agent shall, upon request from the Revolving Agent (at the Revolving Agent’s expense) and as promptly as practicable thereafter, either make available to the Revolving Agent such books and records for inspection and duplication or provide copies thereof.
 
(c)           The Term Loan Agent, for itself and each of the Term Loan Creditors, hereby grants in favor of the Revolving Agent, a nonexclusive right to use, license and/or sublicense any now existing or hereafter acquired Term Loan Priority Collateral consisting of intellectual property, including trademarks and trade names, during the Access Period for the purpose of enabling the Revolving Agent to assemble, prepare for sale, advertise, market and dispose of any and all Revolving Loan Priority Collateral, wherever such Revolving Loan Priority Collateral may be located, including the license and right to access all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof.  The license and right herein shall continue in full force and effect as a burden on the Term Loan Priority Collateral until the earlier to occur of (i) expiration of the Access Period and (ii) the date all Revolving Loan Priority Collateral has been sold, transferred
 
21 

 
or otherwise disposed of (at which time such license and right contemplated hereon shall immediately terminate without any further action required of any party hereto) notwithstanding (x) any exercise of remedies by the Term Loan Creditors with respect to any Term Loan Priority Collateral or (y) any voluntary or involuntary transfer or assignment of any of such Term Loan Priority Collateral consisting of intellectual property or any rights therein (whether by any Obligor, by any Term Loan Creditor or otherwise).  This license right shall inure to the benefit of the Revolving Agent and its successors, assigns and transferees, whether by voluntary conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of foreclosure or otherwise.  Such license right is granted free of charge, without requirement that any monetary payment whatsoever including, without limitation, any royalty or license fee, be made to the applicable Term Loan Creditors or any other Person by the Revolving Agent or any other Person.  The Term Loan Agent, for itself and each of the Term Loan Creditors, agrees not to interfere, hinder, restrict or delay the exercise by the Revolving Agent of any such license and right granted herein during the effectiveness thereof and agrees to execute such documentation and complete such other acts as may reasonably be required by the Revolving Agent to provide Revolving Agent with the license and right contemplated herein.
 
(d)           The rights and remedies of the Revolving Agent in this Section 5 are in addition to and not in limitation of the rights and remedies under the Revolving Loan Financing Documents or applicable law.  The provisions of this Section 5 are agreed to solely as among Term Loan Agent and Revolving Agent and shall not be deemed to limit, expand or otherwise modify any rights granted by any Obligor to any Revolving Loan Creditor or Term Loan Creditor under any of the Documents, as applicable.
 
6.             Covenants .
 
6.1.         Amendment of Term Loan Financing Documents .   Term Loan Creditors may at any time and from time to time and without consent of or notice to any Revolving Loan Creditor, without incurring any liability to any Revolving Loan Creditor and without impairing or releasing any rights or obligations hereunder or otherwise, amend, restate, supplement or otherwise modify any or all of the Term Loan Financing Documents; provided , however, without the consent of Revolving Loan Required Lenders or the Revolving Agent (with the consent of Revolving Loan Required Lenders), the Term Loan Creditors shall not amend, restate, supplement or otherwise modify any or all of the Term Loan Financing Documents to (i) increase any interest rate margins (or, as applicable, any interest rate floors) in respect of Term Loan Obligations by more than 2.50% per annum above the interest rate margins (or, as applicable, interest rate floors) set forth in the Term Loan Credit Agreement as in effect on the date hereof (excluding fluctuations in underlying rate indices and the imposition of a 2.0% per annum default rate), (ii) shorten the final scheduled maturity of the Term Loan Obligations or otherwise modify the amortization schedule with respect to the repayment of the principal balance of the Term Loan Obligations or the calculation or other requirements in connection with the excess cash flow sweep and related mandatory prepayment required pursuant to the Term Loan Financing Documents, in each case, in a manner adverse to Borrower, (iii) modify or add any covenant, condition or event of default under the Term Loan Financing Documents which
 
22 

 
directly restricts one or more Obligors from making payments under the Revolving Loan Financing Documents which would otherwise be permitted under the Term Loan Financing Documents as in effect on the date hereof, (iv) increase the principal amount of the loans constituting Term Loan Obligations to an amount in excess of the Maximum Principal Amount of Term Loan Debt or (v) modify or add any covenant, condition or event of default under the Term Loan Financing Documents in a manner adverse to any Obligor except to the extent the Revolving Creditors shall be afforded the opportunity to make a confirming modification or addition to the applicable Revolving Loan Financing Document.
 
6.2.         Amendments to Revolving Loan Financing Documents .   Revolving Loan Creditors may at any time and from time to time and without consent of or notice to any Term Loan Creditor, without incurring any liability to any Term Loan Creditor and without impairing or releasing any rights or obligations hereunder or otherwise, amend, restate, supplement or otherwise modify any or all of the Revolving Loan Financing Documents; provided , however, without the consent of the Term Loan Required Lenders, the Revolving Loan Creditors shall not amend, restate, supplement or otherwise modify any or all of the Revolving Loan Financing Documents to (i) increase the interest rate margins (or, as applicable, any interest rate floors) in respect of Revolving Loan Obligations by more than 2.50% per annum above the interest rate margins (or, as applicable, interest rate floors) set forth in the Revolving Loan Credit Agreement as in effect on the date hereof (excluding fluctuations in underlying rate indices, fluctuations based on the pricing grid set forth in the Revolving Loan Credit Agreement and the imposition of a 2.0% per annum default rate), (ii) shorten the final scheduled maturity of the Revolving Loan Obligations, (iii) alter the definition of Formula Amount in a manner that increases the stated advance rates against Eligible Accounts or Eligible Inventory (as such terms are defined in the Revolving Loan Credit Agreement) as set forth therein on the date hereof, (iv) increase the commitments to lend under the Revolving Loan Credit Agreement in excess of, or otherwise cause the aggregate outstanding principal balance of the Revolving Loan Obligations to exceed the applicable components of the definition of Maximum Principal Amount of Revolving Loan Debt, (v) modify or add any covenant, condition or event of default under the Revolving Loan Financing Documents which directly restricts one or more Obligors from making payments under the Term Loan Financing Documents which would otherwise be permitted under the Revolving Loan Financing Documents as in effect on the date hereof or (vi) modify or add any covenant, condition or event of default under the Revolving Loan Financing Documents in a manner adverse to any Obligor except to the extent the Term Loan Creditors shall be afforded the opportunity to make a confirming modification or addition to the applicable Term Loan Financing Document.
 
6.3.         [Reserved].
 
6.4.         Enforcement Actions by the Junior Creditors .   Junior Agent shall give the Senior Agent (i) at least ten (10) days written notice prior to taking any Enforcement Action with respect to the Senior Collateral, which notice may be given during the pendency of any Standstill Period, and (ii) prior written notice of any action or commencement of proceedings which constitute “Enforcement Actions” in all respects.
 
23 

 
6.5.         Turnover .
 
(a)           Any prepayments of principal or payments of interest on the Junior Obligations not permitted to be accepted by any Junior Creditor under this Agreement but so received shall be forthwith paid over, in the funds and currency received, if any, by each such Junior Creditor to the Senior Agent for application against the Senior Obligations.
 
(b)           So long as the Revolving Loan Termination Date has not occurred, whether or not any Insolvency Proceeding has been commenced by or against any Obligor, Term Loan Agent agrees, for itself and on behalf of the other Term Loan Creditors, that any Revolving Loan Priority Collateral or Proceeds thereof or payment with respect thereto received by a Term Loan Creditor as a result of an Enforcement Action (including any right of set-off) with respect to such Collateral, and including in connection with any insurance policy claim or any condemnation award (or deed in lieu of condemnation) with respect to Revolving Loan Priority Collateral, shall be promptly transferred or paid over to the Revolving Agent for the benefit of the Revolving Loan Creditors in the same form as received, with any necessary endorsements or assignments or as a court of competent jurisdiction may otherwise direct, for application to the Revolving Loan Obligations and Term Loan Obligations in accordance with Section 4 .  Revolving Agent is hereby authorized to make any such endorsements or assignments as agent for the Term Loan Creditors.  This authorization is coupled with an interest and is irrevocable.
 
(c)           So long as the Term Loan Termination Date has not occurred, whether or not any Insolvency Proceeding has been commenced by or against any Obligor, the Revolving Agent agrees that any Term Loan Priority Collateral or Proceeds thereof or payment with respect thereto received by such a Revolving Loan Creditor as a result of an Enforcement Action (including any right of set-off) with respect to such Collateral, and including in connection with any insurance policy claim or any condemnation award (or deed in lieu of condemnation) with respect to Term Loan Priority Collateral, shall be promptly transferred or paid over to the Term Loan Agent for the benefit of the Term Loan Creditors in the same form as received, with any necessary endorsements or assignments or as a court of competent jurisdiction may otherwise direct, for application to the Term Loan Obligations and Revolving Loan Obligations in accordance with Section 4 .  Term Loan Agent is hereby authorized to make any such endorsements or assignments as agent for the Revolving Loan Creditors.  This authorization is coupled with an interest and is irrevocable.
 
(d)           Nothing in this Agreement shall prohibit the receipt by any Secured Creditor of the payments of interest and payments of principal required under the Documents (as in effect as of the date hereof or modified in accordance with the terms of this Agreement) so long as such receipt is not the direct or indirect result of an Enforcement Action against Collateral in contravention of this Agreement; provided, however, that Revolving Agent, on behalf of itself and the other Revolving Loan Creditors, hereby acknowledge and agree that (i) Revolving Loan Creditors shall not accept or retain a voluntary prepayment of the Revolving Loan Obligations that is made with the proceeds of Term Loan Priority Collateral that are required to be used to make a
 
24 

 
mandatory prepayment of the Term Loan Obligations in accordance with the terms of the Term Loan Credit Agreement (and Revolving Loan Creditors shall promptly remit such proceeds to the Term Loan Agent for application to the Term Loan Obligations) and (ii) Term Loan Creditors shall not accept or retain a voluntary prepayment of the Term Loan Obligations that is made with the proceeds of Revolving Loan Priority Collateral that are required to be used to make a mandatory prepayment (including payments required under Section 4.15(h) of the Revolving Loan Credit Agreement) of the Revolving Loan Obligations in accordance with the terms of the Revolving Loan Credit Agreement (and Term Loan Creditors shall promptly remit such proceeds to the Revolving Agent for application to the Revolving Loan Obligations), except to the extent the Revolving Loan Creditors shall have waived such mandatory prepayment in writing.
 
7.                                       Term Loan Lenders Purchase Option .
 
7.1.         Purchase Notice .   Within ten (10) Business Days after (i) each date, if any, that the Revolving Agent delivers a notice to the Term Loan Agent stating that an Event of Default has occurred and is continuing under the Revolving Loan Credit Agreement due to the Borrower’s failure to timely pay principal or interest thereunder or that any of the Revolving Loan Creditors intend to (x) commence an Enforcement Action (it being agreed to and understood that Revolving Loan Creditors shall be obligated to deliver to Term Loan Agent a notice that they intend to commence an Enforcement Action with respect to all or any portion of the Revolving Loan Collateral) no less than five (5) days prior to the actual commencement of such Enforcement Action, which notice shall be deemed timely given if given in accordance with Section 3.1(b) or any other provision of this Agreement or applicable law requiring notice of such action by Revolving Agent), (y) accelerate all or a substantial portion of the Revolving Loan Obligations as a result of a then existing Event of Default under the Revolving Loan Credit Agreement or (z) terminate the commitment to lend under the Revolving Loan Credit Agreement, (ii) the commencement of any Insolvency Proceeding, (iii) the occurrence and continuance of an Event of Default under the Term Loan Credit Agreement due to the Borrower’s failure to timely pay principal or interest thereunder, or (iv) the Revolving Lenders shall have ceased providing revolving loans and/or letters of credit that the Borrower is otherwise entitled to under the Revolving Loan Credit Agreement for a period of five (5) consecutive Business Days following Borrower’s initial and unfulfilled request therefor (the occurrence of any such event described in clauses (i) — (iv) is referred to herein as a “Trigger Event”), one or more Term Loan Lenders (and/or, at the election of the applicable Term Loan Lenders, their respective affiliates and approved investment funds) (all such Term Loan Lenders, affiliates and approved funds being referred to herein individually as a “Term Loan Purchaser” and collectively as the “Term Loan Purchasers”) shall have an option to purchase from the Revolving Loan Creditors all, but not less than all, of the Revolving Loan Obligations owing to them at par and provide the Required Cash Collateral by giving a written notice (the “Purchase Notice”) to the Revolving Agent prior to the expiration of such ten (10) Business Day period.  The Purchase Notice from the applicable Term Loan Lenders, on behalf of the Term Loan Purchasers, to the Revolving Agent shall be irrevocable.  If no such Purchase Notice is received from a Term Loan Lender, with respect to any Trigger Event, within such ten (10) Business Day period, the option granted pursuant to this Section 6 with respect to such Trigger Event to such Term Loan Lender to purchase such Revolving Loan Obligations shall irrevocably expire and such Term Loan Lender shall have no further rights under this Section 6 with respect to such Trigger Event.
 
25 

 
7.2.         Purchase Option Closing .   On the date specified by the applicable Term Loan Lenders in the Purchase Notice (which shall not be less than three (3) Business Days nor more than fifteen (15) calendar days, after the receipt by the Revolving Agent of the Purchase Notice), each Revolving Loan Lender shall sell to the applicable Term Loan Purchasers, and the applicable Term Loan Purchasers shall purchase from each Revolving Loan Lender, all, but not less than all, of the Revolving Loan Obligations (excluding all such obligations for which Required Cash Collateral is to be provided) owing to such Revolving Loan Lender at par and provide the Required Cash Collateral, and during such period, subject to Section 7.5 , the Revolving Loan Creditors shall not take any Enforcement Action and shall not accelerate (if the Revolving Obligations have not already been accelerated) all or any part of the Revolving Loan Obligations without the consent of the Term Loan Required Lenders.
 
7.3.         Purchase Price .   Such purchase and sale shall be made by execution and delivery by the applicable Secured Creditors of a Commitment Transfer Supplement in the form attached to the Revolving Loan Credit Agreement (provided, the Term Loan Purchasers shall not be required to take promissory notes evidencing their respective interests in the Revolving Loan Obligations).  Upon the date of such purchase and sale (or date thereafter, as applicable), the applicable Term Loan Purchasers shall:
 
(a)           pay or provide to the Revolving Agent for the benefit of the Revolving Loan Lenders as the purchase price therefor the sum of (i) the full amount of all of the Revolving Loan Obligations then outstanding and unpaid (including principal, accrued and unpaid interest, unpaid fees, and expenses, including reasonable attorneys’ fees and expenses, in each case in accordance with the Revolving Loan Financing Documents) but excluding (y) all such obligations for which Required Cash Collateral is to be provided and (z) except as otherwise provided below, any early termination fee or prepayment fee payable pursuant to the Revolving Loan Credit Agreement, plus (ii) the Required Cash Collateral plus (iv) solely to the extent actually collected by Term Loan Agent or such Term Loan Purchasers within forty five (45) calendar days following the consummation of the purchase and sale described in this Section 7 , the early termination fee provided for in Section 13.1 of the Revolving Loan Credit Agreement (it being understood and agreed that payment of such early termination fee shall not be a condition to the purchase and sale described herein and the Term Loan Purchasers sole obligation with respect to such fee shall be to deliver such fee to the Revolving Agent to the extent actually received from the Borrower or any other Obligor, as required by the foregoing clause (iv));
 
(b)           be deemed to have agreed not to amend, modify or waive the provisions of (i) Section 13.1 of the Revolving Loan Credit Agreement so as to waive or reduce the early termination fee set forth therein or (ii) Sections 2.9 through 2.18 thereof unless and until the earlier to occur of (1) all letters of credit issued under the Revolving Loan Credit Agreement having terminated or expired or been cancelled and (2) the Borrower and the applicable Revolving Loan Creditors shall have entered into separate, independent letter of credit facility agreements (“Independent LC Agreements”) reflecting, in all material respects, the terms of Sections 2.9 through 2.18 of the Revolving Loan Credit Agreement; and
 
26 

 
(c)           be deemed to have agreed to reimburse (or if required by any Revolving Loan Creditor, backed by stand-by letters of credit or cash collateral in an amount and in a manner reasonably satisfactory to the Revolving Agent) the Revolving Loan Creditors in respect of indemnification obligations of Obligors under the Revolving Loan Financing Documents owed to a Revolving Loan Creditor as to matters or circumstances for which a claim has been asserted in good faith by the Revolving Agent or another Revolving Loan Creditor in writing on or before the date of such purchase and sale; provided , in no event will Term Loan Lenders or any Term Loan Purchaser have any liability for such amounts in excess of proceeds of Term Loan Collateral received by Term Loan Lenders or any other Term Loan Purchaser.
 
Such purchase price and cash collateral shall be remitted by wire transfer of immediately available funds to such bank account of the Revolving Agent as the Revolving Agent may designate in writing to the applicable Term Loan Purchasers for such purpose.  Interest and fees shall be calculated to but excluding the Business Day on which such purchase and sale shall occur if the amounts so paid by the applicable Term Loan Purchasers to the bank account designated by the Revolving Agent are received in such bank account prior to 1:00 p.m. New York, New York time and interest shall be calculated to and including such Business Day if the amounts so paid by the applicable Term Loan Purchasers to the bank account designated by the Revolving Agent are received in such bank account later than 1:00 p.m. New York, New York time.
 
7.4.         Nature of Sale .   Such purchase and sale shall be expressly made without representation or warranty of any kind by the Revolving Loan Creditors as to the Revolving Loan Obligations or otherwise and without recourse to the Revolving Loan Creditors, except for several (not joint) representations and warranties as to the following:  (i) the notional amount of the Revolving Loan Obligations being purchased (including as to the principal of and accrued and unpaid interest on such Revolving Loan Obligations, fees and expenses thereof, and other amounts set forth in Section 7.3 ), (ii) that the Revolving Loan Lenders own the Revolving Loan Obligations free and clear of any Liens, and (iii) each Revolving Loan Lender has the full right and power to assign its Revolving Loan Obligations and such assignment has been duly authorized by all necessary corporate action by such Revolving Loan Lender.  Upon the consummation of such purchase and sale, all letters of credit, Cash Management Liabilities and Hedge Liabilities originally issued under or secured by the Revolving Loan Financing Documents, including all such obligations in respect of which Required Cash Collateral shall have been provided, shall, in each case, no longer be secured by or under the Revolving Loan Financing Documents or constitute Revolving Loan Obligations under the Revolving Loan Financing Documents and the applicable Revolving Loan Creditors and the Borrower shall enter into Independent LC Agreements for all outstanding letters of credit promptly following the consummation of such purchase and sale.  Notwithstanding anything to the contrary set forth herein, from and after the date of such purchase and sale, the claims of the Revolving Loan Creditors for contingent indemnification obligations of the Obligors, if any, that survive the termination of the Revolving Loan Credit Agreement which have not been paid as set forth in
 
27 

 
Section 7.3 above will continue in full force and effect to the same extent available to any Person that was at any time party to the Revolving Loan Financing Documents as a Revolving Loan Creditor.
 
7.5.         Notice of Intended Action .   The Revolving Agent shall not be required to refrain from taking Enforcement Actions or accelerating all or any portion of the Revolving Loan Obligations during the pendency of a Purchase Option transaction, if in the good faith determination of Revolving Agent, (i) a fraud has been committed by any Obligor in connection with the Revolving Loan Obligations, or (ii) delay of the Enforcement Actions or acceleration, as the case may be, by Revolving Agent would have a reasonable likelihood of (A) causing a diminution in value of the Revolving Loan Collateral (or, after receipt by the Revolving Agent of the irrevocable Purchase Notice from the applicable Term Loan Lenders pursuant to Section 7.1 above, a material diminution in value of the Revolving Loan Collateral taken as a whole), or (B) jeopardizing the Revolving Loan Creditors’ ability to realize on the Revolving Loan Collateral (or, after receipt by the Revolving Agent of the irrevocable Purchase Notice from the applicable Term Loan Lenders pursuant to Section 7.1 above, their ability to realize on a material portion of the Revolving Loan Collateral).
 
7.6.         Release and Resignation .  Upon the consummation of any purchase and sale provided for in this Section 7, the Revolving Loan Creditors shall be released from and discharged of their respective duties, responsibilities and obligations under or in connection with the Revolving Loan Financing Documents, and, notwithstanding any notice, consent or other requirements to the contrary in the Revolving Loan Credit Agreement, concurrently with the closing of such purchase and sale, the Revolving Agent shall be deemed to have resigned as “Agent” under the Revolving Loan Credit Agreement and the Term Loan Agent or any designee of the Term Loan Creditors shall be deemed to have succeeded to the role of “Agent” under the Revolving Loan Credit Agreement.
 
8.             Bankruptcy Matters .
 
8.1.         Bankruptcy .   This Agreement shall be applicable both before and after the filing of any petition by or against any Obligor under the Bankruptcy Code or any other Insolvency Proceeding and all converted or succeeding cases in respect thereof, and all references herein to any Obligor shall be deemed to apply to the trustee for such Obligor and such Obligor as a debtor-in-possession.  This Agreement shall constitute a subordination agreement within the meaning of Section 510(a) of the Bankruptcy Code.  The relative rights of the Term Loan Creditors and the Revolving Loan Creditors in or to any Distributions from or in respect of any Collateral or proceeds of Collateral shall continue after the filing of such petition on the same basis as prior to the date of such filing, subject to any court order approving the financing of, or use of cash collateral by, any Obligor as debtor-in-possession in accordance with the terms hereof.
 
8.2.         Post Petition Financing .
 
(a)           If any Obligor or Obligors shall become subject to a case under the Bankruptcy Code and such Obligor or Obligors as debtor(s)-in-possession (or a trustee appointed on behalf of such Obligor or Obligors) shall move for approval of DIP
 
28 

Financing to be provided by one or more of the Term Loan Lenders or one of their affiliates with the consent of the Term Loan Agent, each Revolving Loan Creditor agrees that no Revolving Loan Creditor shall contest or oppose in any manner such DIP Financing (except to the extent expressly permitted pursuant to this Section 8.2(c) ) or such use of cash collateral and shall be deemed to have waived any objections to such financing or such use of cash collateral as long as (i) to the extent such DIP Financing is secured by Liens on the Revolving Loan Priority Collateral, unless the Revolving Loan Agent provides prior written consent to the contrary, such DIP Financing is secured by Liens that are subordinate to the Liens of the Revolving Loan Agent on the Revolving Loan Priority Collateral in a manner consistent with the terms and provisions of this Agreement, (ii) the Revolving Loan Creditors retain a Lien on the Revolving Loan Collateral (including proceeds thereof arising after the commencement of such Insolvency Proceeding) with the same relative priority as provided for under this Agreement, (iii) the Revolving Loan Creditors are permitted to seek (without objection from the Term Loan Creditors) additional or replacement Liens on post-petition assets consisting of Revolving Loan Collateral, with the same relative priority as provided for under this Agreement and adequate protection in the form of cash payments of interest, fees and expenses (provided that the inability of the Revolving Loan Creditors to receive such a Lien or adequate protection shall not affect the agreements and waivers set forth in this Section 8.2(a) ), (iv) the aggregate principal amount of such DIP Financing (including letters of credit issued or arranged under such facility), assuming the full funding of loans and commitments for such DIP Financing, together with the then-outstanding principal amount of the Term Loan Obligations does not exceed the Maximum Principal Amount of Term Loan Debt, unless the Revolving Loan Agent provides prior written consent to the contrary, and (v) such DIP Financing or use of such cash collateral is subject to the terms of this Agreement.  Each Revolving Loan Creditor hereby agrees it shall not, directly or through an affiliate, seek to provide DIP Financing secured by Liens on Term Loan Priority Collateral equal or senior to the Liens of the Term Loan Creditors thereon unless the Term Loan Agent shall have consented to such DIP Financing.  To the extent any DIP Financing proposed by one or more Term Loan Creditors does not comply with this Section 8.2(a) , the Revolving Loan Creditors may object to such non-compliant terms on any grounds available, including on grounds available to a secured creditor and to an unsecured creditor.
 
(b)           In any Insolvency Proceeding, (i) no Revolving Loan Creditor will oppose the Term Loan Creditors’ motions to receive adequate protection payments, or post-petition interest, or additional collateral in connection with any use of cash collateral or DIP Financing meeting the requirements of Section 8.2(a)  or otherwise in connection with the Term Loan Collateral and (ii) until the Term Loan Termination Date, any adequate protection payments received by Revolving Loan Creditors from the proceeds of any Term Loan Priority Collateral shall, absent the consent or direction of Term Loan Agent, be applied as set forth in Section 4 hereof.
 
(c)           If any Obligor or Obligors shall become subject to a case under the Bankruptcy Code and such Obligor or Obligors as debtor(s)-in-possession (or a trustee appointed on behalf of such Obligor or Obligors) shall move for approval of DIP
 
29 

 
Financing to be provided by one or more of the Revolving Loan Lenders or one of their affiliates with the consent of the Revolving Loan Agent, each Term Loan Creditor agrees that no Term Loan Creditor shall contest or oppose in any manner such DIP Financing (except to the extent expressly permitted pursuant to this Section 8.2(c) ) or such use of cash collateral and shall be deemed to have waived any objections to such financing or such use of cash collateral as long as (i) to the extent such DIP Financing is secured by Liens on the Term Loan Priority Collateral, unless the Term Loan Agent provides prior written consent to the contrary, such DIP Financing is secured by Liens that are subordinate to the Liens of the Term Loan Agent on the Term Loan Priority Collateral in a manner consistent with the terms and provisions of this Agreement, (ii) the Term Loan Creditors retain a Lien on the Term Loan Collateral (including proceeds thereof arising after the commencement of such Insolvency Proceeding) with the same relative priority as provided for under this Agreement, (iii) the Term Loan Creditors are permitted to seek (without objection from the Revolving Loan Creditors) additional or replacement Liens on post-petition assets consisting of Term Loan Collateral, with the same relative priority as provided for under this Agreement and adequate protection in the form of cash payments of interest, fees and expenses (provided that the inability of the Term Loan Creditors to receive such a Lien or adequate protection shall not affect the agreements and waivers set forth in this Section 8.2(a) ), (iv) the aggregate principal amount of such DIP Financing (including letters of credit issued or arranged under such facility), assuming the full funding of loans and commitments for such DIP Financing, together with the then-outstanding principal amount of the Revolving Loan Obligations does not exceed the applicable components of the Maximum Principal Amount of Revolving Loan Debt, unless the Term Loan Agent provides prior written consent to the contrary, and (v) such DIP Financing or use of such cash collateral is subject to the terms of this Agreement.  Each Term Loan Creditor hereby agrees it shall not, directly or through an affiliate, seek to provide DIP Financing secured by Liens on Revolving Loan Priority Collateral equal or senior to the Liens of the Revolving Loan Creditors thereon unless the Revolving Loan Agent shall have consented to such DIP Financing.  To the extent any DIP Financing proposed by one or more Revolving Loan Creditors does not comply with this Section 8.2(c) , the Term Loan Creditors may object to such non-compliant terms on any grounds available, including on grounds available to a secured creditor and to an unsecured creditor.
 
(d)           In any Insolvency Proceeding, (i) no Term Loan Creditor will oppose the Revolving Loan Creditors’ motions to receive adequate protection payments, or post-petition interest, or additional collateral in connection with any use of cash collateral or DIP Financing meeting the requirements of Section 8.2(c)  or otherwise in connection with the Revolving Loan Collateral and (ii) until the Revolving Loan Termination Date, any adequate protection payments received by Term Loan Creditors from the proceeds of any Revolving Loan Priority Collateral shall, absent the consent or direction of Revolving Agent, be applied as set forth in Section 4 hereof.
 
8.3.         Sale of Collateral; Waivers .   Each Revolving Loan Creditor agrees it will consent to and otherwise will not object to or oppose a sale or other disposition of any Term Loan Priority Collateral securing the Obligations under the Term Loan Financing Documents (or
 
30 

 
any portion thereof) free and clear of Liens or other claims under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code if the Term Loan Agent has consented to such sale or disposition of such assets, it being understood that the Revolving Loan Creditors shall be entitled to a second priority Lien with respect to the net proceeds of such sale subject to the terms and conditions of this Agreement.  Each Term Loan Creditor agrees it will consent to and otherwise will not object to or oppose a sale or other disposition of any Revolving Loan Priority Collateral securing the Obligations under the Revolving Loan Financing Documents (or any portion thereof) free and clear of Liens or other claims under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code if the Revolving Agent has consented to such sale or disposition of such assets, it being understood that the Term Loan Creditors shall be entitled to a second priority Lien with respect to the net proceeds of such sale subject to the terms and conditions of this Agreement.  Each Revolving Loan Creditor waives any claim any such Revolving Loan Creditor may now or hereafter have arising out of the Term Loan Creditors’ election in any proceeding instituted under Chapter 11 of the Bankruptcy Code of the application of Section 1111(b)(2) of the Bankruptcy Code.  Each Term Loan Creditor waives any claim any such Term Loan Creditor may now or hereafter have arising out of the Revolving Loan Creditors’ election in any proceeding instituted under Chapter 11 of the Bankruptcy Code of the application of Section 1111(b)(2) of the Bankruptcy Code.  Each Revolving Loan Creditor agrees, following commencement of an Insolvency Proceeding, not to initiate or prosecute or join with any other Person to initiate or prosecute any claim, action or other proceeding (i) challenging the validity or enforceability of the Term Loan Creditors’ claim as a fully secured claim with respect to all or part of the Term Loan Obligations, or opposing any action by the Term Loan Creditors to enforce their rights or remedies under, or relating to, the Term Loan Financing Documents (except to the extent restricted or prohibited under this Agreement with respect to Revolving Loan Priority Collateral), (ii) challenging the enforceability, validity, priority or perfected status of any or all of the Term Loan Obligations or any Liens of the Term Loan Creditors on the Term Loan Collateral, (iii) asserting any claims which the Obligors may hold with respect to the Term Loan Creditors, (iv) seeking to lift any automatic stay relating to the Term Loan Priority Collateral, or (v) opposing a motion by the Term Loan Creditors to lift any automatic stay relating exclusively to the Term Loan Priority Collateral.  Each Term Loan Creditor agrees, following commencement of an Insolvency Proceeding, not to initiate or prosecute or join with any other Person to initiate or prosecute any claim, action or other proceeding (i) challenging the validity or enforceability of the Revolving Loan Creditors’ claim as a fully secured claim with respect to all or part of the Revolving Loan Obligations, or opposing any action by the Revolving Loan Creditors to enforce their rights or remedies under, or relating to, the Revolving Loan Financing Documents (except to the extent restricted or prohibited under this Agreement with respect to Term Loan Priority Collateral), (ii) challenging the enforceability, validity, priority or perfected status of any or all of the Revolving Loan Obligations or any Liens of the Revolving Loan Creditors on the Revolving Loan Collateral, (iii) asserting any claims which the Obligors may hold with respect to the Revolving Loan Creditors, (iv) seeking to lift any automatic stay relating to the Revolving Loan Priority Collateral, or (v) opposing a motion by the Revolving Loan Creditors to lift any automatic stay relating exclusively to the Revolving Loan Priority Collateral.
 
8.4.         Invalidated Payments .   To the extent any Term Loan Creditor receives payments on, or proceeds of, Term Loan Collateral for the Term Loan Obligations which are
 
31 

 
subsequently invalidated, avoided as or declared to be fraudulent or preferential transfers, otherwise set aside, and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law, or equitable cause, then (a) to the extent of such payment or proceeds received, such Term Loan Obligations, or part thereof, intended to be satisfied shall be revived and continue in full force and effect as if such payments or proceeds had not been received by such Term Loan Creditor and (b) the Term Loan Termination Date shall not be deemed to have occurred and this Agreement shall continue in full force and effect.  To the extent any Revolving Loan Creditor has received proceeds of Term Loan Priority Collateral or a Distribution from Term Loan Priority Collateral to which such Revolving Loan Creditor would not have been entitled under this Agreement had such reinstatement occurred prior to receipt of such proceeds or such Distribution, such Revolving Loan Creditor shall turn over such proceeds or such Distributions to the Term Loan Agent for reapplication to the Term Loan Obligations in accordance with this Agreement.  To the extent any Revolving Loan Creditor receives payments on, or proceeds of, Revolving Loan Collateral for the Revolving Loan Obligations which are subsequently invalidated, avoided as or declared to be fraudulent or preferential transfers, otherwise set aside, and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law, or equitable cause, then (x) to the extent of such payment or proceeds received, such Revolving Loan Obligations, or part thereof, intended to be satisfied shall be revived and continue in full force and effect as if such payments or proceeds had not been received by such Revolving Loan Creditor and (y) the Revolving Loan Termination Date shall not be deemed to have occurred and this Agreement shall continue in full force and effect.  To the extent any Term Loan Creditor has received proceeds of Revolving Loan Priority Collateral or a Distribution from Revolving Loan Priority Collateral to which such Term Loan Creditor would not have been entitled under this Agreement had such reinstatement occurred prior to receipt of such proceeds or such Distribution, such Term Loan Creditor shall turn over such proceeds or such Distributions to the Revolving Agent for reapplication to the Revolving Loan Obligations in accordance with this Agreement.
 
8.5.         Payments .  In the event of any Insolvency Proceeding:
 
(a)           Subject to Section 2.4 , (1) (x) all net proceeds of Term Loan Priority Collateral (other than Permitted Reorganization Securities) shall be applied pursuant to Section 4 hereof to permanently reduce the Term Loan Obligations until all Term Loan Obligations are Paid in Full before any Distribution with the proceeds thereof, whether in cash, securities or other property, shall be made to one or more Revolving Loan Creditors on account of any Revolving Loan Obligations, and (y) any Distribution from Term Loan Priority Collateral, whether in cash, securities or other property which would otherwise, but for the terms hereof, be payable or deliverable in respect of the Revolving Loan Obligations (other than Permitted Reorganization Securities) shall be paid or delivered directly to the Term Loan Agent to be applied pursuant to Section 4 hereof until all Term Loan Obligations are Paid In Full and (2) (x) all net proceeds of Revolving Loan Priority Collateral (other than Permitted Reorganization Securities) shall be applied pursuant to Section 4 hereof to permanently reduce the Revolving Loan Obligations until all Revolving Loan Obligations are Paid in Full before any Distribution with the proceeds thereof, whether in cash, securities or other property, shall be made to one or more Term Loan Creditors on account of any Term Loan Obligations, and (y) any Distribution from
 
32 

 
Revolving Loan Priority Collateral, whether in cash, securities or other property which would otherwise, but for the terms hereof, be payable or deliverable in respect of the Term Loan Obligations (other than Permitted Reorganization Securities) shall be paid or delivered directly to the Revolving Agent to be applied pursuant to Section 4 hereof until all Revolving Loan Obligations are Paid In Full.
 
(b)           Each Revolving Loan Creditor irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise deliver all such Distributions described in Section 8.5(a)  from Term Loan Priority Collateral to the Term Loan Agent.  Each of the Revolving Loan Creditors also irrevocably authorizes and empowers the Term Loan Agent, in the name of such Revolving Loan Creditor, to demand, sue for, collect and receive any and all such Distributions from Term Priority Loan Collateral.  Each Term Loan Creditor irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise deliver all such Distributions described in Section 8.5(a)  from Revolving Loan Priority Collateral to the Revolving Agent.  Each of the Term Loan Creditors also irrevocably authorizes and empowers the Revolving Agent, in the name of such Term Loan Creditor, to demand, sue for, collect and receive any and all such Distributions from Revolving Loan Priority Collateral.
 
8.6.         Notice of Claims .   The parties acknowledge and agree that (i) the claims and interests of the Term Loan Creditors under the Term Loan Financing Documents are substantially different from the claims and interests of the Revolving Loan Creditors under the Revolving Loan Financing Documents and (ii) such claims and interests should be treated as separate classes for purposes of Section 1122 of the Bankruptcy Code and, in any Insolvency Proceeding, no Term Loan Creditor and no Revolving Loan Creditor shall, in any case, object to such treatment of such claims and interests or make any assertion to the contrary.
 
8.7.         Rights as Unsecured Creditors .   Except as otherwise provided herein, in any Insolvency Proceeding, the Revolving Loan Creditors may exercise rights and remedies as unsecured creditors against any of the Borrower and other Obligors in accordance with the Revolving Loan Financing Documents and applicable law.  Except as otherwise provided herein, in any Insolvency Proceeding, the Term Loan Creditors may exercise rights and remedies as unsecured creditors against any of the Borrower and other Obligors in accordance with the Term  Loan Financing Documents and applicable law.
 
9.             Miscellaneous .
 
9.1.         Termination .   Subject to Section 8.4 , this Agreement shall terminate and be of no further force and effect upon either (a) the Term Loan Termination Date, or (b) the Revolving Loan Termination Date; provided , the provisions of Section 2.7 shall survive the termination of this Agreement.
 
9.2.         Successors and Assigns .  This Agreement shall be binding upon each Secured Creditor and its respective successors and assigns and shall inure to the benefit of each Secured Creditor and its respective successors, participants and assigns.  In connection with any
 
33 

participation or other transfer or assignment of the Revolving Loan Obligations or the Term Loan Obligations, the applicable Secured Creditor shall disclose to such participant or other transferee or assignee the existence and terms and conditions of this Agreement.  In the case of any participation or other transfer or assignment the participant, assignee or transferee acquiring any interest in the Term Loan Obligations or the Revolving Loan Obligations, as the case may be, shall execute and deliver to the Revolving Agent or Term Loan Agent, respectively, a written acknowledgment of receipt of a copy of this Agreement and the written agreement by such Person to be bound by the terms of this Agreement (unless the Revolving Loan Credit Agreement or Term Loan Credit Agreement, as applicable, contains express provisions providing that such Person agrees to be bound by the terms of this Agreement upon become a party thereto).  The Revolving Loan Credit Agreement and Term Loan Credit Agreement shall provide that at all times the respective Agent has the power and authority to bind the respective Secured Creditors for which it acts as agent to the terms of this Agreement and to act as agent for the applicable Secured Creditors in respect of receiving all notices to be delivered to a Secured Creditor hereunder.
 
9.3.         Notices .   All notices and other communications provided for hereunder shall be in writing and shall be mailed, sent by overnight courier, facsimile, or delivered, as follows:

If to any Term Loan Creditor, to it at the following address:	
 	
Golub Capital LLC, as Term Loan Agent	
666 Fifth Avenue	
New York, NY 10103	
Attention:	Nicholas Chan	
Facsimile:	(212) 750-3756	
and	
 	
Katten Muchin Rosenman LLP	
525 West Monroe Street	
Chicago, Illinois 60661	
Attention: Derek Ladgenski, Esq.	
Facsimile:	(312) 902-1061	
 	 	
If to any Revolving Loan Creditor, to it at the following address	
PNC Bank, National Association	
c/o PNC Business Credit	
2 North Lake Avenue, Suite 440	
Pasadena, California 91101	
Attention:	Kevin J. Gimber	
Facsimile:	(626) 432-4589	
 
34 

 

with a copy to:	
PNC Bank, National Association	
PNC Agency Services PNC	
Firstside Center	
500 First Avenue, 4th Floor	
Pittsburgh, Pennsylvania 15219	
Attention:	Lisa Pierce	
Facsimile:	(412) 762-8672	
and to	
Blank Rome, LLP	
 	
1925 Century Park East, Suite 1900	
Los Angeles, California 90067	
Attention:	Danielle V. Garcia	
Facsimile:	(424) 239-3394	
 	 	
The Chrysler Building	
405 Lexington Avenue	
New York, New York 10174	
Attention:	Lawrence F. Flick II	
Facsimile:	(215) 832-5556	
 
or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties complying as to delivery with the terms of this Section 9.3 .  All such notices and other communications shall be effective (i) if sent by registered mail, return receipt requested, when received or three (3) Business Days after mailing, whichever first occurs, (ii) if sent by facsimile, when transmitted and a confirmation of successful delivery (including such a confirmation generated by the sender’s facsimile machine) is received, provided the same is accomplished prior to 5:00 PM, New York, New York time, on a Business Day and, if not, then such notice so delivered will be effective on the next Business Day, or (iii) if delivered by messenger or nationally recognized overnight courier with instructions to deliver the next Business Day, upon delivery, provided the same is on a Business Day and, if not, then such notice so delivered will be effective on the next Business Day.
 
9.4.         Counterparts .   This Agreement may be executed by the parties hereto in several counterparts, and each such counterpart shall be deemed to be an original and all of which shall constitute together but one and the same agreement.  Signatures delivered by facsimile, email or other electronic transmission shall have the same force and effect as original signatures.
 
9.5.         GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE .  THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW THAT WOULD RESULT IN THE IMPOSITION OF THE LAWS OF ANY OTHER STATE), AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
 
35 

 
AMERICA (WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES).  EACH OF THE PARTIES HERETO HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES AMONG THE PARTIES HERETO PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS; PROVIDED, NOTWITHSTANDING THE FOREGOING, IT IS HEREBY ACKNOWLEDGED AND AGREED THAT INSOLVENCY PROCEEDINGS MAY BE INITIATED IN JURISDICTIONS OTHER THAN THE FOREGOING AND MATTERS RELATING TO THIS AGREEMENT MAY BE LITIGATED IN THE BANKRUPTCY COURT HEARING SUCH INSOLVENCY PROCEEDING.  EACH OF THE PARTIES HERETO EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH OF THE PARTIES HERETO HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS.
 
9.6.         MUTUAL WAIVER OF JURY TRIAL .   THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE PARTIES ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR THE TRANSACTIONS RELATED THERETO.
 
9.7.         Amendments .  No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Person from the terms hereof, shall in any event be effective unless it is in writing and signed by the Term Loan Agent (with the consent of the Term Loan Required Lenders under the terms of the Term Loan Credit Agreement) and the Revolving Agent (with the consent of the Revolving Loan Required Lenders under the terms of the Revolving Loan Credit Agreement).  In no event shall the consent of any Obligor be required in connection with any amendment or other modification of this Agreement.
 
9.8.         No Waiver .   No failure or delay on the part of any Secured Creditor in exercising any power or right under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right.
 
9.9.         Severability .   Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provisions in any other jurisdiction.
 
9.10.       Further Assurances .  Each of the Agents agrees to cooperate fully with each other party hereto to effectuate the intent and provisions of this Agreement and, from time
 
36 

 
to time, to execute and deliver any and all other agreements, documents or instruments, and to take such other actions, as may be reasonably necessary or desirable to effectuate the intent and provisions of this Agreement.
 
9.11.       Headings .   The section headings contained in this Agreement are and shall be without meaning or content whatsoever and are not part of this Agreement.
 
9.12.       Lien Priority Provisions .  This Agreement and the rights and benefits hereunder shall inure solely to the benefit of the Term Loan Creditors and the Revolving Loan Creditors and their respective successors and permitted assigns and no other Person (including the Obligors, or any trustee, receiver, debtor in possession or bankruptcy estate in a bankruptcy or like proceeding) shall have or be entitled to assert rights or benefits hereunder.  Nothing contained in this Agreement is intended to or shall impair the obligation of any Obligor to pay the Obligations as and when the same shall become due and payable in accordance with their respective terms, or to affect the relative rights of the creditors of any Obligor, other than the Term Loan Creditors and the Revolving Loan Creditors as between themselves.
 
9.13.       Credit Analysis .   The Secured Creditors shall each be responsible for keeping themselves informed of (i) the financial condition of the Obligors and all other endorsers, obligors and/or guarantors of the Obligations and (ii) all other circumstances bearing upon the risk of nonpayment of the Obligations.  No Secured Creditor shall have any duty to advise any other Secured Creditor of information known to it regarding such condition or any such other circumstances or otherwise.  No Secured Creditor assumes any liability to any other Secured Creditor or to any other Person with respect to:  (a) the financial or other condition of Obligors under any instruments of guarantee with respect to the Obligations, (b) the enforceability, validity, value or collectibility of the Obligations, any Collateral therefor, or any guarantee or security which may have been granted in connection with any of the Obligations or (c) any Obligor’s title or right to transfer any Collateral or security.
 
9.14.       Waiver of Claims .   To the maximum extent permitted by law, each party hereto waives any claim it might have against any Secured Creditor with respect to, or arising out of, any action or failure to act or any error of judgment, negligence, or mistake or oversight other than such which constitutes gross negligence whatsoever on the part of the any party hereto or their respective directors, officers, employees or agents with respect to any exercise of rights or remedies under the Documents or any transaction relating to the Collateral.  None of the Secured Creditors, nor any of their respective directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or, except as specifically provided herein, shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Obligor or any Secured Creditor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof.
 
9.15.       Conflicts .   In the event of any conflict between the provisions of this Agreement and the provisions of the Documents, the provisions of this Agreement shall govern.
 
9.16.       Representations and Warranties .  The Revolving Agent, on the one hand, and the Term Loan Agent, on the other hand, each hereby represents and warrants to the other that:  (i) the execution, delivery and performance of this Agreement by such Person is
 
37 

 
within the powers of such Person, have been duly authorized by such Person, and do not contravene any law, any provision of any of the Documents to which such Person is a party or any other agreement to which such Person is a party or by which it is bound, and (ii) this Agreement constitutes the legal, valid and binding obligations of such Person, enforceable in accordance with its terms and shall be binding on it (except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally and by equitable principles).
 
9.17.       Roles of Secured Creditors .  The parties hereto agree that any limitations, restrictions or prohibitions imposed on any Secured Creditor in its capacity as Junior Agent or a Junior Creditor hereunder shall not apply to any such Secured Creditor in its capacity as a holder of debt or equity under documentation not subject to this Agreement.
 
- Remainder of Page Intentionally Blank; Signature Pages Follow —
 
38 

 
IN WITNESS WHEREOF , the Revolving Agent and Term Loan Agent have caused this Agreement to be executed as of the date first above written.

TERM LOAN AGENT :	
 	
GOLUB CAPITAL LLC	
 	
By:	 	 	
Name: Marc C. Robinson	 	
Title: Managing Director	 	
 
Intercreditor Agreement

 
IN WITNESS WHEREOF , the Revolving Agent and Term Loan Agent have caused this Agreement to be executed as of the date first above written.

REVOLVING AGENT :	
 	
PNC BANK, NATIONAL ASSOCIATION	

By:	 	 	
Name:	Kevin J. Gimber	 	
Title:	Assistant Vice President	 	
 
Intercreditor Agreement

 
ACKNOWLEDGMENT
 
Dated May 31, 2013
 
Each of the undersigned hereby acknowledges and agrees to the terms and provisions of the foregoing Intercreditor Agreement of even date herewith (as amended, restated, supplemented or otherwise modified from time to time pursuant to the terms hereof and thereof, the “Intercreditor Agreement”) by and among PNC Bank, National Association, as Revolving Agent, and Golub Capital LLC, as Term Loan Agent, including, without limitation, Sections 3.1 and  7.6 .  Capitalized terms used in this Acknowledgment and not otherwise defined herein shall have the meanings ascribed to such terms in the Intercreditor Agreement.
 
Each of the undersigned further acknowledges and agrees that:  (i) although it may sign this Acknowledgment it is not a party to the Intercreditor Agreement and does not and will not receive any right, benefit, priority or interest under or because of the existence of the foregoing Intercreditor Agreement other than as set forth in this Acknowledgement; (ii) it will execute and deliver such additional documents and take such additional action as may be necessary or desirable in the reasonable opinion of any of the Secured Creditors to effectuate the provisions and purposes of the foregoing Intercreditor Agreement, in each case, to the extent required by the terms of the applicable Documents; and (iii) each Secured Creditor may provide any information regarding the Obligors, the Documents or the Collateral to the other Secured Creditors and may take all actions described in the Intercreditor Agreement (subject to the terms of the Documents where applicable).  Notwithstanding any provision of this Acknowledgment or the Intercreditor Agreement to the contrary, no amendment, waiver, supplement or other modification of the Intercreditor Agreement shall (a) increase the obligations of the Obligors, (b) impair the rights granted to the Obligors under the Documents, or (c) amend, or have the effect of amending, in a manner adverse to the Obligors, (i) the definitions of “Maximum Principal Amount of Revolving Loan Debt,” “Maximum Principal Amount of Term Loan Debt,” “Revolving Loan Obligations,” “Term Loan Obligations” or “Obligations” or (ii)  Section 6.1 or Section 6.2 hereof,  without the prior written consent of the Borrower.
 
- Remainder of Page Intentionally Blank; Signature Pages Follow —
 
Intercreditor Agreement

 

 	BOOT BARN, INC. , a Delaware corporation	
 	 	
 	By:	 	
 	Name:	 	
 	Title:	 	
 	 	 	
 	BOOT BARN HOLDING CORPORATION ,	
 	a Delaware corporation	
 	 	
 	By:	 	
 	Name:	 	
 	Title:	 	
 	 	 	
 	RCC WESTERN STORES, INC. ,	
 	a South Dakota corporation	
 	 	
 	By:	 	
 	Name:	 	
 	Title:	 	
 	 	 	
 	BASKINS ACQUISITION HOLDINGS, LLC ,	
 	a Delaware limited liability company	
 	 	
 	By:	 	
 	Name:	 	
 	Title:	 	
 
Intercreditor Agreement

 
EXHIBIT 9.3
 
ENVIRONMENTAL COMPLIANCE CERTIFICATE
 
[Parent Holdco’s Letterhead]
 
Golub Capital LLC, as Agent
666 Fifth Avenue
New York, New York 10103
 
Gentlemen:
 
I hereby certify in my individual capacity as the [President] [Chief Financial Officer]  of Boot Barn Holding Corporation, a Delaware corporation (“ Parent Holdco ”) and not in any individual capacity that, except as listed on Schedule A attached hereto, to the best of my knowledge Boot Barn, Inc., a Delaware corporation (“ Borrower ”), Parent Holdco, and the other Loan Parties are in compliance in all material respects with all federal, state and local Environmental Laws.  Capitalized terms used but not defined herein shall have the meanings set forth in the Amended and Restated Term Loan and Security Agreement dated as of April 15, 2014, among Borrower, Parent Holdco, the lenders from time to time party thereto, and Golub Capital LLC, as agent.
 
IN WITNESS WHEREOF , the undersigned has caused this certificate to be duly executed as of this            day of                           , 20      .

 	BOOT BARN HOLDING CORPORATION ,	
 	a Delaware corporation	

 	By	 	
 	Name	 	
 	Title:	[President] or [Chief Financial Officer]	

 
Schedule A to Environmental Compliance Certificate
Noncompliance with Environmental Laws and Proposed Actions to Achieve Compliance

 
EXHIBIT 15.3
 
ASSIGNMENT AND ACCEPTANCE AGREEMENT
 
This Assignment and Acceptance (the “ Assignment and Acceptance ”) is dated as of the Effective Date set forth below and is entered into by and between [ Insert name of Assignor ] (the “ Assignor ”) and [ Insert name of Assignee ] (the “ Assignee ”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below, receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Acceptance as if set forth herein in full.
 
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any letters of credit and guarantees included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the “ Assigned Interest ”).  Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Acceptance, without representation or warranty by the Assignor.

1.	Assignor:	 	
 	 	 	
2.	Assignee:	 	
 	 	[and is an Affiliate/Approved Fund of [ identify Lender ](6)]	
 	 	 	
3.	Borrower:	BOOT BARN, INC., a Delaware corporation	
 	 	 	
4.	Agent:	GOLUB CAPITAL LLC	
 	 	 	
5.	Credit Agreement: Amended and Restated Term Loan and Security Agreement dated as of April 15, 2014, among BOOT BARN, INC., a Delaware corporation, the other Loan Parties party thereto, the Lenders party thereto and GOLUB CAPITAL LLC, as Agent (as	

(6)                                  Select as applicable.

 

 	amended, restated, supplemented or otherwise modified)	
 	 	
6.	Assigned Interest:	 	

Facility
Assigned(7)	 	Aggregate
Amount of
Loans for all
Lenders(3)	 	Aggregate
Amount of each
Facility
Outstanding	 	Amount of
Loans
Assigned(8)	 	Percentage
Assigned of
Loans(9)	 	
 	 	$	 	 	 	 	$	 	 	 	%	
 	 	$	 	 	 	 	$	 	 	 	%	
 	 	$	 	 	 	 	$	 	 	 	%	

[7.	Trade Date:	](10)	
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

(7)                                  Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g. “Existing Term Loan”, “Restatement Effective Date Term Loan”)
(8)                                  Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
(9)                                  Set forth, to at least 9 decimals, as a percentage of the Loans of all Lenders thereunder.
(10)                           To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.
 
3 

 
Effective Date:                                    , 20       [TO BE INSERTED BY AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
 
The terms set forth in this Assignment and Acceptance are hereby agreed to:

 	ASSIGNOR	
 	 	
 	[NAME OF ASSIGNOR]	
 	 	
 	By:	 	
 	Title:	 	
 	 	 	
 	ASSIGNEE	
 	 	
 	[NAME OF ASSIGNEE]	
 	 	
 	By:	 	
 	 	Title:	

[Consented to and](11) Accepted:	 	
 	 	
[GOLUB CAPITAL LLC],	 	
as Agent	 	
 	 	
By:	 	 	
 	Title:	 	
[Consented to:](12)	 	
 	 	
[BOOT BARN, INC.]	 	
 	 	
By:	 	 	

(11)                           To be added only if the consent of the Agent is required by the terms of the Credit Agreement.
(12)                           To be added only if the consent of the Borrower is required by the terms of the Credit Agreement (add additional Borrowers as necessary).
 
4 

 
ANNEX 1 TO ASSIGNMENT AND ACCEPTANCE
 
AMENDED AND RESTATED TERM LOAN AND SECURITY AGREEMENT DATED, DATED AS OF APRIL 15, 2014, AMONG BOOT BARN, INC., A DELAWARE CORPORATION, THE OTHER LOAN PARTIES PARTY THERETO, THE LENDERS PARTY THERETO AND GOLUB CAPITAL LLC, AS AGENT
 
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ACCEPTANCE
 
1.             Representations and Warranties .
 
1.1          Assignor .  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any Other Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Other Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of the Credit Agreement or any Other Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under the Credit Agreement or any Other Document.
 
1.2.         Assignee .  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements referred to in Section 5.5 or delivered pursuant to Sections 9.7, 9.8, 9.9 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Agent or any other Lender, and (v) if it is a foreign lender, attached to the Assignment and Acceptance is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Other Documents, (ii) such Assignee appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Other Documents as are delegated to Agent by the terms

 
thereof, together with such powers as are reasonably incidental thereto and (iii) it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement and  Other Documents are required to be performed by it as a Lender.
 
2.             Payments .  From and after the Effective Date, the Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts that have accrued to but excluding the Effective Date and to the Assignee for amounts that have accrued from and after the Effective Date.
 
3.             General Provisions .  This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Acceptance may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Acceptance by telecopy, facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance.  This Assignment and Acceptance shall be governed by, and construed in accordance with, the law of the State of New York.

Exhibit 10.14
 
NSB SOFTWARE AS A SERVICE MASTER AGREEMENT
 
THIS AGREEMENT is by and between:
 
NSB Retail Solutions Inc. , having its principal place of business at:
2800 Trans Canada Highway
Pointe Claire, Quebec, Canada
H9R 1B1
 
(Hereinafter referred to as “NSB”)
 
AND
 
Boot Barn, Inc. , having its principal place of business at:
1636 West Collins Avenue
Orange, CA 92867
 
(Hereinafter referred to as the “Client”)
 
WHEREAS , Client wishes to procure from NSB and NSB wishes to provide to Client NSB’s Connected Retailer ®  Software in the form of Software as a Service (“SaaS”); and
 
NOW, THEREFORE , in consideration of the promises hereof, and the mutual obligations herein made and undertaken, the parties hereto agree as follows:
 
1.                                       DEFINITIONS
 
“ Agreement ” means this NSB SaaS Agreement and Schedules, Exhibits and/or Appendices hereto;
 
“ Business Day ” means a day other than any Saturday or Sunday or any of the Local Holidays;
 
“ Designated Equipment ” means the servers and associated equipment which shall have the Software installed for the Client to access and use to operate their business;

NSB Software as a Service Agreement	 	Page 1 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
“ Client Desk Top Computers ” means the computers located at the Client’s site, which have the required Microsoft Windows Operating System and Terminal Services, which shall be used to connect to NSB Designated Equipment. For avoidance of doubt, Microsoft Windows Operating System and Terminal Services software for the Desk Top Computers are not being provided by NSB.
 
“ Documentation ” means all user manuals and other documentation supplied by NSB to Client whether provided in electronic form or otherwise, including training manuals, program listings, data models, flow charts, logic diagrams, functional specifications, instructions, etc.;
 
“ Hosted Applications ” means the NSB Connected Retailer head office Software set forth in Schedule “F”;
 
“ Implementation Services ” means the consulting, client specific parameter settings, training, project management, implementation and/or documentation services, performed pursuant to a statement of work (“SOW”) attached hereto as Schedule “F”;
 
“ Live ” — means the first day of Client posting and/or processing production data through NSB Hosted Applications.
 
“ Local Holidays ” means the following days or the days on which these holidays are observed by NSB for US Clients: New Year’s Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day;
 
“ Maintenance Period ” means: The Maintenance Period for Hosted Applications is 08:30 — 17:30, Client’s head office time zone, for all Business Days excluding NSB Local Holidays and the Maintenance Period for Store Solution is the Client’s store open hours of business plus thirty (30) minutes, excluding Local Holidays.
 
“ Metrics ” means the various measurements used for pricing of Software as a Service as set forth in Schedule “A”. The types of measurements used to establish the Metrics is based on any combination of: the number of stores; users or register count or any other measurements specified by NSB from time-to-time.
 
“ Network Connectivity ” means the high speed persistent connection established between Client’s store and head office locations to NSB hosting facility as set forth in Schedule “H”;

NSB Software as a Service Agreement	 	Page 2 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
“ POS Equipment ” or “ Equipment ” means the store hardware purchased hereunder as set forth in Schedule “B” and/or under maintenance with NSB that is being used to run the Store Software.
 
“ Quarterly Fees ” means the fees paid by Client to NSB based on the current Metrics, for the rights to use the Software and obtain the services associated with Software as a Service;
 
“ Software as a Service ” means the services provided by NSB pursuant to this Agreement, including (i) Client’s access to the Hosted Applications; (ii) licenses granted by NSB in respect of the Connected Retailer Store Software, and (iii) Software and POS Equipment support and maintenance services, the whole as set forth in the Schedules “A”, “B”, “C”, “D”, “E”, “F”, “G” and “H”;
 
“ Software as a Service Fees ” means the annual fees paid by Client to NSB based on the current Metrics, for the rights to use the Software and obtain the support services, excluding hardware lease and maintenance services and implementation services, associated with Software as a Service;
 
“ Store Software ” means the NSB Connected Retailer point of sale software known as “Store”, as set forth in Schedule “F”;
 
“ Software ” means the NSB Connected Retailer software and any applicable Third Party Software licensed by Client from NSB as set forth in Schedule “F”;
 
“ Third Party ” means a supplier whose software is licensed for distribution by NSB to be sublicensed by NSB to its clients and/or a supplier subcontracted by NSB to provide services;
 
“ Third Party Software ” means all software owned by a Third Party (such as Microsoft SQL), but licensed for distribution by NSB as part of the SaaS.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

NSB Software as a Service Agreement	 	Page 3 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
2.                                       CLIENT RIGHT OF USE.
 
2.1.                             Client’s Rights . NSB grants to Client and Client agrees to accept a non-exclusive, non-perpetual, terminable, and non-transferable right, except as provided for in section 18.3, to access and to use the Hosted Applications and a non-exclusive, non-perpetual, terminable, non-transferable license, except as provided for in section 18.3, to use the Store Software, in the United States and/or Canada for its internal use via the Designated Equipment, in accordance with the terms of this Agreement and pursuant to the identified Metrics, during the term of this Agreement. Client’s rights under this Agreement will automatically terminate upon expiration of or termination of this Agreement.
 
2.2.                             Object Code . The computer programs comprising the Software will be supplied in object code only.
 
2.3.                             Limitation On Reverse Engineering, Decompilation, And Disassembly . Client may not reverse engineer, decompile, or disassemble the Software, except and only to the extent that it is expressly permitted by applicable law notwithstanding this limitation.
 
2.4.                             No Rental/No Commercial Hosting . Client may not rent, lease, lend, or provide commercial hosting services with the Software to any other entity.
 
2.5.                             POS Equipment configuration . Client shall purchase the certified POS Equipment configuration as outlined in Schedule “B”, which may be subject to change by NSB. Notwithstanding anything to the contrary, should the POS Equipment models change from what are currently listed in Schedule “B”, NSB shall use reasonable efforts to certify like replacement POS Equipment.
 
3.                                       TERM AND TERMINATION.
 
3.1.                             Term . This Agreement shall commence upon execution hereof and shall continue for five (5) years from the date upon which Client begins using NSB Connected Retailer Software to process live data (the “Initial Term”). During the Initial Term, the SaaS Fees may be increased each year after the second year of the Initial Term, by up to the greater of either (i) the increase in the Consumer Price Index (All Items, Montreal) over the previous year (“CPI”) plus two percent (2%). The foregoing cap on increases shall not apply to increases in respect of Third Party costs including, but not limited to, costs associated with Third Party licenses, maintenance and POS hardware maintenance. Client may terminate this Agreement at the expiration of the Initial Term by providing written notice to NSB not less than one hundred and eighty (180) days prior to the end of the Initial Term, such termination to take effect at the

NSB Software as a Service Agreement	 	Page 4 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
expiration of the Initial Term, while NSB may terminate this Agreement at the expiration of the Initial Term by providing written notice to the Client not less than one (1) year prior to the end of the Initial Term, such termination to take effect at the expiry of the Initial Term. Notwithstanding anything to the contrary, Client may terminate this Agreement after the end of the third year of the Initial Term by providing written notice to NSB not less than one hundred and eighty (180) days prior to the end of the third year of the Initial Term. In such event, Client shall pay NSB an amount equal to fifty percent (50%) of the then current annual SAAS fees for the remaining two years of the Initial Term.
 
3.2.                             Automatic Renewal . This Agreement shall automatically renew for successive renewal terms of twelve (12) months (“Renewal Term(s)”) unless terminated as permitted hereunder. The SaaS Fees may be increased each year by up to the greater of either (i) the increase in the Consumer Price Index (All Items, Montreal) over the previous year (“CPI”) plus two percent (2%). The foregoing cap on increases shall not apply to increases in respect of Third Party costs including, but not limited to, costs associated with Third Party licenses, maintenance and POS hardware maintenance. Either party may terminate this Agreement at the expiration of the then current Renewal Term by providing written notice to the other party of not less than one hundred and eighty (180) days prior to the end of the then current Renewal Term. For avoidance of doubt, termination shall be effective at the expiration of the then current Renewal Term.
 
3.3.                             Termination . In addition to such other rights and remedies as may be available in law or in equity, should either party commit a material breach of its obligations hereunder, the other party may, at its option, terminate this Agreement with thirty (30) days written notice of desire to terminate, which notice shall identify and describe the basis for such termination. If, prior to expiration of such period, the defaulting party cures such default, termination shall not take place.
 
3.4.                             Survival . Any rights and obligations which by their nature extend beyond the term of this Agreement (whether the Agreement is terminated after the Initial Term or any Renewal Term) shall survive and continue after any expiration or termination and shall bind the parties and their legal representatives, successors, heirs and assigns, where assignment is expressly permitted.
 
3.5.                             Cease Use . Upon termination of this Agreement for any reason, Client shall immediately cease all use of Software and return or purge any and all components thereof, including returning or destroying or causing to be destroyed any and all copies of any Software, Documentation, notes and other materials.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

NSB Software as a Service Agreement	 	Page 5 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
4.                                       PROPRIETARY RIGHTS.
 
4.1.                             Ownership . Client acknowledges and agrees that this Agreement grants Client no title or right of ownership in or to the Software, or any component thereof, or to any associated materials including, but not limited to any Documentation, or intellectual property. Client shall not, at any time, take or cause any action, which would be inconsistent with or tend to impair the rights of NSB or its licensors. NSB acknowledges and agrees that this Agreement grants NSB no title or right of ownership in or to Client’s data, documentation or intellectual property.
 
5.                                       SOFTWARE SUPPORT AND MAINTENANCE.
 
5.1.                             Software Support and Maintenance . NSB will provide the following Software Support and Maintenance Services:
 
5.1.1.                   Support and assistance on technical operational issues and application support to Client’s head office designates as it pertains to the Hosted Applications, and direct to Client’s store personnel for the Store Software, during the Maintenance Period. Such support may be provided using remote access to either Client’s desktops, registers or to the Hosted Applications. All Software problem reports will be acknowledged by NSB by reference number. NSB will attempt to generate a correction by modifying the NSB Software, where applicable, and incorporating the modifications in the next Software Release to obviate or mitigate the effect of the defect and to use its commercially reasonable efforts to ensure that the owner of any Third Party Software provides a correction to the Third Party Software, where the problem is, in NSB’s opinion, in the Third Party Software.
 
5.1.2.                   Respond to Client’s inquiries pertaining to all Software procedural queries that are not covered in either the available NSB Documentation or associated training.
 
5.1.3.                   Fault diagnosis and, where possible, recommendations for corrections, subject to the limitations which may be imposed by contractual restrictions of any Third Party, following the reporting of any Software problem by Client. NSB shall use commercially reasonable efforts to commence investigation of the problem within the initial response time as set forth in Schedule “C” to this Agreement. Diagnosis and resolution of operational problems will generally be carried out remotely.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

NSB Software as a Service Agreement	 	Page 6 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
5.1.4.                   NSB shall install new releases to a hosted test environment. Client shall have the opportunity to perform testing of the new releases. Client shall be provided with at least thirty (30) days from the date on which it is notified by NSB that the new release has been applied to notify NSB in writing of any issues or concerns. Failure by Client to notify NSB in writing within such period shall be construed as deemed acceptance and NSB shall have sole discretion to apply the new releases to the live production environment. Notwithstanding the foregoing, fixes may be applied directly to the live production environment where NSB deems that to do so would be appropriate under the circumstances.
 
5.1.5.                   Provide to Client new releases to the Software including Documentation if available, on the condition that these new releases are compatible with Client’s Desktop Computers. New releases shall not include any options, future products, or new versions of the same product previously licensed by Client which NSB licenses to its clients generally at additional cost and/or under separate agreement. Client shall be charged on a time and materials basis for training and other services rendered by NSB in connection with the new releases. It will be Client’s obligation to attend training classes at NSB Montreal, via web conference or Client’s location, as designated by NSB.
 
5.1.6.                   Provide to Client one copy per store of the new Store software releases, maintenance releases and fixes that are generally made available by NSB to its clients, including Documentation (if applicable), on the condition that these releases and fixes are compatible with Client’s POS Equipment. New releases shall not include any options, future products, or new versions of the same product previously licensed by Client which NSB licenses to its clients generally at additional cost or under separate agreement. Client shall be charged on a time and materials basis for training and any other services rendered by NSB to Client in connection with the new Store Software releases. It will be Client’s obligation to attend training classes at NSB Montreal, via web conference or Client’s location, as designated by NSB. Client and/or Client’s store personnel shall work with NSB to deploy and install new POS software releases, maintenance releases and fixes.
 
5.1.7.                   In addition to supporting the current release of the Store Software, NSB will support all releases that have been delivered to Client within the preceding year. For greater clarity, NSB shall support the current shipping release and one previous release. NSB shall have no obligation to provide support if Client does not comply with the foregoing.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

NSB Software as a Service Agreement	 	Page 7 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
5.2.                             Exclusions . Software as a Service shall not include the diagnosis and rectification of any fault resulting from:
 
(a)          use of versions of any third party software including the operating system software on Client’s Desktop Computers, other than those specified from time-to-time by NSB;
 
(b)          inadequate training by Client of its personnel on the use of the Software;
 
(c)           unauthorized use of the Software;
 
(d)          any use of the Software not in accordance with the Documentation or otherwise contrary to NSB’s instructions;
 
(e)           modifications or enhancements to the Software not made by NSB, or made without NSB’s prior written consent;
 
(f)            use of the Software other than that installed on the Designated Equipment or POS Equipment;
 
(g)           failure by Client to implement NSB’s recommendations or solutions related to use of the Software;
 
(h)          use of the Software in conjunction with equipment or software not approved by NSB;
 
5.3.                             Additional Services . NSB may also offer Client the following services, subject to resource availability, on either a time and materials basis at NSB’s then prevailing rates or for a mutually agreeable pre-determined Fee:
 
(a)          work performed outside the contracted Maintenance Period at the request of Client;
 
(b)          perform hourly transaction log backups;
 
(c)           consultation for the resolution of those problems experienced by Client in operating the Software for which training has not been provided;
 
(d)          on-site services, including any related travel time, to carry out such work as the parties may agree upon from time-to-time;
 
(e)           network traffic analysis (between Stores and NSB) and tuning provided that the network connectivity is not aggregated by NSB;
 
(f)            training and/or additional Documentation; services required due to failure of equipment, software not supplied or maintained by NSB, telecommunications facilities, failures of the Software caused by fault or negligence of Client by operator error or by improper use or misuse of the system;

NSB Software as a Service Agreement	 	Page 8 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
(g)           diagnosis of any head office hardware or network problems;
 
(h)          requests for services to change Client configurable POS parameters and additional training.
 
In addition to any fees for the above services, NSB shall be entitled to reasonable out of pocket expenses.
 
6.                                       NSB’s RESPONSIBILITIES
 
6.1.                             Provide access to the hosted applications as outlined in Schedule “D” - NSB’s SaaS Infrastructure Service Level Guidelines, via a secure, persistent network communication connection. NSB, or its hosting partner, shall operate and maintain the servers (“Servers”) in good working order with access restricted to qualified employees or contractors of NSB. NSB, or its hosting partner, shall employ its best practices to ensure the security, confidentiality and integrity of all Client Data and other proprietary information transmitted through or stored on the Servers, including, without limitation: (i) maintenance of independent archival and backup copies of the Client’s Data; and (ii) protection from any network attack and other malicious, harmful or disabling data, work, code or program. Notwithstanding the foregoing, Client understands and acknowledges that from time to time, the Servers may be inaccessible or inoperable for various reasons, including, but not limited to, equipment malfunctions, upgrades or modifications, or other causes beyond the control of NSB, including but not limited to interruption or failure of telecommunication or digital transmission links, hostile network attacks or network congestion or other failures (collectively “Downtime”). NSB shall use commercially reasonable efforts to minimize any disruption, inaccessibility and/or inoperability and in the case of any scheduled Downtime, if applicable, NSB shall use best efforts to provide at least seventy two (72) hours’ advance notice to Client.
 
6.2.                             NSB will be responsible for performing the technical and operational support functions as it pertains to the applications being hosted. NSB’s technical and operational functions will consist of system monitoring (hardware, operating system and database management) and providing the required support measures that will mitigate operational issues.
 
6.3.                             Subject to section 6.1, NSB will use commercially reasonable efforts, pursuant to the terms and conditions set forth in this Agreement, to make the hosted applications accessible to Client twenty-four (24) hours a day, seven (7) days a week, except where scheduled maintenance is required.

NSB Software as a Service Agreement	 	Page 9 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
6.4.                             NSB shall have in place a comprehensive disaster recovery plan which shall provide for the recovery of all core systems operations within (twenty four) 24 hours from a declared disaster.
 
6.5.                             Upon request from Client, NSB agrees to provide, on a monthly basis, an e-mail or an alternative form of electronic communication or access, system usage reports which will detail the number of active users, disk space usage and/or other similar system-specific items where metrics can be obtained.
 
6.6.                             NSB shall allocate five (5) Gigabytes of disk space for the purpose of Client storing attached items within Merchandising. Additional disk space will be made available as required for an incremental quarterly fee of $.10 per megabyte.
 
7.                                       CLIENT’S RESPONSIBILITIES
 
7.1.                             Client will:
 
(a)          use the Equipment and Software as authorized, in accordance with NSB’s operating instructions and the Documentation, with suitable operating supplies.
 
(b)          ensure that the Software is only used in a proper manner by trained employees.
 
(c)           not alter, adapt, modify the Software except where previously agreed in writing by NSB.
 
(d)          co-operate to a reasonable extent with NSB’s personnel in the diagnosis, investigation and correction of any fault in the Software.
 
(e)           to the best of their ability, make available to NSB, free of charge, all information, facilities and services reasonably required by NSB to enable it to perform the Software Support and Maintenance Service.
 
(f)            provide, at no charge to NSB, adequate access to Client’s staff, the Software and other resources as reasonably required to perform remedial maintenance service. Client shall obtain and provide NSB access to, and use of, any machines, attachments, features or other equipment which, in the opinion of NSB, are necessary to enable the performance of the services.
 
(g)           notify NSB promptly by opening a Service Request relating to all Software faults and/or failures via telephone or NSB’s e-Service available on NSB’s website.
 
(h)          not install any new releases or updates to the operating system/database within the hosted environment without the prior consent of NSB. Any assistance provided by NSB in installing or configuring the new operating system/database releases or updates will be billable on a time and materials basis at NSB’s then prevailing rates.

NSB Software as a Service Agreement	 	Page 10 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
(i)              produce a Client specific register manual and train Client’s employees on Store Software use, operation, backup and recovery procedures.
 
(j)             be responsible for the procurement, installation and maintenance of all non-NSB communication media, including, but not limited to, telephone and telegraph equipment for the remote transmission of data, and Client shall assume all charges for such media in connection with the performance of the Services covered by this Agreement.
 
(k)          be responsible for the content and validity of the data, which shall be populated through the Hosted Applications user interfaces and any approved and supported imports and/or exports, in the format specified by NSB.
 
(l)              be responsible for acquiring, setting up and configuring Client’s head office Desk Top Computers which shall be used to connect to NSB Designated Equipment. Efforts for NSB to assist with this process shall be billable on a time and materials basis at NSB’s then prevailing rates.
 
(m)      keep all Desktop Computers current from a virus protection perspective.
 
8.                                       POS EQUIPMENT SUPPORT AND MAINTENANCE
 
8.1.                             POS Equipment Support and Maintenance.
 
NSB warrants that the POS Equipment sold to Client by NSB shall be compatible with the Store Software during the Initial and subsequent Renewal Term(s). Notwithstanding the foregoing, Client may be required to upgrade certain components of the POS Equipment including, but not limited to, memory and disk, which shall be at the Client’s sole expense.
 
8.1.1.                   All POS Equipment to be serviced under this Agreement is being purchased through NSB. If POS Equipment is acquired by Client from someone other than NSB, such equipment shall be subject to inspection by NSB, and Client shall pay for such inspection services and for all labor, materials and adjustments required to place the equipment in good operating condition and staging/integration. Client shall be billed on a time and materials basis at NSB’s then prevailing rates.
 
8.1.2.                   During the specific hours of coverage (“the Maintenance Period”) for the POS Equipment maintenance program as outlined in Schedule “E” and subject to payment by Client of the Annual POS Equipment Maintenance Fees, NSB and/or its agents will use commercially reasonable efforts to provide the following POS Equipment Maintenance and Support Services:
 
8.1.2.1.  Support and maintenance as outlined in Schedule “E” during the Maintenance Period when NSB is notified that the POS Equipment is inoperable.

NSB Software as a Service Agreement	 	Page 11 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
8.1.2.2.  All parts and labor necessary, in the opinion of NSB and/or its agents, for maintaining the POS Equipment in good operating condition. All parts will be furnished on an exchange basis and will be new standard parts or parts of equal quality. All parts removed for replacement shall become the property of NSB.
 
8.1.3.                   Should Client desire to move POS Equipment covered under this Agreement to another physical location identified by a different civic address, such POS equipment shall continue to be covered hereunder provided Client gives NSB at least thirty (30) days written notice prior to such movement. Failure to notify NSB within thirty (30) days may delay service for which NSB shall not be liable. Such notice shall include addresses of originating and destination locations, POS Equipment serial numbers and date of move. Client shall be charged for all such work performed by NSB or its agents on a time and materials basis at the then prevailing NSB rates.
 
8.1.4.                   If upon relocation and inspection NSB personnel determine that the POS Equipment is not in serviceable condition as a result of causes beyond NSB’s control, at Client’s request, NSB shall perform the work required to place the POS Equipment in serviceable condition. Fees for labor and materials shall be at NSB’s then prevailing NSB rates.
 
8.1.5.                   Equipment maintenance service is limited to the POS Equipment covered hereunder, and is contingent upon the proper use of the equipment.
 
8.1.6.                   Client acknowledges and agrees that NSB uses subcontractors to provide local on-site POS Equipment Maintenance and Support Services.
 
8.2.                             Additional Services
 
8.2.1.                   NSB may also offer Client the following services, subject to resource availability, on a time and materials basis at NSB’s then prevailing rates:
 
(a)          work performed outside the Maintenance Period at the request of Client;
 
(b)          on-site services, including any related travel time, to carry out such work as the parties may agree upon from time to time;
 
(c)           installation support services associated with either adding POS registers or other devices into existing stores or installing POS Equipment into new stores;
 
(d)          operating supplies or accessories including cables, power supplies, media such as tapes and disks, printer bands and paper, paint, refinishing the POS Equipment, or furnishing any materials for these purposes;
 
(e)           any modification or additions to the POS Equipment.

NSB Software as a Service Agreement	 	Page 12 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
8.2.2.                   After the POS Equipment has been installed for a cumulative period of seven (7) years from date of first installation, whether for Client or Client’s predecessor, NSB may require the performance of any necessary overhaul of the POS Equipment, subject to the approval of Client, on a time and materials basis at NSB’s then prevailing rates. Should the parties not agree to the overhaul of equipment, NSB may terminate this Agreement by providing Client with one hundred and eighty days (180) prior written notice.
 
In addition to any fees for the above services, NSB shall be entitled to reasonable out-of-pocket expenses.
 
8.3.                             Exclusions
 
8.3.1.                   The POS Equipment Support and Maintenance Service shall not include the diagnosis and rectification of any fault resulting from:
 
(a)          modification of Equipment without NSB’s approval;
 
(b)          accident, neglect, misuse, failure of electrical power, air conditioning, static electricity, humidity control, transportation, or causes other than ordinary use;
 
(c)           the Equipment being serviced or repaired by other than NSB personnel without the prior written consent of NSB;
 
(d)          the Equipment being removed from its Site and/or re-installed without the prior written consent of NSB.
 
8.3.2.                   NSB shall be under no obligation to provide service for POS System components not covered by this Agreement.
 
8.4.                             Client’s Responsibilities
 
8.4.1.                   Client shall provide, at no charge to NSB, adequate access to Client’s staff, the POS systems and any other reasonably required resources to perform the routine support and maintenance service to resolve a service request or documented product issue. Client shall obtain and provide NSB access to, and use of, any machines, attachments, features or other equipment which, in the opinion of NSB, are necessary to enable the performance of the services.
 
8.4.2.                   Client shall co-operate to a reasonable extent with NSB’s personnel in the diagnosis, investigation and correction of any fault in the POS Equipment;

NSB Software as a Service Agreement	 	Page 13 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
8.4.3.                   Client shall make available to NSB, free of charge, all information, facilities and services reasonably required by NSB to enable it to perform the POS Equipment Support and Maintenance Services;
 
8.4.4.                   Client shall be responsible for the procurement, installation and on-going support and maintenance of all internal and external network components and equipment, and shall bear all associated third party charges;
 
8.4.5.                   Client shall provide and maintain in good working order persistent network connections between Client head office users and NSB hosting facilities and between Client’s store location and NSB hosting facilities, as outlined herein, at its sole cost and expense.
 
8.4.6.                   Designated Client personnel shall work with NSB to determine if malfunctions are external to the POS Equipment (e.g., electrical power problem, communication problem, etc.), and such designated Client personnel shall assist NSB’s helpdesk with recovery procedures in the event of a system failure, installing updates or reloading Software where necessary.
 
8.4.7.                   Client shall load diagnostics if provided by NSB and work with NSB on remote diagnostic procedures as instructed by NSB;
 
8.4.8.                   Client shall provide NSB or its agents with a user password for system access in order to perform standard diagnostics;
 
8.4.9.                   Client shall notify NSB in writing of its intent to move the POS Equipment covered by this Agreement;
 
8.4.10.            Client shall provide all operating supplies or accessories including media, such as paper, ribbons batteries or any other materials for the day-to-day use of the Equipment or other operating purposes;
 
8.4.11.            Client shall notify NSB promptly by opening a service request relating to all POS Equipment faults and/or failures via either telephone or NSB e-Service;
 
8.4.12.            Before returning any POS Equipment or POS system component, Client shall call NSB for a return authorization number which must be included with the returned unit along with a description of the problem;
 
8.4.13.            Client shall provide written notice to NSB at least seven (7) days prior to installation of a new POS equipment which is certified for SaaS and not purchased through NSB. In instances where this occurs, should Client require NSB assistance with the installation and staging of the POS equipment, these services would be available at NSB then prevailing rates. Notwithstanding the foregoing, such notice shall include the address of the installation location, equipment serial numbers and date of

NSB Software as a Service Agreement	 	Page 14 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
installation. Failure to notify NSB may result in service delays and extra charges for on-site maintenance.
 
8.4.14.            For those POS system components maintained via depot or advanced exchange service, the defective components must be packed in original packing material and shipped to NSB’s authorized service center(s) as outlined in Schedule “E”.
 
9.                                       DESTRUCTION OF DATA.
 
In performance of services, it is possible that data files on magnetic media may be destroyed. NSB will take commercially reasonable precautions to avoid destruction of data, but will not be held responsible in the event that such destruction occurs except in the case of gross negligence on the part of NSB. For the Hosted Applications, NSB shall make nightly back-ups of Client’s data as outlined in section 6.4, in the event of a required reload.
 
10.                                COPYRIGHTS AND TRADEMARKS.
 
Client will not acquire any title, copyright or other proprietary rights to or interest in the Software, or any portion thereof. All works of authorship shall be the exclusive property of NSB and/or Third Parties, as the case may be. NSB shall have and retain sole ownership of any and all NSB trademarks, including the goodwill pertaining thereto. Client shall not remove or alter any of NSB proprietary or copyright notices, trademarks or logos.
 
11.                                PAYMENT TERMS.
 
11.1.                      The SaaS Fees including, but not limited to, POS Equipment Maintenance are due and payable quarterly in advance. The first payment shall be due when Client is Live. All undisputed sums due under this Agreement will be paid by Client (without any set off or deduction) within thirty (30) days from the date of Client’s receipt of invoice. Any additional charges for services not covered by the SaaS fee shall be due and payable within thirty (30) days from the date of Client’s receipt of invoice. For avoidance of doubt, implementation services and equipment shall be invoiced as per the payment schedule set forth in Schedule “A”.
 
11.2.                      If any fault or problem is found under investigation to be due to unauthorized use of the Software, Client shall pay NSB all reasonable costs and expenses incurred by NSB in consequence of such investigation, calculated on a time and materials basis at NSB’s then prevailing rates.

NSB Software as a Service Agreement	 	Page 15 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
11.3.                      Client shall pay for all applicable taxes, duties or levies at the then prevailing rate. Any late payment charges arising out of Client’s late payment of taxes, duties or levies shall be payable by Client.
 
12.                                EXPENSES.
 
Client shall be invoiced twice monthly for all reasonable out-of-pocket expenses incurred by NSB at cost, in accordance with the then current NSB Travel Policy, attached herewith as Schedule I. Such out-of-pocket expenses will include travel to and from Client’s facilities from NSB facilities, subsistence expenses, overnight accommodation, and telephone calls. Copies of receipts for all expenses other than meals (which shall be covered by the relevant per diem as set forth in Schedule I), shall be provided upon request from Client provided such request is made within three (3) months of invoice date. In addition to such expenses, one-way travel time shall be billable at NSB’s then current rates.
 
13.                                CONFIDENTIALITY.
 
13.1.                      The Software and Documentation together with all other data and materials supplied by NSB to Client in machine-readable form or otherwise pursuant to this Agreement are the property and confidential and proprietary trade secrets of NSB and/or Third Parties and remain so even after delivery to Client.
 
13.2.                      NSB and Client shall advise all their employees, agents or contractors that they are bound by the confidentiality terms of this Agreement. Further, each party agrees that during the performance of this Agreement it may receive information relating to the other party that is not generally known or that is of a proprietary nature (“Confidential Information”). Each party agrees not to use or disclose any Confidential Information except for the purpose of meeting its obligations under this Agreement, and will not use Confidential Information for any other purpose whatsoever. Confidential Information shall not include any information that is (a) generally known or available to the public; (b) already known at the time of receiving the Confidential Information through no wrongful act of the other party; (c) furnished by a third party with the right to do so; or (d) independently developed. In the event that either party is required to disclose Confidential Information relating to the other party to a court or government agency, it shall, prior to disclosure, and as soon as practicable, notify the other party and allow it an adequate opportunity to object to the disclosure order or take other action to preserve the confidentiality of the information.

NSB Software as a Service Agreement	 	Page 16 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
13.3.                      Client acknowledges that NSB’s offering is unique and valuable and has been developed or otherwise acquired by NSB at great expense, and that any unauthorized disclosure or use of Software or any component thereof, would cause NSB irreparable injury and loss, for which damages would be an inadequate remedy.
 
13.4.                      Client agrees to keep all property of NSB, tangible and intangible, free and clear of all claims, liens and encumbrances.
 
14.                                LIMITED WARRANTIES.
 
14.1.                      Each party represents and warrants that it has the right, power and authority to enter into this Agreement and to perform all of its obligations hereunder.
 
14.2.                      NSB represents and warrants that Services performed under this Agreement will be performed in a good and workmanlike manner, using generally accepted industry standards, by trained and skilled personnel and will substantially conform to the specifications, provided, however, that NSB shall not be liable for violation of any applicable law, rule or regulation or any third party claim associated with client content provided to NSB by Client.
 
14.3.                      To the knowledge of NSB, the Software does not violate any applicable law, rule or regulation or any third party, including any patent, trademark, trade name, copyright, trade secret or other intellectual property right. NSB shall defend Client in connection with a claim that the use of the Software by Client as permitted under this Agreement constitutes a patent or copyright infringement and shall indemnify and hold Client harmless against any damages finally awarded (after all appeals and excluding any damages not attributable to NSB) in connection with any such claim, but only to the extent that (i) the action relates to a patent or copyright enforceable in the United States or Canada, (ii) the action relates solely to the Software, (ii) the Software has not been altered or modified by or on behalf of Client, (iii) the Software is not used in connection with any services, software or equipment not approved by NSB, and (iv) the Software is used by Client only on the Designated Equipment, provided that: (a) Client give NSB written notice within ten (10) days of notice of any such claim; (b) NSB controls the defense of any action and has the right to settle; and (c) Client fully cooperates with NSB in the defense of such claim.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

NSB Software as a Service Agreement	 	Page 17 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
14.4.                      In the event that Client’s use of the Software is enjoined, NSB shall, at its expense do one of the following, (a) procure for Client the right to continue using the Software, (b) substitute suitable Software or (c) modify the Software so that it becomes non-infringing. If any of the foregoing options are not commercially practicable, NSB may elect to provide a pro-rata refund to Client of any pre-paid SaaS fees. NSB shall have no liability or obligation to defend or indemnify Client with respect to any infringement of a third party intellectual property right, or claim thereof, based upon the combination, operation or use of any item of equipment or software supplied hereunder with equipment or software not supplied by NSB, or in a manner for which Client was not authorized, or for any claim based upon alteration or modification, without NSB’s written approval, of any Software supplied pursuant to this Agreement.
 
14.5.                      THE WARRANTIES MADE IN THIS AGREEMENT ARE THE ONLY WARRANTIES MADE BY NSB WITH RESPECT TO PRODUCTS AND SERVICES PROVIDED HEREUNDER. CLIENT AGREES THAT THE EXPRESS OBLIGATIONS AND WARRANTIES MADE BY NSB IN THIS AGREEMENT ARE IN LIEU OF AND, TO THE FULLEST EXTENT PERMITTED BY LAW, TO THE EXCLUSION OF ANY OTHER WARRANTY, CONDITION, TERM, UNDERTAKING OR REPRESENTATION OF ANY KIND, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, RELATING TO ANYTHING SUPPLIED OR SERVICES PROVIDED UNDER OR IN CONNECTION WITH THIS AGREEMENT INCLUDING (WITHOUT LIMITATION) AS TO THE CONDITION, QUALITY, PERFORMANCE, MERCHANTABILITY OR FITNESS FOR THE PURPOSE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, NSB DOES NOT WARRANT THE FUNCTIONING OF ANYTHING SUPPLIED OR SERVICES PERFORMED HEREUNDER WITH SOFTWARE OR EQUIPMENT NOT SUPPLIED BY NSB, OR THAT THE OPERATION OF ANYTHING SUPPLIED OR SERVICES PERFORMED HEREUNDER WILL BE UNINTERRUPTED OR ERROR FREE.
 
14.6.                      CLIENT AGREES THAT IF CLIENT HAS RECEIVED ANY WARRANTIES WITH REGARD TO ANYTHING SUPPLIED OR SERVICES PERFORMED HEREUNDER, THEN THOSE WARRANTIES ARE PROVIDED SOLELY BY NSB AND DO NOT ORIGINATE FROM, AND ARE NOT BINDING ON, ANY THIRD PARTIES, EXCEPT AS OTHERWISE SPECIFIED IN ANY END-USER LICENSE AGREEMENT PROVIDED BY A THIRD PARTY. FURTHERMORE, ANY SUPPORT TO BE PROVIDED PURSUANT TO THIS AGREEMENT SHALL BE PROVIDED EXCLUSIVELY BY NSB, UNLESS OTHERWISE SPECIFICALLY AGREED TO BY NSB IN WRITING.

NSB Software as a Service Agreement	 	Page 18 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
15.                                LIMITATION OF LIABILITY.
 
15.1.                      EACH PARTY’S AGGREGATE LIABILITY TO THE OTHER IN RESPECT OF ALL CLAIMS (WHETHER IN CONTRACT, DELICT OR TORT) SHALL NOT EXCEED AN AMOUNT EQUAL TO THE TOTAL FEES PAID BY CLIENT WITHIN THE TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING THE OCCURRENCE OF THE EVENT THAT IS THE SUBJECT OF THE CLAIM. THE FOREGOING LIMITATION OF LIABILITY SHALL NOT APPLY TO THE FOLLOWING: (i) THE PARTIE’S OBLIGATIONS RELATING TO INDEMNIFICATION, CONFIDENTIALITY AND INTELLECTUAL PROPERTY; (ii) CLIENT’S PAYMENT OBLIGATIONS; (iii) DAMAGES ARISING FROM A PARTY’S GROSS NEGLIGENCE OR WILFUL MISCONDUCT; AND (iv) DAMAGES ARISING FROM PERSONAL INJURY OR DEATH.
 
15.2.                      NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL LOSS, DAMAGE, COST OR EXPENSES OF ANY KIND WHATEVER AND HOWEVER CAUSED, WHETHER ARISING UNDER CONTRACT, TORT, DELICT (INCLUDING NEGLIGENCE) OR OTHERWISE, LOSS OF PRODUCTION, LOSS OF OR CORRUPTION OF DATA, LOSS OF PROFITS OR OF CONTRACTS, LOSS OF OPERATION TIME, LOSS OF GOODWILL, LOSS OF ANTICIPATED PROFITS OR ANTICIPATED SAVINGS, EVEN IF SUCH PARTY HAS BEEN ADVISED, KNEW OR SHOULD HAVE KNOWN OF THEIR POSSIBILITY. THIS LIMITATION WILL APPLY EVEN IF ANY REMEDY FAILS OF ITS ESSENTIAL PURPOSE. FOR THE PURPOSES OF THIS ARTICLE, LOSS INCLUDES A PARTIAL LOSS OR REDUCTION IN VALUE AS WELL AS A COMPLETE OR TOTAL LOSS.
 
15.3.                      NOTWITHSTANDING THE FOREGOING LIMITATIONS OF LIABILITY IN SECTION 15.2 AS THEY RELATE TO THE LOSS OF DATA, NSB AGREES THAT IT WILL PERFORM BACKUPS AS SET FORTH IN THIS AGREEMENT AND IN THE EVENT OF ANY LOSS OF DATA, NSB WARRANTS THAT THAT IT WILL BE ABLE TO RESTORE DATA FROM BACKUPS MADE NO MORE THAN FOUR (4) NIGHTS PRIOR. THE FOREGOING IS LIMITED TO DATA AS IT PERTAINS TO HEAD OFFICE SOLUTIONS. IN THE EVENT THAT NSB IS IN BREACH OF THE FOREGOING WARRANTY, NSB’S LIABILITY SHALL BE AS SET FORTH IN SECTION 15.1.

NSB Software as a Service Agreement	 	Page 19 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
15.4.                      NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS AGREEMENT, NSB’S LIABILITY FOR DEATH, PERSONAL INJURY OR PHYSICAL DAMAGE TO PROPERTY CAUSED BY ITS NEGLIGENCE OR THAT OF ITS SERVANTS OR AGENTS SHALL BE LIMITED TO $1,000,000 IN RESPECT OF EACH SUCH EVENT.
 
15.5.                      TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, NO THIRD PARTY WHOSE PRODUCTS OR SERVICES ARE PROVIDED HEREUNDER BY NSB SHALL HAVE ANY LIABILITY FOR ANY DAMAGES, WHETHER DIRECT, INDIRECT, SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES ARISING FROM OR IN CONNECTION WITH THE USE OF ANY PRODUCTS OR SERVICES PROVIDED HEREUNDER. THIS LIMITATION WILL APPLY EVEN IF ANY REMEDY FAILS OF ITS ESSENTIAL PURPOSE.
 
16.                                CONNECTIVITY
 
16.1.                      Client shall provide for high-speed persistent connections between NSB and Client for access to the NSB Software as a Service infrastructure. The following technical specifications must be met:
 
16.1.1.            The persistent connection may be in the form of a Frame Relay, T1 or Broadband like xDSL at the Remote locations that are routed to and terminated at the NSB hosting facility over a Secure VPN that is implemented and managed (Line, Modems, Routers/VPN Devices) by the WAN communications provider. For redundancy purposes, NSB recommends that remote locations have a backup option that will re-establish the secure VPN connection in the event that the primary circuit is down.
 
16.1.2.            The Minimum Bandwidth required for a Store location is 128Kbits(s) assuming 1-2 Registers per store. Should the store configuration exceed two registers, then the minimum incremental bandwidth is 64Kbits per additional register.
 
16.1.3.            The Minimum Bandwidth required for a Corporate (head office) Location is 50Kbits(s) per User - typically 768Kbits(s) for 15 Users.
 
16.2.                      Client and their third-party network provider shall be responsible for setting up, configuring and ensuring that monitoring capabilities are provided as part of the network infrastructure, including the equipment specifically designated by NSB for use in establishing the connectivity, as well as setting up dial backup procedures, operational training, and loading any third party software. Any assistance provided by NSB to configure Client’s equipment or integrate the network solution, shall be billable on a time and materials basis at NSB’s then prevailing rates.

NSB Software as a Service Agreement	 	Page 20 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
17.                                INDEMNITY
 
Each party agrees to defend, indemnify and hold harmless the other party from and against any losses, damages, liabilities and expenses resulting from any claims made by any third party which arise from or are in any way related to such indemnifying party’s breach of their respective obligations, actions and/or omissions hereunder.
 
18.                                MISCELLANEOUS
 
18.1.                      Publicity . Client hereby grants NSB permission to distribute press releases upon completion of various project milestones (e.g., contract signature) and a case study upon project completion. Such publicity may appear in business or trade publications, NSB publications, and/or on the NSB web site. Client will provide NSB with a storefront photo and company logo for use in such published materials. Any published material will be subject to Client’s consent to both content and timing, such consent not to be unreasonably withheld or delayed; provided, however, that Client grants NSB the right to include Client’s name in NSB’s published client list without the need for Client’s consent. Notwithstanding anything to the contrary, Client acknowledges that NSB has a legal obligation to announce any material contracts and, accordingly, Client agrees that NSB will announce the execution of this Agreement, without the need for Client’s consent.
 
18.2.                      Non-Hiring . During the term of this Agreement, and for a period of twelve (12) months after termination hereof, neither party shall directly or indirectly, knowingly solicit, hire or otherwise retain, as an employee, consultant or independent contractor, any employee of the other party, within one (1) year of the employee leaving the employ of the other party, unless previously agreed in writing by the other party.
 
18.3.                      Assignment . Client shall not have the right to assign or transfer, in whole or in part, this Agreement, without NSB’s prior written consent, which shall not be unreasonably withheld, except in the event of the sale of all or substantially all of Client’s assets or shares by way of merger or acquisition, in which case NSB consent shall not be required. Client acknowledges that in the event of the transfer of any third party licenses, Client and/or its assignee may be required to pay license fees to such third party(ies).

NSB Software as a Service Agreement	 	Page 21 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
18.4.                      Entire Agreement . This Agreement comprises the entire agreement between the parties relating to the subject matter hereof. This Agreement supersedes all prior and contemporaneous agreements, proposals, or representations, written or oral, concerning the subject matter of this Agreement. This Agreement may not be modified or amended except in writing signed by a duly authorized representative of each party; no other act, document, usage, or custom shall be deemed to amend or modify this Agreement. In the event of any inconsistencies between this Agreement and any schedules hereto, the schedules shall prevail.
 
18.5.                      Independent Contractors . The relationship of the parties hereunder shall be that of independent contractors. Nothing in this Agreement shall be construed to constitute a partnership between or joint venture of the parties, nor shall either party be deemed the agent of the other party or have the right to bind the other party in any way without the prior written consent of such party, except as specifically provided in this Agreement.
 
18.6.                      Waiver . No term or provision of this Agreement shall be deemed waived and no breach excused unless such waiver or consent is in writing and signed by the party that has given such waiver or excused such breach.
 
18.7.                      Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of California, County of Orange. Exclusive jurisdiction for any action arising out of or in conjunction with this Agreement shall be in the courts of the State of California, County of Orange.
 
18.8.                      Force Majeure . In the event that either party hereto shall be delayed or hindered or prevented from the performance of any act required hereunder, other than a payment obligation, by reason of strikes, lock-outs, labor troubles, inability to procure materials or services, failure of power, riots, insurrection, war or other reasons of a like nature not the fault of the party delayed in performing work or doing acts required under the terms of this Agreement, such party shall immediately provide notice to the other party of such delay, and performance of such act shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay.
 
18.9.                      Notices . Any notice, request or other communication to be given under this Agreement may be delivered or sent by certified mail, registered mail, or courier, or by e-mail or facsimile transmission to the other party to be delivered at its address appearing in this Agreement (or in the event that another address is notified in writing to the other party in accordance with this Article, then to that other address) provided that a paper copy of any communication which is sent by e-mail or facsimile transmission is also sent by certified mail, registered mail, or courier, within one business day of the e-

NSB Software as a Service Agreement	 	Page 22 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
mail or facsimile transmission having been sent. Any such notice or document shall be deemed to have been delivered: (i) if delivered personally, at the time of delivery; or (ii) if mailed, by certified or registered mail, at 10:00 a.m. on the second (2nd) business day after it was mailed; or (iii) if sent by e-mail or facsimile transmission, on the Business Day when dispatched, provided that a paper copy was also sent in accordance with the provision above and provided that any notice which was dispatched or delivered or deemed to be delivered on a day which is not a business day, or after 4:00 P.M. (local time of recipient), shall be treated as delivered on the next business day.
 
18.10.               Severability . If any provision of this Agreement is held invalid or unenforceable by any court or agency of competent jurisdiction, the parties shall mutually agree on an alternate, legally valid and enforceable provision. The remainder of this Agreement shall nevertheless continue in full force and effect to the extent that continued operation under this Agreement without the invalid or unenforceable provision is consistent with the intent of the parties as expressed in this Agreement.
 
18.11.               Currency . All references to currency in this Agreement or any Related Agreement shall be deemed to be in U.S. Dollars, unless otherwise stipulated.
 
18.12.               Taxes . Client shall pay any federal, state, county or local sales, property, investment, use and/or other applicable taxes arising out of Client’s acquisition of the services of NSB under this Agreement, except any taxes on NSB’s income, whenever imposed. Upon request of NSB, Client shall obtain and provide to NSB any certificate of exemption or similar document required to exempt Client from any such tax liability. In the event that (i) any taxes are paid by NSB on behalf of Client, (ii) NSB has received payment therefore from Client, and (iii) it is thereafter determined that Client may be entitled to a refund of any such taxes, or a portion thereof, then NSB shall file the appropriate documents to receive such refund at Client’s request, and NSB shall pay such refund to Client upon receipt of such refund.
 
18.13.               Export/Re-Export Restrictions . Client agrees to comply with all export and re-export restrictions and regulations imposed by the governments of the United States, Canada and/or the country within which the Software is shipped by NSB to Client.
 
18.14.               Execution in Counterparts . This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which, when taken together, shall constitute one and the same instrument.

NSB Software as a Service Agreement	 	Page 23 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
WHEREFORE , the parties have caused this Agreement to be executed by their duly authorized representatives for and on behalf of:

CLIENT:	 	NSB Retail Solutions Inc.:	
 	 	 	 	 	
By:	/s/ Patrick Meany	 	By:	/s/ David C. Hennine	
Authorized Signature	 	Authorized Signature	
 	 	 	
Patrick Meany	 	David C. Hennine	
Name (type or print)	 	Name (type or print)	
 	 	 	
Chief Executive Officer	 	EVP General Manager	
Title	 	Title	
 	 	 	
February 26, 2008	 	February 27, 2008	
Date	 	Date	
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

NSB Software as a Service Agreement	 	Page 24 of 66 
 	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
Schedule “A” to the NSB Software as a Service Agreement
 
Services for the Implementation and Training of:

NSB Connected Retailer Solutions:	 	
 	$225,000	
 	 	
(Merchandising, Planning, Store, Sales Analytics, & CRM)	 	

Current Metrics (i) :	 	
 	 	
Current Store Count:	Thirty Five (36)	
Current Register Count	Eighty One (81)	
 	 	
Merchandising User Count	Twenty Five (25)	
 	 	
Planning User Count	Ten (10)	
 	 	
Sales Analytics User Count	Ten (10)	
 	 	
CRM User Count	Ten (10)	
 	 	
Certifications:	 	
 	 	
Debit/Credit Authorization & Settlement with ChasePaymentech:	Included	
 	 	
Annual Fees (ii)	 	
 	 	
Annual Software as a Service (SaaS) Fees	$197,700	
 	 	
POS Hardware Maintenance*	$47,385	

* The above POS hardware maintenance Fee is based a current register metric of eighty one (81) POS registers as outlined in Schedule B and is subject to change as additional registers and/or mobile devices are added to Client’s estate.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “A”

NSB Software as a Service Agreement	 	Page 25 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
Incremental Stores:
 
Client shall have the right to add additional stores to their estate and Client shall be charged an incremental annual Software as a Service Fee(ii) of four thousand, eight hundred dollars ($4,800.00) per store, which shall include up to two (2) POS registers and/or mobile devices per store. This fee includes the use of the NSB Software and NSB Software support. This Fee does not include POS Equipment or POS Equipment maintenance.
 
Incremental registers/mobile devices:
 
Client may add additional registers and/or mobile devices beyond the two (2) entitled per location, for which Client shall incur an incremental annual Software as a Service Fee(ii) of one thousand, eight hundred dollars ($1,800) per register/mobile device. This Fee does not include POS Equipment or POS Equipment maintenance.
 
Travelling Stores
 
Throughout the calendar year, Client operates temporary travelling stores (“Travelling Store(s)”) at various locations across the United States. The Travelling Stores are operational for an approximate cumulative period of ninety (90) days over a one (1) year period. As part of this agreement, Client is licensed for a Travelling Store with two (2) POS Registers. Notwithstanding the forgoing, Client may add an incremental five (5) POS Registers to either the existing Travelling Store or deploy additional Travelling Stores without incurring additional SaaS Fees, provided that the quantity of POS Registers allocated to all Travelling Stores does not exceed seven (7) POS Registers in total (i.e., Seven (7) registers in total, not seven (7) registers for each Travelling Store). Client is responsible for purchasing POS Equipment and POS Equipment maintenance from NSB for the incremental five (5) POS Registers. Should Client require additional POS Registers beyond the seven (7) entitled as part of this agreement, Client would be required to pay NSB incremental store fees and purchase POS Equipment and POS Equipment maintenance from NSB, as outlined herein. Client must notify NSB in writing at least five (5) business days in advance of deployment of the Travelling Stores. In the event that Client extends the operation of the Travelling Stores beyond ninety (90) days, Client shall pay NSB the then current full license fees for such use.

(i) Additional Users may be added the above Metrics for an incremental monthly fee of Sixty Three Dollars ($63.00) per incremental Users, to cover the associated costs of Third Party enabling items (SQL, etc.)
 
(ii) Subject to incremental store/register and/or user adjustments and/or annual cost of living adjustments as outlined in sections 3.1 and 3.2.
 
Schedule “A”

NSB Software as a Service Agreement	 	Page 26 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
Schedule “A” to the NSB Software as a Service Agreement — cont’d
 
Boot Barn
Connected Retailer - Software as a Service Proposal
CONFIDENTIAL -
 
Current Metrics:
36 Stores with a total of 81 POS Registers
26 Complete POS Registers/55 Partial Registers
 
Descriptions
ONE TIME COSTS
Implementation and Other First Year Items and Costs

NSB Connected Retailer	 	Fixed Bid; Concurrent implementation and user training on Connected Retailer Merchandising, Merchandise Planning, Sales Analytics, CRM, Store, Communication and Electronic Payment Switching	 	$225,000	
POS Hardware Certification	 	Certification of Client’s existing peripherals and equipment in conjunction with NSB certified IBM POS for Connected Retailer	 		
Payment Processing	 	Certification to ChasePaymentech Payment processing and settlement.	 	included	
Store (POS) Hardware
26 Complete IBM Registers
55 Partial IBM Registers	 	IBM SurePOS 742 POS Hardware with 2 GIG RAM
26 complete integrated IBM POS;
- With cash drawer, keyboard with integrated MSR, single station receipt printer, touch screen, customer display, RAID 1 redundancy, integrated UPS
55 partial distributed IBM POS;
- With cash drawer, keyboard with integrated MSR RAID 1 redundancy, integrated UPS. NO Receipt Printer, LCD Screens or Customer Displays
POS Hardware staging and integration services
Enabling Items for POS Registers;
Windows XP professional & SQL
Ingenico Debit Terminal for 81 POS Registers
Symbol Scanners for 26 POS Registers	 	$288,356	
 
ANNUAL COSTS
 
ANNUAL Software as a Service Fees
(includes NSB Software licensing, Hosting Functions and Services,
IT Services, Remedial Support & Maintenance)

Software	 	Connected Retailer ®  solutions include: Merchandising, Merchandise Planning, Sales Analytics, CRM, Store, and Communications (includes trickle polling & centralized payment switching)	 	 	
Hosting Infrastructure	 	NSB Server Farm, including test server, O/S,
Database and Enabling Software.	 	 	
Disaster Recovery	 	Disaster Recovery Services	 	 	
IT Services & Support	 	MSSQL DBA	 	 	
	 	24/7/365 Host IT Support
Pro-active monitoring and support of the hosted infrastructure	 	 	
	 	Direct to Store POS Help Desk -
Supporting your stores directly during their store open hours	 	 	
Maintenance	 	Software Maintenance includes:
- Software Assurance
- Ongoing Development
- Maintenance Releases	 	$197,700	
		Release Upgrades (Software and associated Services)	 	 	
 
ANNUAL Store Infrastructure POS Hardware Support Fees

Store Hardware & Enabling Item Support	 	POS Hardware & Enabling Item Support (Next Day)	 	$47,385	
 
Schedule “A”

NSB Software as a Service Agreement	 	Page 27 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
Schedule “A” to the NSB Software as a Service Agreement — cont’d
 
Payment Schedule in Respect of Implementation Services

Payment 
 Stage	 	Due Date	 	Amount 
 Due	 	
1	 	A deposit of 33.3% is due and payable upon execution of this Agreement.	 	$	75,000	 	
2	 	Second payment 33.3% is due upon the earlier of (i) the commencement of the POS register playback phase of the project plan or (ii) June 15th, 2008.	 	$	75,000	 	
3	 	Balance of the implementation fee is due and payable upon the earlier of (i) Client Live or (ii) December 15th, 2008.	 	$	75,000	 	
 	 	Total	 	$	225,000	 	
 
Payment Schedule in Respect of Annual Software as a Service and POS Equipment Support & Maintenance Fees

Payment 
 Stage	 	Due Date	 	Amount 
 Due	 	
1	 	Fees are due and payable quarterly in advance, commencing from Live date of SaaS.	 	$	245,085	 	

Payment Schedule in Respect of POS Equipment Purchase

Payment 
 Stage	 	Due Date	 	Amount 
 Due	 	
1	 	A deposit of 25% of the POS Equipment purchase price is due and payable upon execution of this Agreement.	 	$	72,089	 	
2	 	Balance of the POS Equipment purchase price is due and payable in full by either upon shipment from NSB to Client or by December 15th, 2008.	 	$	216,267	 	
 	 	Total	 	$	288,356	 	
 
Schedule “A”

NSB Software as a Service Agreement	 	Page 28 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
Schedule “B” to the NSB Software as a Service Agreement
 
POS HARDWARE ACQUISITION
 
EQUIPMENT PURCHASE
 
1.0                                Client is purchasing the following Equipment from NSB:
 
Boot Barn
Description of Store Hardware and Enabling Software for the Software as a Service Offering

Hardware Description	 	Qty	 	Unit
Price	 	Extended
Price	 	Annual
Maintenance	 	
26 Complete IBM POS Registers
55 Partial IBM POS Registers; where Boot Barn will use existing RECEIPT PRINTERS, LCD SCREENS, CUSTOMERS DISPLAYS, SYMBOL SCANNERS & REPORT PRINTERS	 	 	 	 	 	 	 	 	 	
POS Hardware	 	 	 	 	 	 	 	 	 	
IBM SurePOS POS Register
Includes: Intel Celeron 2.5GHz Processor, 2 GIG RAM, 2 x 40 GB SATA hard drives, Integrated Raid 1, Integrated UPS, CD-ROM drive; Alpha-numeric POS keyboard with MSR and cable; full-size cash drawer, fixed till and cable; Suremark single station USB POS printer and cable; Surepoint 12.1 Touch LCD, mount and cable; IBM 2 x 20 Customer Display; Iron Gray; configured for integrated (stacked) use and all power from base unit.
NO MODEM QUOTED, See note (1).
Staging and Integration is included.
On-site installation and remote support NOT included;
Support Note:
Support is combination of NEXT DAY ON-SITE & ADVANCED EXCHANGE Service	 	26	 	$	8,556	 	$	222,456	 	$	15,210	 	
 	 	Sub Total	 	$	222,456	 	$	15,210	 	
 	 	Special Consideration Discount	 	$	-96,902	 	—	 	
 	 	POS Hardware Subtotal	 	$	100,297	 	$	15,210	 	
IBM SurePOS POS Register
Includes: Intel Celeron 2.5GHz Processor, 2 GIG RAM, 2 x 40GB SATA hard drives, Integrated Raid 1, Integrated UPS, CD-ROM drive,; Alpha-numeric POS keyboard with MSR and cable; full-size cash drawer, fixed till and cable; Iron Gray; configured for distributed use with all power from base unit. Staging and Integration is included. On-site installation and remote support NOT included.
 
ASSUMPTIONS:
This proposal assumes that NSB will be able to use Boot Barn’s existing Star Receipt Printers and ELO Touch Screens. Additional cables and/or connectors may be required and would be quoted in addition to the equipment quoted herein. Client’s Scanners and Customer Displays have NOT been tested by NSB.
 
Support Note:
Support is combination of NEXT DAY ON SITE & ADVANCED EXCHANGE Service	 	55	 	$	8,177	 	$	449,735	 	$	32,175	 	
 	 	Sub Total	 	$	449,735	 	$	32,175	 	
 	 	Special Consideration Discount	 	$	-96,902	 	—	 	
 	 	POS Hardware Subtotal	 	$	144,679	 	$	32,175	 	
Symbol Scanners	 	 	 	 	 	 	 	 	 	
Symbol LS2208 Scanner & Stand
Includes: USB hand held scanner, intellistand, power supply and cable.
Support Note: Maintenance is Advanced Exchange	 	26	 	$	 	245	 	$	6,370	 	Included	 	
 	 	Sub-Total	 	$	6,370	 	 	Included	 	
 	 	Special Consideration Discount	 	$	-1,296	 	—	 	
 	 	Symbol Scanner Total	 	$	4,966	 	Included	 	

Schedule “B”

NSB Software as a Service Agreement	 	Page 29 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 

Payment Terminals	 	 	 	 	 	 	 	 	 	
Ingenico EN-Crypt 2100 PIN PAD
Includes: R5232C PIN-pad with Retail Base Application Software, 19 Key Keypad with 4 functional keys, and bi-directional MSR, dual Track (1 and 2)
Support Note: Support is Advanced Exchange	 	81	 	$	350	 	$	28,350	 	Included	 	
 	 	Sub-Total	 	$	28,350	 	 	Included	 	
 	 	Special Consideration Discount	 	$	-11,097	 	—	 	
 	 	Ingenico Total	 	$	17,253	 	 	Included	 	
Microsoft Enabling Software - Operating System & Database for POS Registers	 	 	 	 	
Windows XP Professional
OEM license version SP2, Required for each IBM SurePos Register and combined IBM SurePOS Server/Register
Support Note: Support provided from NSB Help Desk;
Support fee does not include new software versions/upgrade	 	81	 	$	385	 	$	31,185	 	Included	 	
SQL Server 2000 Standard Edition Restricted-use Embedded CAL
Standard edition, restricted-use Client Access License (CAL) for use with Restricted-use Embedded SQL Server License; for sale with NSB-supplied application software only; one license required per dedicated server, server-register, and all registers or other client devices.
Support Note: Support provided from NSB Help Desk;
Support fee does not include new software versions/upgrades	 	81	 	$	95	 	$	7,695	 	Included	 	
 	 	Sub-Total	 	$	38,880	 	—	 	
 	 	Special Consideration Discount	 	$	-17,719	 	—	 	
Operating System, Database & Other Total	 	$	21,161	 	Included	 	
 	 	 	 	 	 	
Grand Total Hardware & Enabling Item Acquisition Costs	 	$	288,356	 	—	 	
Grand Total Annual POS Hardware & Enabling Item Support & Maintenance Costs	 	—	 	$	47,385	 	

NOTES
 
(1)  A dedicated server is required for all stores that have more than four (4) P0S devices (registers/mobile) per location.  A dedicated server for Client’s existing 6 register stores has NOT been included within this proposal and shall be scoped under separate cover.
 
1.1                                Any operating system or other Third Party Software listed above is licensed to Client under the terms and conditions of the NSB Software License Agreement.
 
2.0                                OTHER TERMS AND CONDITIONS
 
2.1                                Shipping charges shall be F.O.B. NSB Montreal.
 
2.2                                NSB shall retain title to and ownership of the Equipment until the purchase price is paid in full. NSB represents and warrants that it will have the right to transfer good title to the Equipment and, upon full payment therefore, such Equipment shall be transferred to Client free and clear of encumbrance. In the event that Client shall fail to make the payments when due, in addition to all its other remedies, NSB shall have the immediate right to repossess any Equipment and Documentation provided. Client agrees to execute appropriate financing statements or other documents as NSB may deem necessary to protect its security interests and to pay all expenses for recording thereof.
 
2.3                                NSB is hereby authorized by Client to sign, file, or record in Client’s name and on its behalf any documents required for the protection of NSB’s title to the subject Equipment including security documents and financing statements and hypothecary documentation.
 
2.4                                Upon any default by Client under this Agreement, NSB shall have all the rights and remedies of a secured party under all applicable laws, which rights shall be cumulative.
 
3.0                                RISK OF LOSS
 
Risk of Loss shall be borne by NSB until delivery to a common carrier.
 
Schedule “B”

NSB Software as a Service Agreement	 	Page 30 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
SCHEDULE “C” to the NSB Software as a Service Agreement
 
SUPPORT AND MAINTENANCE SERVICE LEVEL GUIDELINES
 
The Maintenance Period for Head Office Solutions is 08:30 – 17:30, Client’s head office time zone, for all Business Days excluding NSB Local Holidays, and the Maintenance Period for Store Solution is the Client’s store open hour of business, that is, the hours of operations that the Clients stores are open for trading, for all Days, excluding Local Holidays. Notwithstanding anything to the contrary, NSB shall provide support for the Designated Equipment, as it pertains to systems operations and processing, on a 24/7 basis.
 
SEVERITY LEVELS
 
Severity levels are defined by the fault(s) that is a direct result of a malfunction of the supported Software that causes the following conditions at the identified severity levels:
 
1.                                       CLIENT CARE DELIVERED SERVICES (SUPPORT)

Severity	 	Definition	
 	 	 	
1	 	Severity 1 issues in a production environment shall be defined as a problem that is a direct result of a malfunction of the Software causing the application to be inoperable. The business impact is such that business is impacted to a severe level such that head office is unable to access the application for use or stores are unable to trade.	
 	 	 	
2	 	Severity 2 issues in a production environment shall be defined as a problem that is a direct result of a malfunction of the Software that causes the application to function in a limited manner and no workaround is available.	
 	 	 	
3	 	Severity 1 and Severity 2 issues shall be downgraded to Severity 3 when an acceptable workaround is provided and a permanent solution is not yet available.	
 	 	 	
4	 	A problem that is a direct result of a malfunction of the Software that causes minimal impact to the application’s functionality or pertains to a special request that requires the scheduling of resources for special requests and/or minor errors that do not impede the operation of the Software.	
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “C”

NSB Software as a Service Agreement	 	Page 31 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
NSB introduces Service Request Entitlement Levels in order to mitigate calls coming into NSB Client Care that were directly related to operational and/or procedural queries pertaining to the use of the NSB Solutions that should be addressed through user training. Product defects, issues with supported hardware equipment that requires service and/or issues whose root causes are unknown; do not contribute to Client’s Service Request Entitlement Levels.
 
1.1.                                               Supported Solution
 
The Service Request Entitlement Level as outlined herein shall refer to NSB’s Connected Retailer Store Solution (the “Store Solution”) and NSB’s Connected Retailer Merchandising, Planning, Sales Analytics, and CRM Solutions (the “Head Office Solution”). The Service Request Entitlement Levels for the Store Solution as outlined herein are predicated on a store dynamic of Thirty Six (36) store locations with a total of Eighty One (81) POS registers, which is subject to change.
 
The addition of new Solutions to the SaaS offering shall have separate Service Request Entitlement Level.
 
1.2.                                               NSB Responsibilities
 
NSB will provide support and maintenance services, on a helpdesk to Client’s assigned head office designates for the components of the Head Office Solutions that are included as part of the SaaS offering and on a helpdesk to Client store personnel basis as it pertains to the Store Solution.
 
1.3.                                               Client’s Responsibilities
 
1.3.1.                   Client shall provide NSB with a maximum of three (3) assigned designates for the Merchandising Solution, two (2) assigned designates for the Planning Solution, two (2) assigned designates for the Sales Analytics Solution and two (2) for the CRM Solution, who shall be responsible for interacting with NSB for all Support and Maintenance related issues.
 
Schedule “C”

NSB Software as a Service Agreement	 	Page 32 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
1.3.2.                   Client shall monitor communications with NSB to ensure that e-Service, NSB on line support portal, is the primary and preferred communications route for support related issues as it pertains to the Head Office Solutions.
 
1.4.                                               Service Request Entitlement Level (SREL)
 
SREL shall only be enforced commencing Six (6) months from Client’s Live date. NSB and Client shall review the quantity and types (technical, procedural, etc.) of service request incidents placed by Client to NSB over the first Six (6) months of this agreement in order to substantiate the quantity of service requests Client’s stores are entitled to place to NSB as part of their quarterly entitlement. SREL may be adjusted upon review and agreement by both parties.
 
1.4.1.                   Client will be entitled to the equivalent of Seventy (70) Service Requests per quarter, as it pertains to remedial support for the Store Solution . Service Requests are non-transferable from one quarter to the next, and are measured quarterly.
 
1.4.2.                   As it pertains to support for the Head Office Solutions, Client’s Service Request Entitlement shall be as follows:
 
Merchandising — Thirty (30) Service Requests per quarter
 
Planning — Fifteen (15) Service Requests per quarter
 
Sales Analytics — Twelve (12) Service Requests per quarter
 
CRM — Ten (10) Service Requests per quarter
 
Service Requests Entitlement Levels are non-transferable from one quarter to the next, and are measured quarterly.
 
1.4.3.                   Service Requests resulting from an identified product defect, a POS Equipment-related Service Request resulting in the need for the dispatch of an on-site field technician for a NSB POS Equipment failure, system reboot as a result of a register freeze and/or a Service Request resulting from a NSB-hosted infrastructure issue, will not be counted against the Service Request Entitlement levels outlined above.
 
Schedule “C”

NSB Software as a Service Agreement	 	Page 33 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
1.4.4.                   Calls in excess of the quarterly Service Request Entitlement Level will be billed on a time and materials basis at the prevailing NSB rates.
 
1.4.5.                   Each client reported incident shall be assigned a unique Service Request number, such that there shall be one incident or issue reported per Service Request.
 
1.4.6.                   For each incremental 4 stores added from the metrics outlined in Schedule “A”, Client shall be entitled to One (1) calls per quarter, as it pertains to the Store Solution.
 
2.                                       PRODUCT SUPPORT SERVICES (MAINTENANCE)
 
2.1.                                               NSB Responsibilities
 
2.1.1.                   NSB shall attempt to identify, reproduce and validate defect on an in-house test environment.
 
2.1.2.                   NSB shall provide workarounds and/or software fixes, within the Service Level Guidelines, for additional Client testing and validation.
 
2.1.3.                   NSB shall provide Client with information regarding the service releases and associated documentation.
 
2.1.4.                   NSB shall manage the software defect process and apply all fixes and updates accordingly.
 
2.2.                                               Client’s Responsibilities
 
2.2.1.                   Client shall provide required application support services to their respective internal resources and/or users, in addition to those support services being delivered by NSB.
 
2.2.2.                   Client shall provide support for all non NSB supported products and infrastructures.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “C”

NSB Software as a Service Agreement	 	Page 34 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
3.                                       SERVICE LEVEL GUIDELINES
 
NSB provides two levels of Service Level Guidelines. The initial Service Level Guidelines, defined in sections 3.1 and 3.2 below, are in effect during the period from when the issue has been assigned a Service Request number by Client reporting the issue and NSB begins analyzing the issue to identify whether the root cause of the issue is a product defect. Should NSB believe that the issue is not being caused by a product defect, then the guidelines provided for in section 3.1 below would continue to be in effect until the issue is resolved. In the event that NSB believes that the issue is being caused by a product defect, then the issue is passed to the NSB product support team to analyze and typically provide a resolution that involves a modification to the Software. Once the issue is passed to the NSB product support team then the Service Level Guidelines as defined in section 3.2 below are in effect.
 
3.1.                                               Delivered Service; Service Level Guidelines for Service Requests without identified defects
 
Measurement commences from the time that a Service Request number is issued.

 	 	Severity
Level 1	 	Severity
Level 2	 	Severity
Level 3	 	Severity
Level 4	
Direct to Store 1 st  Level Response	 	WITHIN AN AVERAGE of 5 MINUTES	 	 	
2 nd  Level Response	 	Within 60 Minutes	 	Within 120 Minutes	 	n/a	 	Within 3 Days	
Status update (Via e-Service)	 	Twice per Business Day	 	Once per Business Day	 	Bi-Weekly	 	Monthly	
Acceptable Workaround	 	Within 8 Business Hours	 	Within 40 Business Hours	 	n/a	 	n/a	
Permanent Resolution	 	Reduced to Severity 3	 	Reduced to Severity 3	 	Within 20 Business Days	 	Within 30 Business Days	
 
3.2.                                               Product Support; Service Level Guidelines for Service Requests with identified defects

 	 	DEFECT 
Severity 1	 	DEFECT 
Severity 2	 	DEFECT 
Severity 3	 	DEFECT 
Severity 4	
Status Update	 	Every 8 Business Hours	 	Every Other Business Day	 	Quarterly	 	Upon Request	
Acceptable Workaround	 	Within 16 Business Hours	 	Within 40 Business Hours	 	n/a	 	n/a	
Permanent Solution	 	Within 5 Business Days	 	Within 20 Business Days	 	Per Service Release Schedule	 	Annually	
Delivery Method	 	Hot Fix	 	Hot Fix	 	Maintenance Release	 	Maintenance Release	
 
Schedule “C”

NSB Software as a Service Agreement	 	Page 35 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
Schedule “D” to the NSB Software as a Service Agreement
 
HOSTED INFRASTRUCTURE SERVICE LEVEL GUIDELINES
 
Definitions
 
“ Service Availability ” is defined as the amount of time NSB’s Hosted Infrastructure is available, per quarter, during Client’s Core Business Hours of 8:30 to 17:30, Monday through Friday, Client’s local head office time zone and exclusive of Scheduled Maintenance downtime.
 
“ Hosted Infrastructure ” is comprised of NSB’s hosting hardware, associated operating systems or NSB’s internal network. Hosted Infrastructure excludes performance-related issues pertaining to NSB Software applications. In addition, Hosted Infrastructure excludes Client’s WAN, which if contracted through NSB is covered by a separate service level guideline as outlined in a separate schedule to NSB’s SaaS Agreement.
 
“ Scheduled Maintenance ” shall mean any maintenance to NSB Hosted Infrastructure of which Client is notified 72 hours in advance, or for work that is performed during a standard maintenance window outside of Client’s Core Business Hours.
 
“ Service Unavailability ” shall mean a failure of the NSB Hosted Infrastructure resulting in Client being unable to connect to the NSB Hosted Infrastructure from Client’s head office location. Service Unavailability shall not include failure as a result of Scheduled Maintenance, other planned outages, packet loss, problems with NSB software applications (which are covered by NSB service-level guidelines as outlined in Section C), Client’s head office equipment or facilities, acts or omissions of Client, Force Majeure or network-provider outages or service interruptions.
 
System Availability
 
NSB will provide a fault-management process to monitor NSB services for error conditions and notify appropriate technical personnel to initiate fault resolution. The following table describes the components of NSB fault management process.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “D”

NSB Software as a Service Agreement	 	Page 36 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 

DESCRIPTION	 	SERVICE LEVEL	
Service Availability	 	99.3% system availability of the Hosted Infrastructure.	

 
Proactive monitoring of Service Availability	 	Coverage: - 7 x 24
 
Service Level: NSB personnel will automatically be notified within 30 minutes of a system incident	
 
Notice of Scheduled Maintenance will be provided to Client’s designated point of contact by a method elected by NSB (e-Service, telephone, email, or fax).
 
Service Unavailability due to issues arising from Client’s Data, NSB Software application performance issues (which are covered by NSB service level guidelines as outlined in Section C), and other issues resulting from Client’s internal network, communication link to NSB internal network or events of force majeure shall not be deemed Service Unavailability for the purpose of this commitment.
 
Standard System and Client Data Back-up & Recovery Processes
 
In order to minimize the loss of critical data, NSB Hosting Services employs a strict backup policy for all file systems and database files. Incremental backup for file systems and full backup for databases is provided on a scheduled basis as outlined in the table below. All back ups are stored on tapes and are secured at an off-site location, accessible solely by authorized NSB employees. Restoration of lost file system data and database restoration starts within 5 hours of a client’s request.
 
Client is allowed to request up to one backup restoration once annually, provided however that the need to restore is not directly related to a malfunction or issues with the Hosted Infrastructure. Any additional backup or restore requests by Client may be provided by NSB on a “time and materials” basis.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “D”

NSB Software as a Service Agreement	 	Page 37 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 

DESCRIPTION	 	SERVICE LEVEL	
 	 	 	
Back-up services	 	Full backup: nightly
-1 week on-site
-3 weeks off-site
 
Frozen backups:
1 per Month (12 rotations)
1 per Calendar year  end (One rotation)	
 	 	 	
Database Back-up services	 	Backup for RDBMS. All data is backed up nightly. Backups are stored at a secure off site 3rd party location.	
 	 	 	
Restoration of lost file system data (restore from last backup)	 	Coverage: M-F 8:30am–5:30pm (local to Client H/O) Service Level: 5-hour response to begin the data recovery process	
 	 	 	
Restoration of Client database. (restore from previous nights backup)	 	Coverage: M-F 8:30am–5:30pm (local to Client H/O) Service Level: 5-hour response to begin the data recovery process.	
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “D”

NSB Software as a Service Agreement	 	Page 38 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
Schedule “E” to the NSB Software as a Service Agreement
 
POS EQUIPMENT SUPPORT AND MAINTENANCE
 
NSB POS Equipment support and maintenance is provided using various methods of service delivery. Next Day On Site Maintenance is used for the IBM Cash Drawer, LCD and CPU as outlined within Schedule ‘A’ to this SaaS Agreement.
 
ON SITE MAINTENANCE (“OSM”) SERVICE
 
OSM Service is provided next business day, during Client’s store hours of operations each Monday, Tuesday, Wednesday, Thursday, Friday, Saturday and Sunday, excluding Local Holidays. OSM is designed to provide Client with timely service and maintain Client’s designated POS Equipment in good working order. OSM Service does not assure uninterrupted operation of Clients POS Equipment.
 
OSM, as it pertains to service for Client’s POS Equipment, NSB shall utilize a combination of Next Day on site service and Advanced Exchange support.
 
OSM Service includes remedial and preventive maintenance based upon the specific needs of the individual item of Equipment. Client shall initiate each request for remedial maintenance by placing a call to NSB and providing to NSB the Equipment model and serial number. Remedial maintenance shall be considered completed when the Client’s Equipment has been repaired and NSB has made a commercially reasonable effort to restore, if necessary, the system’s disk image and data from the supplied image and data backup media securely stored on site at Clients store location. NSB will follow a definitive set of guidelines applicable to system restoration. OSM Service includes lubrication and adjustments, and may also include the replacement of maintenance parts, as NSB deems necessary. Preventive maintenance service may be performed by NSB in conjunction with a remedial service call.
 
Maintenance parts may or may not be manufactured by the OEM, may be altered by NSB to enhance maintainability, and may be new or reconditioned to perform as new.
 
CLIENT’S RESPONSIBILITIES
 
Client shall ensure that;
 
1.         The POS Equipment is available for the tech upon arrival at the store;
 
2.         Media copies are available for the technician if and when required to perform a system restore as NSB is not responsible for Client’s failure to do so, or for the cost of reconstructing data stored on disc files, tapes, memories, etc., lost or damaged during the performance of services under this Agreement.
 
Schedule “E”

NSB Software as a Service Agreement	 	Page 39 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
ADVANCED EXCHANGE (“AE”) SERVICE
 
AE is a service provided for those designated POS peripherals (keyboards, receipt printers, scanners, debit terminals, report printers, etc) which are easily replaceable by store personnel and where the service of an on-site technician does not bring any added value. In most cases, store personnel are simply required to unplug a cable and replace the defective peripheral with the replacement and pack the defective unit in the same box which the replacement unit was shipped in.
 
The advanced exchange process completely manages the delivery and return of replacement peripherals to and from the Client’s sites. The Client simply logs a call to NSB either through e-Service (NSB on line call channel) or via telephone to NSB 24/7 staffed Call Center, describing the issue and upon troubleshooting with NSB, a diagnosis will be made and the defective peripheral identified and a replacement ordered. A replacement peripheral is shipped from the central Logistics facility to the site. Once the part is confirmed on site, the store personnel will call NSB and NSB shall work with the store to have to replacement peripheral installed in placed of the defective peripheral. Upon successful completion of the installation of the replacement peripheral, the defective peripheral shall be returned to NSB repair facility. NSB partners with major air freight carriers, ensuring that accurate, up to the minute delivery tracking reports are readily available.
 
NSB Advanced Exchange Program
 
Upon determination by either NSB that a peripheral supported under NSB’s Advanced Exchange Program (“The Program”) is defective and requires replacement, NSB will:
 
I.                      ship all replacement parts for next day delivery each Monday, Tuesday, Wednesday, Thursday, Friday and Saturday (where applicable), excluding Local Holidays with a prepaid return shipping label and an associated RMA number with detailed shipping instructions for the return of the defective equipment to NSB’s designated repair facility.
 
II.                  receive the defective equipment from Client and match the RMA number, model and NSB Software as a serial number and other relevant product tracking information with the defective equipment received to validate that the correct unit has been received by NSB and/or by NSB’s Representatives. In the unlikely event that the equipment received by NSB and/or by NSB’s Representatives is not the expected equipment, NSB will contact the client’s store for immediate resolution. Client shall have 2 Business days to return the expected defective equipment to NSB’s designated facility at their cost. NSB shall return the equipment received in error back to Client and Client shall be responsible for all associated costs.
 
Schedule “E”

NSB Software as a Service Agreement	 	Page 40 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
III.             contact the Client’s store location directly and request that the defective equipment is returned to NSB designated repair facility if after 1 day from Client’s receipt of replacement unit, the defective equipment has not been shipped back to NSB’s designated repair facility.
 
IV.              where applicable, have the right to send a local field technician on site to the Client’s store location to pickup the defective equipment if after the attempt to retrieve the defective equipment as outlined in point In above, to NSB designated repair facility is unsuccessful. NSB shall invoice Client for said service at a two hour fiat rate fee at NSB then current Fees.
 
V.                   purchase replacement units for sparing purposes and invoice Client for the replacement cost in the event that the defective equipment is deemed to be unattainable, unrecoverable or abused. Replacement costs will be based upon NSB’s then current rates for said equipment plus a 15% surcharge.
 
In the event that Client retrieves equipment that has been designated as either unattainable or unrecoverable and where NSB has processed an order for equipment replacement under the Program, NSB may allow Client to return said equipment with a 45% restocking fee.
 
Dispatching for service under the Program must be reported to NSB by 5:00 pm EST, Monday through Friday and by 1:00 pm Saturday (where applicable). All Calls received by NSB outside of those hours will be processed for following day.
 
Schedule “E”

NSB Software as a Service Agreement	 	Page 41 of 66	 	February 26, 2008	
Boot Barn Inc.	 	 	 	 	

 
SCHEDULE F to the NSB Software as a Service Agreement
 
NSB Retail Solutions Inc.
 
Software as a Service
Statement of Work

REFERENCE:	 	CR-SAAS-BOOTBARN	
 	 	 	
Original Date Issued:	 	February 25 th , 2008	
 	 	 	
VERSION:	 	1.0	
 	 	 	
Date Revised:	 	February 26 th , 2008	
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn Inc.	Page 42 of 66 
 	February 26, 2008	

 
Overview
 
Your Connected Retailer solutions delivered in a Software as a Service (SaaS) model provides a full range of industry leading, integrated products and services. With 35+ years of experience designing, developing and implementing systems for the specialty apparel and footwear market, we offer our customers software and best practice expertise to ensure that immediate business value is realized, risks are minimized, and return on investment maximized. As a trusted business partner, we are committed to on-going product development ensuring that the systems that you invest in today will meet both your short term and long term system and business requirements.
 
NSB Professionals combine advanced technical skills, extensive retail industry experience and of course, comprehensive NSB product knowledge to ensure that you maximize system functionality and that you are kept abreast of industry best practices.
 
This Statement of Work will list the scope of service deliverables and itemize the assumptions of our SaaS offering as they pertain to your implementation.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 43 of 66 
 	February 26, 2008	

 
Project Scope
 
The project scope and SaaS implementation services outlined herein covers the following Connected Retailer modules: Foundation, Merchandising, Planning, Sales Analytics, CRM, Store and Communications. (An outline of each module can be found in the next section - Product Scope) The SaaS Product Review Meeting (PRM) serves as the project kick off. In this meeting, business processes will be aligned with SaaS product business flows and parameter configuration will be determined for Merchandising, Sales Analytics, CRM and Store. As such, client attendees must be empowered to make business and configuration decisions for the company in each of the specified areas. A detailed agenda will be provided in advance of the meeting to ensure accurate resource planning. The PRM is hosted at NSB’s corporate office, located in Montreal, Quebec.
 
NSB will provide training on each solution module using a train the trainer approach where NSB will deliver user training to a select group of client users within each module who will act as client designates for that module. (Note: the limit of number of people per training session can be found under “considerations” within each module in the Product Scope section) We have found that not only is this an efficient training approach but it also develops the strong in house expertise that ensures optimum system use.
 
Application training may be delivered on site, or at NSB. Live meeting may be used for certain application training at the discretion of the NSB trainer.
 
A three (3) day post live audit/advanced training is provided as part of this Statement of Work. Ongoing and/or additional advanced training may be provided to the client at prevailing rates.
 
In order to eliminate the duplication of effort, streamline processes, standardize on formats, and convert historical data, NSB recognizes that integration between certain of Client’s existing systems (i.e. Great Plains, Devix eCommerce) and NSB’s Connected Retailer environment will be required. Client understands and accepts that any integration effort (between any NSB Connected Retailer module and any 3 rd  party solution) shall be the sole responsibility of the Client and that all integration files shall conform to NSB’s standard application data layouts (API).
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 44 of 66 
 	February 26, 2008	

 
Assumptions
 
Efforts described in this Statement of Work (SOW) are based on the implementation of one single company. In addition, it is understood and accepted that the SaaS offering is a suite of pre-configured solutions based on industry best practices. Client specific customization or modifications are considered out of scope of the SaaS offering and as such, provisions for custom work will not be included within the SOW. All out of pocket expenses (travel, lodging, ground transportation, meals, etc) that are incurred as a result of travel to and from the Client location(s) for training, implementation and/or support of the project deliverable is the sole responsibility of Client.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 45 of 66 
 	February 26, 2008	

 
Product Scope
 
The product scope section of this Statement of Work lists each module with corresponding features, functions and certain parameter settings as per the SaaS Connected Retailer packaged offering unless otherwise specified.
 
Within the SaaS configuration, there are certain parameter options that are client specific and as such, cannot be pre-configured by NSB. These client specific configuration elements require consultative input by the Client at the PRM. This Statement of Work includes implementation services for the following Connected Retailer products: Foundation, Merchandising, Planning, CRM, Sales Analytics and Store.
 
Connected Retailer Foundation
 
Connected Retailer Foundation includes vital tools such as security and enterprise application integration that provide the platform for the system infrastructure.
 
Considerations pertaining to Foundation:
 
1.               NSB will provide Client with a user security grid template during the PRM that shall be completed by the Client. This user security grid will identify all users, their areas of responsibility and system module/menu access requirements. NSB will enable Client to maintain user access as it pertains to the Merchandising solution.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 46 of 66 
 	February 26, 2008	

 
Connected Retailer Merchandising
 
The Connected Retailer Merchandising Solution is the core of NSB integrated Connected Retailer suite of solutions that automates and synchronizes master data within the retail cycle— from master file definition to final sale. Connected Retailer Merchandising incorporates a centralized infrastructure that ensures the consistency and integrity of data throughout the enterprise.
 
The configuration of each module shall be defined under separate cover in the Application Configuration document. The Application Configuration document will include client specific configurable elements determined during the Merchandising phase of the PRM.
 
NSB Connected Retailer Merchandising includes the following modules listed below.
 
Product Management
 
·                   Definition and creation of the Main Merchandise Hierarchy:
·                   Chain-Division-Department-Class-Subclass
·                   Style Maintenance (creation, modification, reclassification)
·                   Styles will be created and maintained as ‘Regular - Color & Size, Color/No Size, or Size /No Color.
·                   Size and Color Maintenance
·                   User defined Product Attributes set up and usage. (Attribute definition and usage for location, vendor and document types is also included)
·                   Style Pack definitions and usage
·                   Fourteen (14) pre-defined views are available in the Merchandising Scorecard to monitor sales and inventory activity at the style/color/location level.
 
Purchase Order Management
 
·                   The following Purchase Order types are supported:
·                   Standalone Bulk Purchase Orders (Bulk order flows for both pre and post allocated merchandise are included)
·                   Pack-by-Store drop-ship Purchase Orders
·                   Procedure for inventory flow through within the warehouse.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 47 of 66 
 	February 26, 2008	

 
·                   Purchase Orders may be generated by:
·                   Manual entry via Purchase Order Mgmt Module
·                   Copy order via Purchase Order Mgmt Module
·                   Using historical data to determine demand within the Allocation module and then converted to a Purchase Order.
·                   Using automated replenishment vendor reviews.
·                   The Purchase Order Approval workflow is defined by employee position.
·                   There are seven (7) pre-configured views within the Purchase Order Worklist. Sort and filter capabilities are available within each view.
·                   Two Purchase Order print formats are included:
·                   1 bulk and 1 drop-ship.
·                   Purchase Orders may be printed or emailed to vendors.
·                   Integrated OTB look up (assuming planning values are made available)
 
Allocation & Replenishment (A&R)
 
·                   Pre Allocation workflow and process
·                   Post Allocation workflow and process
·                   Generation of Purchase Orders using historical information within A&R to determine demand.
·                   Allocation methods included are:
·                   Allocate using Actual Selling (assuming history is loaded and/or available)
·                   Allocate using Min/Max profiles
·                   Allocate using Manual Entry
·                   Allocate using Prior Distribution Instruction
·                   Definition and execution of automated vendor replenishment based on Min-Max quantities ( designed to generate Purchase Orders to replenish either store or warehouse demand)
·                   Definition and execution of automated warehouse picks based on Min Max quantities (designed to push product from the warehouse to the stores)
·                   Scheduling of system generated Min Max profiles ( based on Weeks of Supply)
·                   Size Ownership: Understanding Size Ownership as it relates to the calculation of allocation/replenishment quantities.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 48 of 66 
 	February 26, 2008	

 
Inventory Management
 
Note: Assumption is that the NSB Inventory Management module contained within Merchandising will be used at head office and NSB Web based Inventory Module will be used in store to perform inventory movement transactions (Receipts, Transfers, RTV’s, Inventory Adjustments, etc). Assumption: Layaway sales (if applicable) are booked at the time of pickup.
 
·                   Receiving management and work flow of Bulk and Drop Ship Purchase Orders.
·                   Pick, Pack and Ship
·                   Transfer management and work flow of head office initiated or store initiated transfers.
·                   Using “unsolicited receipt” documents to receive merchandise without a purchase order. (if required)
·                   Working with returns-to-vendor (RTV’s): Back office flow and/or store flow.
·                   Working with Inventory Movement Request Documents (IMRDs)
·                   Working with stock status adjustments to move merchandise from one stock status to another.
·                   Using Shrink Adjustments to account for known theft.
·                   Using User-Defined (unit and/or cost) Adjustments
·                   Using Average Cost Adjustments
·                   Physical Inventory processes and procedures:
·                   Ticket Printing: Head Office functions to generate and print price tickets. Two (2) pre-defined tickets formats are included. Tickets must contain at minimum, the UPC number, UPC barcode, current retail, and SKU identifier.
 
Price Management
 
·                   Working with Permanent & Promotional Price Changes.
·                   Working with Deals, including:
 
·                   Mix & Match,
·                   Single Item Pack,
·                   Multi-item Pack,
·                   Tier Pricing,
·                   Classification Threshold,
·                   Mix & Match Coupon,
·                   Mix & Match Prompt
 
·                   Working with Price Statuses.
·                   Price Look Up: Configuring Price Look Up to ensure the accurate, automated download of Styles, UPC’s, Descriptions, and Pricing (Permanent, Promotional and Deal price changes) to the stores.
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 49 of 66 
 	February 26, 2008	

 
Stock Ledger
 
·                   Both the Retail and Cost methods of accounting are supported.
 
Invoice Matching
 
·                   Both manual and automated Invoice Matching flows are supported.
·                   There are three automated matching flows:
 
1.               Conservative Matching
2.               Better Total Discounts Matching
3.               Match by PO Only
 
Merchandise Analytics
 
·                   Building user defined queries and automated alerts
·                   Working interactively with on line queries – sorts, filters, and taking action on product to automatically populate Style lists, Transfers and/or Price Changes.
 
Considerations pertaining to Merchandising:
 
I.                 NSB will provide hands on, on site training to the Client’s merchandising super users (maximum 7) who will be client designates for the Merchandising application. On going or additional training may be provided to Client, post-live for an incremental fee to cover topics such as:
 
a.               Advanced Query and Report writing
 
b.               Refresher Training – review of the core modules/basic training
 
c.                Advanced Training with respect to the core modules – including use of additional functionality available within Merchandising and Merchandise Analytics.
 
d.               Additional functional and/or technical consulting services, operational and/or procedural audits.
 
II.            Two (2) ticket formats are included with the package. Ticket printing via the Merchandising application requires that Teklynx/Codesoft software be installed. Additional ticket format development will be billed at NSB current rates. Teklynx software is not included within the SaaS deliverable and can be sourced either through NSB or directly through Teklynx.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 50 of 66 
 	February 26, 2008	

 
 
Data Conversion and Integration
 
Technical consulting services are available on a Time & Materials basis to provide guidance for client Integration work.
 
Data Conversion
 
NSB will work with Client to identify where automated data conversions are possible. A total of three (3) technical consulting days are included as part of this SOW to facilitate data conversion efforts. All data conversions shall conform to NSB’s standard application data layouts (API’s).
 
The following is a list of potential data elements that may be electronically loaded into merchandising, providing that the data conforms to NSB standard API:
 
·                   Styles and UPC’s
·                   Open Inventory & History Load
·                   Open PO’s
·                   Cumulative Cost to Stock Ledger
·                   Min / Max profiles to Replenishment
 
Historical data may be electronically loaded at the following merchandise levels:
 
(i) SKU, (ii) Style/Color, (iii) Style and the lowest level in the merchandise hierarchy, by location, by merchandise week.
 
Once Client signs off on data loaded into the test merchandising system, NSB will work with Client to execute the conversion loads into the live merchandising environment. Client shall be responsible for validation of all converted data loaded in both the test and live merchandising systems.
 
Client is responsible for providing NSB with a populated pre-defined grid for:
 
·                   Employee names and security levels
·                   Merchandising Vendors
·                   During the conversion period, a cutover plan will be created and reviewed with Client. All cutoff times must be respected by the Client in order to maintain data integrity and timelines.
 
3 rd  party Integration Points
 
·                   Integration to and from any 3 rd  party software solution shall confirm to NSB’s standard API file layouts and be the sole responsibility of the client.
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 51 of 66 
 	February 26, 2008	

 
Connected Retailer Merchandise Planning
 
The Connected Retailer Merchandise Planning solution being implemented is a comprehensive planning solution that includes both chain and store planning, utilizing both a top down and bottom up approach. The SaaS approach to Merchandise Planning is to deliver a pre-configured process with respect to implementation and client training, taking into consideration the needs of specialty retailers.
 
Considerations pertaining to Merchandise Planning:
 
I.                 NSB will provide hands on, on site, training to the Client’s defined list of a maximum of Five (5) merchandise planning super users who will be termed as client designates for the Merchandising Planning application. We have found that this is not only an efficient training approach but it also develops the strong in house expertise that ensures optimum system use. On going or additional training may be provided to the client, post-live for an incremental fee to cover topics such as:
 
a.               Store Planning
 
b.               Additional set up instructions and training within System Administration
 
c.                Incremental user training for Clients planning processes, i.e:, alternate hierarchies, data filters, navigation, etc
 
Merchandise Planning training includes;
 
·                   System Administration
·                   Planning Module (Chain planning to include new store planning).
 
Merchandise Planning Implementation Key Considerations:
 
·                   NSB will post history from Merchandising Analytics to Planning. With support from the client, NSB will perform all data validation exercises. Client is responsible for the final signoff of history posting into planning.
 
·                   The planning hierarchy will mirror the Merchandising hierarchy.
 
·                   The Planning implementation services contained herein assume that the Merchandising Analytics data is up to date and certified by Client to be accurate.
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 52 of 66 
 	February 26, 2008	

 
·                   Current plans will be manually created within the new Planning module
 
·                   Additional out of scope training can be provided to the client, post-live for an incremental fee:
 
·                   This Statement of Work assumes that the Standard Planning Rules (SPR’s) will be implemented. Any effort required to customize the standard planning elements, related metadata, calculations, and/or planning execution rules are outside the scope of this Statement of Work. Calculations are based on retail planning.
 
The details below define the key elements and execution rules:
 
Sales
 
·                   A change in Sales dollars will recalculate the Markdown dollars holding the Markdown %; this is also true for Shrink dollars.
 
·                   Sales are not affected by changes to either Inventory or Receipts.
 
·                   A change in Sales dollars will not affect Inventory dollars; Receipts dollars will be adjusted to reflect the change. i.e. if Sales dollars are increased, Receipts dollars will be increased by the same amount; therefore assuming that the additional Receipts dollars will be sold.
 
·                   A change in Sales dollar will also adjust the Receipts units. The receipt units will be calculated using the Receipt average price. Inventory units will then flow to the end of the season.
 
·                   Sales units will work in reverse of above example.
 
Receipts
 
·                   Receipt Average Price will not change when changing Inventory, Sales or Receipts; Receipt Average Price will be used to re-calculate units and/or dollars.
 
·                   A change in Receipt dollars will change Receipt units using Receipt average price. The Inventory dollars and units will flow through to the end of the season; Sales will not be affected.
 
·                   Receipt units will work in reverse of above example.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 53 of 66 
 	February 26, 2008	

 
Inventory
 
·                   Changes to Inventory dollars will reflect an adjustment to the previous and current months Receipt dollars using a flow calculation; the assumption being that season’s total Receipt dollars will remain constant. The Receipt units will calculate from the Receipt average price. Inventory units will then flow to the end of the season.
 
·                   Inventory units will work in reverse of above example.
 
Margin Elements
 
·                   The Retail Gross Margin dollars element is a calculated value. In order to affect Retail Gross Margin dollars, at least one of its components (Sales, Cogs, Markdown dollars, Shrink dollars) must be affected.
 
·                   The Cost Gross Margin dollars element is a calculated value. It is not affected by a change to Markdown dollars, Shrink dollars etc. It is only recalculated if Sales or Cogs is affected.
 
Analysis Elements
 
·                   The elements listed below are used for analysis purposes, in most cases an execution rule exists to make changes to these elements (*are elements without execution rules).

STK TO SALES R	STK TO SALES U	
SELL THRU % R	SELL THRU % U	
SEASONAL TURN	GMROI	
*FWOS R	*FWOS U	
*OTB R	*OTB U	
AVG STR SLS R	AVG STR SLS U	
AVG STR BOM R	AVG STR BOM U	
MARKDOWN TOT %	MARKDOWN PERM %	
MARKDOWN PRO %	BOM MU%	
RCPT IMU %	 	
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 54 of 66 
 	February 26, 2008	

 
Connected Retailer Sales Analytics
 
Designed for multi-channel retailers, NSB Connected Retailer Sales Analytics Solution ensures the integrity and accuracy of head office information systems that rely on point-of-sale transaction data. Acting as the central repository for sales transaction data, Sales Analytics controls store-level transactions, detects problems with transaction data, ensures supporting transaction details are easily accessible, and eliminates inconsistencies across retail information systems.
 
Sales Analytics includes the modules listed below. The configuration for each of the respective modules shall be defined under separate cover in the Application Configuration document that will include references to the client specific configurable elements of Sales Analytics, and will be determined during Sales Analytics PRM:
 
i.                   Sales Audit including Store Translate
 
ii.                Flash Sales
 
iii.             Credit Settlement
 
iv.            Voucher Management
 
Considerations pertaining to Sales Analytics:
 
I.                           NSB will provide hands on, on site training to the Client’s finance/auditing super users (maximum 4) who will be client designates for the Sales Analytics application. On going or additional training may be provided to the client, post-live for an incremental fee to cover topics such as:
 
e.                Advanced Query and Report writing
 
f.                 Advanced Training with respect to the core modules
 
g.                Additional functional and/or technical consulting services, operational and or procedural, that pertains to the business or technical processes
 
II.                      NSB can provide Sales Audit standard export interface files as per the NSB pre-defined export formats.
 
III.                 NSB can accept import files into Sales Audit based on NSB standard pre-defined import formats.
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 55 of 66 
 	February 26, 2008	

 
IV.                  This Statement of Work assumes Client will use the standard import and export interface files as per the NSB pre-defined formats.
 
V.                       The implementation of Sales Audit does not have provisions, nor permit for the conversion and migration of data originating from a third-party system.
 
VI.                  NSB Integration services to incorporate 3rd party POS or 3rd party data sources, (i.e. eCommerce and catalog), and any other imports outside of the standard SaaS Connected Retailer offering into Sales Audit are outside of the scope of this Statement of Work.
 
VII.             Client is responsible for maintaining any data exported to 3rd party systems (i.e. eCommerce and catalog) using NSB standard Sales Audit transaction export file for all other solutions outside of the SaaS Connected Retailer offering.
 
VIII.        Client is responsible for providing NSB with a pre-defined populated grid for:
 
i.                   Employee names and security levels
 
IX.                  Client is responsible any effort associated with integrating their 3 rd  party (Dynamics G.P) financial system to NSB Connected Retailer as it pertains to the moving of data to and from the NSB Solutions. NSB shall provide the standard API for Client to use as an integration reference guide. NSB consultation efforts will be billable on a time and materials basis.
 
X.                       The Sales Analytics applications will be implemented in a single currency environment (USD).
 
XI.                  Credit Settlement interface, integration and certification work is assumed to be for a single payment-processing provider. NSB preferred payment processor is ChasePaymentech and all NSB efforts to integrate to ChasePaymentech are included as part of this Statement of Work.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 56 of 66 
 	February 26, 2008	

 
Connected Retailer Customer Relationship Management
 
The Connected Retailer Customer Relationship Management (“CRM”) Solution provides all the tools necessary to capture, manage, and analyze customer information. Data management, data segmentation tools, promotion management, dynamic analytical reports, and loyalty program management, comprise our comprehensive CRM Solution.
 
CRM includes the modules listed below. The configuration for each of the respective modules shall be defined under separate cover in the Application Configuration document that will include references to the client specific configurable elements of CRM, and will be determined and reviewed as part of the CRM PRM:
 
i.                             Information Center
 
a.               Data Manager
 
b.               Web Extensions *
 
c.                Contact Manager
 
d.               Customer Inquiry
 
ii.                          Insights Manager
 
a.               Customer Reporting
 
b.               Campaign Manager
 
c.                Reward Manager
 
iii.                       Store
 
a.               Point of Service CRM

*Web Extensions is a development tool kit.  NSB shall provide Client with the necessary programming guide which contains information about the function calls within Web Extensions, enabling Client to integrate them with their custom designed web interface. Microsoft enterprise licensing may be required and those costs would be the responsibility of the Client.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 57 of 66 
 	February 26, 2008	

 
Considerations pertaining to CRM:
 
I.                           NSB will provide hands on, on site training to the Client’s CRM super users (maximum 3) who will be client designates for the CRM application. On going or additional training may be provided to the client, post-live for an incremental fee to cover topics such as:
 
a.               Advanced Query and Report writing
 
b.               Advanced Training with respect to the core modules
 
c.                Additional functional and/or technical consulting services, operational and or procedural, that pertains to the business or technical processes.
 
II.                      Connected Retailer Point of Service CRM is being implemented on the Store platform.
 
III.                 Only one database is being implemented.
 
IV.                  Client is responsible for providing NSB with a populated pre-defined grid for:
 
i.                   Employee names and security levels
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 58 of 66 
 	February 26, 2008	

 
Connected Retailer Store
 
Connected Retailer Store, is a Windows-based store automation system that includes POS and store back office functionality. The Connected Retailer Store Solution, configured within the frame work of SaaS will enable you to improve customer service, generate better management information and reports (about customers, merchandise, and sales processes), and help your sales associates maximize time spent with customers.
 
Store includes the modules listed below. The configuration for each of the respective modules shall be defined under separate cover in the Application Configuration document that will include references to the client specific configurable elements of Store, and will be determined and reviewed as part of the STORE PRM:
 
i.                             Point of Sale
 
ii.                          CRM In-Store Extensions
 
iii.                       Customer Payment & In Store Voucher Authorization
 
iv.                      Enterprise Electronic Journal
 
v.                         Enterprise Returns
 
vi.                      Back Office (Cash Management, In-Store Report Viewer, Employee Maintenance, Time and Attendance Management)
 
vii.                   Inventory Control
 
viii.                Communications
 
ix.                      Trickle Polling
 
x.                         Electronic Payment Switching
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 59 of 66 
 	February 26, 2008	

 
Considerations pertaining to Store:
 
I.                           NSB will provide hands on, on site training to the Client’s POS super users (maximum 6) who will be Client designates as it pertains to the NSB Store application. On going or additional training may be provided to Client, post-live for an incremental fee to cover topics such as:
 
a.               Advanced Training with respect to the supported core modules
 
b.               Additional functional and/or technical consulting services,
 
c.                Operational and or procedural, that pertains to the business or technical processes.
 
II.                      Client shall be using some of their existing receipt printers and LCD screens.  NSB has performed preliminary testing and based on the results to date, have a high degree of confidence that they can function in accordance with the NSB Store version that it was tested with. Notwithstanding the forgoing, Client shall assume responsibility for the ongoing support and maintenance of the Client supplied peripherals, including, but not limited to Star receipt printer and ELO LCD panel.
 
III.                 Client shall be responsible for providing to NSB with two (2) POS Register hardware set ups for the NSB lab at the beginning of the project. The lab system (i.e., server/workstation combinations) shall be identical to the setup(s) in the store, and is required for testing, training and ongoing support purposes. For avoidance of doubt, Client shall provide NSB two of each of the Client supplied peripherals as deployed at Client stores. These peripherals are required by NSB to ensure that NSB can provide ongoing tested updated and be able to troubleshoot potential issues reported by stores that may be a direct cause of an issue with the Client supplied peripherals.
 
IV.                  The associated services are included as it pertains to the combination of one (1) complete hardware configuration purchases as complete registers from NSB as well as one (1) hybrid hardware configuration which shall include Equipment purchased from NSB, such as an IBM CPU, keyboard and cash drawer, along with Client supplied receipt printer and LCD screen and one (1) software configurations (English), is included within this Statement of Work. NSB has NOT tested Client supplied Customer Displays or Scanners and as such, cannot assure that they can and will function as part of the Client supplied POS hardware.
 
V.                       Additional software configurations may be necessary should Client require different software sets as a result of the need to address different banners, divisions, languages, and/or concepts and may be established at an additional cost to Client.
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 60 of 66 
 	February 26, 2008	

 
VI.                  Stores with more than four (4) POS devices (Registers/Mobile) shall require a dedicated file server. NSB has not yet scoped the required dedicated server and that configuration shall shall be quoted under separate cover and agreement.
 
VII.             Client shall have the rights to use the Store solution in a mobile (wireless) POS environment. Efforts associated with configuring, implementing, deploying and supporting a mobile POS initiative would be scoped and quoted at a later date and time and all costs would be in addition to the efforts quoted within this scope of work.
 
VIII.        The timing for the rollout and deployment for the chain is in a single go live effort which will be detailed and agreed upon at part of the SAAS PRM or shortly thereafter.
 
IX.                  The standard remote access tool for application support is using Remote Desktop via a WAN or Dialup persistent connection to the Hosted Infrastructure.
 
X.                       The services to be provided are based on a single credit certification process and on the use of standard Communications and Customer Payment interfaces, which will be provided and reviewed at the STORE PRM.
 
XI.                  The implementation outlined herein does not have provisions nor permit for the conversion and migration of data originating from any other third-party systems.
 
XII.             Connected Retailer Communications utilizes IP connectivity between stores and the credit service provider.
 
XIII.        Should Client not contract with NSB for the establishment of a persistent network connection (i.e. ADSL) from their stores to NSB, Client will be responsible for the establishment, management and support of the persistent high speed network connection from their stores to NSB for the purpose of credit and debit authorization and settlement of credit and debit transactions, enterprise returns, customer lookup, etc.
 
XIV.         Should Client decide not to contract NSB for the implementation and support of their persistent network connection from their stores to NSB, Client must provide NSB with the network specifications and topology design at the STORE PRM or shortly thereafter.
 
Payment processors require a formal certification process to ensure the implementation of the credit/debit authorization and settlement process is properly defined to interface with their remote systems. NSB has established a preferred partnership with CHASEPAYMENTECH as
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 61 of 66 
 	February 26, 2008	

 
our preferred payment processor as this will streamline this process, mitigate risk and minimize costs. Should Client elect to establish or maintain an existing partnership outside of the NSB preferred payment-processing partnership, NSB will work with Client’s preferred payment processor to establish certification and Client shall be responsible for all incremental NSB and 3 rd  party costs associated with such certification process. In addition, Client will be responsible for all costs associated with the secured persistent network connection between NSB and their preferred payment processor.
 
Assumptions
 
i                               This implementation is for a single company within Client’s retail operation.
 
ii.                         A single set of corporate business processes will be used for all selling channels.
 
iii.                      In the event that Client postpones or delays the project or any portion thereof, Client agrees to accept and pay for the additional work required, as well as, the fees and related out-of-pocket expenses related to any travel costs.
 
iv.                     All Client specific application configurations will be limited to those items defined as client configurable elements during the SAAS PRM. Client must approve the SAAS PRM minutes in writing before any additional configuration work is started. Changes to any Client configurable elements after approval, are considered additional effort and shall be billable on a time and materials basis.
 
v.                        Connectivity efforts are based on a VPN connection between NSB and Client. Additional efforts to install or support other types of connections (i.e. dial-up connections) will be quoted separately.
 
vi.                     Minimum Client Desk Top Computer requirements for the use of the NSB SaaS Head Office applications of the Connected Retailer are as follows:
 
Pentium III+ or equivalent Celeron
Windows XP Professional
512 MB of RAM
4 GBytes of available disk space
 
vii.                  Test database installation will be on the same server and use the same instance as the live production database. Access to a fully integrated test database in a test environment will be on a scheduled basis.
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 62 of 66 
 	February 26, 2008	

 
Sample Timeline
 
The following is a sample timeline as it pertains to the implementation of NSB Connected Retailer, Software as a Service. The deliverables, timeline and associated milestones are for reference purposes only and the actual dates, timeline and deliverables shall be adjusted upon completion of the PRM process.

Tasks	 	Start date	 	Finish date	
Software as a Servcie: Project Milestones	 	February 4, 2008	 	June 10, 2008	
Pre-Project Review Meeting - Tasks	 	February 4, 2008	 	February 19, 2008	
Project Review Meetings (PRM) and post-PRM tasks	 	February 20, 2008	 	March 28, 2008	
SaaS server infrastructure set up	 	March 17, 2008	 	March 28, 2008	
NSB Head Office applications installed on servers	 	March 31, 2008	 	April 21, 2008	
NSB Store application configurations	 	April 2, 2008	 	April 18, 2008	
Playback register image ready	 	April 17, 2008	 	April 17, 2008	
Store Playback to Client completed	 	April 23, 2008	 	April 24, 2008	
Store final image frozen	 	May 2, 2008	 	May 2, 2008	
Merchandidsing data load files and validation - in Test	 	March 4, 2008	 	March 12, 2008	
NSB Merchandise training	 	April 16, 2008	 	April 23, 2008	
NSB Host application configurations	 	April 11, 2008	 	April 25, 2008	
NSB Readiness testing	 	May 5, 2008	 	May 8, 2008	
Client pre-live training	 	April 16, 2008	 	June 9, 2008	
Purchase Order Management Allocations & Replensihment training	 	May 27, 2008	 	May 29, 2008	
Merchandise Planning training	 	May 29, 2008	 	June 3, 2008	
Sales Audit & Flash Sales training	 	June 2, 2008	 	June 6, 2008	
CRM training	 	June 6, 2008	 	June 9, 2008	
POS Training	 	May 29, 2008	 	June 2, 2008	
Business Intelligence & Report training	 	May 29, 2008	 	June 2, 2008	
Merchandidsing data load files and validation - in Production	 	May 10, 2008	 	June 10, 2008	
Pre-live work complete	 	June 10, 2008	 	June 10, 2008	
Client Live	 	June 10, 2008	 	June 10, 2008	
 
Schedule “F”

NSB Software as a Service Agreement
Boot Barn	Page 63 of 66 
 	February 26, 2008	

 
Schedule “G” to the NSB Software as a Service Agreement
 NSB U.S RATE & LOCAL HOLIDAY SCHEDULE
 
This rate schedule sets forth the rates in respect of Professional Services and Support and Maintenance Services that are billable on a time and materials basis. Rates are subject to change with sixty (60) days notice. Notwithstanding the foregoing, for the first six (6) months from the date of execution of this agreement, Client shall be entitled to a twenty percent (20%) discount off of NSB then current rates for additional out of scope services.
 
All Travel time and all out-of-pocket expenses are billable.
 
HARDWARE & SOFTWARE SUPPORT
 
In respect of hardware and software covered under the NSB Master Agreement, rates for billable time are:
 
Regular time  $190.00/hr 8:31 – 17:30 Weekdays
Overtime       $285.00/hr 17:31 – 8:30 Weekdays, Weekends, and Statutory Holidays
 
Note:     Time is rounded up to the nearest 1/2 hour. A minimum of one (1) hour is in effect from 23:01 to 7:59.
 
Note:     Work performed by any NSB sub-contractor will be billed at the then current sub-contractor rate which is subject to change without notice.
 
UNITED STATES NSB HOLIDAY SCHEDULE (January 1, 2008-January 1, 2009)

January 1, 2008
New Year’s Day	September 1, 2008
Labor Day	
 	 	
March 21, 2008
Good Friday	November 27, 2008
Thanksgiving Day	
 	 	
May 26, 2008
Memorial Day	December 25, 2008
Christmas Day	
 	 	
July 4, 2008
Independence Day	January 1, 2009
New Years Day	
 
Schedule “G”

NSB Software as a Service Agreement
Boot Barn Inc.	Page 64 of 66 
 	February 26, 2008	

 
Schedule “H” to the NSB Software as a Service Agreement
 
HIGH SPEED PERSISTENT NETWORK CONNECTIVITY
 
Client may elect to enter into an agreement with NSB for network connectivity and if so, a separate stand alone agreement would be entered into between both parties.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
Schedule “H”

NSB Software as a Service Agreement
Boot Barn Inc.	Page 65 of 66 
 	February 26, 2008	

 
Schedule I
 
NSB Per Diem Travel Policy
 
Client hereby agrees that travel related expenses including but not limited to airfare, hotel, meals, and travel time will be subject to NSB’s Travel Policy, billed at the current rate schedule, and including per diem defined as follows.
 
·                   All travel shall be economy class, and shall be booked as far in advance as possible.
 
·                   Hotels shall be standard business class (such as Marriott, Sheraton, Hilton, etc.).
 
·                   NSB Resources will be paid a per diem to cover all incidentals including meals with tips, snacks & sundries, personal entertainment, laundry and personal telephone call expenses while traveling. Receipts are not required to be submitted.
 
·                   The per diem amount is:
 
·                   $65 CDN in Canada
·                   $65 US per day in the US
·                   $85 US per day in New York, California, Las Vegas, Chicago and Atlanta
·                   $75 US per day in Bermuda
·                   £85 per day in London
·                   €75 for Europe
 
·                   The per diem rate is proportionately adjusted for partial travel days. Travel begins one hour before the scheduled departure of a commercial carrier (plane, train, etc.) or, if driving, the actual time of departure. The travel status ends one hour after the commercial carrier returns the traveler to his/her home base. Travel by automobile ends upon arrival at the traveler’s workplace or residence.
 
·                   For partial travel days, the following guidelines will be used to determine the proportionate meal per diem. Travel days begin at 12:01AM and end at midnight. Each day is further broken up into quarters (12:00 AM to 6:00 AM, 6:00 AM to 12:00 PM, 12:00 PM to 6:00 PM, and 6:00 PM to 12:00 AM).
 
·                   As an example, if you have a flight at 10:00 AM on Monday and return 4:00 PM on Wednesday you would be eligible for 2.5 days of per diem which is 75% for Monday, 100% Tuesday and 75% on Wednesday.
 
·                   Travel time will be billed at NSB’s current prevailing rates.
 
Schedule “I”

NSB Software as a Service Agreement
Boot Barn Inc.	Page 66 of 66 
 	February 26, 2008	

 

Exhibit 10.15

 
Carrier Agreement
 
This Agreement (“Agreement”) is made and entered into by and between Boot Barn (“Customer”) and United Parcel Service Inc., an Ohio Company (“UPS”).
 
Pricing.   UPS will provide the pickup and delivery services (“Services”) as set forth below subject to the terms of this Agreement.  These Services will be provided with the incentives (“Incentives”) as also set forth below.  These Incentives shall only be available to the locations and account numbers approved and identified in Addendum A.  Account numbers of Customer and its affiliates, each of which is more than fifty percent (50.0%) owned by Customer, may be added or deleted only by mutual written agreement of Customer and UPS and require seven (7) business days notice to UPS to become effective.  Customer is prohibited from reselling or offering Incentives to any other party without the prior written consent of UPS and failure to comply with this prohibition may result in immediate cancellation of this Agreement.
 
Customer acknowledges and agrees that the Incentives and the minimum rates in Addendum B are based on and derived from the most recently published UPS Standard List Rates available at www.ups.com and are subject to change based on changes to such list rates.  Each eligible package (or shipment) will receive its applicable Incentive for the term of this Agreement.  Incentives are applied on a [***] basis unless otherwise specified.  Incentives shall be applied to [***] outbound shipments unless otherwise noted.  This Agreement will be subject to periodic review by UPS for Customer compliance.
 
Automation.   Customer agrees to supply the UPS Service Provider with a hard copy summary manifest at the time that the packages are tendered to UPS for shipment and provide UPS with Timely Upload of electronic Package Level Detail (“PLD”) in a form acceptable to UPS.  PLD includes, but is not limited to, consignee’s full name, complete delivery address, package weight and zone.  Timely Upload is defined as the electronic transmission of PLD to UPS at the time the packages are tendered to UPS.  Customer agrees to provide smart labels on all packages tendered to UPS.  A smart label, as defined herein and described in the current UPS Guide to Labeling, which may be updated from time to time by UPS, includes, but is not limited to, a MaxiCode, Postal Bar Code, current UPS Routing Code, appropriate UPS Service Icon and a UPS IZ Tracking Number Bar Code.  Customer further agrees that all shipping locations will use a UPS OnLine or OnLine compatible shipping solution that is approved and authorized by UPS as such.
 
Payment Terms.   Customer agrees that all invoices will be paid by electronic Funds Transfer or by check prior to the agreed upon due date.  If the payment method changes during the life of this Agreement, UPS reserves the right to reevaluate these incentives and adjust accordingly.
 
Service.   All Services provided by UPS shall be pursuant to the UPS Rate and Service Guide and UPS Tariff/Terms and Conditions of Service in effect at the time of shipping, each of which are incorporated herein by reference and which may be subject to change without prior notice and which, together with this Agreement, are the entire agreement and understanding between Customer and UPS relating to the relationship under this Agreement, superseding all prior or contemporaneous agreements or understandings.
 
Confidentiality.   Customer and UPS agree to maintain the confidentiality of this Agreement including its rates, terms and Incentives (“Confidential Information”) unless disclosure is required by law.  Customer agrees not to post or publicly display this Confidential Information.
 
Offer Expiration and Prior Agreements.   This offer is void if not accepted by October 11, 2013 (“Deadline”).  Customer may accept Agreement by providing a duly signed copy of this Agreement to UPS by the Deadline.  This Agreement supersedes all other agreements between the Customer and UPS regarding these Services.  This Agreement is hereby signed and executed by authorized representatives of both parties.
 
Term.   The Incentives contained in this Agreement take effect on the Monday following the signing of this Agreement or the Effective Date, whichever is later.  The Incentives remain in effect for 1558 weeks.  At the end of the 1558 week period, UPS in its sole discretion, reserves the right to extend the terms of this Agreement on a month-to-month basis.  Either party may terminate this Agreement at any time upon 30 days prior written notice to the other.

UPS Customer	 	 	
 	 	 	
United Parcel Service Inc.	 	Boot Barn	
 	 	 	
By:	/s/ Diana Knight	 	By:	/s/ Paul Iacono	
 	 	 	 	 	
Title:	AE	 	Title:	CFO	
 	 	 	 	 	
Address:	1331 S. Vernon Ave.	 	Address:	15776 Laguna Canyon	
 	 	 	 	 	
 	Anaheim, CA 92805	 	 	Irvine, CA 92618	
 	 	 	 	 	
Date Signed:	9-25-13	 	Date Signed:	9-25-2013	
 	 	 	 	
 	 	Effective Date:	9-30-13	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P720025535 – 01
Carrier Agreement Page 1 of 11

 
Addendum A
List of Account Numbers
 
Boot Barn’s UPS accounts identified below shall be included in the Agreement.
The following accounts shall have their activity committed and are eligible for incentives as specified in Addendum B:

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
Section 1 :	 	 	 	 	
 	 	 	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN CORPORATE	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN HR	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKINS - STORE #33	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #11	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P720025535 – 01
Addendum A Page 2 of 11

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #26	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN STORE 85	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN/INTERNET	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC E WAREHOUSE	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P720025535 – 01
Addendum A Page 3 of 11

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P720025535 – 01
Addendum A Page 4 of 11

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #14	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	SOURCE ONE OFFICE PRODUCTS	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BILLY BOB’S BOOT OUTLET #24	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN & WORK STORE	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN & WORK STORE	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P720025535 – 01
Addendum A Page 5 of 11

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE # 38	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN % GEORGIA SMITH	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #20	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN STORE 94	 	 	
 	 	[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P720025535 – 01
Addendum A Page 6 of 11

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BOOT BARN STORE 105	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #32	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN STORE 100	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #7	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #18	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #12	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #19	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #17	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #10	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #15	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #16	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #8	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	WORK WAREHOUSE #27	 	[***]	
 	 	[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P720025535 – 01
Addendum A Page 7 of 11

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #38	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #21	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN WEAR	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #25	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN #177	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P720025535 – 01
Addendum A Page 8 of 11

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT CORRAL #9	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN CORPORATE	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKINS DEPT STORE #31	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKINS DEPT STORE #32	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN #0055	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P720025535 – 01
Addendum A Page 9 of 11

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN #0067	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
 
The following accounts shall have their activity committed as specified in Addendum B:

ACCOUNT	 	NAME AND ADDRESS	
Section 2:	 	 	
[***]	 	BOOT BARN	
 	 	[***]	

*If there is an account number for the same service included in another UPS agreement, such account number will be deemed deleted from such other agreement as of the effective date.
 
** The commodity tier displayed is for Hundredweight outbound [***]. For other Hundredweight Billing Options (third party, freight collect and consignee billing) please refer to the Hundredweight Service Contract Agreement.UPS Hundredweight rates and incentives will only apply to UPS accounts with an active Hundredweight Tier (01-07).The stated commodity tier set forth in this Addendum supersedes the commodity tier set forth in any existing Hundredweight Service Contract Agreement between the parties.
 
***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P720025535 – 01
Addendum A Page 10 of 11

 

 	Addendum B
Incentives		
 
All incentives contained in this Addendum B apply to the effective UPS rate at the time of shipment and shall be applied on a [***] basis unless otherwise specified. (1)
 
Summary Level Deferred Tier
 
The Customer will receive an additional incentive off of net transportation charges (not including Fuel Surcharges paid) subject to all applicable minimums in this or other agreements per the following schedule based on a [***] rolling average of eligible packages tendered to UPS. The band determination is based on the average net transportation charges per [***] (excluding accessorials and surcharges, unless otherwise specified). The incentives will be administered on a [***] basis. Within thirty (30) days after the end of the period, UPS will issue a single check to the Customer representing the total amount of the additional incentive(s) earned, if any.

Zone	 	Bands ($)	 	
 	 	[***]	 	
[***]	 	[***]	 	
 
The following products will be included in determining the appropriate bands of the customer: Service(s) listed in Group(s)  All Small Package Freight, All International Import, All UPS Ground with Freight Pricing of the Committed Services section at the end of the Addendum B.
 
Committed Services:
 
All Small Package Freight: Domestic and Export transportation charges from the following: [***] will be used to determine the customer’s incentive levels: [***].
 
All International Import:  Import transportation charges from the following: [***] will be used to determine the customer’s incentive levels: [***].
 
All UPS Ground with Freight Pricing: The following service(s) will be used to determine the band of the customer: [***].

Notes:
(1) Incentives are based on and derived from the most recently published Standard List Rates and adjusted periodically pursuant to the terms and conditions of the Carrier Agreement. Updated rate charts will be made available to Customer in January of subsequent contract years by contacting your UPS account executive.
 
***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P720025535 – 01
Addendum B Page 11 of 11

Exhibit 10.16

Carrier Agreement		
 
This Agreement (“Agreement”) is made and entered into by and between Boot Barn (“Customer”) and United Parcel Service Inc., an Ohio Company (“UPS”).
 
Pricing. UPS will provide the pickup and delivery services (“Services”) as set forth below subject to the terms of this Agreement. These Services will be provided with the incentives (“Incentives”) as also set forth below. These Incentives shall only be available to the locations and account numbers approved and identified in Addendum A . Account numbers of Customer and its affiliates, each of which is more than fifty percent (50.0%) owned by Customer, may be added or deleted only by mutual written agreement of Customer and UPS and require seven (7) business days notice to UPS to become effective. Customer is prohibited from reselling or offering Incentives to any other party without the prior written consent of UPS and failure to comply with this prohibition may result in immediate cancellation of this Agreement.
 
Customer acknowledges and agrees that the Incentives and the minimum rates in Addendum B are based on and derived from the most recently published UPS Standard List Rates available at www.ups.com and are subject to change based on changes to such list rates. Each eligible package (or shipment) and accessorial will receive its applicable Incentive for the term of this Agreement. Incentives are applied on a [***] basis unless otherwise specified. Incentives shall be applied to [***] outbound shipments unless otherwise noted. This Agreement will be subject to periodic review by UPS for Customer compliance.
 
Automation. Customer agrees to supply the UPS Service Provider with a hard copy summary manifest at the time that the packages are tendered to UPS for shipment and provide UPS with Timely Upload of electronic Package Level Detail (“PLD”) in a form acceptable to UPS. PLD includes, but is not limited to, consignee’s full name, complete delivery address, package weight and zone. Timely Upload is defined as the electronic transmission of PLD to UPS at the time the packages are tendered to UPS. Customer agrees to provide smart labels on all packages tendered to UPS. A smart label, as defined herein and described in the current UPS Guide to Labeling, which may be updated from time to time by UPS, includes, but is not limited to, a MaxiCode, Postal Bar Code, current UPS Routing Code, appropriate UPS Service Icon and a UPS 1Z Tracking Number Bar Code. Customer further agrees that all shipping locations will use a UPS OnLine or OnLine compatible shipping solution that is approved and authorized by UPS as such.
 
Payment Terms. Customer agrees that all invoices will be paid by Electronic Funds Transfer or by check prior to the agreed upon due date. If the payment method changes during the life of this agreement, UPS reserves the right to reevaluate these incentives and adjust accordingly.
 
SurePost. Rates applicable to UPS SurePost Service are set forth at www.ups.com/content/us/en/preferred/lws_index.html.
 
Service. All Services provided by UPS shall be pursuant to the UPS Rate and Service Guide and UPS Tariff/Terms and Conditions of Service in effect at the time of shipping, each of which are incorporated herein by reference and which may be subject to change without prior notice and which, together with this Agreement, are the entire agreement and understanding between Customer and UPS relating to the relationship under this Agreement, superseding all prior or contemporaneous agreements or understandings. UPS SurePost Service is provided pursuant to the UPS SurePost Terms of Service, located at www.ups.com/content/us/en/preferred/lws_index.html, which are also incorporated herein by this reference.
 
Confidentiality. Customer and UPS agree to maintain the confidentiality of this Agreement including its rates, terms and incentives (“Confidential Information”) unless disclosure is required by law. Customer agrees not to post or publicly display this Confidential Information.
 
Offer Expiration and Prior Agreements. This offer is void if not accepted by October 11, 2013 (“Deadline”). Customer may accept Agreement by providing a duly signed copy of this Agreement to UPS by the Deadline. This Agreement supersedes all other agreements between the Customer and UPS regarding these Services. This Agreement is hereby signed and executed by authorized representatives of both parties.
 
Term. The Incentives contained in this Agreement take effect on the Monday following the signing of this Agreement or the Effective Date, whichever is later and continue until terminated by either party. Either party may terminate this Agreement at any time upon 30 days prior written notice to the other. In addition to these termination rights, UPS shall have the right to terminate the UPS SurePost Service Incentive Program set forth herein immediately (i) if Customer fails to comply with any term of the UPS SurePost , or (ii) if the US Postal Service eliminates or changes the terms under which it provides the Lightweight Parcel Select Service for packages tendered pursuant to UPS SurePost.

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P780025560 - 02
Carrier Agreement Page 1 of 18

 

UPS	 	Customer	
 	 	 	
United Parcel Service Inc.	 	Boot Barn	
 	 	 	
By:	/s/ Diana Knight	 	By:	/s/ Paul Iacono	
 	 	 	 	 	
Title:	AE	 	Title:	CFO	
 	 	 	 	 	
Address:	1331 S. Vernon Ave.	 	Address:	15776 Laguna Canyon	
 	Anaheim, CA 92805	 	 	Irvine, CA 92618	
 	 	 	 	 	
Date Signed:	9-25-13	 	Date Signed:	9-25-2013	

 	Effective Date:	9-30-13	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.

P780025560 - 02
Carrier Agreement  Page 2 of 18

 

Addendum A
List of Account Numbers		
 
Boot Barn’s UPS accounts identified below shall be included in the Agreement.
 
The following accounts shall have their activity committed and are eligible for incentives as specified in Addendum B:

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
Section 1 :	 	 	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN CORPORATE
[***]
[***]	 	[***]	
[***]	 	BOOT BARN HR
[***]
[***]	 	 	
[***]	 	RCC WESTERN
[***]
[***]	 	[***]	
[***]	 	BASKINS -STORE #33
[***]
[***]	 	 	
[***]	 	RCC WESTERN STORE #11
[***]
[***]	 	[***]	
[***]	 	BOOT BARN
[***]
[***]	 	[***]	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P780025560 - 02
Addendum A Page 3 of 18

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	[***]	
[***]	 	BOOT BARN
[***]
[***]	 	[***]	
[***]	 	RCC WESTERN STORE #26
[***]
[***]	 	[***]	
[***]	 	BOOT BARN
[***]
[***]	 	[***]	
[***]	 	BOOT BARN
[***]
[***]	 	[***]	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	[***]	
[***]	 	BOOT BARN STORE 85
[***]
[***]	 	 	
[***]	 	BOOT BARN/INTERNET
[***]
[***]	 	[***]	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	 	
[***]	 	RCC E WAREHOUSE
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	[***]	
[***]	 	BOOT BARN
[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P780025560 - 02
Addendum A Page 4 of 18

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	[***]	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	[***]	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	[***]	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	[***]	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	 	
[***]	 	RCC WESTERN
[***]
[***]	 	 	
[***]	 	RCC WESTERN
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P780025560 - 02
Addendum A Page 5 of 18

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	RCC WESTERN STORE #14
[***]
[***]	 	[***]	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	SOURCE ONE OFFICE PRODUCTS
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BILLY BOB’S BOOT OUTLET #24
[***]
[***]	 	[***]	
[***]	 	RCC WESTERN & WORK STORE
[***]
[***]	 	 	
[***]	 	RCC WESTERN & WORK STORE
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	[***]	
[***]	 	BASKIN/BOOT BARN
[***]	 	[***]	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P780025560 - 02
Addendum A Page 6 of 18

 

ACCOUNT	 	NAME AND ADDRESS 	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	[***]	
[***]	 	BOOT BARN
[***]
[***]	 	[***]	
[***]	 	RCC WESTERN STORE # 38
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	[***]	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	[***]	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN % GEORGIA SMITH
[***]
[***]	 	 	
[***]	 	RCC WESTERN STORE #20
[***]
[***]	 	[***]	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN STORE 94
[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P780025560 - 02
Addendum A Page 7 of 18

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BOOT BARN STORE 105
[***]
[***]	 	[***]	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	[***]	
[***]	 	RCC WESTERN STORE #32
[***]
[***]	 	[***]	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN STORE 100
[***]
[***]	 	 	
[***]	 	RCC WESTERN STORE #7
[***]
[***]	 	[***]	
[***]	 	RCC WESTERN STORE #18
[***]
[***]	 	[***]	
[***]	 	RCC WESTERN STORE #12
[***]
[***]	 	[***]	
[***]	 	RCC WESTERN STORE #19
[***]
[***]	 	[***]	
[***]	 	RCC WESTERN STORE #17
[***]
[***]	 	[***]	
[***]	 	RCC WESTERN STORE #10
[***]
[***]	 	[***]	
[***]	 	RCC WESTERN STORE #15
[***]
[***]	 	[***]	
[***]	 	RCC WESTERN STORE #16
[***]
[***]	 	[***]	
[***]	 	RCC WESTERN STORE #8
[***]
[***]	 	[***]	
[***]	 	WORK WAREHOUSE #27
[***]	 	[***]	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P780025560 - 02
Addendum A Page 8 of 18

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #38
[***]
[***]	 	[***]	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	[***]	
[***]	 	RCC WESTERN STORE #21
[***]
[***]	 	[***]	
[***]	 	RCC WESTERN WEAR
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	[***]	
[***]	 	RCC WESTERN STORE #25
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN #177
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]	 	 	

***   Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P780025560 - 02
Addendum A Page 9 of 18

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BASKIN/BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT CORRAL #9
[***]
[***]	 	[***]	
[***]	 	BOOT BARN CORPORATE
[***]
[***]	 	[***]	
[***]	 	BASKINS DEPT STORE #31
[***]
[***]	 	 	
[***]	 	BASKINS DEPT STORE #32
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN #0055
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]
[***]	 	 	
[***]	 	BOOT BARN
[***]	 	 	

***   Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P780025560 - 02
Addendum A Page 10 of 18

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN #0067	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
 
The following accounts shall have their activity committed as specified in Addendum B:

ACCOUNT	 	NAME AND ADDRESS	 	 	
Section 2:	 	 	 	 	
[***]	 	BOOT BARN
[***]	 	 	

*If there is an account number for the same service included in another UPS agreement, such account number will be deemed deleted from such other agreement as of the effective date.
 
** The commodity tier displayed is for Hundredweight outbound [***]. For other Hundredweight Billing Options (third party, freight collect and consignee billing) please refer to the Hundredweight Service Contract Agreement.UPS Hundredweight rates and incentives will only apply to UPS accounts with an active Hundredweight Tier (01-07).The stated commodity tier set forth in this Addendum supersedes the commodity tier set forth in any existing Hundredweight Service Contract Agreement between the parties.
 
UPS Hundredweight rates and incentives will only apply to UPS accounts with an active Hundredweight Tier (01-07).

***   Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P780025560 - 02
Addendum A Page 11 of 18

 

Addendum B
Incentives		
 
All incentives contained in this Addendum B apply to the effective UPS rate at the time of shipment and shall be applied on a [***] basis unless otherwise specified. (1)
 
[***] - Incentives Off Effective Rates

Weight	 	Zones	 	
(lbs)	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
1 -30	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
31 -150	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
151 and up	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
Commitment levels for [***] are at least [***] in base transportation charges per [***].
 
[***] - Incentives Off Effective Rates

Weight	 	Zones	 	
(lbs)	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
1 -5	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
6 -10	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
11 -20	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
21 -30	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
31 -150	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
151 and up	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
Commitment levels for [***] are at least [***] in base transportation charges per [***].
 
[***] - Incentives Off Effective Rates

Weight	 	Zones	 	
(lbs)	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
1 -3	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
4 -9	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
10 -70	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
71 and up	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
Commitment levels for [***] are at least [***] in base transportation charges per [***].
 
[***] - Incentives Off Effective Rates

Weight	 	Zones	 	
(lbs)	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
1 -16	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
Commitment levels for [***] are at least [***] in base transportation charges per [***].
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P780025560 - 02
Addendum B Page 12 of 18

 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Dimensional Weight
 
Dimensional Weight
 
UPS will apply the Dimensional Weight (Custom Divisor) factor below for any package shipped using the indicated service . All other services and/or zones not specified will be billed using the Dimensional Weight divisor set forth in the UPS Rate and Service Guide in effect at the time of shipment.
 
Custom Dimensional Weight Divisor : [***]
 
UPS reserves the right to re-evaluate the package characteristics and adjust the Dimensional Weight (Custom Divisor\ Custom Cubic Inch Threshold) accordingly upon 30 days written notice to Customer.
 
The incentives stated above are valid from July 20, 2013 to [***].
 
[***] - Dimensional Weight
 
Dimensional Weight
 
UPS will apply the lower of either the Dimensional Weight Threshold factor below or the Dimensional Weight Threshold factor in effect at the time of shipping as indicated in the UPS SurePost Terms of Service, located at www.ups.com/content/us/en/preferred/lws_index.html. All shippers, services and zones not specified will be billed using the Dimensional Weight factor indicated in the UPS SurePost Terms of Service effective at the time of the shipment.

Dimensional
Weight (Custom
Cubic Inch
Threshold) by
Zone	 	
[***]	 	
[***]	 	
 
UPS reserves the right to re-evaluate the package characteristics and adjust the Dimensional Weight (Custom Divisor\ Custom Cubic Inch Threshold) accordingly upon 30 days written notice to Customer.
 
Portfolio Tier Incentive
 
Each eligible package will receive an incentive per the following schedule based on a [***] rolling average of eligible packages tendered to UPS. The band determination is based on the cumulative [***] (excluding accessorials and surcharges, unless otherwise specified). The incentives will be administered on a [***] basis.

 	 	[***] Charges Bands - ($)	 	
Service(s)	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P780025560 - 02
Addendum B Page 13 of 18

 

 	 	[***] Charges Bands -   ($)	
Service(s)	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
 
For the first [***] of this agreement, discounts per the schedule for eligible services will be applied based on [***].
 
After the first [***] of this agreement, [***] charges per [***] will be based on [***] through the [***]. Average [***] charges per [***] is defined as the [***] from eligible and committed services for the given time period divided by the number of [***] in the time period.
 
The following products will be included in determining the appropriate bands of the customer: Service(s) listed in Group(s) [***] of the Committed Services section at the end of the Addendum B.
 
For the purposes of determining the appropriate band of the customer, UPS will consider activity by the account numbers specified in Addendum A , Section 2.
 
Minimum Net Charge
 
For each shipment, Customer agrees to pay the greater of the (a) net shipment charge based on the above incentives or (b) the minimum net shipment charge. When applicable, Minimum net shipment charge is calculated by deducting the applicable amount (by zone) in the table below from the published list rate for the respective service.
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
(Continued)

[***]	 	[***]	 	
[***]	 	[***]	 	
 
Service: [***] - Adjustment to the Rate Per Letter Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
(Continued)

[***]	 	[***]	 	
[***]	 	[***]	 	
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
(Continued)

[***]	 	[***]	 	
[***]	 	[***]	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P780025560 - 02
Addendum B Page 14 of 18

 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
(Continued)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
(Continued)

[***]	 	[***]	 	
[***]	 	[***]	 	
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
(Continued)

[***]	 	[***]	 	
[***]	 	[***]	 	
 
Service: [***] - Adjustment to the Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
(Continued)

[***]	 	[***]	 	
[***]	 	[***]	 	
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
(Continued)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	

Service	 	Minimum
Per	 	Zone	 	Base Rate	 	Adjustment	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P780025560 - 02
Addendum B Page 15 of 18

 

Service	 	Minimum
Per	 	Zone	 	Base Rate	 	Adjustment	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	

Accessorials	 	Incentives	
[***]	 	[***] Off Effective Rates	
 
The incentives stated above apply for the period July 20, 2013 through [***].

Accessorials	 	Incentives	
[***]	 	[***] Off Effective Rates	
[***]	 	[***] Off Effective Rates	
[***]	 	[***] Off Effective Rates	
 
The incentives stated above apply for the period July 20, 2013 through [***].
 
Destination Area Surcharge(s) - Incentives per Shipment

Service(s)	 	Country/
Zone	 	Delivery Area -
Extended	 	Delivery Area	
[***]	 	[***]	 	[***] Off	 	[***] Off	
 
Committed Services:
 
All Small Package Freight: Domestic and Export transportation charges from the following: [***] will be used to determine the customer’s incentive levels: [***].
 
All International Import:  Import transportation charges from the following: [***].
 
All UPS Freight(3): The following [***] will be used to determine the customer’s incentive levels: [***].
 
All UPS Ground with Freight Pricing: The following service(s) will be used to determine the band of the customer: [***].
 
Rate Cap Summary:
 
UPS and Customer have mutually agreed to a maximum rate increase amount on the Standard List Rates and minimum shipment charges in accordance with the terms set forth below. The maximum rate increase amount only applies to Standard List Rates and not to any other surcharges, accessorials or fees. Should UPS increase its Standard List Rates (hereinafter a “General Rate Increase”), Customer’s incentives in Addendum B will be evaluated to determine if they need to be adjusted upward to maintain the maximum increase as listed in the table below (hereinafter the “Rate Cap Percentage”).
 
Any applicable incentive adjustments will be calculated using the specific impact of the General Rate Increase on Customer’s volume distribution.

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.

P780025560 - 02
Addendum B Page 16 of 18

 
Customer’s volume distribution will be based on a sample of Customer’s business tendered to UPS. Should a statistically viable sampling not be available for a specific UPS product, UPS will calculate the applicable incentive adjustment using the announced General Rate Increase amount. If the General Rate Increase is used or if Customer’s actual shipping characteristics change, Customer’s effective rate increase may be greater or less than the Rate Cap Percentage.
 
If the incentive evaluation process determines that the Customer’s rate increase for a product is less than the Rate Cap Percentage, no adjustments to incentives will occur. Customer’s adjusted incentives, if any, will become Customer’s revised incentives and will apply to Customer thereafter. Notwithstanding anything to the contrary, the Rate Cap Percentage does not apply to any changes in additional charges. Additional charges are defined as fees for value added services, accessorial charges, other charges or surcharges.
 
When evaluating if any incentive adjustments are required as part of this agreement, UPS will adjust the Rate Cap Percentage to account for any changes in Standard List Rates that may occur as a result of an adjustment to the applicable fuel surcharge index. For example, if Customer’s rate cap is 5.0% and UPS increases Standard List Rates by an effective 6.0%, where 1.0% of the increase is part of a 1.0% net reduction in the fuel surcharge index, Customer will take the full 6.0% increase with the net effect being a 5.0% increase.

 	 	Year of Rate Increase	 	 	 	
Service(s)	 	2014	 	2015	 	2016	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	 	 	

** Minimum shipment charges are capped (the net minimum shipment charge will not increase more than the negotiated rate cap). For products not indicated any applicable minimum shipment charge will float based on changes to the Standard List Rates.
 
[***]
 
The incentives detailed earlier in this Agreement include an [***] bonus up to the amount defined in the table below. Shipments tendered via [***] will not receive this bonus. At no point will non-application of the bonus result in net rates that exceed the published rates in effect at the time of shipment. The bonus will be applicable to all shipments paid for by accounts in this agreement.

Service(s)	 	[***] Bonus	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P780025560 - 02
Addendum B Page 17 of 18

 

Service(s)	 	[***]  Bonus	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
[***]	 	[***]	 	
 
The following methods of providing UPS shipment information will be considered non-electronic for this agreement: [***].
 
All other shipment information will be considered electronic PLD.

Notes:
 
(1)   Incentives are based on and derived from the most recently published Standard List Rates and adjusted periodically pursuant to the terms and conditions of the Carrier Agreement. Updated rate charts will be made available to Customer in January of subsequent contract years by contacting your UPS account executive. Rates applicable to UPS SurePost Service are set forth at www.ups.com/content/us/en/preferred/lws_index.html. Transportation charges for UPS SurePost packages will be included in any applicable Small Package Freight commitments.
(3)   For [***] services, the rolling average used to calculate the tier band will be based on [***] charges that will be one week behind the [***] charges used to calculate the tier.
[***]  Includes all available billing options and return services with the exception of [***] services. Please refer to the UPS Tariff/Terms and Conditions for additional information on available billing options.
[***]  Undeliverable Packages will be returned as specified in the UPS Terms and Conditions. Any incentives in effect at the time of shipment for the service in which an undeliverable package is shipped will be applied to the undeliverable package.
*  [***] is committed based on net [***] charges.

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P780025560 - 02
Addendum B Page 18 of 18

 

Contract Carrier Agreement
Addendum C
Terms of Contract
 
Boot Barn, including all of its subsidiaries, (Customer) and United Parcel Service, Inc. (US) hereby agree that the UPS Carrier Agreement (P780025560), effective September 30, 2013, is amended as follows:
 
1.               Minimum Commitment Fee . In consideration of the rates and discounts provided to Customer under this Agreement, Customer agrees to designate UPS as Customer’s primary carrier of choice throughout the Term of this Agreement, and to tender to UPS a minimum volume of shipments to achieve an average of no less than [***] per [***] in gross Transportation Charges during any [***] period (“Minimum Commitment”), unless Customer’s shipping volume declines due to conditions outside Customer’s control.
 
If UPS determines that Customer has failed to meet the Minimum Commitment during any [***] period, UPS reserves the right to assess a one-time charge in the amount of [***].
 
2.               Early Termination Fee . If Customer terminates this Agreement during [***] of this Agreement, UPS reserves the right to assess an Early Termination Fee in the amount of [***]. Customer agrees that the incentives provided herein will not be made negotiable during the term of this Agreement.
 
3.               Divestiture . If Customer eliminates or divests itself of an Affiliate or Shipping Location during the Term of the Agreement, Customer shall immediately notify UPS in writing of such change. If such Affiliate or Shipping Location was eligible to receive the Incentives under this Agreement immediately prior to such divestment, UPS, in its sole discretion, may allow the divested Shipping Location or Affiliate to continue under this Agreement for a period not to exceed six (6) months (the “Transition Period”). At the end of the Transition Period and subject to any change in Customer’s Incentives based on changed shipping characteristics, UPS shall remove the divested Shipping Location or Affiliate from this Agreement and any amounts attributable to the divested Shipping Location or Affiliate shall be removed from Customer’s current Incentives calculation as set forth in the Agreement. UPS and Customer may also negotiate in good faith any related changes to Minimum Commitment Fee and Early Termination Fee.

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
This contract offer is void if an executed copy is not returned to UPS by 10/05/13
Addendum C Page 1 of 2

 
 
4.               Acquisition. If during the Term of this Agreement, Customer acquires an Affiliate as defined herein or if Customer is acquired, the Affiliate may be added to this Agreement, subject to UPS’s approval, within ninety (90) days of Customer’s written request to add such Affiliate and subject to any change in Customer’s Incentives based on changed shipping characteristics.
 
Assignment . Neither party may assign, sell, transfer, or otherwise dispose of, whether voluntarily or involuntarily, by merger, change of control, or corporate reorganization, by operation of law or otherwise, this Agreement, or any of its rights or obligations without the prior written consent of the other party, which consent will not be unreasonably withheld. In the event customer sells substantially all of its assets or sells the majority of its ownership interests to a single unrelated third party, the Early Termination Fee would not be assessed provided that UPS is maintained as the primary carrier of choice for Customers business for the duration of the agreement. Except as otherwise provided herein, any attempted assignment, sale, transfer, or other disposition by a party without the prior written consent of the other party shall be void and without force or effect.
 
This addendum supersedes any previous addendum as of the effective date.
 
Unless expressly changed by this Amendment, all other terms and conditions of the Agreement will remain valid and enforceable. In the event of a conflict between this Amendment and the Agreement, this Amendment will prevail.
 
This offer is void if not accepted by October 5, 2013 (“Deadline”). Customer may accept Agreement by providing a duly signed copy of this Agreement to UPS by the Deadline. This Agreement supersedes all other agreements between the Customer and UPS regarding these Services. This Agreement is hereby signed and executed by authorized representatives of both parties.

UNITED PARCEL SERVICE, INC	 	BOOT BARN	
 	 	 	 	 	
By:	/s/ Diana Knight	 	By:	/s/ Paul Iacono	
 	(An Authorized Representative)	 	 	(An Authorized Representative)	
Print Name:	Diana Knight	 	Print Name:	Paul Iacono	
Title:	AE	 	Title:	CFO	
Address:	1331 S. Vernon	 	Address:	15776 Laguna Canyon	
 	Anaheim, CA 92805	 	 	Irvine, CA 92618	
Date Signed:	9-25-2013	 	Date Signed:	9-25-2013	

 	 	Effective Date:	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
This contract offer is void if an executed copy is not returned to UPS by 10/05/13
Addendum C Page 2 of 2

 
Addendum to Carrier Agreement
Between
Boot Barn and United Parcel Service Inc.
 
Boot Barn (“Customer”) and United Parcel Service Inc., an Ohio Company (“UPS”) here by agree that the Carrier Agreement - P780025560 (the “Agreement”) is hereby amended by this addendum (“Addendum”) as of the date set forth below which shall be the effective date (the “Effective Date”). The Addendum supersedes any prior amendments or addenda and is incorporated into and made part of the Agreement to the extent any provisions of this Addendum are inconsistent with, conflict with, or vary from the provisions of the Agreement, the provisions of this Addendum shall control. Terms not defined in this Addendum shall have the meaning set forth in the Agreement. All other terms and conditions of the Agreement shall continue in full force and effect except as modified herein.
 
The following is added to the Agreement:
 
All incentives contained in this Addendum apply to the effective UPS rate at the time of shipment and shall be applied on a [***] basis unless otherwise specified.
 
1.   Change of bid number . For purposes of adding freight collect, third party and return service billing options to the incentive structure of the current agreement, a new bid number (P050025848) will be implemented as of the effective date of this Addendum.
 
2.   Freight Collect, Third Party and Return Service billing options . Freight collect, third party and return service billing options are added to the Agreement and eligible for incentives as of the effective date of this Addendum for services included in the Agreement.
 
3.   Freight Collect, Third Party and Return services committed . All base transportation freight collect, third party and return service revenues for committed services in the Agreement will be included to determine the band.
 
This offer is void if not accepted by November 6, 2013 (“Deadline”). Customer may accept Addendum by providing a duly signed copy of this Addendum to UPS by the Deadline. This Addendum supersedes all other agreements between the Customer and UPS regarding these Services. This Agreement is hereby signed and executed by authorized representatives of both parties.

UPS
United Parcel Service, Inc	 	Customer
Boot Barn	
 	 	 	 	 	
By:	/s/ Diana Knight	 	By:	/s/ Donald Petersen	
 	 	 	 	 	
Title:	AE	 	Title:	Vice President, Supply Chain	
 	 	 	 	 	
Address:	1331 S. Vernon	 	Address:	15776 Laguna Canyon Rd.	
 	 	 	 	 	
 	Anaheim, CA 92805	 	 	Irvine, CA	
 	 	 	 	 	
Date Signed:	10/25/13	 	Date Signed:	10/25/13	

 	 	Effective Date:	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Carrier Agreement		
 
This Agreement (“Agreement”) is made and entered into by and between Boot Barn (“Customer”) and United Parcel Service Inc., an Ohio Company (“UPS”).
 
Pricing. UPS will provide the pickup and delivery services (“Services”) as set forth below subject to the terms of this Agreement. These Services will be provided with the incentives (“Incentives”) as also set forth below. These Incentives shall only be available to the locations and account numbers approved and identified in Addendum A . Account numbers of Customer and its affiliates, each of which is more than fifty percent (50.0%) owned by Customer, may be added or deleted only by mutual written agreement of Customer and UPS and require seven (7) business days notice to UPS to become effective. Customer is prohibited from reselling or offering Incentives to any other party without the prior written consent of UPS and failure to comply with this prohibition may result in immediate cancellation of this Agreement.
 
Customer acknowledges and agrees that the Incentives and the minimum rates in Addendum B are based on and derived from the most recently published UPS Standard List Rates available at www.ups.com and are subject to change based on changes to such list rates. Each eligible package (or shipment) and accessorial will receive its applicable Incentive for the term of this Agreement. Incentives are applied on a [***] basis unless otherwise specified. Incentives shall be applied to [***] outbound shipments unless otherwise noted. This Agreement will be subject to periodic review by UPS for Customer compliance.
 
Automation. Customer agrees to supply the UPS Service Provider with a hard copy summary manifest at the time that the packages are tendered to UPS for shipment and provide UPS with Timely Upload of electronic Package Level Detail (“PLD”) in a form acceptable to UPS. PLD includes, but is not limited to, consignee’s full name, complete delivery address, package weight and zone. Timely Upload is defined as the electronic transmission of PLD to UPS at the time the packages are tendered to UPS. Customer agrees to provide smart labels on all packages tendered to UPS. A smart label, as defined herein and described in the current UPS Guide to Labeling, which may be updated from time to time by UPS, includes, but is not limited to, a MaxiCode, Postal Bar Code, current UPS Routing Code, appropriate UPS Service Icon and a UPS 1Z Tracking Number Bar Code. Customer further agrees that all shipping locations will use a UPS OnLine or OnLine compatible shipping solution that is approved and authorized by UPS as such.
 
Payment Terms. Customer agrees that all invoices will be paid by Electronic Funds Transfer or by check prior to the agreed upon due date. If the payment method changes during the life of this agreement, UPS reserves the right to reevaluate these incentives and adjust accordingly.
 
SurePost. Rates applicable to UPS SurePost Service are set forth at www.ups.com/content/us/en/preferred/lws_index.html.
 
Service. All Services provided by UPS shall be pursuant to the UPS Rate and Service Guide and UPS Tariff/Terms and Conditions of Service in effect at the time of shipping, each of which are incorporated herein by reference and which may be subject to change without prior notice and which, together with this Agreement, are the entire agreement and understanding between Customer and UPS relating to the relationship under this Agreement, superseding all prior or contemporaneous agreements or understandings. UPS SurePost Service is provided pursuant to the UPS SurePost Terms of Service, located at www.ups.com/content/us/en/preferred/lws_index.html, which are also incorporated herein by this reference.
 
Confidentiality. Customer and UPS agree to maintain the confidentiality of this Agreement including its rates, terms and incentives (“Confidential Information”) unless disclosure is required by law. Customer agrees not to post or publicly display this Confidential Information.
 
Offer Expiration and Prior Agreements. This offer is void if not accepted by February 9, 2014 (“Deadline”). Customer may accept Agreement by providing a duly signed copy of this Agreement to UPS by the Deadline. This Agreement supersedes all other agreements between the Customer and UPS regarding these Services. This Agreement is hereby signed and executed by authorized representatives of both parties.
 
Term. The Incentives contained in this Agreement take effect on the Monday following the signing of this Agreement or the Effective Date, whichever is later and continue until terminated by either party. Either party may terminate this Agreement at any time upon 30 days prior written notice to the other. In addition to these termination rights, UPS shall have the right to terminate the UPS SurePost Service Incentive Program set forth herein immediately (i) if Customer fails to comply with any term of the UPS SurePost , or (ii) if the US Postal Service eliminates or changes the terms under which it provides the Lightweight Parcel Select Service for packages tendered pursuant to UPS SurePost.

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Carrier Agreement Page 1 of 20

 

Addendum A
List of Account Numbers		
 
Boot Barn’s UPS accounts identified below shall be included in the Agreement.
The following accounts shall have their activity committed and are eligible for incentives as specified in Addendum B:

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
Section 1 :	 	 	 	 	
[***]	 	BASKIN/BOOT BARN #164	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN CORPORATE	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN HR	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN STORE 132	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN STORE 134	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN STORE 133	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN STORE 0136	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKINS/BOOT BARN STORE 183	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #11	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum A Page 2 of 20

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier ** 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN #169	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN #184	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC/BOOT BARN STORE 126	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	[***]	
 	 	[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum A Page 3 of 20

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN #160	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN STORE 85	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN/INTERNET	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN #175	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC E WAREHOUSE	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN #171	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN STORE 158	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN #154	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN #173	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.

P050025848
Addendum A Page 4 of 20

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #14	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum A Page 5 of 20

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	SOURCE ONE OFFICE PRODUCTS	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BILLY BOB’S BOOT OUTLET #24	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN & WORK STORE	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC/BOOT BARN STORE 100	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN #159	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE # 38	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN #172	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN % GEORGIA SMITH	 	 	
 	 	[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum A Page 6 of 20

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #20	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN #174	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN #168	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN #166	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN STORE 94	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN STORE 105	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC/BOOT BARN STORE 108	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #7	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #18	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #12	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #19	 	[***]	
 	 	[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum A Page 7 of 20

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #17	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #10	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #15	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #16	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #8	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	WORK WAREHOUSE #27	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #38	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN #161	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #21	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN WEAR	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	RCC WESTERN STORE #25	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN #176	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN #177	 	 	
 	 	[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum A Page 8 of 20

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier ** 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKIN/BOOT BARN #167	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT CORRAL #9	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN CORPORATE	 	[***]	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKINS/BOOT BARN STORE 181	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BASKINS/BOOT BARN STORE 182	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN STORE 137	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN #20	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum A Page 9 of 20

 

ACCOUNT	 	NAME AND ADDRESS	 	Commodity Tier **	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN #0055	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN #0067	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	
 	 	[***]	 	 	
 
The following accounts shall have their activity committed as specified in Addendum B:

ACCOUNT	 	NAME AND ADDRESS	 	 	
Section 2:	 	 	 	 	
[***]	 	BOOT BARN	 	 	
 	 	[***]	 	 	

*If there is an account number for the same service included in another UPS agreement, such account number will be deemed deleted from such other agreement as of the effective date.
 
** The commodity tier displayed is for Hundredweight outbound [***]. For other Hundredweight Billing Options (third party, freight collect and consignee billing) please refer to the Hundredweight Service Contract Agreement.UPS Hundredweight rates and incentives will only apply to UPS accounts with an active Hundredweight Tier (01-07).The stated commodity tier set forth in this Addendum supersedes the commodity tier set forth in

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum A Page 10 of 20

 
any existing Hundredweight Service Contract Agreement between the parties.
 
UPS Hundredweight rates and incentives will only apply to UPS accounts with an active Hundredweight Tier (01-07).

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum A Page 11 of 20

 

Addendum B
Incentives		
 
All incentives contained in this Addendum B apply to the effective UPS rate at the time of shipment and shall be applied on a [***] basis unless otherwise specified. (1)
 
[***] - Incentives Off Effective Rates

Weight	 	Zones	 	
(lbs)	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
1 -30	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
31 -150	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
151 and up	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
Commitment levels for [***] are at least [***] in base transportation charges per [***].
 
[***] - Incentives Off Effective Rates

Weight	 	Zones	 	
(lbs)	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
1 -5	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
6 -10	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
11 -20	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
21 -30	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
31 -150	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
151 and up	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
Commitment levels for [***] are at least [***] in base transportation charges per [***].
 
[***] - Incentives Off Effective Rates

Weight	 	Zones	 	
(lbs)	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
1 -3	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
4 -9	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
10 -70	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
71 and up	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
Commitment levels for [***] are at least [***] in base transportation charges per [***].
 
[***] - Incentives Off Effective Rates

Weight	 	Zones	 	
(oz)	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
1 -16	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
Commitment levels for [***] are at least [***] in base transportation charges per [***].
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Incentives Off Effective Rates - [***]

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum B Page 12 of 20

 
 
[***] - Incentives Off Effective Rates - [***]
 
[***] - Dimensional Weight
 
Dimensional Weight
 
UPS will apply the Dimensional Weight (Custom Divisor) factor below for any package shipped using the indicated service . All other services and/or zones not specified will be billed using the Dimensional Weight divisor set forth in the UPS Rate and Service Guide in effect at the time of shipment.
 
Custom Dimensional Weight Divisor : [***]
 
UPS reserves the right to re-evaluate the package characteristics and adjust the Dimensional Weight (Custom Divisor\ Custom Cubic Inch Threshold) accordingly upon 30 days written notice to Customer.
 
The incentives stated above are valid from November 2, 2013 to [***].
 
[***] - Dimensional Weight
 
Dimensional Weight
 
UPS will apply the lower of either the Dimensional Weight Threshold factor below or the Dimensional Weight Threshold factor in effect at the time of shipping as indicated in the UPS SurePost Terms of Service, located at www.ups.com/content/us/en/preferred/lws_index.html. All shippers, services and zones not specified will be billed using the Dimensional Weight factor indicated in the UPS SurePost Terms of Service effective at the time of the shipment.
 
Dimensional Weight (Custom Cubic Inch Threshold) by Zone

[***]	
[***]	
 
UPS reserves the right to re-evaluate the package characteristics and adjust the Dimensional Weight (Custom Divisor\ Custom Cubic Inch Threshold) accordingly upon 30 days written notice to Customer.
 
Portfolio Tier Incentive
 
Each eligible package will receive an incentive per the following schedule based on a [***] rolling average of eligible packages tendered to UPS. The band determination is based on the cumulative [***] (excluding accessorials and surcharges, unless otherwise specified). The incentives will be administered on a [***] basis.

 	 	[***] Charges Bands - ($)	 	
Service(s)	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum B Page 13 of 20

 

 	 	[***] Bands - ($)	 	
Service(s)	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
Average [***] charges per [***] will be based on [***]. Average [***] charges per [***] is defined as the [***] charges per [***] from all eligible and committed services for the given time period divided by the number of [***] in the time period.
 
Incentives effective from January 4, 2014 to [***]. The following products will be included in determining the appropriate bands of the customer: Service(s) listed in Group(s) [***] of the Committed Services section at the end of the Addendum B.
 
For the purposes of determining the appropriate band of the customer, UPS will consider activity by the account numbers specified in Addendum A , Section 2.
 
Minimum Net Charge
 
For each shipment, Customer agrees to pay the greater of the (a) net shipment charge based on the above incentives or (b) the minimum net shipment charge. When applicable, Minimum net shipment charge is calculated by deducting the applicable amount (by zone) in the table below from the published list rate for the respective service.
 
Incentives effective from November 2, 2013 to [***].
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	[***]	
[***]	[***]	
 
Incentives effective from January 4, 2014 to [***].
 
[***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
 
Incentives effective from November 2, 2013 to [***].
 
[***] - Adjustment to the Rate Per Letter Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum B Page 14 of 20

 
Incentives effective from January 4, 2014 to [***].
 
Service: [***] - Adjustment to the Rate Per Letter Per Zone ($)

[***]	 	[***]	
[***]	 	[***]	
 
Incentives effective from November 2, 2013 to [***].
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	
 
Incentives effective from January 4, 2014 to [***].
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
 
Incentives effective from November 2, 2013 to [***].
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
 
Incentives effective from January 4, 2014 to [***].
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
 
(Continued)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 
Incentives effective from January 4, 2014 to [***].
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
 
Incentives effective from January 4, 2014 to [***].
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
 
Incentives effective from November 2, 2013 to [***].
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	
[***]	 	[***]	
 
Incentives effective from January 4, 2014 to [***].

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum B Page 15 of 20

 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
 
Incentives effective from November 2, 2013 to [***].
 
Service: [***] - Adjustment to the Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	
 
Incentives effective from January 4, 2014 to [***].
 
Service: [***] - Adjustment to the Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	 	 	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	 	 	 	 	 	
 
Incentives effective from November 2, 2013 to [***].
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	
[***]	 	[***]	
 
Incentives effective from January 4, 2014 to [***].
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
 
Incentives effective from November 2, 2013 to [***].
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	
[***]	 	[***]	
 
Incentives effective from January 4, 2014 to [***].
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	
 
(Continued)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	 	 	 	 	 	 	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	 	 	 	 	 	 	 	
 
Incentives effective from January 4, 2014 to [***].
 
Service: [***] - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	
 
Incentives effective from January 4, 2014 to [***].

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum B Page 16 of 20

 
 
Service: [***]  - Adjustment to the [***] Rate Per Shipment Per Zone ($)

[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	
[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	

Service	 	Minimum 
 Per	 	Zone	 	Base Rate	 	Adjustment	
Incentives effective from January 4, 2014 to [***].	 	 	 	 	 	 	 	 	
[***]	 	Letter	 	[***]	 	[***]	 	[***]	
Incentives effective from January 4, 2014 to [***].	 	 	 	 	 	 	 	 	
[***]	 	Package	 	[***]	 	[***]	 	[***]	
Incentives effective from January 4, 2014 to [***].	 	 	 	 	 	 	 	 	
[***]	 	Letter	 	[***]	 	[***]	 	[***]	
Incentives effective from January 4, 2014 to [***].	 	 	 	 	 	 	 	 	
[***]	 	Package	 	[***]	 	[***]	 	[***]	
Incentives effective from January 4, 2014 to [***].	 	 	 	 	 	 	 	 	
[***]	 	Letter	 	[***]	 	[***]	 	[***]	
Incentives effective from January 4, 2014 to [***].	 	 	 	 	 	 	 	 	
[***]	 	Package	 	[***]	 	[***]	 	[***]	
Incentives effective from January 4, 2014 to [***].	 	 	 	 	 	 	 	 	
[***]	 	Letter	 	[***]	 	[***]	 	[***]	
Incentives effective from January 4, 2014 to [***].	 	 	 	 	 	 	 	 	
[***]	 	Package	 	[***]	 	[***]	 	[***]	
Incentives effective from November 2, 2013 to [***].	 	 	 	 	 	 	 	 	
[***]	 	Package	 	[***]	 	[***]	 	[***]	
Incentives effective from January 4, 2014 to [***].	 	 	 	 	 	 	 	 	
[***]	 	Package	 	[***]	 	[***]	 	[***]	
Incentives effective from January 4, 2014 to [***].	 	 	 	 	 	 	 	 	
[***]	 	Package	 	[***]	 	[***]	 	[***]	
Incentives effective from November 2, 2013 to [***].	 	 	 	 	 	 	 	 	
[***]	 	Package	 	[***]	 	[***]	 	[***]	
Incentives effective from November 2, 2013 to [***].	 	 	 	 	 	 	 	 	
[***]	 	Package	 	[***]	 	[***]	 	[***]	

Accessorials	 	Incentives	
[***]	 	[***] Off Effective Rates	
 
The incentives stated above apply for the period November 2, 2013 through [***].

Accessorials	 	Incentives	
[***]	 	[***] Off Effective Rates	
[***]	 	[***] Off Effective Rates	
[***]	 	[***] Off Effective Rates	
 
The incentives stated above apply for the period November 2, 2013 through [***].

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum B Page 17 of 20

 
 
[***] - Incentives per Shipment

Service(s)	 	Country/
Zone	 	Delivery Area -
Extended	 	Delivery Area	
[***]	 	[***]	 	[***] Off	 	[***] Off	
 
Committed Services:
 
All Small Package Freight: Domestic and Export transportation charges from the following: [***] will be used to determine the customer’s incentive levels: [***].
 
All International Import:  Import transportation charges from the following:  [***] will be used to determine the customer’s incentive levels: [***].
 
All UPS Freight(3): The following [***] will be used to determine the customer`s incentive levels: [***].
 
All UPS Ground with Freight Pricing: The following service(s) will be used to determine the band of the customer: [***].
 
Rate Cap Summary:
 
UPS and Customer have mutually agreed to a maximum rate increase amount on the Standard List Rates and minimum shipment charges in accordance with the terms set forth below. The maximum rate increase amount only applies to Standard List Rates and not to any other surcharges, accessorials or fees. Should UPS increase its Standard List Rates (hereinafter a “General Rate Increase”), Customer’s incentives in Addendum B will be evaluated to determine if they need to be adjusted upward to maintain the maximum increase as listed in the table below (hereinafter the “Rate Cap Percentage”).
 
Any applicable incentive adjustments will be calculated using the specific impact of the General Rate Increase on Customer’s volume distribution. Customer’s volume distribution will be based on a sample of Customer’s business tendered to UPS. Should a statistically viable sampling not be available for a specific UPS product, UPS will calculate the applicable incentive adjustment using the announced General Rate Increase amount. If the General Rate Increase is used or if Customer’s actual shipping characteristics change, Customer’s effective rate increase may be greater or less than the Rate Cap Percentage.
 
If the incentive evaluation process determines that the Customer’s rate increase for a product is less than the Rate Cap Percentage, no adjustments to incentives will occur. Customer’s adjusted incentives, if any, will become Customer’s revised incentives and will apply to Customer thereafter. Notwithstanding anything to the contrary, the Rate Cap Percentage does not apply to any changes in additional charges. Additional charges are defined as fees for value added services, accessorial charges, other charges or surcharges.
 
When evaluating if any incentive adjustments are required as part of this agreement, UPS will adjust the Rate Cap Percentage to account for any changes in Standard List Rates that may occur as a result of an adjustment to the applicable fuel surcharge index. For example, if Customer’s rate cap is 5.0% and UPS increases Standard List Rates by an effective 6.0%, where 1.0% of the increase is part of a 1.0% net reduction in the fuel surcharge index, Customer will take the full 6.0% increase with the net effect being a 5.0% increase.

 	 	Year of Rate Increase	
Service(s)	 	2014	 	2015	 	2016	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum B Page 18 of 20

 

 	 	Year of Rate Increase	
Service(s)	 	2014	 	2015	 	2016	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	
[***]	 	[***]	 	[***]	 	[***]	

** Minimum shipment charges are capped (the net minimum shipment charge will not increase more than the negotiated rate cap). For products not indicated any applicable minimum shipment charge will float based on changes to the Standard List Rates.
 
[***]
 
The incentives detailed earlier in this Agreement include an [***] bonus up to the amount defined in the table below. Shipments tendered via [***] will not receive this bonus. At no point will non-application of the bonus result in net rates that exceed the published rates in effect at the time of shipment. The bonus will be applicable to all shipments paid for by accounts in this agreement.

Service(s)	 	[***] Bonus	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	
[***]	 	[***]	

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum B Page 19 of 20

 

Service(s)	 	[***] Bonus	
[***]	 	[***]	
[***]	 	[***]	
 
The following methods of providing UPS shipment information will be considered non-electronic for this agreement: [***]. All other shipment information will be considered electronic PLD.

Notes:
 
(1)              Incentives are based on and derived from the most recently published Standard List Rates and adjusted periodically pursuant to the terms and conditions of the Carrier Agreement. Updated rate charts will be made available to Customer in January of subsequent contract years by contacting your UPS account executive. Rates applicable to UPS SurePost Service are set forth at www.ups.com/content/us/en/preferred/lws_index.html. Transportation charges for UPS SurePost packages will be included in any applicable Small Package Freight commitments.
(3)              For [***] services, the rolling average used to calculate the tier band will be based on [***] charges that will be one week behind the [***] charges used to calculate the tier.
[***]  Includes all available billing options and return services with the exception of [***] services. Please refer to the UPS Tariff/Terms and Conditions for additional information on available billing options.
[***]  The incentives will be extended to [***] where applicable for the zones listed.
[***]   The incentives will be extended to [***] where applicable for the zones listed.
[***]  Undeliverable Packages will be returned as specified in the UPS Terms and Conditions. Any incentives in effect at the time of shipment for the service in which an undeliverable package is shipped will be applied to the undeliverable package.
[***]  The incentives will be extended to [***] where applicable for the zones listed.
[***] The incentives will be extended to [***] where applicable for the zones listed.
*  [***] is committed based on net [***] charges.

***     Certain information on this page has been omitted and filed separately with the Commission.  Confidential treatment has been requested with respect to the omitted portions.
 
P050025848
Addendum B Page 20 of 20

Exhibit 21.1
 
Subsidiaries of Boot Barn Holdings, Inc.

Legal Name	 	Jurisdiction of Organization or Incorporation	
 	 	 	
Baskins Acquisition Holdings, LLC	 	Delaware	
 	 	 	
Boot Barn, Inc.	 	Delaware	
 	 	 	
RCC Western Stores, Inc.	 	South Dakota	

QuickLinks -- Click here to rapidly navigate through this document

 Exhibit 23.2

 Consent of Independent Registered Public Accounting Firm
We consent to the use in this Registration Statement on Form S-1 of our report dated June 13, 2014 relating to the consolidated financial statements of Boot Barn Holdings, Inc. (formerly WW Top Investment Corporation) and subsidiaries appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such Prospectus.
/s/ Deloitte & Touche LLP
Costa Mesa, California
September 29, 2014

QuickLinks
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm

Exhibit 23.3
 
September 13, 2014
 
Boot Barn Holdings, Inc.
15776 Laguna Canyon Road
Irvine, California 92618
 
Ladies and Gentlemen:
 
We hereby consent to the use of our name, Mōd Advisors LLC, and our industry numbers and predictions prepared for Boot Barn Holdings, Inc. (the “Company”), including but not limited to the Mōd study (as such term is defined in the Registration Statement), in (i) the Company’s Registration Statement on Form S-1 (the “Registration Statement”)  and in all subsequent amendments, including post-effective amendments, and supplements to the Registration Statement and in any related prospectus and any related registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, relating to the Company’s initial public offering of its common shares, (ii) in any interim, quarterly or annual filings with the Commission by the Company, (iii) in any other registration statement relating to the Company’s common shares and any amendment thereto and (iv) in any other document offering securities in the Company or its respective subsidiaries. We further consent to the filing of this Consent as an exhibit to such Registration Statement.
 
Mōd Advisors LLC

By:	/s/ Ken Hewes	 	
Name:	Ken Hewes	 	
Title:	President